The opinion of the court was delivered by: JEREMY FOGEL, District Judge
ORDER*fn1 GRANTING DEFENDANTS' SECOND MOTION TO DISMISS
Defendants Nora Dahl ("Dahl") and the California Employment
Development Department ("EDD") move to dismiss the complaint of
Plaintiff Sam Ferris ("Ferris") pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. Ferris opposes the motion.
Having considered the briefs, relevant evidence, and the
arguments on behalf of the parties at the hearing on November 4,
2005, the Court will GRANT the motion for the reasons set forth
below.
Ferris is the former owner of Nude Models, a business that
supplied female models to customers from 1988 to 1990. On
November 1, 1990, Ferris was convicted in state court of six misdemeanor and felony tax violations, pursuant to California
Unemployment Insurance Code ("UIC") §§ 2108, 2118.5 and 2117.5,
for failure to pay employee taxes in connection with his
business. EDD subsequently assessed a levy on Ferris' property to
collect the unpaid taxes. On November 4, 1991, Ferris filed a
petition for reassessment of tax liability with the California
Unemployment Insurance Appeals Board ("CUIAB"), and on August 25,
1994, the CUIAB granted Ferris' petition for reassessment in
part, but found that Ferris was "collaterally estopped" from
"deny[ing] the employer-employee relationship" because that
relationship had already been established by Ferris' criminal
conviction. EDD appealed the CUIAB ruling. On May 4, 1995, the
CUIAB modified its prior decision as to the amount of money owed
by Ferris, but again found that "an employer-employee
relationship existed between [Ferris] and [the] models." Ferris'
final payment to the EDD was made on November 7, 1995.
On December 31, 2001, Ferris filed a petition for writ of
mandate for refund of taxes under UIC § 1241(a) against EDD in
the Sacramento Superior Court. The petition alleged that the
"[m]odels [were] Independent Contractors" and that there were
"due process, statutory [sic] procedural and equal protection
errors made" by EDD. The complaint also requested that
the "[c]ourt not decide any Federal Claim or Federal
Constitutional issue" pursuant to England v. Louisiana State Bd.
of Medical Examiners, 375 U.S. 411 (1964). On March 8, 2002, the
superior court sustained EDD's demurrer to the complaint without
leave to amend.
Ferris appealed the superior court's ruling. On April 17, 2003,
the Court of Appeal affirmed the superior court's decision. The
appellate court determined "from appellant's often rambling and
incoherent narratives that he is principally challenging the
finding that an employer/employee relationship existed between
him and the workers at Nude Models." On May 8, 2003, Ferris was
denied a rehearing by the appellate court, with the court
specifically rejecting "[a]ppellant's motion to declare the
independent contractor laws unconstitutionally vague." On July
16, 2003, Ferris' petition for review before the California
Supreme Court was summarily denied.
Ferris filed the instant action on January 7, 2005 against Dahl
and EDD, pursuant to 42 U.S.C. § 1983 and California Civil Code §
52.1, alleging that Defendants subjected him to double jeopardy, prosecuted him under a vague statute, failed to
provide equal protection of the law, denied him substantive and
procedural due process, engaged in malicious prosecution and
abuse of process, and caused him emotional distress. On May 23,
2005, Dahl and EDD moved to dismiss the instant action in its
entirety, arguing that Ferris' state and federal claims are
barred by the doctrine of res judicata. On August 4, 2005, the
Court granted Defendants' motion to dismiss as to Ferris' state
law claims, but denied Defendants' motion as to Ferris' federal
constitutional claims, noting that Ferris did not allege federal
claims in his state court action and, indeed, expressly reserved
such claims by means of an England reservation. The Court
provided Defendants with thirty days to file a renewed motion
based upon collateral estoppel. Defendants now move to dismiss
the instant action in its entirety consistent with the Court's
order.
A complaint may be dismissed for failure to state a claim upon
which relief can be granted for one of two reasons: (1) lack of a
cognizable legal theory or (2) insufficient facts under a
cognizable legal theory. Conley v. Gibson, 355 U.S. 41, 45-46
(1957); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530,
533-34 (9th Cir. 1984). For purposes of a motion to dismiss, all
allegations of material fact in the complaint are taken as true
and construed in the light most favorable to the nonmoving party.
Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir.
