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Donald Reinhardt, and Jon Armstrong v. Gemini Motor Transport

July 18, 2012

DONALD REINHARDT, AND JON ARMSTRONG, PLAINTIFFS,
v.
GEMINI MOTOR TRANSPORT, AN OKLAHOMA LIMITED LIABILITY PARTNERSHIP, ) AND DOES 1-10, INCLUSIVE,
DEFENDANTS.



ORDER ON DEFENDANTS' SECOND MOTION TO DISMISS AND MOTION TO STRIKE (Doc. No. 18)

This case arises from the termination of an employment relationship between Plaintiffs Donald Reinhardt ("Reinhardt") and Jon Armstrong ("Armstrong") (collectively "Plaintiffs"), and their former employer Defendant Gemini Motor Transport ("Gemini"). Plaintiffs drove semi-trucks for Gemini, and delivered gasoline and diesel fuel to various Love's Gas Stations in California. The Court previously granted in part and denied in part a Rule 12(b)(6) motion to dismiss. In response, Plaintiffs filed a First Amended Complaint ("FAC"), which is the active complaint. The FAC alleges ten California state law causes of action under the Labor Code, the Business & Professions Code, the Government Code, and the California common law. Gemini now moves under Rule 12(b)(6) to dismiss the fifth (Labor Code § 226), sixth (breach of express contract), seventh (breach of implied covenant of good faith and fair dealing), and part of the tenth (Business & Professions Code § 17200) causes of action, and also moves to strike Plaintiffs' prayer for the "maximum rates promised by defendants." For the reasons that follow, Gemini's motions will be denied.

LEGAL FRAMEWORK

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). However, the Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). To avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. The Ninth Circuit has distilled the following principles from Iqbal and Twombly:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). If a Rule 12(b)(6) motion is granted, leave to amend should be generally be given, even if no request to amend the pleading was made. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). Leave to amend need not be given when amendment would be futile because no amendment could cure the complaint's defects. See id.; Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).

DEFENDANT'S MOTION

I. Fifth Cause of Action -- Labor Code § 226

Defendant's Argument

Gemini argues that Plaintiffs have merely restated the statutory language of § 226. The FAC fails to allege either that Plaintiffs suffered a compensable injury or that Gemini knowingly and intentionally failed to provide Plaintiffs with correctly itemized wage statements. Conclusory allegations that an injury was suffered, and allegations that only identify information that was missing from the wage statements, do not properly allege a violation of § 226.

Plaintiffs' Opposition

Plaintiffs argue that a cause of action is pled. Paragraph 77 expressly alleges that Gemini's violations of § 226 were knowing and intentional. Further, Paragraph 76 properly alleges a compensable injury that is more than simply identifying missing information.

Relevant Allegations

Paragraphs 76 and 77 of the FAC allege: Plaintiffs have suffered injury in amounts to be determined as the direct and proximate result of the violations of § 226(a) alleged herein, which have left them with no records of hours worked on which to base their claims for any of the five categories of uncompensated work time, and no specified rate of pay for any of those hours, seriously complicating and possibly compromising those claims. The omission of a rate of pay also complicates the claims for one hour of pay at the employee's standard rate as "premium pay" for denial of a meal or rest period.

The failure of defendants to comply with these requirements of § 226(a) was knowing and intentional.

Legal Standard Labor Code § 226(a) requires an employer at the time that wages are paid to provide an accurate itemized statement that contains nine items. See Cal. Labor Code § 226(a). Labor Code § 226(e) reads: "An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a) is entitled to recover the greater of all actual damages or [penalties ranging from $50 to $4,000 depending on the circumstances], and is entitled to an award of costs and reasonable attorney's fees." Cal. Lab. Code § 226(e). In order to recover under Labor Code § 226(e), a plaintiff must show: (1) a violation of § 226(a); (2) the violation of § 226(a) was knowing and intentional; and (3) an injury suffered as a result of the violation of § 226(a). See Cal. Lab. Code § 226(e); Harris v. Vector Mktg. Corp., 656 F.Supp.2d 1128, 1146 (C.D. Cal. 2009); Elliot v. Spherion Pacific Work, LLC, 572 F.Supp.2d 1169, 1180-81 (N.D. Cal. 2008); Price v. Starbucks Corp., 192 Cal.App.4th 1136, 1142-43 (2011). Because § 226(e) requires the demonstration of an actual suffered injury, the deprivation of the information required by § 226(a), "standing alone, is not a cognizable injury." Price, 192 Cal.App.4th at 1143; Jaimez v. Daiohs USA, Inc., 181 Cal.App.4th 1286, 1306-07 (2010). Courts have indicated that an injury under § 226 may be shown through the possibility of not being paid overtime, employee confusion over whether they received all wages owed them, difficulty and expense involved in reconstructing pay records, and forcing employees to make mathematical computations to analyze whether the wages paid in fact compensated them for all hours worked. Alonzo v. Maximus, Inc., 832 F.Supp.2d 1122, 1135 (C.D. Cal. 2011); Elliot, 572 F.Supp.2d at 1181. Thus, if a plaintiff is required to engage in discovery and mathematical computations to reconstruct time records in order to determine if he was correctly paid, then the plaintiff has suffered an injury. See Alonzo, 832 F.Supp.2d at 1135; Price, 192 Cal.App.4th at 1143. However, if a claimed injury is based merely upon the plaintiff having to perform "simple math" with the information already in his possession, then there is no cognizable injury. See Alonzo, 832 F.Supp.2d at 1135; Price, 192 Cal.App.4th at 1143.

Discussion

First, the argument that insufficient facts have been pled to show "knowing and intentional" conduct is without merit. As quoted above, the FAC expressly states that Gemini's failure to comply with § 226 was "knowing and intentional." FAC ¶ 77. "Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. Pro. 9(b). Because mental states may be alleged generally, Plaintiffs have adequately alleged "knowing and intentional" conduct by Gemini. See Fed. R. Civ. Pro. 9(b); Reinhardt v. Gemini Motor Transp., 2012 U.S. Dist. LEXIS 58039, *25 (E.D. Cal. Apr. 25, 2012); Albergo v. Cuxhaven Holdings, LLC, 2011 U.S. Dist. LEXIS 144484, *10 (S.D. Cal. Dec. 15, 2011).

Second, the injury described in the FAC is more than a simple identification of omitted information. Instead, the FAC states that the Plaintiffs are without records of hours worked and without specified rates of pay for those hours, which complicates calculations for categories of uncompensated work and for "premium pay" related to meal or rest periods. These allegations indicate that there is a need for both additional documentation and additional mathematical calculations in order to determine whether Plaintiffs were correctly paid and what they may be owed. The allegations do not indicate that only "simple math" is necessary to be performed with the information that is already in Plaintiffs' possession. For purposes of Rule 12(b)(6), the FAC has adequately alleged an actual injury under § 226. See Alonzo, 832 F.Supp.2d at 1135; Price, 192 Cal.App.4th at 1143.

Because Plaintiffs have sufficiently pled an injury and Gemini's scienter, dismissal of the fifth cause of action is not appropriate.

II. Sixth Cause of Action -- Breach of Express Contract

Defendant's Argument

Gemini argues that dismissal is appropriate because Plaintiffs have failed to properly allege two of the required elements of a breach of contract claim. First, the FAC does not allege that Gemini breached the contract as to each Plaintiff. Second, the FAC fails to allege that the Plaintiffs performed their obligations under the contract, or were excused for not ...


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