Sliger v. Prospect Mortgage Llc

• Decision Date: 27 May 2011
• Docket Number: No. CIV. S–11–465 LKK/EFB.,CIV. S–11–465 LKK/EFB.
• Citation: 789 F.Supp.2d 1212
• Parties: Elizabeth SLIGER, Carol Dion and Scott Avila, individually, on behalf of others similarly situated, and on behalf of the general public, Plaintiffs,v.PROSPECT MORTGAGE, LLC, and Does 1 through 50, inclusive, Defendants.
• Court: U.S. District Court — Eastern District of California

789 F.Supp.2d 1212

Elizabeth SLIGER, Carol Dion and Scott Avila, individually, on behalf of others similarly situated, and on behalf of the general public, Plaintiffs,

v.PROSPECT MORTGAGE, LLC, and Does 1 through 50, inclusive, Defendants.

No. CIV. S–11–465 LKK/EFB.

United States District Court, E.D. California.

May 27, 2011.

Robert L. Schug, Matthew C. Helland, Nichols Kaster, LLP, San Francisco, CA, for Plaintiffs.Alfred L. Sanderson, Andrew Marc Paley, Brandon Reed McKelvey, Seyfarth Shaw, LLP, Sacramento, CA, for Defendants.

ORDER

LAWRENCE K. KARLTON, Senior District Judge.

This is a wage and hour class and collective action filed by loan officers formerly working for Prospect Mortgage, LLC. Plaintiffs make eight claims for relief: 1) failure to pay overtime in violation of the Fair Labor Standards Act (“FLSA”); 2) failure to pay minimum wage in violation of the FLSA; 3) failure to pay overtime in violation of California law; 4) failure to pay minimum wage in violation of California law; 5) waiting time penalties under California law; 6) failure to provide itemized wage statements in violation of California law; 7) failure to provide and/or authorize meal and rest periods under California law; and 8) violation of California unfair competition law. Defendant Prospect Mortgage has filed a motion to dismiss the first amended complaint, or in the alternative to strike class allegations. Plaintiffs oppose the motion. For the reasons stated below, defendant's motion is DENIED.

I. Background ¹

Plaintiffs Elizabeth Sliger, Carol Dion, and Scott Avila (“Sliger,” “Dion,” and “Avila,” respectively) worked as loan officers between 2008 and 2010. As loan officers, plaintiffs were engaged in selling mortgages. Plaintiffs “regularly” performed this work over the phone, via the internet, or at defendant's offices. Plaintiffs did not make sales at customers homes or places of business. FAC ¶ 29.

Defendant had a uniform policy of paying plaintiffs and other loan officers on a commission-only basis. FAC ¶ 38. During pay periods in which a loan officer did not complete any mortgage sales, that loan officer received no pay. For example, plaintiff Sliger began working for defendant in May 2008, and did not receive any pay from defendant until approximately June or July 2008. FAC ¶ 18. Plaintiff Dion did not receive any pay for the first six or eight weeks of her employment, starting in May 2008. FAC ¶ 19. Plaintiff Avila worked from March 2009 until June 2009 without receiving any pay. FAC ¶ 20. The commission-only pay structure was uniformly applied to all loan officers. FAC ¶ 21. Plaintiffs allege that other loan officers from time to time did not receive any pay during pay periods in which they did not complete any mortgage sales.

In addition to working some pay periods without pay, plaintiffs sometimes worked more than eight hours per day or forty hours per week without receiving overtime pay. Sliger, Dion, and Avila typically began their work day in the “early morning,” five days per week, and continued to work into the evening and also on weekends. Plaintiff Sliger, for example, “often worked from 8:00 until 5:00 two days a week and 8:00 to 6:00 three days a week, plus additional time at home in the evenings” and additional hours on weekends. FAC ¶ 23. Dion “often” worked eleven hours per day, six days per week. FAC ¶ 24. Avila “often” worked in the evenings and on weekends, in addition to eight hours per day worked in the office. FAC ¶ 25.

Defendant expected plaintiffs and other loan officers to respond to phone calls and emails in the evenings and weekends. Defendant had a policy of requiring loan officers to respond to leads within two hours of receiving them, even when the leads came in outside of the regular working hours. Plaintiffs observed other loan officers working in excess of eight hours per day and forty hours per week. Defendant had production requirements that applied to plaintiffs and other loan officers, which required loan officers to work through lunch and rest periods. FAC ¶ 30.

