Cesar Moreno v. Utiliquest, LLC ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CESAR ANTONIO MORENO, an No. 21-55313
individual,
Plaintiff-Appellant, D.C. No.
2:20-cv-03156-
v. AB-MRW
UTILIQUEST, LLC, a Georgia Limited
Liability Company, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Andre Birotte, Jr., District Judge, Presiding
Argued and Submitted January 12, 2022
Pasadena, California
Filed March 18, 2022
Before: A. WALLACE TASHIMA and MILAN D.
SMITH, JR., Circuit Judges, and STEPHEN J.
MURPHY, III, * District Judge.
Opinion by Judge Milan D. Smith, Jr.
*
The Honorable Stephen Joseph Murphy, III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
2 MORENO V. UTILIQUEST
SUMMARY **
Labor Law
The panel affirmed the district court’s dismissal, as
preempted by the National Labor Relations Act (“NLRA”),
of Cesar Moreno’s wrongful termination lawsuit against his
former employer, UtiliQuest, LLC.
Although the NLRA does not contain express
preemption provisions, the Supreme Court held that two
categories of state action are implicitly preempted: (1) laws
that regulate conduct that is either protected or prohibited by
the NLRA (Garmon preemption); and (2) laws that regulate
in an area Congress intended to leave unregulated or
controlled by the free play of economic forces (Machinists
preemption). UtiliQuest contends that Garmon preemption
applied to Moreno’s claims related to his termination.
Moreno brought several California state law claims
relating to his termination: intentional misrepresentation;
fraud and deceit; whistleblowing retaliation; and wrongful
termination in violation of public policy. The panel held that
all of these claims arguably implicated NLRA sections 7 and
8, and were subject to Garmon preemption.
The panel considered, and rejected, Moreno’s three
arguments for why these claims were not subject to Garmon
preemption. First, he argued that even if his termination-
based claims implicated the NLRA, preemption was
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
MORENO V. UTILIQUEST 3
inappropriate because of the compelling local interest
underlying his claims. The panel held that the risk of
interference with the National Labor Relations Board’s
jurisdiction was sufficient to outweigh the state’s interest in
Moreno’s claims, and Garmon preemption was appropriate.
Second, Moreno argued that his grievances with UtiliQuest
were personal in nature and lacked any element of
“concerted activity” necessary to establish an NLRA
violation. The panel rejected his contention and held that
when Moreno received a raise and other employees did not,
the NLRB could consider Moreno’s advocacy for his fellow
co-workers to be “concerted activity.” Third, Moreno
argued that he was a statutory supervisor exempt from the
NLRA. The panel held that the NLRB could arguably
consider Moreno an employee, rather than a supervisor.
Moreno also asserted wage and hour-related claims
against UtiliQuest after his termination. The district court
dismissed the claims for failure to state a claim. On January
10, 2022, UtiliQuest informed this court of a class action
settlement in California Superior Court. The class consisted
of UtiliQuest employees who, like Moreno, used company
vehicles to commute to and from worksites. As part of the
settlement, class members released their wage and hour
claims. Because Moreno did not opt out of the settlement,
UtiliQuest argued these claims were moot. The panel held
that the California Superior Court’s settlement judgment was
entitled to full faith and credit. Applying the principles of
claim preclusion, the panel affirmed the district court’s
dismissal of Moreno’s wage and hour claims.
4 MORENO V. UTILIQUEST
COUNSEL
Joshua M. Mohrsaz (argued) and Edwin Pairavi, Pairavi
Law, P.C., Los Angeles, California, for Plaintiff-Appellant.
Alex Meier (argued) and Jill A. Porcaro, Seyfarth Shaw
LLP, Los Angeles, California, for Defendant-Appellee.
OPINION
M. SMITH, Circuit Judge:
Plaintiff Cesar Moreno appeals the district court’s
dismissal of his lawsuit against his former employer,
Defendant UtiliQuest. Moreno alleges that UtiliQuest
promised him that if he convinced all of his fellow
employees to “sign away” their union rights, they would
each receive a ten percent raise. Once Moreno obtained
signatures from his co-workers releasing their union rights,
UtiliQuest gave him a ten percent raise. Moreno soon
learned, however, that UtiliQuest did not give any other
employees the promised raise. Moreno contends he was
terminated after confronting his supervisors about
UtiliQuest’s breach of its promise.
