Cruz v. MM 879, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 ANGELA CRUZ, MARIA MADRIGAL, No. 1:15-cv-01563-TLN-EPG LOURDES BAIZ, AND CHRISTIE 12 GOODMAN, individuals, 13 Plaintiffs, ORDER GRANTING MOTION TO RECONSIDER AND MOTION FOR 14 v. SUMMARY JUDGMENT BY THE SERVICEMATER COMPANY, LLC, 15 MM 869, INC., a corporation; BARRETT MERRY MAIDS, LP, AND MM MAIDS, BUSINESS SERVICES, INC., a LLC 16 corporation; THE SERVICEMASTER COMPANY LLC., a corporation; MERRY 17 MAIDS LP, a limited partnership; MM MAIDS LLC, a limited liability 18 corporation, and DOES 1 through 98, inclusive, 19 Defendants. 20 21 22 This matter is before the Court on a motion for reconsideration filed by Defendants the 23 ServiceMaster Company, LLC; Merry Maids, LP; and MM Maids, LLC (collectively 24 “Defendants”).1 (ECF No. 163.) Defendants move for reconsideration of the Court’s order 25 denying Defendants’ motion for summary judgment/partial summary judgment (ECF No. 162), or 26 27 1 Two additional defendants, MM 879, Inc. and Barrett Business Services, Inc., do not join this motion. For the purposes of this motion, “Defendants” refers to the moving defendants, as 28 defined above. 1 in the alternative, for reconsideration of the Court’s order granting Plaintiffs’ motion for class 2 certification (ECF No. 161). Plaintiffs filed an opposition to the motion (ECF No. 166), and 3 Defendants submitted a reply (ECF No. 167). For the reasons set forth below, Defendants’ 4 Motion for Reconsideration is GRANTED, and the Motion for Summary Judgment (ECF No. 5 112), previously denied on the issue of ostensible agency, is GRANTED. 6 I. FACTUAL AND PROCEDURAL BACKGROUND 7 All parties are aware of the factual background as set forth in the Court’s previous orders 8 (ECF Nos. 162, 161), and that factual background is adopted herein. In summary, the instant 9 action arises from Plaintiffs Angela Cruz, Maria Madrigal, Lourdes Baiz, and Christine 10 Goodman’s (collectively “Plaintiffs”) certified class action lawsuit alleging violations of various 11 wage and hour laws contained in the California Labor Code by MM 879, Barrett Business 12 Services, and Defendants. (ECF No. 1 at 2.) 13 The case was removed to this Court on October 14, 2015. (ECF No. 1.) On August 26, 14 2016, Plaintiffs filed a motion for class certification. (ECF No. 99.) On September 8, 2016, 15 Defendants filed a motion for summary judgment, arguing they could not be held liable for the 16 employment-related practices of its franchisee (MM 879) based on the undisputed facts, and were 17 therefore entitled to judgment dismissing all claims against them as a matter of law. (ECF. No 18 112 at 6.) 19 On January 18, 2019, the Court entered an order granting Plaintiffs’ motion for class 20 certification and appointing the named Plaintiffs as class representatives. (ECF No. 161 at 14.) 21 On the same day, the Court also entered an order denying Defendants’ motion for summary 22 judgment on the issue of Defendants’ liability under a theory of ostensible agency. (ECF No. 162 23 at 16.) Defendants filed the instant motion for reconsideration of those orders on February 1, 24 2019. (ECF No. 163.) 25 /// 26 /// 27 /// 28 /// 1 II. STANDARD OF LAW 2 A. Motion to Reconsider 3 The Court is authorized to reconsider an order under its inherent powers and Federal Rule 4 of Civil Procedure 54(b) (“Rule 54(b)”). See Fed. R. Civ. P. 54(b); City of Los Angeles, Harbor 5 Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir. 2001). With respect to non-final 6 orders, such as an order granting in part and denying in part a defendant's motion for summary 7 judgment, the Ninth Circuit has recognized that "[a]s long as a district court has jurisdiction over 8 the case, then it possesses the inherent procedural power to reconsider, rescind, or modify an 9 interlocutory order for cause seen by it to be sufficient." Santa Monica Baykeeper, 254 F.3d at 10 885 (internal quotation marks omitted). 11 In addition to the inherent power to modify a non-final order, Rule 54(b) authorizes a 12 district court to revise a non-final order "at any time before the entry of a judgment adjudicating 13 all the claims." Fed. R. Civ. P. 54(b). A district court may reconsider and reverse a previous 14 interlocutory decision for any reason it deems sufficient, even in the absence of new evidence or 15 an intervening change in the controlling law. Abada v. Charles Schwab & Co., Inc., 127 F. Supp. 16 2d 1101, 1102 (S.D. Cal. 2000). Still, a court should not revisit its own decisions unless 17 extraordinary circumstances show that its prior decision was wrong. Christianson v. Colt Indus. 18 Operating Corp., 486 U.S. 800, 816 (1988). Even in the context of a non-final order, the major 19 grounds that justify reconsideration involve an intervening change of controlling law, the 20 availability of new evidence, or the need to correct a clear error or prevent manifest injustice. See 21 Pyramid Lake Paiute Tribe of Indians v. Hodel, 882 F.2d 364, 369 n. 5 (9th Cir. 1989). 