Sims v. At & T Mobility Servs. LLC

• Decision Date: 02 July 2013
• Docket Number: No. 2:12–CV–2702–JAM–AC.,2:12–CV–2702–JAM–AC.
• Citation: 955 F.Supp.2d 1110
• Court: U.S. District Court — Eastern District of California
• Parties: Phillip SIMS, individually and on behalf of all others similarly situated, Plaintiff, v. AT & T MOBILITY SERVICES LLC, a Delaware limited liability company; and Does 1 through 10, inclusive, Defendants.

955 F.Supp.2d 1110

Phillip SIMS, individually and on behalf of all others similarly situated, Plaintiff,

v.AT & T MOBILITY SERVICES LLC, a Delaware limited liability company; and Does 1 through 10, inclusive, Defendants.

No. 2:12–CV–2702–JAM–AC.

United States District Court,

E.D. California.

July 2, 2013.

Dimitrios Vasiliou Korovilas, Wucetich & Korovilas LLP, El Segundo, CA, Jon David Henderson, Thomas Walker Falvey, Law Office of Thomas W. Falvey, Pasadena, CA, Michael S. Morrison, Alexander Krakow Glick LLP, Santa Monica, CA, for Plaintiff.

George W. Abele, Elizabeth Alexandra Brown, Paul Hastings LLP, Los Angeles, CA, for Defendants.

ORDER LIFTING STAY; DENYING MOTION TO REMAND; and GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS.

JOHN A. MENDEZ, District Judge.

The Court previously considered Plaintiff Phillip Sims' Motion to Remand (Doc. # 8) and stayed this action (Order, February 27, 2013, Doc. # 21, 2013 WL 753496) pending the outcome of Standard Fire Ins. Co. v. Knowles, ––– U.S. ––––, 133 S.Ct. 1345, 185 L.Ed.2d 439 (2013). The issue decided by the Supreme Court in Standard Fire bears directly on this Court's subject matter jurisdiction under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). Due to the stay, Defendant's pending Motion to Dismiss Plaintiff's Seventh and Eighth Claims and Request for Punitive Damages (Doc. # 6) was not decided.¹ On April 3, 2013, the parties filed a stipulation (Doc. # 22) informing the Court that the Standard Fire decision was published and requesting a final order on Plaintiff's Motion to Remand and Defendant's Motion to Dismiss if the action is not remanded. The stay on this action is accordingly lifted.

I. MOTION TO REMAND

As fully discussed in the Court's February 27, 2013 Order, federal subject matter jurisdiction exists over this action if Plaintiff is not permitted to waive recovery beyond CAFA's $5,000,000 jurisdictional threshold on behalf of both himself and absent members of the class he seeks to represent. Standard Fire unequivocally held that such waivers are ineffective and cannot defeat federal subject matter jurisdiction under CAFA. 133 S.Ct. 1345, 1350–51 (2013) (holding that stipulations purporting to waive recovery of damages over $5,000,000 are to be ignored when determining a CAFA amount in controversy). Accordingly, in conformity with the holding in Standard Fire and for the reasons given in the Court's February 27, 2013 Order, Plaintiff's motion to remand is denied because this Court has subject matter jurisdiction over this action.

II. MOTION TO DISMISS

The substantive claims raised by Plaintiff relate to his former employment with Defendant. Plaintiff was a Retail Store Manager (“RSM”) for one of Defendant's retail locations. Plaintiff alleges that his position was unlawfully classified as exempt from state overtime and break period laws. Plaintiff seeks unpaid wages, overtime compensation, meal and rest break compensation, statutory penalties, and relief under California's Unfair Competition law (“UCL”), Cal. Bus. & Prof.Code § 17200, et seq.

In its motion to dismiss, Defendant seeks to dismiss Plaintiff's Seventh and Eighth causes of action along with his request for punitive damages. The Seventh cause of action is in tort for conversion of Plaintiff's earned but unpaid wages. The Eighth Cause of Action is for violation of the UCL.

A. Legal Standard

A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984); Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). Assertions that are mere “legal conclusions,” however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). To survive a motion to dismiss, a plaintiff needs to plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir.1990).

Upon granting a motion to dismiss for failure to state a claim, the court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). “Dismissal with prejudice and without leave to amend is not appropriate unless it is clear ... that the complaint could not be saved by amendment.” Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir.2003).