Moreno brought various claims related to his
termination, but the district court dismissed them because it
found that they were preempted by the National Labor
Relations Act (NLRA), 29 U.S.C. § 151 et seq. Moreno also
appeals the dismissal of his wage and hour claims, but as his
appeal was pending, the Superior Court of California entered
judgment on a final settlement precluding these claims. We
affirm the district court’s dismissal of Moreno’s complaint.
MORENO V. UTILIQUEST 5
FACTUAL AND PROCEDURAL BACKGROUND
Moreno worked for UtiliQuest as a Field Technician
from 2007 until 2018. At the time he was terminated,
Moreno was a Lead Field Technician “responsible for
supervising the work of field technicians” on job sites.
Moreno alleges that in June 2017, UtiliQuest’s management
asked him to collect signatures from “all other employees”
to “release their [union] rights” in exchange for a ten percent
raise “in their hourly pay per year” for all who signed.
Moreno and the other employees each signed “the union
release” in June 2017. UtiliQuest gave Moreno a ten percent
raise but did not give a raise to his fellow employees. On
multiple occasions, Moreno complained to his managers
about his co-workers not receiving the promised raises. He
alleges that UtiliQuest retaliated against him because of his
advocacy on behalf of the other employees. On February 13,
2018, Moreno contends that someone in Human Resources
falsely accused him of taking money from other employees
in exchange for providing them with overtime hours. On
February 28, 2018, Moreno’s manager fired him without
explanation.
Moreno brought several state law claims related to his
termination. Moreno also asserted wage and hour-related
claims against UtiliQuest after his termination. He contends
that UtiliQuest did not provide him with compensation for
travel time between his home and the first and last job sites
for the day. Moreno also alleges that the nature of his job
responsibilities, together with UtiliQuest’s policies,
prevented him from taking an “uninterrupted 30 minute meal
break.”
The district court held that the NLRA preempted
Moreno’s termination claims and dismissed them. The
district court also dismissed Moreno’s wage and hour claims
6 MORENO V. UTILIQUEST
pursuant to Federal Rule of Civil Procedure 12(b)(6) because
he failed to state a cause of action. Moreno appealed.
On January 10, 2022—two days before oral argument in
our court—UtiliQuest informed us of a class action
settlement in California Superior Court that was finalized on
November 29, 2021. The California class consisted of
UtiliQuest employees who, like Moreno, used company
vehicles to commute to and from worksites. As part of the
settlement, class members released their wage and hour
claims. Because Moreno did not opt out of the California
settlement, UtiliQuest argued that the wage and hour claims
portion of Moreno’s appeal was moot. We ordered, and have
now received, supplemental briefing on this issue.
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review de novo the district court’s dismissal pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state
a claim. Okwu v. McKim, 682 F.3d 841, 844 (9th Cir. 2012)
(citing AE ex rel. Hernandez v. County of Tulare, 666 F.3d
631, 636 (9th Cir. 2012)). In reviewing a motion to dismiss,
we accept as true all factual allegations in the complaint and
draw all reasonable inferences in favor of the nonmoving
party. Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1003
(9th Cir. 2008).
ANALYSIS
I.
The NLRA does not contain express preemption
provisions, but the Supreme Court held that “two categories
of state action are implicitly preempted: (1) laws that
regulate conduct that is either protected or prohibited by the
MORENO V. UTILIQUEST 7
NLRA (Garmon preemption), and (2) laws that regulate in
an area Congress intended to leave unregulated or
‘controlled by the free play of economic forces’ (Machinists
preemption).” Interpipe Contracting, Inc. v. Becerra, 898
F.3d 879, 887 (9th Cir. 2018) (quoting Chamber of Com. of
the U.S. v. Brown, 554 U.S. 60, 65 (2008)). UtiliQuest
contends that Garmon preemption applies to Moreno’s
claims.
