Bilog v. Progressive Casualty Ins. Co. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 LACRISHA BILOG, an individual, No. 2:19-cv-01236-MCE-CKD 12 Plaintiff, 13 v. MEMORANDUM AND ORDER 14 PROGRESSIVE CASUALTY INSURANCE COMPANY, and 15 Does 1-100, inclusive, 16 Defendants. 17 18 Through the present lawsuit, Plaintiff LaCrisha Bilog (“Plaintiff”) seeks relief on 19 behalf of herself and others similarly situated against her former employer, Defendant 20 Progressive Casualty Insurance Company (“Defendant” or “Progressive”). According to 21 the operative First Amended Complaint (“FAC”), Progressive failed to correctly calculate 22 the regular rate of pay during pay periods in which Plaintiff and putative class members 23 worked overtime and “received commissions, non-discretionary bonuses and/or other 24 items of compensation” that should have been calculated into regular pay but were not. 25 Plaintiff alleges these discrepancies caused her and other members not to receive the 26 overtime pay to which they were entitled. As a result, when Plaintiff’s and other class 27 members’ employment ended, they failed to receive unpaid wages which were owed, 28 and their wage statements were inaccurate. Plaintiff’s FAC consequently alleges five 1 wage-and-hour related causes of action for violations of the federal Fair Labor Standards 2 Act, the California Labor Code, and the California Business and Professions Code. 3 Presently before the Court is Progressive’s Motion to Dismiss pursuant to Federal 4 Rule of Civil Procedure 12(b)(6),1 on grounds that the FAC fails to state claims upon 5 which relief can be granted. Progressive also seeks to strike Plaintiff’s proposed class 6 definition and allegations for failure to meet minimum pleading standards. As set forth 7 below, with one exception, Progressive’s Motion is DENIED. 8 9 BACKGROUND2 10 11 Plaintiff worked for Progressive from approximately November 2015 to April 2019. 12 As a non-exempt employee, she was eligible for overtime pay under applicable statutes, 13 rules, and regulations, both state and federal. Plaintiff alleges that during her tenure of 14 employment, she and other non-exempt personnel received commissions, non- 15 discretionary bonuses and other items of compensation that included, but were not 16 limited to, “performance and wellness bonuses, ‘gainshare’, ‘Non Tobacco Use’ credits, 17 ‘R&R Earned’, and shift differentials.” See FAC, ¶ 11 and Exs. 1 and 2. According to 18 Plaintiff, these components of additional pay should have been used to properly 19 calculate overtime wages but at times were not. 20 Plaintiff has attached four wage statements to her complaint which show that she 21 received various non-discretionary payments during four different pay periods, but that 22 the amounts of those payments were not added to her regular rate of pay for purposes 23 of calculating overtime wages during the same pay periods. Plaintiff alleges, for 24 example, that on December 15, 2017, she received a non-discretionary “Gainshare Odd 25 Year” performance bonus for the 2017 calendar year. Although she worked 60.75 hours 26 1 All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure. 27 2 Unless otherwise indicated, the facts set forth in this Section are taken, at times verbatim, from 28 the allegations contained in Plaintiff’s FAC. ECF No. 13. 1 of overtime during the same 2017 period, Progressive failed to incorporate that bonus 2 into her “regular rate of pay” for purposes of calculating overtime, and accordingly 3 Plaintiff was underpaid. Id. at ¶ 19. 4 Plaintiff cites several other similar examples. During the pay period between 5 October 22, 2017 and November 4, 2017, She claims she earned a non-discretionary 6 “Non-Tobacco Use Discount” of $15.00, but that Defendant again failed to incorporate 7 that payment into the 8.25 hours of overtime Plaintiff earned during that earnings period. 8 Id. at ¶ 20. Additionally, for the periods ending May 19, 2018, and June 2, 2018, Plaintiff 9 earned not only a non-discretionary “Non Tobacco Use Discount” but also a non- 10 discretionary “Recognition Award’, both of which she claims should have been reflected 11 in the overtime she received. Id. at ¶¶ 21-22. 12 Plaintiff further alleges that the final paycheck she received when her employment 13 ended (FAC, Ex. 5) did not include the balance of the unpaid overtime she earned but 14 was not paid. Moreover, because of the above-enumerated discrepancies, Plaintiff 15 alleges that the wage statements Defendant issued to her and other employees who 16 received similar payments did not properly reflect the correct applicable rates and wages 17 earned. 