22 B. Motion for Summary Judgment 23 Summary judgment is appropriate when the moving party demonstrates no genuine issue 24 as to any material fact exists and the moving party is entitled to judgment as a matter of law. Fed. 25 R. Civ. P. 56(a); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The moving party 26 always bears the initial responsibility of informing the Court of the basis of its motion, identifying 27 those portions of “the pleadings, depositions, answers to interrogatories, and admissions on file 28 together with affidavits, if any,” which it believes demonstrate the absence of a genuine issue of 1 material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[W]here the nonmoving party 2 will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may 3 properly be made in reliance solely on the pleadings, depositions, answers to interrogatories, and 4 admissions on file.” Id. at 324 (internal quotations omitted). Summary judgment is proper 5 against a party who does not make a showing sufficient to establish the existence of an element 6 essential to that party’s case, and on which that party will bear the burden of proof at trial. 7 If the moving party meets its initial responsibility, the burden then shifts to the opposing 8 party to establish a genuine issue as to any material fact exists. Matsushita Elec. Indus. Co. v. 9 Zenith Radio Corp., 475 U.S. 574, 585–87 (1986); First Nat’l Bank of Ariz. v. Cities Serv. Co., 10 391 U.S. 253, 288–89 (1968). In attempting to establish the existence of this factual dispute, the 11 opposing party may not rely upon the denials of its pleadings but is required to tender evidence of 12 specific facts in the form of affidavits, and/or admissible discovery material, in support of its 13 contention that the dispute exists. Fed. R. Civ. P. 56(c). The opposing party must demonstrate 14 that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under 15 the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and that the 16 dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the 17 nonmoving party. Id. at 251–52. 18 In the endeavor to establish the existence of a factual dispute, the opposing party need not 19 establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual 20 dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at 21 trial.” First Nat’l Bank, 391 U.S. at 288–89. Thus, the “purpose of summary judgment is to 22 ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for 23 trial.’” Matsushita, 475 U.S. at 587 (quoting Rule 56(e) advisory committee’s note on 1963 24 amendments). 25 In resolving the summary judgment motion, the evidence of the opposing party is to be 26 believed, and all reasonable inferences that may be drawn from the facts pleaded before the court 27 must be drawn in favor of the opposing party. Anderson, 477 U.S. at 255. Nevertheless, 28 inferences are not drawn out of the air, and it is the opposing party’s obligation to produce a 1 factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 2 F. Supp. 1224, 1244–45 (E.D. Cal. 1985), aff’d, 810 F.2d 898 (9th Cir. 1987). Finally, to 3 demonstrate a genuine issue that necessitates a trial, the opposing party “must do more than 4 simply show that there is some metaphysical doubt as to the material facts.” Matsushita, 475 5 U.S. at 586. “Where the record taken as a whole could not lead a rational trier of fact to find for 6 the nonmoving party, there is no ‘genuine issue for trial.’” Id. at 587. 7 III. ANALYSIS 8 Defendants move the Court to reconsider its Order (ECF No. 162) denying summary 9 judgment on the issue of ostensible agency theory of liability. (ECF No. 163 at 5.) In the 10 alternative, Defendants urge the Court to reconsider its Order (ECF No. 161) granting class 11 certification to Plaintiffs. (ECF No. 163 at 5.) Defendants argue that the Court committed clear 12 error in its orders and therefore should reconsider both rulings. (Id.) 13 More specifically, Defendants claim they cannot be held liable for Labor Code violations 14 under an ostensible agency theory of liability as a matter of law because the Court has granted 15 summary judgment in their favor on a joint employer theory of liability. (ECF No. 163 at 12; 16 ECF No. 162 at 14, 16.) On the issue of class certification, Defendants argue prosecution of the 17 alleged Labor Code violations under an ostensible agency theory is not amenable to class-wide 18 treatment because it would require individual inquiries into class members’ individual 19 experiences, thus conflicting with Rule 23’s commonality and predominance requirements. (ECF 20 No. 163 at 18.) For the reasons set forth below, the Court GRANTS Defendants’ motion to 21 reconsider as it pertains to the order denying summary judgment, and pursuant to the same 22 reasoning, GRANTS Defendants’ motion for summary judgment on the issue of ostensible 23 agency. 