Sections 7 and 8 of the NLRA provide a private cause of
action for claims “based on the conduct of labor
organizations or their agents that constitute unfair labor
practices.” Retail Prop. Tr. v. United Bhd. of Carpenters &
Joiners of Am., 768 F.3d 938, 950 (9th Cir. 2014).
Specifically, NLRA Section 7 protects the right of
employees “to form, join, or assist labor organizations, to
bargain collectively through representatives of their own
choosing, and to engage in other concerted activities for the
purpose of collective bargaining or other mutual aid or
protection.” 29 U.S.C. § 157. Section 8 bars unfair labor
practices by employers and labor organizations and also
makes it illegal “for an employer to interfere with, restrain,
or coerce employees in the exercise of the rights guaranteed
in section [7 of the NLRA].” Id. at § 158(a)–(b).
“When an activity is arguably subject to § 7 or § 8 of the
Act, the States as well as the federal courts must defer to the
exclusive competence of the National Labor Relations Board
if the danger of state interference with national policy is to
be averted.” San Diego Bldg. Trades Council v. Garmon,
359 U.S. 236, 245 (1959). Garmon’s central concern “is the
potential for conflict with federal policy.” Retail Prop. Tr.,
768 F.3d at 952. The Supreme Court acknowledged that it
is not always clear whether a particular activity is preempted,
but “[e]ven when a court is unsure,” it should leave the
8 MORENO V. UTILIQUEST
determination to the National Labor Relations Board
(NLRB). Bassette v. Stone Container Corp., 25 F.3d 757,
760 (9th Cir. 1994) (citing Garmon, 359 U.S. at 244–45).
Moreno brought several California state law claims
relating to his termination: intentional misrepresentation
(Count 7); fraud and deceit (Count 8); whistleblowing
retaliation (Counts 9 & 10); and wrongful termination in
violation of public policy (Count 11). In connection with
Garmon preemption, “[i]t is not the label affixed to the cause
of action under state law that controls the determination of
the relationship between state and federal jurisdiction.”
United Ass’n of Journeymen & Apprentices v. Borden, 373
U.S. 690, 698 (1963). In Borden the Supreme Court held
that plaintiff’s claims were preempted even though his
complaint “sounded in contract as well as in tort” because
the “facts as alleged in the complaint, and as found by the
jury,” could arguably support a finding that the conduct
violated the NLRA. Id. at 694, 698. As the district court
correctly found here, all of Moreno’s claims arguably
implicate NLRA Sections 7 and 8 and are subject to Garmon
preemption.
Moreno’s intentional misrepresentation and fraud claims
are both treated the same under California law. Compare
Lazar v. Superior Court, 909 P.2d 981, 984–85 (Cal. 1996),
with Tenet Healthsystem Desert v. Blue Cross of Cal., 199
Cal. Rptr. 3d 901, 914–15 (Ct. App. 2016). The elements of
a fraud or intentional misrepresentation claim are:
(1) misrepresentation, (2) knowledge of falsity, (3) intent to
defraud or induce reliance, (4) justifiable reliance, and
(5) damage. Lazar, 909 P.2d at 984. Moreno’s underlying
theory for both counts is that UtiliQuest deceived him into
convincing other employees to sign away their union rights
for a ten percent raise. What Moreno alleges UtiliQuest
MORENO V. UTILIQUEST 9
did—offering employees a benefit to give up their union
rights—is a textbook NLRA violation. See 29 U.S.C.
§§ 157, 158(a)(1).
Moreno’s fraud and misrepresentation claims deal not
primarily with UtiliQuest’s alleged illegal conduct, but
rather with the fact that UtiliQuest deceived him. In
determining whether there is potential for conflict with the
NLRA, however, we cannot ignore the subject of
UtiliQuest’s alleged deception. The elements of
misrepresentation and intent to defraud in the state law
claims both touch on conduct clearly covered by the NLRA.
For example, a jury would need to determine whether
UtiliQuest made the misrepresentation, and such a finding
would strongly suggest an NLRA Section 8 violation.