18 In moving to dismiss, Progressive argues that the FAC includes insufficient 19 information as to just how Plaintiff claims she was entitled to overtime but did not receive 20 it in accordance with the Fair Labor Standards Act, 29 U.S.C. § 201, et seq (“FLSA”) and 21 Sections 510 and 1198 of the California Labor Code. Progressive goes on to claim that 22 Plaintiff’s other causes of action, which derive from her failure to pay overtime claim, 23 similarly fail. Defendant also avers that any claim premised upon failure to pay wages 24 upon the cessation of Plaintiff’s employment fails because Plaintiff fails to specify 25 whether she was terminated or resigned. In addition, Progressive contends that as a 26 former employee, Plaintiff has no standing to pursue injunctive relief restraining its future 27 conduct. Finally, Defendant takes issue with the sufficiency of Plaintiff’s class action 28 allegations and move to strike those averments. 1 STANDARD 2 3 A. Motion to Dismiss 4 On a motion to dismiss for failure to state a claim under Federal Rule of Civil 5 Procedure 12(b)(6), all allegations of material fact must be accepted as true and 6 construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. 7 Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain 8 statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the 9 defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell 10 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 11 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 12 detailed factual allegations. However, “a plaintiff's obligation to provide the grounds of 13 his entitlement to relief requires more than labels and conclusions, and a formulaic 14 recitation of the elements of a cause of action will not do.” Id. (internal citations and 15 quotations omitted). A court is not required to accept as true a “legal conclusion 16 couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 17 Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief 18 above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & 19 Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the 20 pleading must contain something more than “a statement of facts that merely creates a 21 suspicion [of] a legally cognizable right of action”)). 22 Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket 23 assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations and 24 quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard 25 to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of 26 the nature of the claim, but also ‘grounds' on which the claim rests.” Id. (citing Wright & 27 Miller, supra, at 94, 95). A pleading must contain “only enough facts to state a claim to 28 relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their 1 claims across the line from conceivable to plausible, their complaint must be dismissed.” 2 Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge 3 that actual proof of those facts is improbable, and ‘that a recovery is very remote and 4 unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). 5 A court granting a motion to dismiss a complaint must then decide whether to 6 grant leave to amend. Leave to amend should be “freely given” where there is no 7 “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice 8 to the opposing party by virtue of allowance of the amendment, [or] futility of the 9 amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. 10 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to 11 be considered when deciding whether to grant leave to amend). Not all of these factors 12 merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . 13 carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 14 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that 15 “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, 16 Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 17 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 18 1989) (“Leave need not be granted where the amendment of the complaint . . . 19 constitutes an exercise in futility . . . .”)). 20 B. Motion to Strike 21 The Court may strike “from any pleading any insufficient defense or any 22 redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “[T]he 23 function of a 12(f) motion to strike is to avoid the expenditure of time and money that 24 must arise from litigating spurious issues by dispensing with those issues prior to 25 trial. . . .” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). 26 Immaterial matter is that which has no essential or important relationship to the claim for 27 relief or the defenses being pleaded. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 28 (9th Cir. 1993), rev’d on other grounds 510 U.S. 517 (1994) (internal citations and 1 quotations omitted). Impertinent matter consists of statements that do not pertain, and 2 are not necessary, to the issues in question. Id. 3 4 ANALYSIS 5 6 A. Failure to Pay Overtime 7 Relying on the Ninth Circuit’s decision in Landers v. Quality Communications, 8 Inc., 771 F.3d 638 (9th Cir. 2014), which considered Rule 8(a)’s pleading requirements 9 for unpaid wages or overtime, Progressive contends that Plaintiff’s First Cause of Action, 10 for Unpaid Overtime, fails to state any plausible claim. Defendant points out that while 11 Landers recognized that “detailed factual allegations” are not required in this regard, 12 some facts in addition to mere conclusory assertions are nonetheless required. Id. at 13 644. According to Progressive, Plaintiff’s claim is insufficient because “[n]o information 14 is provided as to the circumstances--- including when, or for what reasons, if any” why 15 overtime was not paid. Defs. Memo, ECF No. 15-1: 4:21-22. 16 The Court disagrees. Plaintiff’s FAC discusses four different earning statements 17 (and attaches those statements as exhibits). From those statements, Plaintiff identifies 18 items of compensation which should have been added to her regular rate of pay for 19 purposes of calculating overtime. Those items include a 2017 yearly bonus, which 20 Plaintiff alleges was non-discretionary, as well as bonuses for refraining from using 21 tobacco and a non-discretionary “Recognition Award.” Moreover, according to the FAC, 22 those items should have been added to Plaintiff’s regular rate of pay for purposes of 23 calculating overtime but were not. Those allegations are specific and not conclusory or 24 formulaic as Progressive appears to allege. While Defendant does allege that no 25 specifics concerning any unpaid commissions are included, commissions are merely one 26 component of an umbrella of additional compensation forms identified by the First Cause 27 of Action, which also includes non-discretionary bonuses as well as other items of 28 compensation. Since Plaintiff has identified both alleged non-discretionary bonuses and 1 additional payments in the form of a recognition award and credits for not using tobacco, 2 her First Cause of Action suffices even in the absence of additional particulars as to any 3 commission earnings. Whether all those items should indeed be added to Plaintiff’s 4 base wage for purposes of calculation is a matter that will have to be tested through 5 discovery and the remainder of the litigation process. In the meantime, Plaintiff has 6 sufficiently stated a claim. 7 B. Failure to Pay Wages Owed Upon Cessation of Employment 8 Progressive’s primary argument with respect to the Second Cause of Action, for 9 Failure to Pay All Wages Due Upon Termination pursuant to the FLSA, is that because 10 any claim in that regard (for so-called “waiting time” penalties) is necessarily derivative of 11 Plaintiff’s First Cause of Action (for Failure to Pay Overtime itself), the Second Cause of 12 Action fails for the same reason as the First. That argument misses the mark since the 13 Court has concluded above that Plaintiff’s overtime claim is indeed viable. 14 Progressive also alleges, however, in attacking the Second Cause of Action, that 15 Plaintiff’s claim fails because the FAC does not specify whether she was terminated (and 16 would consequently have a potential claim for unpaid wages under California Labor 17 Code § 201), or instead resigned in which case the provisions of § 202 would apply with 18 respect to exactly when the unpaid wages were due.3 Defendant maintains that the two 19 provisions are mutually exclusive and that because it cannot be determined from the 20 face of the FAC which provision applies the Second Cause of Action should be rejected 21 for failure to provide the requisite specificity. 22 Because the Second Cause of Action is based on the FLSA, however, and since 23 it is unquestioned that the FLSA contains provisions that apply in either instance and 24 would pertain to Plaintiff irrespective of how her employment ended, the Court believes 25 that it will be readily apparent through discovery the circumstances of Plaintiff’s 26 /// 27 3 Under § 202, an employer must pay all wages within 72 hours following resignation, whereas if an employee is fired all wages earned and unpaid at the time of discharge are due and payable 28 immediately in accordance with § 201. 1 departure and the precise basis of her claim for unpaid wages upon the cessation of her 2 employment. There is no reason to require more specificity at this early juncture. 