Diaz v. Sun-Maid Growers of California ( 2019 )

2 3 UNITED STATES DISTRICT COURT 4 FOR THE EASTERN DISTRICT OF CALIFORNIA 5 6 DAVID DIAZ, an individual, on behalf of 1:19-CV-00425-LJO-SKO himself and all members of the putative class, 7 MEMORANDUM DECISION AND Plaintiff, ORDER GRANTING PLAINTIFF’S 8 MOTION PREFERENCE, GRANTING v. PLAINTIFF’S MOTION TO AMEND, 9 AND DENYING DEFENDANT’S SUN-MAID GROWERS OF CALIFORNIA, a MOTION TO DISMISS AS MOOT 10 California Corporation; and Does 1 through 100, inclusive, 11 (ECF Nos. 5, 13, 14, and 15) Defendants. 12 13 I. INTRODUCTION 14 Defendant Sun-Maid Growers of California, a California corporation, and Does 1 through100, 15 inclusive (collectively, “Defendant”), removed from California state court a labor law action brought by 16 David Diaz (“Plaintiff”) on his own behalf and as representative of a putative class. ECF No. 1. The 17 action presents one claim, under California’s Private Attorney General Act (“PAGA”), which Plaintiff 18 now requests to amend in order to plead a solely state law cause of action. ECF Nos. 1 at 13-17, 13-1 at 19 1. Defendant opposes and moves to dismiss the action, alleging improper claim splitting. ECF No. 16. 20 The Court finds it appropriate to rule on Plaintiff’s and Defendant’s motions without oral argument. See 21 Local Rule 230(g). For the following reasons, Plaintiff’s motion to amend is GRANTED and 22 Defendant’s motion to dismiss is DENIED as moot. 23 II. BACKGROUND 24 The current matter before the Court arises from the second of two actions brought by Plaintiff 25 2 alleging various violations of California’s Labor Code and Business and Professions Code by 3 Defendant. Id. Defendant removed that case from state court, which is currently Case No. 1:19-cv- 4 00149-LJO-SKO in this District Court. Id. Plaintiff filed a motion to remand, which the Court denied. 5 ECF No. 13-1 at 2. The Court’s denial was based on its finding that one cause of action in Plaintiff’s 6 first complaint is preempted under § 301 of the Labor Management Relations Act (“§ 301,” “LMRA”), 7 29 U.S.C. § 185. Id. 8 While Plaintiff’s motion to remand was pending, Plaintiff filed the instant action—his second— 9 in state court, alleging a single claim under California’s PAGA. ECF No. 1 at 2. Defendant removed the 10 case from state court and filed a motion to dismiss on April 10, 2019. ECF Nos. 1 at 2, and 5. 11 Defendant’s removal in the instant action was predicated on § 301 preemption, and Defendant’s current 12 motion to dismiss argues that Plaintiff’s second action violates the doctrine against claim splitting. ECF 13 Nos. 1 at 2, 5-1. Plaintiff filed his opposition to dismissal on April 24, 2019, and Defendant filed a reply 14 on May 1, 2019. ECF Nos. 10, 11. 15 On May 6, 2019, Plaintiff filed a motion requesting leave to amend, as he was beyond the date 16 for amendment as a matter of course, according to his calculation. ECF No. 13-1. Plaintiff filed 17 simultaneously a notice of motion preference, asking this Court to decide his motion to amend before 18 deciding Defendant’s earlier-filed motion to dismiss. ECF Nos. 14, 15.1 Plaintiff seeks to amend his sole 19 cause of action to plead an exclusively state-law cause of action, based on the Court’s decision denying 20 remand in his first action. ECF No. 13-1 at 2. Defendant opposes both amendment of the complaint and 21 Plaintiff’s motion preference. ECF Nos. 16, 17. The Court now examines the pending motions to 22 dismiss and amend, as well as the motion preference request. ECF Nos. 5, 13, 14, 15. 23 24 1 Two docket entries appear for the same request, both entered on May 8, 2019. The first, ECF No. 13, is docketed as 25 “Motion Plaintiff ’s Request for Motion Preference.” The second, ECF No. 14, is docketed as “Request for Plaintiff’s Request 2 Under Federal Rule of Civil Procedure 15, a plaintiff may amend a complaint once as a matter of 3 course within certain time constraints; after the prescribed time has lapsed, a plaintiff “may amend its 4 pleading only with the opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15. The 5 rule, however, directs that courts “should freely give leave [to amend] when justice so requires.” Id. The 6 Ninth Circuit has stated that the policy is “to be applied with extreme liberality.” Eminence Capital, LLC 7 v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotations and citation omitted). 