Holding that Moreno’s fraud and misrepresentation
claims are preempted reflects a logical extension of our
holding in Milne Employees Ass’n v. Sun Carriers, Inc., 960
F.2d 1401 (9th Cir. 1991). In Milne we considered whether
the NLRA preempted a fraud claim. We concluded that
because an employer’s alleged misrepresentations did not
implicate the NLRA, the fraud claim survived Garmon
preemption. Id. at 1414–15. Here, UtiliQuest’s alleged
misrepresentation would violate the NLRA and thus
involves national labor policy. The challenged conduct
could be seen as “an attempt on the part of [the employer] to
interfere with the collective bargaining process or to
diminish the union’s representative role.” Id. at 1415–16
(quoting Wells v. Gen. Motors Corp., 881 F.2d 166, 171 (5th
Cir. 1989)) (alteration in the original).
Moreno’s whistleblowing retaliation and wrongful
termination claims are also preempted. Cal. Lab. Code
§§ 98.6; 1102.5. To establish a prima facie whistleblowing
case, a plaintiff must show that (1) he engaged in a protected
10 MORENO V. UTILIQUEST
activity, (2) his employer subjected him to an adverse
employment action, and (3) there is a causal link between the
two. See St. Myers v. Dignity Health, 257 Cal. Rptr. 3d 341,
352 (Ct. App. 2019). A California wrongful termination in
violation of public policy claim “requires a showing that
there has been a violation of a fundamental public policy
embodied in statute.” Merrick v. Hilton Worldwide, Inc.,
867 F.3d 1139, 1150 (9th Cir. 2017).
Moreno’s central theory in his whistleblowing retaliation
and wrongful termination claims is that he was terminated
for advocating on behalf of his fellow employees after
UtiliQuest refused to give them a promised raise. In
Bassette, we held that an employee’s wrongful termination
claim against her employer was preempted because the
employer’s alleged conduct arguably violated the NLRA.
25 F.3d at 761. The same reasoning applies in this case
because UtiliQuest’s conduct arguably violated the NLRA.
Thus, there is clear potential for conflict between state law
and federal policy.
On appeal, Moreno advances three arguments for why
his claims are not subject to Garmon preemption. He
contends that the local interest exception to Garmon
preemption applies, that his grievances lack the “concerted
activity” element necessary for an NLRA claim, and that he
is a statutory supervisor exempt from the NLRA. We
address, and reject, each in turn.
A.
Moreno argues that even if his termination-based claims
implicate the NLRA, preemption is inappropriate because of
the compelling local interest underlying his claims.
Although Garmon preemption is broad, one well-recognized
exception is when a regulation “touches on interests so
MORENO V. UTILIQUEST 11
deeply rooted in local feeling and responsibility that”
preemption could not be inferred. Loc. 926, Int’l Union of
Operating Eng’rs v. Jones, 460 U.S. 669, 676 (1983) (citing
Garmon, 359 U.S. at 243–44). State laws “of general
applicability” can be enforced “even though aspects of the
challenged conduct” are arguably covered by the NLRA.
Sears, Roebuck & Co. v. San Diego Cnty. Dist. Council of
Carpenters, 436 U.S. 180, 194–95 (1978). To determine
whether this exception applies, courts are required to balance
the state’s interest in protecting its citizens with the risk of
interfering with the NLRB’s ability to adjudicate the
controversy. Id. at 196–97.
In determining whether adjudicating a state claim risks
interference with the NLRB’s jurisdiction, we inquire
whether “the controversy presented to the state court is
identical with that which could be presented to the Board.”
Belknap, Inc. v. Hale, 463 U.S. 491, 510 (1983). When
controversies are identical, “a state court’s exercise of
jurisdiction necessarily involves a risk of interference with
the unfair labor practice jurisdiction of the Board.” Sears,
Roebuck & Co., 436 U.S. at 197. Importantly, the claims
need not be identical, but rather the focus is on whether the
“controversy presented” is identical. A finding of Garmon
preemption does not require “that a plaintiff have a certain
remedy before the Board, or even that the Board will hear
the claim in the first place.” Bassette, 25 F.3d at 759–60.
When we consider Moreno’s fraud and
misrepresentation claims, we note that a state has a
“substantial interest in protecting its citizens from
misrepresentations that have caused them grievous harm.”
