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Sandoval v. Ali

United States District Court, N.D. California

March 28, 2014

RAFAEL SANDOVAL, ET AL, Plaintiff,
v.
SYED ALI, ET AL, Defendant

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For Rafael Sandoval, Plaintiff: Tomas Eduardo Margain, LEAD ATTORNEY, Huy Ngoc Tran, CASA Legal, San Jose, CA; Hector R. Martinez, Marco A Palau, Stanley Scott Mallison, Mallison & Martinez, Oakland, CA; Phung Hoang Truong, Justice at Work Law Group, San Jose, CA.

For Luis Martin Calixto, on behalf of themselves, on behalf of all others similarly situated and in the interest of the general public, Plaintiff: Tomas Eduardo Margain, LEAD ATTORNEY, Huy Ngoc Tran, CASA Legal, San Jose, CA; Hector R. Martinez, Marco A Palau, Stanley Scott Mallison, Mallison & Martinez, Oakland, CA.

For Bobby A. Ali, Rick Ali, M1 Auto Collisions Centers, M1 Colllision Care Centers, Inc., Autovest Collision Repairs, Inc., also known as Autowest Collision Repairs, Inc., MB Body Shop of San Francisco, Inc., Serramonte Auto Plaza Body Shop, Inc. Inc., Defendants: Kara L. Arguello, LEAD ATTORNEY, Christine H. Long, Berliner Cohen, San Jose, CA.

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND GRANTING DEFENDANTS' MOTION TO STRIKE

ELIZABETH D. LAPORTE, United States Chief Magistrate Judge.

Plaintiffs Rafael Sandoval and Luis Calixto allege, on behalf of themselves and a putative class, that Defendants failed to comply with the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § 216, California labor law, and California unfair competition law. Defendants move to dismiss Plaintiffs' First Amended Complaint with prejudice, to strike Plaintiffs' class allegations, and to disqualify Plaintiffs' counsel. The Court dismisses with leave to amend Plaintiffs' FLSA claim against all Defendants except Autowest, M1 Collision Care Centers, Inc., Bobby Ali, and Rick Ali. The Court further dismisses with leave to amend Plaintiffs' state law claims against all Defendants except Autowest and M1 Collision Care Centers, Inc. The Court strikes Plaintiffs' class allegations with

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leave to amend and strikes the word " damages" from Plaintiffs' unfair competition claim without leave to amend. The Court declines to disqualify Plaintiffs' counsel at this stage of the proceedings on the present record.

Plaintiffs are to file any amended pleading no later than April 18, 2014. The Court will hold a further case management conference on May 23, 2014 at 10:00 a.m., 450 Golden Gate Ave., Courtroom E, 15th Floor, San Francisco, California. The parties' joint case management statement is due May 16, 2014.

I. Background

A. Superior Court Case

Plaintiffs' case is related to a pending superior court case brought by Martin Juarez and Adrian Ramirez against some of the same Defendants as here. Juarez and Ramirez are represented in the superior court case by the same counsel as Plaintiffs here and Juarez and Ramirez have opted in under the FLSA in this case.

In 2008, Juarez filed a wage and hour class action in the Superior Court for Santa Clara County against Syed Ali and MB Bodyshop of San Francisco, Inc.: Juarez v. Ali, Case No. 1-08-CV-121859 (Sup. Ct. Santa Clara Cnty) (the " superior court case" or Juarez). (Request for Judicial Notice (" RJN" ) Ex. A.)[1] Later, Ramirez joined Juarez as a superior court plaintiff. Juarez alleged that he worked for MB Bodyshop San Francisco, which was the San Francisco location of Autovest Collision Repairs, Inc. dba Autowest Collision Repairs, Inc. (" Autowest" ). He also alleged that Syed Ali owned and controlled a number of entities, including MB Bodyshop of San Francisco, Collision Service Center of Oakland, San Jose Autowest Collision, Fremont Collision Care Center, Concord Collision Care Center, Sunnyvale Collision Care Center, and Serramonte Auto Plaza Body Shop. He alleged claims for: (1) not paying wages when due; (2) not paying minimum and overtime wages; (3) not complying with rest and meal period requirements; and (4) not complying with record-keeping wage statement, and payment deadline provisions of California law. (RJN Ex. A ¶ 1.) He defined the class as " [a]ll non-exempt bodyshop employees who are employed or have been employed by Defendants in California within four (4) years of the filing of this Complaint through the date of final disposition of this action." (RJN Ex. A ¶ 15.)

