Heidrich v. Pennymac Financial Services, Inc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 ERICH HEIDRICH, ERIC KIDD, and No. 2:16-cv-02821-TLN-JDP MARIA ANGELICA CASTRO, on behalf 12 of themselves and others similarly situated, 13 Plaintiffs, ORDER 14 v. 15 PENNYMAC FINANCIAL SERVICES, INC., PENNYMAC MORTGAGE 16 INVESTMENT TRUST, and PRIVATE NATIONAL MORTGAGE 17 ACCEPTANCE CO., 18 Defendants. 19 20 This matter is before the Court on Defendants PennyMac Financial Services, Inc., 21 PennyMac Mortgage Investment Trust, and Private National Mortgage Acceptance Company’s 22 (collectively, “Defendants”) Motion to Dismiss and Strike. (ECF No. 47.) Plaintiffs Erich 23 Heidrich, Eric Kidd, and Maria Angelica Castro (collectively, “Plaintiffs”) filed an opposition. 24 (ECF No. 48.) Defendants replied. (ECF No. 51.) 25 Also before the Court is Plaintiffs’ Motion to Toll the Statute of Limitations. (ECF No. 26 54.) Defendants filed an opposition. (ECF No. 55.) Plaintiffs replied. (ECF No. 57.) For the 27 reasons set forth below, the Court GRANTS Defendants’ motion and DENIES Plaintiffs’ motion 28 as moot. 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 Plaintiffs filed the operative Second Amended Complaint (“SAC”) in this putative class 3 action on September 17, 2021. (ECF No. 46.) Plaintiffs are Defendants’ former and current 4 employees. (Id. at 2.) Plaintiffs allege Defendants do not include all their non-exempt 5 employees’ compensation in calculating the regular rate of pay for overtime purposes, do not 6 provide their employees with wage statements that comply with California law, do not pay 7 employees their bonuses on a timely basis, and do not pay employees all wages owed at the time 8 of their termination. (Id.) Plaintiffs allege claims under the Fair Labor Standards Act (“FLSA”), 9 the California Labor Code, the relevant Industrial Welfare Commission wage orders, and the 10 Private Attorneys General Act (“PAGA”). (Id.) 11 On October 8, 2021, Defendants filed a motion to dismiss pursuant to Federal Rule of 12 Civil Procedure (“Rule”) 12(b)(6). (ECF No. 47.) On December 17, 2021, Plaintiffs filed a 13 motion to toll the statute of limitations for their FLSA claim. (ECF No. 54.) 14 II. STANDARD OF LAW 15 A motion to dismiss for failure to state a claim upon which relief can be granted under 16 Federal Rule of Civil Procedure (“Rule”) 12(b)(6) tests the legal sufficiency of a complaint. 17 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a) requires that a pleading contain 18 “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. 19 Civ. P. 8(a); see also Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). Under notice pleading in 20 federal court, the complaint must “give the defendant fair notice of what the . . . claim is and the 21 grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal 22 citation and quotations omitted). “This simplified notice pleading standard relies on liberal 23 discovery rules and summary judgment motions to define disputed facts and issues and to dispose 24 of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). 25 On a motion to dismiss, the factual allegations of the complaint must be accepted as true. 26 Cruz v. Beto, 405 U.S. 319, 322 (1972). A court must give the plaintiff the benefit of every 27 reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail 28 Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege 1 “‘specific facts’ beyond those necessary to state his claim and the grounds showing entitlement to 2 relief.” Twombly, 550 U.S. at 570 (internal citation omitted). 3 Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of 4 factual allegations.” U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). 5 While Rule 8(a) does not require detailed factual allegations, “it demands more than an 6 unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A 7 pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the 8 elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 9 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 10 statements, do not suffice.”). Thus, “[c]onclusory allegations of law and unwarranted inferences 11 are insufficient to defeat a motion to dismiss” for failure to state a claim. Adams v. Johnson, 355 12 F.3d 1179, 1183 (9th Cir. 2004) (citations omitted). Moreover, it is inappropriate to assume the 13 plaintiff “can prove facts that it has not alleged or that the defendants have violated the . . . laws 14 in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State 15 Council of Carpenters, 459 U.S. 519, 526 (1983). 