Belknap, 463 U.S. at 511. We also observe that it would be
irrelevant to the NLRB that UtiliQuest’s promise to Moreno
was false—UtiliQuest’s alleged promise would likely
12 MORENO V. UTILIQUEST
violate the NLRA regardless of its intent to honor its
promise. In any event, the underlying controversy is
substantially identical and the facts as alleged in Moreno’s
complaint could support a finding that UtiliQuest violated
the NLRA. See Borden, 373 U.S. at 694. The risk of
interference with the NLRB’s jurisdiction is sufficient to
preclude the state’s interest in combatting fraud. Garmon
preemption is appropriate.
The risk of interference between Moreno’s
whistleblowing and retaliation claims and NLRA-related
conduct is even more extensive than with the fraud claims.
Moreno alleges that UtiliQuest terminated him for
advocating on behalf of his fellow employees for a promised
ten percent raise. Such conduct arguably violates the NLRA.
Of course, the state also has an interest in protecting its
citizens from employers’ illegal actions, but the
controversies presented in Moreno’s whistleblowing and
retaliation claims are substantially identical.
B.
Moreno contends that his grievances with UtiliQuest
were personal in nature and lacked any element of
“concerted activity” necessary to establish an NLRA
violation. See NLRB v. City Disposal Sys. Inc., 465 U.S.
822, 830–31 (1984). The term “concerted activit[y]” in
Section 7 of the NLRA “embraces the activities of
employees who have joined together in order to achieve
common goals,” but can also include actions of a single
employee. Id. Section 7 requires both “concert” and activity
for “mutual aid or protection.” E.I. Du Pont De Nemours &
Co. v. NLRB, 707 F.2d 1076, 1077–78 (9th Cir. 1983). The
NLRA does not protect an employee acting alone to
complain about an issue, even if the issue concerns mutual
aid or protection. “[I]t is the backdrop of other group activity
MORENO V. UTILIQUEST 13
that transforms it into concerted action.” Id. at 1079. Even
if “the employees’ conduct constituted merely individual
activity,” the NLRB would still be entitled to find that
“individual actions were concerted to the extent they
involved a ‘logical outgrowth’ of prior concerted activity.”
NLRB v. Mike Yurosek & Son, Inc., 53 F.3d 261, 265 (9th
Cir. 1995). This is so because “[t]he lone act of a single
employee is concerted if it ‘stems from’ or ‘logically grew’
out of prior concerted activity.” Id.The question before us is whether the “activity is
arguably subject to § 7 or § 8 of the Act.” Garmon, 359 U.S.
at 245. If conduct is “arguably” protected, the party claiming
preemption must show that the NLRB could legally decide
the case in its favor. Int’l Longshoremen’s Ass’n, v. Davis,
476 U.S. 380, 395 (1986). “This is not a demanding
standard.” Idaho Bldg. & Const. Trades Council v. Inland
Pac. Chapter of Associated Builders & Contractors, 801
F.3d 950, 965 (9th Cir. 2015). UtiliQuest must (1) “advance
an interpretation of the [NLRA] that is not plainly contrary
to its language and that has not been ‘authoritatively
rejected’ by the courts or the [NLRB]” and (2) offer “enough
evidence to enable the court to find that the [NLRB]
reasonably could uphold a claim based on such an
interpretation.” Davis, 476 U.S. at 394–95 (quoting Marine
Eng’rs v. Interlake S.S. Co., 370 U.S. 173, 184 (1962)).
UtiliQuest has met this burden. Although Moreno
contends that he acted on his own volition, the NLRB could
reasonably find that his “individual actions were concerted
to the extent they involved a ‘logical outgrowth’ of prior
concerted activity.” Mike Yurosek & Son, Inc., 53 F.3d at
265. Moreno convinced other employees to relinquish their
union rights in exchange for a ten percent raise. When
Moreno received a raise and other employees did not, the
14 MORENO V. UTILIQUEST
NLRB could consider Moreno’s advocacy for his fellow co-
workers to be “concerted activity.”
C.