Defendant uniformly represented to plaintiffs and other loan officers that they were exempt employees, and were not entitled to overtime pay. FAC ¶ 27.

Defendant did not keep records of hours worked by plaintiffs. Nor did they require plaintiffs to keep records of their own hours worked. FAC ¶ 32.

II. Standards

A. Standard for a Motion to Dismiss

A Fed.R.Civ.P. 12(b)(6) motion challenges a complaint's compliance with the pleading requirements provided by the Federal Rules. Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The complaint must give defendant “fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation and modification omitted).

To meet this requirement, the complaint must be supported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, ––––, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). “While legal conclusions can provide the framework of a complaint,” neither legal conclusions nor conclusory statements are themselves sufficient, and such statements are not entitled to a presumption of truth. Id. at 1949–50. Iqbal and Twombly therefore prescribe a two step process for evaluation of motions to dismiss. The court first identifies the non-conclusory factual allegations, and the court then determines whether these allegations, taken as true and construed in the light most favorable to the plaintiff, “plausibly give rise to an entitlement to relief.” Id.; Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007).

“Plausibility,” as it is used in Twombly and Iqbal, does not refer to the likelihood that a pleader will succeed in proving the allegations. Instead, it refers to whether the non-conclusory factual allegations, when assumed to be true, “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). A complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990).

B. Standard for a Motion to Strike

Rule 12(f) authorizes the court to order stricken from any pleading “any redundant, immaterial, impertinent, or scandalous matter.” A party may bring on a motion to strike within 21 days after the filing of the pleading under attack. The court, however, may make appropriate orders to strike under the rule at any time on its own initiative. Thus, the court may consider and grant an untimely motion to strike where it seems proper to do so. See 5A Wright and Miller, Federal Practice and Procedure: Civil 2d 1380. A matter is immaterial if it “has no essential or important relationship to the claim for relief or the defenses being pleaded.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir.1993), rev'd on other grounds by 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). A matter is impertinent if it consists of statements that do not pertain to and are not necessary to the issues in question. Id. Redundant matter is defined as allegations that “constitute a needless repetition of other averments or are foreign to the issue.” Thornton v. Solutionone Cleaning Concepts, Inc., No. 06–1455, 2007 WL 210586 (E.D.Cal. Jan. 26, 2007), citing Wilkerson v. Butler, 229 F.R.D. 166, 170 (E.D.Cal.2005).

Motions to strike are generally viewed with disfavor, and will usually be denied unless the allegations in the pleading have no possible relation to the controversy, and may cause prejudice to one of the parties. See 5A C. Wright & A. Miller, Federal Practice and Procedure: Civil 2d 1380; see also Hanna v. Lane, 610 F.Supp. 32, 34 (N.D.Ill.1985). However, granting a motion to strike may be proper if it will make trial less complicated or eliminate serious risks of prejudice to the moving party, delay, or confusion of the issues. Fantasy, 984 F.2d at 1527–28.

If the court is in doubt as to whether the challenged matter may raise an issue of fact or law, the motion to strike should be denied, leaving an assessment of the sufficiency of the allegations for adjudication on the merits. See Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970 (9th Cir.2010); see also 5A Wright & Miller, supra, at 1380. Whittlestone emphasized the distinction between Rule 12(f) and Rule 12(b)(6) and held that Rule 12(f) does not authorize district courts to strike claims for damages on the ground that such claims are precluded as a matter of law. Id. at 976.

“Were we to read Rule 12(f) in a manner that allowed litigants to use it as a means to dismiss some or all of a pleading ... we would be creating redundancies within the Federal Rules of Civil Procedure.” Whittlestone, Inc. v. Handi–Craft Co., See also Yamamoto v. Omiya, 564 F.2d 1319, 1327 (9th Cir.1977) (“Rule 12(f) is neither an authorized nor a proper way to procure the dismissal of all or a part of a complaint.” (Citation omitted)). Id. at 974.

Whittlestone reasoned that Rule 12(f) motions are reviewed for abuse of discretion, whereas 12(b)(6) motions are reviewed de novo. Id. Thus, if a party seeks dismissal of a pleading under Rule 12(f), the district court's action would be subject to a different standard of review than if the district court had adjudicated the same substantive action under Rule 12(b)(6). Id.

III. Analysis

In its motion to dismiss, defendant argues: (1) that dismissal of the first amended complaint is appropriate because the class allegations fail to meet the...