3 Moreover, and even more significantly, courts have held that Rule 8’s pleading 4 requirements are met in a wage and hour claim where a Plaintiff simply alleges without 5 further detail that his or her employment ended, just as Plaintiff has done here. See, 6 e.g., Lopez v. Wendy’s Int’l. Inc., No. CV 11-00275 MMM (JCx), 2012 WL 13014600 at 7 *11 (C.D. Cal. 2012) (holding that waiting time penalty claim was sufficiently pled, 8 stating that liability clearly did “not turn on whether wages to which [the plaintiff] was 9 entitled were paid immediately or within 72 hours, but [instead] on whether [plaintiff] was 10 entitled to the wages she claim[ed] at all.”); Mitchell v. Corelogic, Inc., No. SA CV 17- 11 2274-DOC (DFMx), 2018 WL 6118444 at *13 (C.D. Cal. 2018) (finding that plaintiffs 12 adequately alleged a claim for failure to pay wages at “cessation of employment”). 13 Further, in response to Progressive’s argument that the issue should be framed in terms 14 of whether Plaintiff has standing to pursue one variant or the other on behalf of other 15 similarly situated individuals, courts have also determined that where entitlement to 16 waiting time penalties does not turn, as here, on the fact of termination versus 17 resignation, an employee who was terminated has standing to represent employees who 18 resigned. Alikhan v. Goodrich Corp., No. CV 17-6756-DMG (RAOx), 2018 WL 6333673 19 at *3 (C.D. Cal. 2018) (citing Melendres v. Arpaio, 784 F.3d 1254, 1262 (9th Cir. 2015). 20 C. Failure to Furnish Accurate Itemized Wage Statements 21 Citing decisions from both the Central and Northern Districts, Progressive 22 contends that Plaintiff’s Third Cause of Action, for failure to furnish accurate itemized 23 wage statements in contravention of California Labor Code § 226(a), fails because 24 Plaintiff has failed to allege sufficient facts to show how the wage statement prevented 25 Plaintiff from “promptly and easily” determining the information she required. See de 26 Rios v. Gerard Roof Products, LLC, No. 5:18-CV-1163 SJO (FFMX), 2018 WL 6016952 27 at *6); Suarez v. Bank of America Corp., No. 18-cv-01202-MEJ, 2018 WL 2431473 at 28 *13 (N.D. Cal. 2018). 1 Plaintiff has nonetheless pled that she and other non-exempt employees “were 2 unable to promptly and easily determine their gross wage earned from the wage 3 statements furnished by Defendant” (FAC, ¶ 31), and in light of the payroll statements 4 provided and the numerous cryptic categories of additional compensation claimed 5 therein, that claim does not lack factual plausibility. Defendant’s challenge to the viability 6 Third Cause of Action therefore fails. 7 Having made that determination, however, the Court nonetheless notes 8 Progressive’s argument that the relief sought by way of the Third Cause of Action is 9 improper to the extent that it requests injunctive relief. According to Defendant, as a 10 former employee, Plaintiff lacks standing to bring a claim against Progressive under 11 § 226 because she no longer stands to benefit from an injunction. See Luna v. 12 Universal City Studios Prods. LLLP, No. CV 12-9286 PSG (SSx), 2013 WL 12308201 at 13 * 8 (C.D. Cal. 2013); Holak v. Kmart Corp., No. 1:12-cv-00304 AWI MJS, 2012 WL 14 6202298 at *8 (E.D. Cal. 2012) (“An inunction ‘to ensure compliance’ with Section 226(a) 15 is a form of prospective relief that necessarily affects only current and future 16 employees.”). Plaintiff fails to oppose that argument and accordingly the FAC’s prayer 17 for relief as to the Third Cause of Action, to the extent it requests injunctive relief, will be 18 stricken. 19 D. Unfair Competition 20 Plaintiff’s Fourth Cause of Action, for Unfair Business Practices in violation of 21 California Business and Professions Code §§ 17200, et seq., necessarily relies upon 22 Defendant’s violation of other laws as set out in the First through Third Causes of Action. 23 Progressive’s Motion to Dismiss that claim rests solely on the fact that because Plaintiff 24 has failed to state a cause of action under any of those underlying claims, the derivative 25 unfair competition claim must also be dismissed. See Def.’s Memo, ECF No. 15-1, 26 10:11-22 and case cited therein. As explained above, because that premise lacks merit, 27 Plaintiff’s Fourth Cause of Action also survives. 28 /// 1 E. Class Action Allegations 2 Plaintiff seeks to represent a class of “[a]ll current and former non-exempt 3 employees of Defendant who received commissions, non-discretionary bonuses and/or 4 other items of compensation and worked overtime during one or more pay period from 5 July 3, 2015 through the date of final judgment.” FAC, ¶ 43. While conceding that 6 courts should generally refrain from ruling on the issue of class certification at the 7 pleadings stage, Progressive argues that Plaintiff must still plead specific facts showing 8 an entitlement to relief on a classwide basis. Because it claims that basic Rule 8(a) 9 pleading standards have not been met in this instance, Defendant urges the court to 10 dismiss or strike the class action allegations. It argues that “all allegations, including 11 those related to class treatment, must contain sufficient facts for a court to determine 12 that a plaintiff is entitled to move forward and subject defendants to the rigors, burdens, 13 and costs of the discovery in a class action.” Def.’s Memo, ECF No. 15-1, 11:18-21. 