Walsh v. SL One Glob.
| Docket Number | 2:22-cv-00583 WBS DB |
| Decision Date | 10 August 2022 |
| Parties | MARTIN J. WALSH, Secretary of Labor, United States Department of Labor, Plaintiff, v. SL ONE GLOBAL, INC., dba VIVA SUPERMARKET, a California Corporation; SMF GLOBAL, INC., dba VIVA SUPERMARKET, a California Corporation; NARI TRADING, INC., dba VIVA SUPERMARKET; UNI FOODS, INC., dba VIVA SUPERMARKET, a California Corporation; SEAN LOLOEE, an individual, and as owner and managing agent of the Corporate Defendants; and KARLA MONTOYA, an individual, and managing agent of the Corporate Defendants, Defendants. |
| Court | U.S. District Court — Eastern District of California |
Plaintiff Martin J. Walsh, in his capacity as Secretary of the United States Department of Labor, brought this action against defendants SL One Global, SMF Global, Nari Trading and Uni Foods, all of which allegedly do business as Viva Supermarket (the “corporate defendants”); Sean Loloee; and Karla Montoya alleging various ongoing violations of federal labor laws at grocery stores operated by defendants. Specifically, plaintiff alleges (1) interference with employees' rights under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 215(a)(3); (2) obstruction of the Secretary's investigation under the FLSA, 29 U.S.C. § 211(a); (3) violation of minimum wage requirements under the FLSA, 29 U.S.C. §§ 206, 215(a)(2); (4) violation of overtime requirements under the FLSA, 29 U.S.C. §§ 207, 215(a)(2); (5) violation of recordkeeping requirements under the FLSA, 29 U.S.C §§ 211(c), 215(a)(5); (6) violation of child labor requirements under the FLSA, 29 U.S.C. §§ 212, 215(a)(4); and (7) violation of paid sick leave requirements under the Emergency Paid Sick Leave Act, Pub. L. No. 116-127, 134 Stat. 178 §§ 5101-5111 (2020). (Compl. (Docket No. 1).)
Defendants now move to dismiss Count III (minimum wage) and Count IV (overtime) of plaintiff's Complaint as against defendant SL One Global to the extent they allege wage violations before February 20, 2020, and as against all other defendants to the extent they allege violations before April 1, 2019; all claims against defendant Montoya; and plaintiff's Count Six (child labor) claims in their entirety. (Mot. (Docket No. 7).)
The Secretary of Labor is charged with enforcing the FLSA's requirements regarding employers' labor practices. (Compl. at ¶ 3.) Defendant Loloee owns and is managing agent of the corporate defendants, each of which operates as a Viva Supermarket location in Sacramento. (See id. at ¶¶ 4-12.) Defendant Montoya is a General Manager and agent of the corporate defendants. (Id. at ¶ 16.)
In 2009, the United States Department of Labor's Wage and Hour Division (the “WHD”) began an investigation into Loloee's and SL One Global's wage and hour practices, covering a period from November 10, 2008 to May 26, 2009. (Id. at ¶¶ 24 25.) The WHD concluded Loloee and SL One Global had violated multiple FLSA provisions, including minimum wage and child labor provisions. (Id. at ¶ 25.) Loloee and SL One Global entered into a settlement agreement with the WHD to pay back wages and to pay civil penalties for the alleged child labor violations. (Id. at ¶ 27.)
In 2020, the WHD began a second investigation into Loloee's and SL One Global's wage and hour practices, covering a period from February 20, 2018 to February 19, 2020 (the “Second Investigation”). (Id. at ¶ 28.) The WHD concluded those defendants had again violated multiple FLSA provisions, and it and those defendants entered into a second settlement agreement to pay back wages (the “Second Agreement”). (Id. at ¶¶ 29-31.) As part of the Second Agreement, SL One Global and Loloee represented that they were in full compliance with the FLSA and would continue to comply going forward. (Id. at ¶ 32.)