The parties also disagree about whether Moreno was a
supervisor at the time of his termination. Section 2(3) of the
NLRA excludes supervisors from the protections of the
NLRA. 29 U.S.C. § 152(3). Therefore, if Moreno was a
statutory supervisor, his claims would not be preempted
because he could not bring them before the NLRB. The
NLRA defines a supervisor as one who (1) has authority to
engage in certain supervisory functions defined in the Act, 1
(2) uses independent judgment when exercising this
authority, and (3) holds this authority in the interest of the
employer. NLRB v. Ky. River Cmty. Care, Inc., 532 U.S.
706, 713 (2001). We need not determine whether Moreno
was a supervisor. Rather, the relevant question is whether
he “was arguably an employee, rather than a supervisor.”
Davis, 476 U.S. at 394.
Moreno contends that as Lead Field Technician, he was
a supervisor responsible for “assigning all work to the field
technicians and managing all of the work orders.” The
district court rejected Moreno’s supervisor argument
because it found his allegations in the complaint conclusory.
Because UtiliQuest had the burden to show that the NLRB
could legally decide that Moreno was an employee, the
district court erred in its reasoning. See Chamber of Com. of
the U.S. v. City of Seattle, 890 F.3d 769, 795 (9th Cir. 2018).
1
Supervisory functions are defined as the power “to hire, transfer,
suspend, lay off, recall, promote, discharge, assign, reward, or discipline
other employees, or responsibility to direct them, or to adjust their
grievances.” 29 U.S.C. § 152(11).
MORENO V. UTILIQUEST 15
“Nevertheless, we may affirm based on any ground
supported by the record.” Johnson v. Riverside Healthcare
Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008).
UtiliQuest’s motion to dismiss included notices of
election from the NLRB, which are public records subject to
judicial notice. See Santa Monica Food Not Bombs v. City
of Santa Monica, 450 F.3d 1022, 1025 n.2 (9th Cir. 2006).
The notices reveal that in two prior California union
elections involving UtiliQuest’s workforce, the NLRB
determined that Lead Technicians fall within the collective
bargaining unit. As UtiliQuest admits, these records are not
conclusive proof as to what the NLRB would decide in
Moreno’s case, but readily meet the burden to show that the
NLRB would “arguably” consider Moreno an employee.
II.
The Full Faith and Credit Act, 28 U.S.C. § 1738, “directs
all courts to treat a state court judgment with the same
respect that it would receive in the courts of the rendering
state.” Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367,
373 (1996). The California Superior Court’s settlement
judgment is entitled to full faith and credit. Applying the
principles of claim preclusion, we affirm the district court’s
dismissal of Moreno’s wage and hour claims.
The Supreme Court’s decision in Matsushita, controls
the outcome here. Id. In Matsushita, the plaintiffs appealed
a summary judgment dismissal to our court. Id. at 370.
While the appeal was pending, a related state court class
action settlement was finalized. Id. at 370–71. The federal
appellants had not opted out of the class, and the settlement
explicitly released their federal claims that were on appeal
before this court. Id. at 371–72. The Supreme Court later
reversed our court for not applying the Full Faith and Credit
16 MORENO V. UTILIQUEST
Act as a bar to further prosecution of the federal action. Id.
at 373. The same principle applies here. As Moreno’s
federal case was pending appeal, the Los Angeles County
Superior Court entered a final settlement order and judgment
that bars his wage and hour claims. 2
Our court must treat a state court judgment with the same
respect it would receive in the courts of the rendering state.
28 U.S.C. § 1738. We apply California law to determine a
judgment’s preclusive effect. See Manufactured Home
Cmtys. Inc. v. City of San Jose, 420 F.3d 1022, 1031 (9th
Cir. 2005). In California, claim preclusion applies when
“(1) the decision in the prior proceeding is final and on the
merits; (2) the present proceeding is on the same cause of
action as the prior proceeding; and (3) the parties in the
present proceeding or parties in privity with them were
parties to the prior proceeding.” Fed’n of Hillside & Canyon
Ass’ns v. City of Los Angeles, 24 Cal. Rptr. 3d 543, 557 (Ct.
App. 2004).
All three elements of claim preclusion are satisfied here.