16 Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough 17 facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim 18 has facial plausibility when the plaintiff pleads factual content that allows the court to draw the 19 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 20 680. While the plausibility requirement is not akin to a probability requirement, it demands more 21 than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility 22 inquiry is “a context-specific task that requires the reviewing court to draw on its judicial 23 experience and common sense.” Id. at 679. Thus, only where a plaintiff fails to “nudge [his or 24 her] claims . . . across the line from conceivable to plausible[,]” is the complaint properly 25 dismissed. Id. at 680 (internal quotations omitted). 26 If a complaint fails to state a plausible claim, “‘[a] district court should grant leave to 27 amend even if no request to amend the pleading was made, unless it determines that the pleading 28 could not possibly be cured by the allegation of other facts.’” Lopez v. Smith, 203 F.3d 1122, 1 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)); 2 see also Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in 3 denying leave to amend when amendment would be futile). Although a district court should 4 freely give leave to amend when justice so requires under Rule 15(a)(2), “the court’s discretion to 5 deny such leave is ‘particularly broad’ where the plaintiff has previously amended its complaint.” 6 Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting 7 Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)). 8 III. ANALYSIS 9 Defendants move to dismiss for the following reasons: (1) the FLSA claim in the SAC 10 (the basis for this Court’s federal question jurisdiction) is not alleged with the specificity required 11 by Landers v. Quality Comms., Inc., 771 F.3d 638 (9th Cir. 2014); (2) once the FLSA claim is 12 dismissed, the Court should decline to exercise supplemental jurisdiction over the remaining state 13 law claims; (3) if the FLSA claim is not dismissed, the Court should still decline to exercise 14 jurisdiction over the state law claims based on the Colorado River doctrine; (4) if the Court 15 decides to entertain the state law claims, it must at minimum dismiss Plaintiffs’ PAGA claim 16 based on a judgment entered in an identical California state case against Defendants; and (5) even 17 if the Court does not dismiss the PAGA claim, it should strike Plaintiffs’ request for underpaid 18 wages as part of the PAGA claim because that remedy is not available to private litigants suing 19 under PAGA. (ECF No. 47 at 7–8.) The Court first addresses the FLSA claim and then the 20 remaining state law claims. 21 A. FLSA Claim 22 The Ninth Circuit has held that “a plaintiff asserting a claim to overtime payments must 23 allege that she worked more than forty hours in a given workweek without being compensated for 24 the overtime hours worked during that workweek.” Landers, 771 F.3d at 644–45. In Landers, 25 the plaintiff “presented generalized allegations asserting violations of the minimum wage and 26 overtime provisions of the [Fair Labor Standards Act].” Id. at 646. The plaintiff alleged the 27 defendants implemented a “de facto piecework no overtime” system, failed to pay minimum 28 wages or overtime wages, and falsified payroll records to conceal their failure to pay required 1 wages. Id. In affirming the district court’s dismissal of the plaintiff’s wage and hour claims, the 2 Ninth Circuit emphasized, 3 Notably absent from the allegations in Landers’s complaint . . . was 4 any detail regarding a given workweek when Landers worked in excess of forty hours and was not paid overtime for that given 5 workweek and/or was not paid minimum wages. Although plaintiffs in these types of cases cannot be expected to allege with 6 mathematical precision, the amount of overtime compensation owed by the employer, they should be able to allege facts demonstrating 7 there was at least one workweek in which they worked in excess of forty hours and were not paid overtime wages. Landers’s allegations 8 failed to provide sufficient detail about the length and frequency of [his] unpaid work to support a reasonable inference that [he] worked 9 more than forty hours in a given week. 10 Id. (internal quotation marks and citations omitted). 11 Defendants argue Plaintiffs’ allegations fail to satisfy the rule set forth in Landers. (ECF 12 No. 47 at 15.) In opposition, Plaintiffs argue Landers is inapplicable because Landers involved 13 an employer’s alleged failure to properly record overtime hours under a piecework pay system. 