Novoselac v. ISM Vuzem D.O.O.
| Decision Date | 03 June 2022 |
| Docket Number | 21-cv-08654-BLF |
| Parties | STJEPAN NOVOSELAC, et al., Plaintiffs, v. ISM VUZEM D.O.O., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
ORDER GRANTING MOTION TO DISMISS COMPLAINT WITH LEAVE TO AMEND [RE: ECF 12]
Defendants Tesla, Inc. and Eisenmann Corporation (“Moving Parties”) seek dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs' counsel did not appear when the case was called for hearing at 9:30 a.m on May 19, 2022. After waiting until 9:45 a.m., the Court stated its ruling on the record. The Court did not hear substantive argument. The motion is GRANTED WITH LEAVE TO AMEND.
Plaintiffs sue for wages and penalties allegedly owed to them for construction work they performed at Tesla's facility in Fremont, California between November 2014 and June 2016. Compl. ¶ 17. As relevant here, they assert violations of California Labor Code provisions governing minimum wages (Claim 3), overtime wages (Claim 4), rest breaks (Claim 5) and waiting time penalties (Claim 7). Moving Parties argue that Plaintiffs have failed to state a claim against them under Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) because the claims are time-barred, and Moving Parties were not Plaintiffs' employers. The Court addresses these arguments in reverse order.
Plaintiffs allege that Tesla hired Eisenmann as the general contractor for the work in question, that Eisenmann in turn hired Defendant ISM Vuzem d.o.o. as a subcontractor, and that Plaintiffs were direct employees of ISM Vuzem d.o.o. Compl. ¶¶ 25, 48. Plaintiffs claim that Moving Parties Tesla and Eisenmann are deemed to be their employers under California Labor Code § 2750.5, because neither Eisenmann nor ISM Vuzem d.o.o. held a contractor's license. Id. ¶ 51. Section 2750.5 “operates to conclusively determine that a general contractor is the employer of not only its unlicensed subcontractors but also those employed by the unlicensed subcontractors.” Sanders Constr. Co. v. Cerda, 175 Cal.App.4th 430, 434-35 (2009) (internal quotation marks and citation omitted).
Moving Parties seek dismissal of Plaintiffs' claims on the basis that a non-party entity called Vuzem USA Company held a contractor's license during the relevant period. Moving Parties ask the Court to take judicial notice of Vuzem USA Company's license. It appears that Moving Parties are asking the Court to make a factual determination that the licensed entity, Vuzem USA Company, was Plaintiffs' employer despite Plaintiffs' allegation that an unlicensed entity, ISM Vuzem d.o.o., was their employer. The Court cannot make that factual determination in the context of a Rule 12(b)(6) motion.
Claims 3, 4, and 5 are subject to a three-year limitations period, and Claim 7 is subject to a one-year limitations period. See Cal. Civ. Proc. Code §§ 338, 340. Plaintiffs allege that work at the Tesla site was completed in “June of 2016.” Compl. ¶ 17. Construing that allegation in the light most favorable to Plaintiffs, the work was completed on the last day of the month, June 30, 2016, and the applicable limitations periods began running on that date. Absent tolling, the one-year limitations period expired on June 30, 2017, and the three-year limitations period expired on June 30, 2019. Plaintiffs did not file this suit until August 3, 2021.
Plaintiffs allege that their wage claims were tolled during the pendency of a state court action titled Lesnik v. ISM Vuzem USA, Inc., and a federal action titled Lesnik v. Eisenmann SE. Compl. ¶ 22. Plaintiffs also allege that their wage claims against Moving Parties were tolled by other defendants' acknowledgement of debts to Plaintiffs. Id. ¶ 23. In their opposition (but not in the complaint) Plaintiffs additionally assert that Eisenmann's absence from the state of California constitutes a basis for tolling. Only Plaintiffs' allegations regarding the Lesnik cases merit discussion. Plaintiffs have not cited authority suggesting that acknowledgement of a debt by other defendants could toll the limitations periods with respect to Moving Parties, and the Court cannot consider Plaintiffs' assertion regarding Eisenmann's absence, as it is not alleged in the complaint.