14 Progressive further maintains that Plaintiff has “not demonstrate[d] that any member of 15 the putative class, including those who worked in different positions and/or locations, 16 had similar work experiences.” Id. at 13:13-14. According to Defendant, Plaintiff has 17 made “no attempt to specify exactly which job classifications, positions, or workers she 18 specifically wants to represent.” Id. at 13:8-10. 19 Progressive asks for too much at this early stage of the proceeding. As the 20 Supreme Court and courts within this circuit have indicated, it is generally improper to 21 strike class action allegations on the pleadings. “An order striking class allegations is 22 functionally equivalent to an order denying class certification. Microsoft v. Baker, 23 137 S. Ct. 1702, 1711 n.7 (2017); Johnson v. WinCo Foods, LLC, 2018 WL 6017012 at 24 *22 (C.D. Cal. 2018). “Class allegations are generally not tested at the pleading stage 25 and instead are usually tested after one party has filed a motion for class certification.” 26 Romero v. Securus Techs., Inc., 216 F. Supp. 3d 1078, 1095 (S.D. Cal. 2016). “[T]he 27 granting of motions to dismiss class allegations before discovery has commenced is rare 28 . . . the better course is to deny such a motion because ‘the shape and form of class 1 action’ evolves only through the process of discovery.” In re Wal-Mart Stores, Inc. Wage 2 and Hour Litigation, 505 F. Supp. 2d 609, 615 (N.D. Cal. 2008). 3 Progressive also overreaches in arguing that the classes are so ill-defined so as 4 to defy any meaningful assessment. As Plaintiff points out, the FAC specifically defines 5 our separate subclasses: 1) a “Regular Rate Class” that pertains to Plaintiff’s FLSA 6 overtime claim; 2) a “California Regular rate Class” that pertains to Plaintiff’s California 7 Labor Code overtime claim; 3) a “California Waiting Time Penalty Class” that include 8 those California employees who Plaintiff alleges would be entitled to waiting time 9 penalties under California Labor Code § 203 for underpayment of overtime wages based 10 on Plaintiff’s regular rate theory; and 4) a “California Wage Statement Class” that include 11 those employees who Plaintiff contends received inaccurate wage statements in the year 12 preceding the commencement of this lawsuit, based on Plaintiff’s theory that such 13 individuals were not paid overtime due to miscalculation of their regular rate. See Pl.’s 14 Opp, ECF No. 17, 14:20-15:8; FAC, ¶ 43. 15 In addition, Plaintiff’s classwide theory appears, on the basis of the averments 16 contained within the FAC, to be premised on allegations that Progressive “had a uniform 17 policy and practice of failing to properly incorporate items of compensation earned by its 18 non-exempt employees . . . into . . . regular rates of pay for purposes of overtime 19 compensation.” Id. at 15:9-12, citing FAC, ¶¶ 10-23. Those allegations of commonly 20 applied payroll practices transcend any difference between individual employees and cut 21 against Progressive’s argument that Plaintiff has not shown any similarity in treatment 22 vis-à-vis Progressive’s employees that could justify class treatment. As Plaintiff remarks, 23 there is “nothing about [her] theory of liability [that] turns on any idiosyncrasies of her 24 position and [the FAC’s] allegations are equally applicable to any non-exempt employee 25 of Defendant who earned compensation that was required to be included in their regular 26 rate of pay and who also worked overtime.” Id. at 15:22-25. 27 Given these circumstances, the Court declines to dismiss and/or strike the class 28 action allegations contained in the FAC at this juncture of these proceedings. CLD VM LOCOU NIN EN INE MMVI OO IEP OY AO te 1 CONCLUSION 2 3 For all the above reasons, Defendant Progressive’s Motion to Dismiss or Strike 4 | (ECF No. 15) is DENIED, except with regard to the availability of injunctive relief in 5 | Plaintiff's Third Cause of Action. Plaintiff has failed to oppose Defendant's Motion as to 6 | the availability of such relief and the Motion is accordingly GRANTED as to that issue 7 | only.* To the extent the FAC’s prayer requests such relief, those allegations are g | STRICKEN. Given Plaintiff's non-opposition, and because the Court does not believe g | that further amendment will justify Plaintiff's request for injunctive relief as to the Third 40 | Cause of Action, no further leave to amend will be permitted. 11 IT |S SO ORDERED. 42 | Dated: June 8, 2020 13 . UNITED STATES DISTRI 15 16 17 18 19 20 21 22 23 24 25 26 27 28 | sotion submitted on the briefs pursuant to Local Rule 2509), 12