8 In considering whether to permit amendment under the court’s discretion, a court evaluates the 9 matter with the following as a guide: 10 If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his 11 claim on the merits. In the absence of any apparent or declared reason— such as undue delay, bad faith or dilatory motive on the part of the 12 movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of 13 the amendment, futility of amendment etc.—the leave sought should, as the rules require, be ‘freely given.’ Of course, the grant or denial of an 14 opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing 15 for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules. 16 In re Tracht Gut, LLC, 836 F.3d 1146, 1151-52 (9th Cir. 2016) (quoting Foman v. Davis, 371 U.S. 178 17 (1962)). In determining the propriety of a motion to amend under these factors, generally “all 18 inferences” are made “in favor of granting the motion.” Griggs v. Pace American Group, Inc., 170 F.3d 19 877, 880 (9th Cir. 1999). 20 IV. DISCUSSION 21 Plaintiff opposes Defendant’s attempt to have this action dismissed for impermissible claim 22 splitting, and he requests that his motion to amend his complaint be decided prior to Defendant’s 23 motion. ECF Nos. 10, 14, 15. Defendant counters that “logic and fairness dictate” that its earlier-filed 24 motion be decided first. ECF No. 17 at 3. 25 2 other reasons, including judicial efficiency, the motion to amend raises jurisdictional issues that must be 3 decided before any other issues are addressed. See, e.g., Ohan v. AmeriFirst Fin., Inc., No. 4 CV148380MWFAGRX, 2015 WL 13757759, at *2 (C.D. Cal. Jan. 20, 2015). Amendment of the type 5 requested by Plaintiff does not divest this Court of jurisdiction; however, it raises a question whether 6 this Court has “a powerful reason to choose not to continue to exercise jurisdiction.” Carnegie–Mellon 7 Univ. v. Cohill, 484 U.S. 343, 349-352 (1988). 8 For the following reasons, the Court grants Plaintiff leave to amend his complaint and denies 9 Defendant’s motion to dismiss as moot. 10 A. The Motions to Dismiss and Amend 11 Plaintiff’s request to have his motion to amend decided before Defendant’s motion to dismiss 12 requires the Court to examine the factors informing a court’s discretionary grant of leave to amend, as 13 outlined in section III above, which encompasses the allegation of impermissible claim splitting. 14 The Ninth Circuit summarizes the factors a court is to consider when weighing a request as: 1) 15 bad faith; 2) undue delay; 3) prejudice to the opposing party; and 4) futility (collectively, “Foman 16 factors”). In re Tracht Gut, LLC, 836 F.3d at 1152. The Court will examine each factor within the policy 17 context already explained, under which courts are to apply “with extreme liberality” the portion of Fed. 18 R. Civ. P. 15 permitting leave to amend outside the initial amendment window “when justice so 19 requires.” Eminence Capital, LLC, 316 F.3d at 1051. 20 1. Futility 21 The Court dispenses with the futility factor immediately. Amendment of Plaintiff’s second action 22 removes a potentially preempted federal claim2 and leaves Plaintiff with a cause of action, grounded in 23 24 25 2 The Court has n ot been asked to decide whether Plaintiff’s cause of action in this action, as pled, is preempted under the 2 amendment of the complaint is not futile. 3 2. Bad Faith and Undue Delay 4 Under the circumstances of this action, the Court’s analysis of bad faith and undue delay are 5 interconnected. Plaintiff’s instant action was filed in state court on February 22, 2019, while Plaintiff’s 6 motion to remand his first action still was pending before this Court. Plaintiff had a good-faith basis to 7 believe that his first action would be remanded to state court, where he filed his second action: this 8 Court, and other district courts, had ruled in favor of Plaintiff’s position in prior cases, holding that 9 overtime claims based on certain California laws were not preempted under § 301 of the LMRA, even 10 when a qualifying collective bargaining agreement existed. See Diaz v. Sun-Maid Growers of California, 11 No. 1:19-CV-00149-LJO-SKO, 2019 WL 1785660 (E.D. Cal. Apr. 23, 2019). After Plaintiff filed his 12 first action, and shortly before he filed his second, the Ninth Circuit decided the case of Curtis v. Irwin 13 Industries, Inc., 913 F.3d 1146 (9th Cir. 2019). Curtis was the basis for the Court’s decision finding 14 § 301 preemption in Plaintiff’s first action and denying Plaintiff’s request to remand. Diaz, No. 1:19- 15 CV-00149-LJO-SKO, 2019 WL 1785660, at *7. 