On November 29, 2021, the California Superior Court
entered an order granting final settlement approval in
Garcia-Muniz v. UtiliQuest, LLC. See Order Granting
Motion for Final Approval of Class Action Settlement, No.
BC685160 (L.A. Super. Ct. Nov. 29, 2021). The judgment
was entered on December 1, 2021. Final Judgment, Garcia-
Muniz v. UtiliQuest, LLC, No. BC685160 (L.A. Super. Ct.
2
Although preclusion is an affirmative defense, not a jurisdictional
matter, we are nonetheless bound to recognize the preclusive effects of a
state court judgment. See Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280, 293 (2005). This affirmative defense was not—
and could not have been—raised in district court, but we exercise our
discretion to consider it for the first time on appeal. See United States v.
Patrin, 575 F.2d 708, 712 (9th Cir. 1978).
MORENO V. UTILIQUEST 17
Dec. 1, 2021). Under California law, “[a] court-approved
settlement” constitutes a final judgment on the merits,
Consumer Advoc. Grp., Inc. v. ExxonMobil Corp., 86 Cal.
Rptr. 3d 39, 54 (Ct. App. 2008), but a judgment is not final
“if an appeal is pending or could still be taken.” Riverside
Cnty. Transport. Comm’n v. S. Cal. Gas Co., 268 Cal. Rptr.
3d 196, 208 (Ct. App. 2020); see also Franklin & Franklin
v. 7-Eleven Owners for Fair Franchising, 102 Cal. Rptr. 2d
770, 774 (Ct. App. 2000).
As part of the settlement agreement, the parties in
Garcia-Muniz v. UtiliQuest, LLC, agreed to waive any
appeals unless the California Superior Court entered an order
that materially altered the settlement’s terms. The Superior
Court subsequently entered a final judgment “in accordance
with terms of the Settlement.” Final Judgment at 1, Garcia-
Muniz, No. BC685160. Moreover, on January 30, 2022, the
time to appeal California’s judgment lapsed, and so the
judgment is final and free from “direct attack.” 3 People v.
Burns, 131 Cal. Rptr. 3d 121, 125 (Ct. App. 2011). Moreno
does not contest that the settlement releases cover his wage
and hour claims. Moreno also admits that he received notice
of the class settlement and did not opt out within the
timeframe. Accordingly, there is a final judgment on the
merits involving the same parties and same cause of action.
Moreno’s wage and hour claims are precluded.
Moreno argues that he implicitly opted out of the state
settlement by maintaining this federal litigation, and in the
3
As an absent class member, Moreno must have formally intervened
or filed a motion to vacate the judgment and been denied relief to have
the right to appeal the Superior Court’s judgment. Hernandez v.
Restoration Hardware, Inc., 409 P.3d 281, 290 (Cal. 2018). He did
neither. Nor has Moreno, after two rounds of supplemental briefing on
this subject, expressed any intent to appeal the California settlement.
18 MORENO V. UTILIQUEST
alternative, requests permission to file a late opt out. He
raises these issues in the wrong court. A federal court’s
broad collateral review of a state court class action judgment
would be inappropriate. Hesse v. Sprint Corp., 598 F.3d
581, 587 (9th Cir. 2010). Our review is limited to
determining “whether the procedures in the prior litigation
afforded the party against whom the earlier judgment is
asserted a ‘full and fair opportunity’ to litigate the claim or
issue.” Id. (quoting Epstein v. MCA, Inc., 179 F.3d 641,
648–49 (9th Cir. 1999)). “Normally we will satisfy
ourselves that the party received the requisite notice,
opportunity to be heard, and adequate representation by
referencing the state court’s findings.” Id. at 588. The
Superior Court of California made specific findings that the
notice given to class members comported with due process
and that the settlement was fair, adequate, and reasonable.
See Order Granting Motion for Final Approval of Class
Action Settlement at 9–11, Garcia-Muniz, No. BC685160.
Accordingly, the district court’s dismissal of Moreno’s wage
and hour claims is affirmed.
CONCLUSION
For the foregoing reasons, we affirm the district court’s
dismissal of Moreno’s complaint and action.
AFFIRMED.