Turning to Plaintiffs' allegations of tolling based on the Lesnik cases, this Court applies California's tolling rules to Plaintiffs' wage and hour claims brought under California law. See Emrich v. Touche Ross & Co., 846 F.2d 1190, 1199 (9th Cir. 1988) (). Plaintiffs contend that tolling exists under two tolling doctrines applied by California courts: (1) the federal tolling rule articulated by American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) and its progeny, and (2) California's equitable tolling rule.
In American Pipe, the United States Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” American Pipe, 414 U.S. at 554. “Once the statute of limitations has been tolled, it remains tolled for all members of the putative class until class certification is denied.” Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 354 (1983) (discussing American Pipe). “At that point, class members may choose to file their own suits or to intervene as plaintiffs in the pending action.” Id.
The California Supreme Court considered the application of American Pipe tolling in Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1121 (1988), identifying two major policy considerations underlying the federal rule. The first consideration is the protection of the class action device. See id. Absent protection from statutes of limitations, putative class members might file motions to intervene or otherwise act in a way that would deprive “class actions of the efficiency and economy of litigation which is a principal purpose of the procedure.” Id. (internal quotation marks and citation omitted). The second consideration is the purposes of statutes of limitations -“ensuring essential fairness to defendants and of barring a plaintiff who has slept on his rights.” Id. (internal quotation marks and citation omitted). Those purposes are served where a class action “notifies the defendants not only of the substantive claims being brought against them, but also of the number and generic identities of the potential plaintiffs who may participate in the judgment.” Id. While observing that some courts do not focus on notice to defendants when applying the American Pipe rule, the Jolly court found the lack of such notice to be dispositive. See id. at 1123-24. Where the prior class action could not have put the defendants on notice of the subsequent personal injury claims asserted by Christine Jolly “within the statutory period of limitations so that they might prepare their defense, ” the Jolly court found the notice deficiency “alone sufficient to deny plaintiff relief under American Pipe.” Id. at 1124. Although the California Supreme Court found that American Pipe tolling was not warranted in Jolly, California appellate courts have construed Jolly as adopting the American Pipe rule and have applied the rule in other cases. See, e.g., Hildebrandt v. Staples the Off. Superstore, LLC, 58 Cal.App. 5th 128, 136 (2020).
Plaintiffs allege tolling from September 25, 2015 through July 18, 2016 based on the state court Lesnik case. Compl. ¶ 22. However, the only class claim asserted in the state court Lesnik case was dismissed on June 22, 2016. See Pl.'s RJN Exh. 22. Plaintiffs cite no authority that would support American Pipe tolling after dismissal of the class claim. Consequently, it does not appear that the state court Lesnik case provides a basis for American Pipe tolling of the limitations periods in this case, which began to run on June 30, 2016.
Plaintiffs allege that the federal Lesnik case gives rise to tolling from an undisclosed start date “through August 25, 2020 and of not less than 30 days thereafter.” Compl. ¶ 22. The federal Lesnik case was filed under seal as a qui tam action on March 7, 2016. See Lesnik at ECF 1, Case No. 16-cv-01120. Class claims were not added until the second amended complaint was filed, also under seal, on August 8, 2017. See id. at ECF 31. The second amended complaint was unsealed on January 8, 2018 and served on Moving Parties on January 18 2018. See id. at ECF 39, 63, 64. As discussed above, the California Supreme Court has identified two important policies that must be served for American Pipe tolling to apply: protection of the class action device by allowing putative class members to wait until after certification is denied to file individual suits, and effectuating the purposes of statutes of limitations by requiring that a class action gives defendants adequate notice of potential claims. See Jolly, 44 Cal.3d at 1121-24. Neither of these policies would be served by allowing tolling while the pleadings in the federal Lesnik case were sealed, when neither Plaintiffs nor Moving Parties had notice of the putative class claims. Accordingly, the Court finds that American Pipe tolling began, at the earliest, when the Lesnik second amended complaint was unsealed on January 8, 2018. Moving Parties argue that any American Pipe tolling began ten days later when they were served with the Lesnik action on ...
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