B. Discussion

1. Seventh Cause of Action, Conversion

(a) “New-right Exclusive-remedy” Rule

Defendant seeks dismissal of Plaintiff's claim for conversion of Plaintiff's allegedly unpaid wages on the theory that violations of the Labor Code are limited to the remedies and penalties contained therein pursuant to California's “new right-exclusive remedy” rule. Plaintiff disputes Defendant's position and argues that the “new right-exclusive remedy” rule does not apply to the facts of this case. Plaintiff's allegations related to his conversion claim are limited to unpaid wages, and he does not allege conversion of statutory penalties related to waiting time or meal and rest breaks.

The California Supreme Court has recognized as a matter of statutory interpretation that, “[a]s a general rule, where a statute creates a right that did not exist at common law and provides a comprehensive and detailed remedial scheme for its enforcement, the statutory remedy is exclusive.” Rojo v. Kliger, 52 Cal.3d 65, 79, 276 Cal.Rptr. 130, 801 P.2d 373 (1990). Conversely, “where a statutory remedy is provided for a preexisting common law right, the newer remedy is generally considered to be cumulative, and the older remedy may be pursued at the plaintiff's election.” Id. The first step in analyzing whether the “new right-exclusive remedy” rule applies is therefore to determine whether the statute at issue created a right not available under the common law.

Defendant relies on a series of federal district court cases that apply the “new right-exclusive remedy” rule and find that the California Labor Code preempts conversion claims for unpaid wages. The first decision in this line of cases, Green v. Party City Corp., No. CV–01–09681 CAS (EX), 2002 WL 553219 (C.D.Cal. Apr. 9, 2002), involved a motion for judgment on the pleadings. Id. at *3. The Green court held that an employee's right to overtime is a right created by statute and additional causes of action are therefore barred by the comprehensive remedial scheme in the Labor Code. Id. at *5. A subsequent Central District case applied Green's reasoning to recovery of meal and rest break penalties under California Labor Code § 226.7. Pulido v. CocaCola Enters., Inc., No. EDCV06–406VAP(OPX), 2006 WL 1699328, at *1 (C.D.Cal. May 25, 2006). A Northern District case then relied on Green and Pulido to hold that the “new right-exclusive remedy” rule barred a conversion claim for unpaid overtime wages because the Labor Code created the right to overtime and also provided the exclusive remedies for failure to pay wages. In re Wal–Mart Stores, Inc. Wage & Hour Litig., 505 F.Supp.2d 609 (N.D.Cal.2007).

Defendant also relies on two decisions from the Eastern District that support its position. The first, Vasquez v. Coast Valley Roofing Inc., No. CV–F–07–227–OWW–DLB, 2007 WL 1660972 (E.D.Cal. June 6, 2007), did not apply the “new right-exclusive remedy” rule. That case relied on an absence of California authority permitting a conversion claim for unpaid overtime, authority from other states, and the comprehensive remedial scheme in the Labor Code to determine that the Labor Code provided the exclusive remedy for non-payment of overtime wages. Id. at *10. The final case cited by Defendant, Jacobs v. Genesco, Inc., No. CIV. S–08–1666 FCD DAD, 2008 WL 7836412 (E.D.Cal. Sept. 3, 2008), relied on Green,Pulido,Wal–Mart, and Vasquez in holding that the “new right-exclusive remedy” rule applied to bar a conversion claim for unpaid wages. Id. at *3. While these cases may be considered for their persuasive value, they are nonbinding authority.

When a federal district court interprets state law, it is bound by the decisions of the highest state court. Vernon v. City of L.A., 27 F.3d 1385, 1391 (9th Cir.1994) (citing Hewitt v. Joyner, 940 F.2d 1561, 1565 (9th Cir.1991)). “Where the state supreme court has not spoken on an issue presented to a federal court, the federal court must determine what result the state supreme court would reach based on state appellate court opinions, statutes, and treatises.” Id. The California Supreme Court has not directly addressed the application of the “new right-exclusive remedy” rule to common law claims for unpaid minimum and overtime wages. This Court must therefore determine what result the California Supreme Court would reach on this issue.

The California Supreme Court, in a case not involving the “new right-exclusive remedy” rule, determined that the Labor Code does not provide the exclusive remedies for unpaid wages. Cortez v. Purolator Air Filtration Prods. Co., 23 Cal.4th 163, 96 Cal.Rptr.2d 518, 999 P.2d 706 (2000). In Cortez, the Supreme Court held that an employee could bring a California Business and Professions Code § 17203 claim for the restitution of unpaid wages. Id. at 178, 96 Cal.Rptr.2d 518, 999 P.2d 706 (“We are satisfied ... that an order that a business pay to an employee wages unlawfully withheld is consistent with the...