16 The timeline of events is important to the analysis here. The Court’s decision finding preemption 17 in Plaintiff’s first action was issued on April 24, 2019—well after Plaintiff had filed his second action in 18 state court. Diaz, No. 1:19-CV-00149-LJO-SKO, 2019 WL 1785660. Plaintiff’s subsequent requests for 19 leave to amend both this action and his first were filed on May 6, 2019, promptly after the Court issued 20 its decision in the first case. ECF No. 13-1 at 4. The Court does not see any undue delay in Plaintiff’s 21 request to amend under the circumstances presented here, which is further reinforced by the Ninth 22 Circuit’s pronouncement that leave to amend may be granted “where the controlling precedents change 23 midway through the litigation.” Sonoma Cty. Ass’n of Retired Employees v. Sonoma Cty., 708 F.3d 24 1109, 1117-18 (9th Cir. 2013). 25 2 litigation by adding new but baseless legal theories.” Griggs v. Pace American Group, Inc., 170 F.3d 3 877 (9th Cir. 1999). Such dilatory tactics are not evinced by Plaintiff’s second complaint, and in fact, 4 Defendant does not contend that Plaintiff’s PAGA claim constitutes a baseless legal theory intended to 5 prolong litigation. ECF No. 16. Instead, Defendant argues that the claim violates the doctrine against 6 claim splitting. Id. That allegation, however, is markedly different from an allegation of bad faith. 7 Defendant also claims that Plaintiff’s request to “excise the portions of his complaint that relate 8 to the preempted overtime allegations” amounts to improper forum shopping. ECF No. 16 at 4. The 9 Court disagrees. A plaintiff is generally considered the master of his or her complaint and may freely 10 choose to plead state law causes of action only, even where viable claims under federal law may exist. 11 Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99 (1987). A plaintiff may not, however, “avoid federal 12 jurisdiction by omitting from the complaint allegations of federal law that are essential to the 13 establishment of the claim,” Paige v. Henry J. Kaiser Co., 826 F2d 857, 860 (9th Cir. 1987), or attempt 14 to cloak a federal claim in “state law garb” in order to evade appropriate review. Alaska Airlines v. 15 Schurke, 898 F.3d 904, 951 (9th Cir. 2018). 16 As explained already, the district courts have been split in answering the question of preemption 17 as it relates to overtime claims brought under California law when a qualifying CBA exists. Diaz, No. 18 1:19-CV-00149-LJO-SKO, 2019 WL 1785660, at *4-5. By excising the portion of his claim that may be 19 preempted by federal law, Plaintiff acts as master of his complaint. The danger of Plaintiff evading 20 federal review through a pleading that masks the nature of his claim is avoided through Plaintiff’s 21 proposed amendments. Moreover, Plaintiff could not have anticipated the Ninth Circuit’s decision in 22 Curtis or how that decision would affect this Court’s review of his motion to remand. For these reasons, 23 the Court finds no undue delay in Plaintiff’s request to amend, which is his first request to amend, and 24 similarly finds no bad faith in the request. 25 2 The Court next considers the fourth factor informing the determination of permissive leave to 3 amend: prejudice to the opposing party. “As [the Ninth Circuit] and others have held, it is the 4 consideration of prejudice to the opposing party that carries the greatest weight” in a court’s analysis to 5 grant leave to amend. Eminence Capital, LLC, 316 F.3d at 1052. “Absent prejudice, or a strong showing 6 of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting 7 leave to amend.” Id. (emphasis original). 