Later in 2020, the WHD began a third investigation, this time into the wage and hour practices of Loloee and all four corporate defendants in this action (the “Third Investigation”). (Id. at ¶¶ 33-34.) Plaintiff alleges defendants repeatedly interfered with that investigation, including by directing employees to lie to or not speak with investigators, hiding employees from investigators, and threatening employees with deportation and other immigration consequences if they cooperated. (Id. at ¶ 35.) During the Third Investigation, the WHD also received information that Loloee and Montoya coerced employees who had received back wages pursuant to the Second Agreement to return those payments. (Id. at ¶ 37.)
Plaintiff alleges that, based on its investigations, defendants have failed to pay required minimum wages and overtime premiums or to retain accurate records since at least October 23, 2017; have employed minors in hazardous occupations since at least October 25, 2019; have employed minors to work more hours than is permitted since at least September 14, 2019; and failed to provide required paid sick leave to employees between April 1, 2020 and December 30, 2020, or to maintain accurate records of paid sick leave requests and determinations. (Id. at ¶¶ 38-63.) Plaintiff filed this action on April 1, 2022, seeking injunctive relief, back wages, and liquidated damages. (Compl.)
Federal Rule of Civil Procedure 12(b)(6) allows for dismissal when the plaintiff's complaint fails to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). “A Rule 12(b)(6) motion tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The inquiry before the court is whether, accepting the allegations in the complaint as true and drawing all reasonable inferences in the plaintiff's favor, the complaint has alleged “sufficient facts . . . to support a cognizable legal theory,” id., and thereby stated “a claim to relief that is plausible on its face,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Courts are not, however, “required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see Bell Atl. Corp., 550 U.S. at 555. Accordingly, “for a complaint to survive a motion to dismiss, the non-conclusory ‘factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
Defendants first argue that the claims in Counts III and IV, alleging violations of the FLSA's minimum wage and overtime provisions, are precluded by the Second Agreement to the extent they assert violations against SL One Global between February 20, 2018 and February 19, 2020. (Mot. at 10-13.) Defendants point to the language of the Second Agreement,[2] which “covered [SL One Global]'s operations from 02/20/2018 to 02/19/2020” and provides that SL One Global “agree[d] to pay the back wages due the employees in question” for that period, in arguing that SL One Global is released from liability for alleged violations covering that period. (Docket No. 11-1 at 4; see Mot. at 11-13.)
Plaintiff does not argue that the Second Agreement did not, at least at the time it was executed, release SL One Global from liability for minimum wage and overtime payments owed for the period covered by the Second Investigation, or that the back wages were never paid. (See Opp. at 4 (Docket No. 11).) Rather, as plaintiff's opposition brief indicates, and as counsel for plaintiff seemed to confirm at oral argument, plaintiff's position is that by requiring employees to return the back wages they received under the Second Agreement, SL One Global breached or voided the Second Agreement, such that it no longer releases SL One Global from FLSA liability for the same alleged violations. (See id. ( ) (internal citation omitted).)
However, plaintiff identifies no provision of the Agreement or any other authority to support the proposition that coercing employees to return wages paid under the Agreement somehow voids the Agreement, thereby allowing plaintiff to bring a new suit to recover for the same violations it had already settled. When asked at oral argument whether plaintiff's claim might instead be presented as one for breach of contract, counsel for plaintiff reiterated that it is plaintiff's intent to proceed with the FLSA minimum wage and overtime violations. The court expresses no opinion on whether the Secretary would be permitted to proceed on a breach of contract theory, but because he has not made clear how the alleged kickbacks voided the Second Agreement, the Secretary has failed to rebut defendants' showing that the Agreement precludes plaintiff's Count III and IV claims against SL One Global for alleged violations from between February 20, 2018 and February 19, 2020. Therefore, to the extent those claims assert violations against SL One Global for that period, those claims will be dismissed.
Defendants argue that plaintiff's claims under Counts III and IV are also barred as against all defendants to the extent they allege violations from before April 1, 2019, based on the applicable statute of limitations. (Mot. at 10, 13-16.) The statute of limitations for FLSA actions for unpaid minimum wages or overtime compensation is two years,...
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