In the early part of 2012, Juarez moved for class certification of a slightly narrower class limited to those who worked on a " piece rate basis." (RJN Ex. B at 3.) In support of the motion, Rafael Sandoval and Luis Calixto, Plaintiffs in the pending federal case, submitted declarations in superior court as potential class members. (RJN Ex. D, E.) Plaintiff Calixto stated that he worked for Autowest in San Jose from 2004 to 2011. (RJN Ex. D ¶ 10.)

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Plaintiff Sandoval stated that he worked at Autowest Collision Repairs, Inc. in San Jose and later in Concord at Concord Collision Care Center. (RJN Ex. E ¶ 10 and attached pay stubs).

On April 23, 2012, the superior court denied the motion for class certification without prejudice. (RJN Ex. B.) The superior court noted that " Defendants raise a valid point that without evidence of alter ego liability between the non-party corporate entities and Ali, [Juarez] lacks standing to sue on behalf of employees of shops other than the location at which he worked. . . . " [I]f Plaintiff only has standing to sue his own employer, then it cannot be said that Defendants' liability will be determined from facts and legal findings common to all members of the class." (RJN Ex. B at 5.) The superior court further found that defendant Ali was not the alter ego of any of the corporations or vice versa, as they maintained separate statuses and assets and observed corporate formalities. (Id. at 8.) Commonality was also lacking because the evidence showed that different Autowest locations had different policies regarding paying employees. The superior court also concluded that the standing/alter ego issue defeated typicality: " Plaintiff's claims are not typical of the rest of the class because he has no relationship to any entity other than MB Bodyshop." (Id. at 9.)

After the denial of class certification, the superior court case proceeded on Juarez's and Ramirez's individual claims and a claim under the California Private Attorneys General Act (" PAGA" ), California Labor Code section 2699, on behalf of themselves and other current or former employees of MB Body Shop of San Francisco, Inc. Summary judgment issued on August 5, 2013, as to the fourth claim for failure to provide meal periods. (Defs.' 3/6/14 Supp. Ltr., Dkt. 46.) Trial commenced later in August 2013. After the plaintiffs rested their case, the superior court granted judgment to the defendants as to the claims for failure to provide paid rest breaks, failure to provide itemized wage statements, and unfair competition. (Id.) In November 2013, the superior court plaintiffs moved to vacate the judgment as to the claim for failure to provide rest breaks. (Id.) The superior court heard argument on the motion on January 10, 2014, and heard closing arguments on February 14, 2014. (Id.) The superior court has not issued a judgment yet as to any claims. Defendants anticipate that the superior court will issue a ruling on the motion to vacate judgment and the other outstanding issues within sixty days of February 14, 2014. (Id.)

B. Federal Case

On July 12, 2013, Plaintiffs Sandoval and Calixto, represented by the same counsel who represented the superior court plaintiffs, filed a complaint against Defendants Syed Ali, Bobby A. Ali, Rick Ali, M1 Auto Collisions Centers, and M1 Collision Care Centers, Inc. On September 5, 2013, prior to serving the complaint, Plaintiffs filed a First Amended Complaint (" FAC" ) naming as additional defendants Autovest Collision Repairs, Inc. aka Autowest Collision Repairs, Inc., MB Body Shop of San Francisco, Inc., and Serramonte Auto Plaza Body Shop. The FAC is very similar to the complaint in the superior court case. According to Plaintiffs, the individual Ali Defendants own and/or control the other defendants, which are auto body repair shops. Plaintiffs allege that the Ali Defendants are jointly and severally liable as " employers" for purposes of the Fair Labor Standards Act, and are jointly and severally liable as the " common law employer of the putative class," and as alter egos of the corporate defendants for purposes of the state law claims. (FAC ¶ 9.)

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Plaintiffs allege that they were employed by Defendants to work in Defendants' automobile facilities on repairs for body and paint work. (FAC ¶ 7.) Plaintiffs bring claims for: (1) failure to pay overtime wages and minimum wages under the Fair Labor Standards Act; (2) failure to pay state minimum wages in violation of the California Labor Code; (3) failure to pay state overtime wages in violation of the California Labor Code; (4) failure to provide rest periods or compensation in lieu thereof in violation of the California Labor Code; (5) failure to pay timely wages after termination or resignation in violation of the California Labor Code; (6) failure to provide itemized employee wage statement provisions in violation of the California Labor Code; (7) unlawful kickback payments in violation of the California Labor Code; and (8) violations of California unfair competition law. Plaintiffs seek compensatory damages, restitution, civil penalties, injunctive relief, declaratory relief, and attorneys' fees. (FAC, Prayer.) With a few exceptions, these claims are the same as those in the superior court Case. (RJN Ex. A.) Plaintiffs' proposed class is:

All non-exempt bodyshop employees who are employed or have been employed by Defendants in California within four (4) years of the filing of this Complaint plus any tolling from any State court class actions filed ...

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