8 Prejudice to the opposing party may be found where, for example, the amendment would require 9 additional discovery after the close of discovery or relitigation of issues previously decided. Jackson v. 10 Bank of Hawaii, 902 F.2d 1385, 1387-88 (9th Cir. 1990); see also Ryan v. Editions Ltd. West, Inc., 786 11 F.3d 754, 767 (9th Cir. 2015). Prejudice is not found where the opposing party “should be ‘fully 12 prepared to litigate the substantive issues’ of the claim, given that both the theory and the operative facts 13 of the claim remain the same.” Sonoma Cty. Ass’n of Retired Employees, 708 F.3d at 1118. 14 Defendant does not contend that it will be prejudiced by Plaintiff’s amendment, and the Court 15 sees no danger of prejudice as it is defined in case law. The excision of part of a claim will not require 16 Defendant to provide additional discovery or to relitigate issues settled previously, and both the theory 17 and operative facts of the claim remain the same. Accordingly, the Court finds no prejudice to 18 Defendant arising from Plaintiff’s request to amend his complaint. 19 B. Defendant’s Reliance on Barnes v. District of Columbia 20 The Court briefly examines the single case cited by Defendant in support of its contention that 21 the motion to dismiss should be decided first because it was filed first in time. In that case, Barnes v. 22 District of Columbia, 42 F. Supp. 3d 111, 113 (D.D.C. 2014), the defendant filed a motion to dismiss 23 certain claims by plaintiff, which was never opposed. Some fifty-one days after the filing of the motion 24 to dismiss, the plaintiff filed a motion requesting leave to amend its complaint to remove all federal 25 causes of action and to remand the remaining claims. Barnes, 42 F. Supp. 3d at 113. Because the 2 17. The court dismissed with prejudice certain claims—the ones giving rise to federal jurisdiction—but 3 also granted the plaintiff’s motion to amend, remanding the case to the local court of the District of 4 Columbia. Id. at 121. 5 First, Barnes is a case originating in the District Court for the District of Columbia, rather than a 6 sister court within the Eastern District of California or even within the Ninth Circuit. Second, and 7 perhaps more importantly, Barnes is distinguishable based on its significantly different procedural 8 posture. Unlike the plaintiff in Barnes, Plaintiff here timely opposed Defendant’s motion to dismiss and 9 in that regard conceded nothing. The court in Barnes made clear that its decision to rule on the motion to 10 dismiss before the motion to amend weighted heavily the plaintiff’s failure to timely respond to the 11 motion to dismiss. 42 F. Supp. 3d at 116-20. 12 As underscored already, courts are to apply liberally the policy permitting amendments where 13 justice so requires, and inferences generally are to be made in favor of amending. Accordingly, and in 14 light of the minimal relevancy of Barnes to the instant matter, the Court is not persuaded that, as 15 Defendant asserts, deciding Defendant’s motion to dismiss before Plaintiff’s motion to amend is dictated 16 by “logic and fairness.” ECF No. 17 at 3. 17 C. Defendant’s Allegation of Claim Splitting 18 Defendant centers much of its argument for its motion to dismiss on the allegation that Plaintiff 19 has improperly split claims between his first and second action. ECF No. 5-1. The general prohibition on 20 claim splitting stems from the doctrine of res judicata. Trujillo v. City of Ontario, 269 Fed. Appx. 683, 21 684 (9th Cir. 2008). In California, “res judicata precludes parties or their privies from relitigating 22 a cause of action that has been finally determined by a court of competent jurisdiction.” Rice v. Crow, 81 23 Cal. App. 4th 725, 734 (2000) (internal quotations and citation omitted). If the court, causes of action, 24 relief sought, and parties are the same, a suit is duplicative and therefore constitutes impermissible claim 25 2 grounds by Taylor v. Sturgell, 553 U.S. 880 (2008). 3 It is not clear, however, that Defendant has adequately argued that Plaintiff engaged in improper 4 claim splitting and that the claim splitting constitutes such an egregious offense that dismissal of this 5 action is warranted, given the procedural history and legal circumstances outlined above. See, e.g., Noel 6 v. Hall, 341 F.3d 1148, 1159 (9th Cir. 2003) (recognizing that “overlapping or even identical federal and 7 state court litigation may proceed simultaneously, limited only by doctrines of abstention and comity”). 