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Brian T. Michaluk, D.O v. Vohra Health Services

September 10, 2012



Defendant Vohra Health Services (Vohra) has filed a motion to dismiss plaintiff's second, third, fourth, fifth, sixth and seventh causes of action and to strike plaintiff's prayer for punitive damages. Plaintiff has opposed the motion and defendant has filed a reply. The court ordered the matter submitted without argument, L.R. 230(g), and GRANTS the motion, giving plaintiff leave to file an amended complaint.


On March 21, 2012, plaintiff filed a complaint in Solano County Superior Court alleging seven causes of action: (1) breach of contract; (2) failure to pay fees, wages and waiting time penalties, CAL. LAB. CODE §§ 202, 203; (3) violation of California Labor Code § 2802(a); (4) unlawful business practices, CAL. BUS. & PROF. CODE § 17200; (5) negligent and intentional misrepresentation and fraud and deceit; (6) declaratory relief; and (7) interference with contractual relations and prospective economic advantage. Complaint, ECF No. 1-1. The complaint alleges generally that plaintiff entered into a contract with defendant to provide medical services; the contract characterized plaintiff as an independent contractor, even though plaintiff was in fact defendant's employee. Id. ¶¶ 5-6. According to the terms of the contract, plaintiff would perform wound care services using defendant's methods for patients at a number of facilities in northern California in return for a projected annual revenue of $206,400 based on a fee schedule. Id. ¶ 7. The contract also contained covenants not to compete and not to solicit any of defendant's clients or employees. Id. ¶ 8. After approximately six months, defendant unilaterally reduced the payment schedule and then stopped reimbursing plaintiff for services to Medicaid patients. It also did not provide plaintiff with records itemizing his wages. Id. ¶ 9. Plaintiff terminated the contract in April 2011 because of defendant's misrepresentations and breach of contract.

Defendant removed the case to this court on April 30, 2012, invoking this court's diversity jurisdiction, and on May 7, filed its motion to dismiss. ECF Nos. 1, 8.


Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." A court may dismiss "based on the lack of cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A motion to dismiss under this rule may also challenge the sufficiency of fraud allegations under the more particularlized standard of Rule 9(b) of the Federal Rules of Civil Procedure. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003).

Although a complaint need contain only "a short and plain statement of the claim showing that the pleader is entitled to relief," FED. R. CIV. P. 8(a)(2), in order to survive a motion to dismiss this short and plain statement "must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something more than "an unadorned, the-defendant-unlawfully-harmed-me accusation" or "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Id. (quoting Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss for failure to state a claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. Ultimately, the inquiry focuses on the interplay between the factual allegations of the complaint and the dispositive issues of law in the action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).

In making this context-specific evaluation, this court must construe the complaint in the light most favorable to the plaintiff and accept as true the factual allegations of the complaint. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). This rule does not apply to "'a legal conclusion couched as a factual allegation,'" Papasan v. Allain, 478 U.S. 265, 286 (1986) (quoted in Twombly, 550 U.S. at 555), nor to "allegations that contradict matters properly subject to judicial notice" or to material attached to or incorporated by reference into the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). A court's consideration of documents attached to a complaint or incorporated by reference or matter of judicial notice will not convert a motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003); Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995); compare Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002) (noting that even though court may look beyond pleadings on motion to dismiss, generally court is limited to face of the complaint on 12(b)(6) motion).

Defendant has attached the Independent Contractor Agreement as Exhibit A to its Motion to Dismiss. Plaintiff does not object to the court's consideration of this document, which he mentioned in the complaint, but in fact relies on it in opposing the motion to dismiss. The court therefore will consider it in resolving the instant motion. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).


A. Insufficient Allegations That Plaintiff Was An Employee -- Second And Third Causes Of Action

Defendant argues that plaintiff's second and third causes of action, based on defendant's alleged failure to comply with provisions of the Labor Code, must be dismissed because plaintiff pleads in only conclusory fashion that he was an employee. Plaintiff counters that the complaint is sufficient, but if it is not, the Independent Contractor Agreement supports his claim that defendant asserted the sort of control over him as to render him an employee within the meaning of the Labor Code provisions he claims were violated. Defendant contends, however, that the agreement clearly shows plaintiff's status as an independent contractor, which renders any amendment futile.

Under California Labor Code § 202, wages are due within seventy-two hours of an employee's quitting employment; a failure timely to pay subjects the employer to a penalty in the amount of the employee's wages for up to thirty days. CAL. LAB. CODE § 203. In addition, under California Labor Code § 2802, an employer must indemnify an employee for expenditures and losses occasioned by the discharge of the employee's duties.

In Estrada v. FedEx Ground Package System, Inc., 154 Cal. App. 4th 1 (2007), the court held that because "employee" is not defined for purposes of Labor Code § 2802, the common law test of employment controls.*fn2

The essence of that test is the "control of details"--that is, whether the principal has the right to control the manner and means by which the worker accomplishes the work--but there are a number of additional factors in the modern equation, including (1) whether the worker is engaged in a distinct occupation or business, (2) whether, considering the type of occupation and locality, the work is usually done under the principal's direction or by a specialist without supervision, (3) the skill required, (4) whether the principal or worker supplies the instrumentalities, tools, and place of work, (5) the length of time for which the services are to be performed, (6) the method of payment, ...

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