1994). Although the Court generally may not consider any material
beyond the pleadings when ruling on a motion to dismiss pursuant
to Federal Rule of Civil Procedure 12(b)(6), Cooper v. Pickett,
137 F.3d 616, 622 (9th Cir. 1997), it may consider documents that
are attached to and part of the complaint, Durning v. First
Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). A complaint
should not be dismissed "unless it appears beyond doubt the
plaintiff can prove no set of facts in support of his claim that
would entitle him to relief." Clegg, 18 F.3d at 754. However,
the Court "is not required to accept legal conclusions cast in
the form of factual allegations if those conclusions cannot
reasonably be drawn from the facts alleged." Id. at 754-55.
Motions to dismiss generally are viewed with disfavor under this
liberal standard and are granted rarely. Gilligan v. Jamco Dev.
Corp., 108 F.3d 246, 249 (9th Cir. 1997). III. DISCUSSION
Defendants argue that Ferris' remaining claims are barred by
the doctrine of collateral estoppel, and therefore request that
the Court dismiss the complaint in its entirety. Under the
doctrine of collateral estoppel, "once a court has decided an
issue of fact or law necessary to its judgment, that decision may
preclude relitigation of the issue in a suit on a different cause
of action involving a party to the first case." Allen v.
McCurry, 449 U.S. 90, 94 (1980). California courts apply
collateral estoppel if "(1) the issue decided in the prior case
is identical with the one now presented; (2) there was a final
judgment on the merits in the prior case; and (3) the party to be
estopped was a party to the prior adjudication." San Remo Hotel,
L.P. v. City and County of San Francisco, 364 F.3d 1088, 1096
(9th Cir. 2004), aff'd, 125 S. Ct. 2491 (2005). The fact that a
plaintiff litigating in state court expressly reserved his or her
federal claims by means of an England reservation does not
preclude application of standard principles of collateral
estoppel. See San Remo Hotel, L.P. v. City and County of San
Francisco, 125 S. Ct. 2491, 2502 (2005).
Ferris seeks relief in the instant action pursuant to
42 U.S.C. § 1983, alleging that Defendants subjected him to double
jeopardy, prosecuted him under a vague statute, failed to provide
equal protection of the law, denied him substantive and
procedural due process, engaged in malicious prosecution and
abuse of process, and caused him emotional distress. Although
Ferris asserts these federal claims for the first time in the
instant action, an examination of the "Facts and Allegations" set
forth in Ferris' complaint, and expressly incorporated in each of
his eight claims for relief, reveals that Ferris is merely
attempting to relitigate an issue that was previously decided in
a final judgment.
Ferris continues to argue that he is entitled to a refund of
the income taxes paid to the EDD because the models he
represented in his business were independent or labor contractors
and not employees. Complaint, ¶¶ 5-7, 10, 12-15. Ferris alleges
that "[u]nder the relevant facts as found by the ALJ . . . Ferris
is a Labor Contractor pursuant to Bus. & Prof. Code § 9902."
Id., ¶ 6. However, this allegation is a plain misstatement of
fact. Despite Ferris' representations to the contrary, the
existence of an employer-employee relationship was conclusively
established in a final judgment. On August 25, 1994, the CUIAB
issued its initial ruling regarding Ferris' petition for reassessment of tax liability. The ALJ expressly
invoked the doctrine of collateral estoppel, stating in relevant
part:
In the criminal proceedings against the petitioner,
in order for the court to find the petitioner guilty
of failing to file employer returns and failing to
make employer contributions under Section 2117.5 and
2108 of the Code, it necessarily had to find that the
relationship between the petitioner and the models
and drivers was that of employer to employee. That is
the identical issue presented in this case. The
petitioner had full opportunity to litigate that
issue in the criminal proceeding and it was finally
decided against him. He is accordingly estopped to
deny the employer-employee relationship.
Exhibits to Complaint, at 37. Likewise, after the CUIAB issued
its final ruling, the Sacramento Superior Court, California Court
of Appeal and California Supreme Court each refused to entertain
Ferris' repeated attempts to challenge the existence of an
employer-employee relationship. See infra p. 2. The central
issue raised by Ferris in the instant action has been fully
litigated in the criminal, administrative and state civil
proceedings. The Court is satisfied that the elements of
collateral estoppel have been met. Moreover, although he alleges
conclusorily that he was denied substantive or procedural due
process, Ferris fails to identify any facts in the record that
would support such a claim. Accordingly, Ferris may not, under
the guise of § 1983 federal claims, attempt to relitigate the
established fact that an employer-employee relationship existed
between he and the models.
Good cause therefore appearing, IT IS HEREBY ORDERED that
Defendants' second motion to dismiss is ...