8 The Supreme Court of California and the Ninth Circuit have recognized that PAGA claims are not 9 subject to waiver or the Federal Arbitration Act, respectively, even when an individual’s claims are 10 arbitrable. See Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014); Sakkab v. Luxottica 11 Retail North American, Inc., 803 F.3d 425 (9th Cir. 2015). This raises at least some question as to 12 whether PAGA claims truly overlap individual employee claims in the context presented here. 13 In addition, the case law relied upon by Defendant is unpersuasive. For instance, Defendant cites 14 Adams in support of its claim splitting argument, ECF Nos. 5-1 at 4 and 16 at 6, but that case involves a 15 plaintiff who filed a second action in the same court when her motion to amend her first action was 16 denied based upon a missed deadline established in a scheduling order. 487 F.3d at 687-88. 17 Notwithstanding the above brief discussion, the Court need not decide the issue of the alleged 18 impermissible claim splitting. The Court has found that granting Plaintiff leave to amend his complaint 19 is appropriate, and with that leave, Plaintiff indicates the potential federal claim is removed. If the Court 20 declines to exercise jurisdiction over an action with no remaining federal claims, it is appropriate to 21 leave the question of claim splitting to be resolved in the state forum. 22 D. Jurisdiction after Amendment 23 Plaintiff contends that remand of this action is compelled by the prospect of an amended 24 complaint that lacks a federal claim. ECF No. 13-1 at 5. Plaintiff argues that this Court “would lack 25 2 covered by a collective bargaining agreement.” ECF No. 13-1 at 6. Plaintiff is mistaken. 3 “Jurisdiction must be analyzed on the basis of the pleadings filed at the time of removal without 4 reference to subsequent amendments.” Sparta Surgical Corp. v. Nat'l Ass'n of Sec. Dealers, Inc., 159 5 F.3d 1209, 1213 (9th Cir. 1998), abrogated by Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 6 136 S. Ct. 1562 (2016). “Because of this rule, a plaintiff may not compel remand by amending a 7 complaint to eliminate the federal question upon which removal was based.” Id. Instead, courts are 8 guided by the principle that “in the usual case in which all federal-law claims are eliminated before trial, 9 the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state- 10 law claims.” Carnegie–Mellon Univ, 484 U.S. at 350 n.7. The factors a court considers are judicial 11 economy, convenience, fairness, and comity. Id. 12 Here, the Court declines to exercise jurisdiction over an action with no remaining federal claims. 13 Acri v. Varian Assocs., Inc., 114 F.3d 999 (9th Cir. 1997). This action does not present an unusual case. 14 Carnegie–Mellon Univ, 484 U.S. at 350 n.7. The Court has found that granting Plaintiff leave to amend 15 his complaint is appropriate, and with that leave, Plaintiff indicates the federal claim is removed. The 16 balance of factors supports the Court’s decision. 17 E. Conclusion 18 The balance of Foman factors weigh heavily in favor of allowing Plaintiff to amend his 19 complaint. Defendant has failed to demonstrate a compelling reason to decide its motion to dismiss prior 20 to Plaintiff’s motion to amend, and this conclusion takes into consideration Defendant’s argument that 21 Plaintiff has impermissibly split claims. The Court finds that it would be “contrary to the spirit of the 22 Federal Rules of Civil Procedure,” which favors “decisions on the merits,” rather than decisions on 23 “mere technicalities,” if this Court were to decide Defendant’s motion to dismiss before Plaintiff’s 24 motion to amend. Foman, 371 U.S. at 181. 25 2 For the reasons stated above, Plaintiff’s motion preference is accepted, ECF Nos. 14 and 15, and 3 his Motion for Leave to Amend, ECF No.13, is GRANTED. Defendant’s Motion to Dismiss is DENIED 4 as MOOT. ECF No. 5. 5 Within five days of electronic service of this order, Plaintiff shall file a clean (i.e., not redlined), 6 signed copy of the lodged complaint, ECF No 13-2, Ex. A, together with a proposed Order for Remand. 7 8 IT IS SO ORDERED. 9 Dated: August 1, 2019 /s/ Lawrence J. O’Neill _____ UNITED STATES CHIEF DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25