24 In its January 18, 2019 Order denying summary judgment, the Court found Defendants 25 did not qualify as joint employers under the Martinez test because they did not (1) exercise 26 control over the wages, hours, or working conditions; (2) “suffer or permit to work;” or (3) 27 engage, thereby creating a common law employment relationship. Martinez v. Combs, 49 Cal. 28 4th 35, 64 (2010) (using a three-prong test to define “to employ.”) The Court found, however, 1 that there was a genuine issue of material fact as to whether Defendants were employers under the 2 ostensible agent doctrine. Therein, the Court relied on both Salazar v. McDonald’s Corp., 14-cv- 3 02096-RS, 2016 WL 4394165 (N.D. Cal. Aug. 16, 2016) (“Salazar I”) and Ochoa v. 4 McDonald’s Corp., 133 F. Supp. 3d 1228 (N.D. Cal. 2015) (“Ochoa”). By way of the present 5 motion, Defendants argue the Court committed clear error when it held triable issues exist 6 regarding Defendants’ potential liability under the ostensible agency theory but ruled in favor of 7 Defendants on a joint liability theory. (ECF No. 163 at 13.) They reason the latter holding 8 precludes a finding that Defendants can be liable under an ostensible agency theory as a matter of 9 law. (ECF No. 163 at 13.) More specifically, Defendants spend much time discussing the 10 definition of an “employer” as it pertains to liability under the Labor Code. (ECF No. 163 at 13– 11 14.) Defendants assert the Labor Code imposes obligations only on “employers” and defines 12 “employers” as those exercising control over the employee, and thus, the definition of an 13 employer does not and cannot include an ostensible agent. Id. 14 The instant motion points to the Court’s reliance on Salazar I in its summary judgment 15 order (ECF No. 163 at 15.) and argues Salazar v. McDonald’s Corp., 14-cv-02096-RS, 2017 WL 16 950986 (N.D. Cal. 2017) (“Salazar II”), which later granted summary judgment to the franchisor 17 defendant on the issue of ostensible agent liability, demonstrates Defendants here cannot be liable 18 as a matter of law. (ECF No. 163 at 16–17.) 19 In opposition, Plaintiffs rely on the fact that Defendants provide no new evidence or case 20 law requiring the Court to reconsider its previous ruling. (ECF No. 166 at 2.) They contend 21 Defendants’ motion misuses the reconsideration mechanism to repackage arguments made on 22 previously decided motions. (ECF No. 166 at 5.) Plaintiffs also point out that Salazar II was on 23 appeal when the motion was filed. (ECF No. 166 at 3.) 24 Subsequent to filing their motion (and while that motion was submitted and pending 25 before the Court), Defendants filed a notice of supplemental authority from the Ninth Circuit, 26 determining the Salazar matter on appeal. Salazar v. McDonald’s Corp., 944 F.3d 1024 (9th Cir. 27 28 1 2019) (“Salazar III”). While this Court continues to find Ochoa well-reasoned,2 Salazar III is 2 now controlling authority and this Court must apply that analysis here. 3 The Ninth Circuit in Salazar III expressly found a franchisor could not be held liable for 4 wage and hour violations under an ostensible agency theory pursuant to Wage Order 5-2001. 5 Salazar III, 944 F.3d at 1033. The court specifically looked to the definition of “employer” from 6 Wage Order 5-2001 § 2(H) and from that definition, concluded that, “[b]y its plain terms, the 7 reference to an ‘agent’ applies only to an entity that actually employs the worker or that actually 8 exercises control over the wages, hours, or working conditions of the worker.” Salazar III, 944 9 F.3d at 1033. The court, citing Cal. Civ. Proc. Code § 1859, further noted that while “agency 10 principles ordinarily encompass both actual and ostensible agency … the Wage Order is more 11 specific and, therefore, controls.” Salazar, 944 F.3d at 1033. As a result, the ostensible agency 12 theory is inconsistent with the plain terms of the Wage Order and is therefore precluded as a 13 matter of law. Id. 14 This controlling authority provides grounds for this Court to reconsider its prior order 15 denying summary judgment. Plaintiffs here bring their wage and hour claims under the 16 California Labor Code, and therefore the same interpretation of the Wage Order must apply. 17 Consequently, pursuant to Ninth Circuit precedent as set forth in Salazar III, this Court must find 18 the ostensible agency theory does not apply as a matter of law. As a result, there are no longer 19 material issues of triable fact precluding summary judgment in favor of Defendants, and summary 20 judgment is therefore GRANTED.3 21 /// 22 2 As discussed in the Court’s previous Order on Defendants’ Motion for Summary 23 Judgment (ECF No. 162), the court in Ochoa held the defendant franchisor was not an “employer” jointly liable for labor violations, but nevertheless found genuine issues of fact as to 24 whether the franchisor was liable under an ostensible agency theory. Ochoa, 133 F. Supp. 3d at 1239–1240. 25 3 Defendants also move the Court in the alternative to reconsider the order granting 26 Plaintiffs’ class certification pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3). (ECF No. 161 at 14.) Because the Court has now entered summary judgment in favor of the 27 moving Defendants on the issue of ostensible agency, these alternate grounds need not be addressed. 28 1 IV. CONCLUSION 2 For the foregoing reasons, Defendants’ Motion for Reconsideration (ECF No. 163) is 3 GRANTED and the Motion for Summary Judgment (ECF No. 112), previously denied on the 4 issue of ostensible agency, is GRANTED. Moving Defendants ServiceMaster Company, LLC; 5 Merry Maids, LP; and MM Maids, LLC are hereby DISMISSED from the action. 6 IT IS SO ORDERED. 7 8 Dated: January 30, 2020 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28