14 (ECF No. 48 at 9–10.) Plaintiff argues that unlike Landers, the allegation here is not that 15 Defendants failed to properly record overtime hours, but that Defendants incorrectly calculated 16 the overtime rate of pay. (Id. at 10.) Plaintiffs cite paragraph 13 of the SAC, which states: 17 Plaintiffs worked a considerable amount of overtime. Defendants did not include the benefit stipend, the draw, or non-discretionary 18 bonuses . . . in the calculation of the Plaintiffs’ regular rate of pay in determining their overtime. Defendants also miscalculated 19 Plaintiffs’ overtime by calculating the bonus overtime rate for a specific month by using the hours worked (in whole or in part) from 20 a different month, or some [other] means that resulted in the inaccurate payment of overtime. 21 22 (Id. (citing ECF No. 46 at ¶ 13).) Plaintiffs also cite paragraphs 39–41 of the SAC, which state: 23 Defendants did not include all applicable compensation in calculating its employees’ rate of pay for overtime purposes. The 24 FLSA requires employers to calculate the overtime rate of pay based on amounts earned while the overtime is being worked. Defendants 25 did not calculate the overtime rate of pay for Plaintiffs based on amounts earned while the overtime was being worked. 26 27 /// 28 1 (Id. (citing ECF No. 46 at ¶¶ 39–41).) Plaintiffs argue these allegations indicate that every time 2 Defendants paid overtime during the applicable period, it was calculated incorrectly. (Id.) 3 Defendants argue these allegations are insufficient. (ECF No. 51 at 3.) The Court agrees. 4 Plaintiffs do not cite any case law to support the contention that Landers only applies to overtime 5 claims based on a piecework pay system. Nor do Plaintiffs persuade the Court that Landers does 6 not apply in the context of this case. Even if Plaintiffs’ ultimate focus is Defendants’ alleged 7 miscalculation of the rate of overtime pay, Plaintiffs still must allege facts indicating that they 8 worked overtime and were thus entitled to overtime pay on a specific occasion. Landers, 771 9 F.3d at 646. Instead, Plaintiffs merely allege they worked a “considerable amount of overtime.” 10 (ECF No. 46 at ¶ 13.) This is the same type of conclusory language found to be insufficient in 11 Landers. 771 F.3d at 646; see also Guerrero v. Halliburton Energy Servs., Inc., No. 1:16-CV- 12 1300-LJO-JLT, 2016 WL 6494296, at *5 (E.D. Cal. Nov. 2, 2016). The Court therefore 13 concludes Plaintiffs’ overly general allegations fail “to provide sufficient detail about the length 14 and frequency of [their] unpaid work” to support a reasonable inference that they worked 15 overtime and were underpaid. Landers, 771 F.3d at 646; see Sanchez v. Ritz Carlton, No. 16 CV153484PSGPJWX, 2015 WL 5009659, at *3 (C.D. Cal. Aug. 17, 2015) (“[T]here are no 17 allegations about either Plaintiff’s schedules to substantiate that they worked double/overtime 18 shifts that would trigger overtime pay.”). 19 Accordingly, the Court GRANTS Defendants’ motion to dismiss the FLSA claim. 20 Because this is the first time the Court has ruled on this issue and Plaintiffs indicate they can cure 21 these deficiencies in an amended complaint, the Court will give Plaintiffs the opportunity to 22 amend. Lopez, 203 F.3d at 1130. 23 B. State Law Claims 24 Defendants also move to dismiss Plaintiffs’ remaining state law claims. (ECF No. 47.) 25 When a federal court has dismissed all claims over which it has original jurisdiction, it may, at its 26 discretion, decline to exercise supplemental jurisdiction over the remaining state law claims. 28 27 U.S.C. § 1367(c)(3); Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639–40 (2009). 28 Because this Court’s jurisdiction depends on Plaintiffs stating a viable FLSA claim, the Court 1 | declines to rule on Defendants’ challenges to Plaintiffs’ remaining state law claims at this stage. 2 | See Landis v. North Am. Co., 299 U.S. 248, 254 (1936) (stating that courts have inherent power 3 | “to control the disposition of the causes on its docket with economy of time and effort for itself, 4 | for counsel, and for litigants”). 5 IV. CONCLUSION 6 For the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss (ECF No. 7 | 47) and DENIES as moot Plaintiffs’ Motion to Toll the Statute of Limitations (ECF No. 54). 8 | Plaintiffs shall file their amended complaint not later than thirty (30) days from the electronic 9 | filing date of this Order. Defendants shall file their responsive pleading not later than twenty-one 10 (21) days from the filing of the amended complaint. 11 IT IS SO ORDERED. 12 | DATED: January 2, 2023 13 /) “ \/ Vel 15 — WN Troy L. Nunley } 16 United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28