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Bernal v. Fedex Ground Package System Inc.

United States District Court, C.D. California

July 14, 2015

JOSE L. BERNAL, on behalf of himself and all others similarly situated, Plaintiff,
FEDEX GROUND PACKAGE SYSTEM INC., a Delaware corporation; FEDEX CORPORATION, a Delaware corporation; and FLAT RATE TRUCK REPAIR, INC., a California corporation, Defendants.


DEAN D. PREGERSON, District Judge.

Presently before the Court is Defendant FedEx Ground Package System, Inc. ("FedEx Ground")'s Motion to Dismiss Plaintiffs' First Cause of Action for Fraud and/or Strike Portions of Plaintiffs' First Amended Complaint. (See Dkt. No. 23.) Having considered the parties' submissions and heard oral argument, the Court GRANTS the motion to dismiss, GRANTS in part and DENIES in part the motion to strike, and adopts the following order.


Plaintiffs, a group of 73 individuals, are current and former pickup truck drivers for FedEx Ground. (First Amended Complaint ("FAC"), Dkt. No. 15, ¶ 1.) Defendant FedEx Ground is a package shipping company and a subsidiary of Defendant FedEx Corporation. (Id. ¶ 2.) Plaintiffs allege that FedEx Ground and FedEx Corporation (collectively, "FedEx") "contracted and created various individuals and companies in California to misclassify Plaintiffs as independent contracts [sic] rather than employees." (Id. ¶ 3.) Plaintiffs allege that, as part of this alleged scheme, FedEx leased tractor vehicles from various individuals and companies in California. (Id. ¶ 4.) Plaintiffs name FedEx Ground, FedEx Corporation, and 32 of the aforementioned "individuals and companies" (the "Trucking Companies") as defendants in the FAC.

Plaintiffs bring this lawsuit on behalf of themselves and a putative class, defined in the FAC as "[a]ll persons who: 1) drove a tractor with a FedEx Ground logo which was leased to FedEx Ground Package, Inc. by other trucking companies; 2) received daily routes from terminals belonging to FedEx Ground Package, Inc located in California; 4) received a W2 or Paycheck from trucking companies; and 5) within the employment period from 2010 to the present day or date of judgment." (Id. ¶ 18.)

Plaintiffs allege that the Trucking Companies' primary business is leasing tractor vehicles to FedEx, which then uses the tractors to connect and transport trailers throughout the country. (Id. ¶ 5.) Plaintiffs allege that the Trucking Companies issue W-2s and paychecks to Plaintiffs, but that the Trucking Companies "have no other business purpose and merely serve as shell companies, payroll or staffing companies" for FedEx. (Id.) Plaintiffs allege that FedEx engaged in a fraudulent scheme to misclassify Plaintiffs as independent contractors rather than employees, and that FedEx conspired with the Trucking Companies to carry out this scheme. (Id. ¶¶ 6, 9.)

Plaintiffs allege that they are employees of both the Trucking Companies and FedEx. (Id. ¶ 9.) Plaintiffs allege that FedEx, rather than the Trucking Companies, controlled the terms of their employment and their pay, including "the method and calculation of payments... by compensating Plaintiffs using a complex method and system, and only for authorized routes and assignments." (Id. ¶ 11.) Plaintiffs allege that the Trucking Companies' relationship with FedEx should not have gone beyond the lease of the tractors; instead, Plaintiffs allege, the Trucking Companies improperly inserted themselves in Plaintiffs' employment relationship with FedEx by (1) issuing W-2s and paychecks to Plaintiffs and (2) assisting FedEx in hiring Plaintiffs. (Id. ¶ 10.) Plaintiffs allege that FedEx "decided who to hire, terminate, and suspend, " and therefore, under California law, Plaintiffs should have been classified as FedEx employees. (Id. ¶¶ 12, 13, 26.)

Plaintiffs further allege that FedEx's practices with respect to Plaintiffs' daily routes and assignments violated California employment and labor codes. (Id. ¶ 26.) Plaintiffs allege that FedEx employees and dispatchers gave drivers their daily routes and assignments at FedEx terminals, after which the drivers' tractors would be connected to FedEx trailers in order to drive packages to various terminals and hubs across the country. (Id. ¶ 27.) Once drivers would reach their destination terminal, Plaintiffs allege that FedEx would instruct drivers either to "drop and hook" new trailers or to wait for the next assignment. (Id. ¶ 28.) Plaintiffs allege that the wait time would often take hours or days. (Id.) Plaintiffs allege that FedEx would request the drivers run quick local routes while they waited for the next assignment, and that if the drivers refused, they would be retaliated against or terminated. (Id.) Plaintiffs allege that if they returned home without waiting for a new route or assignment, they were not compensated for the return mileage. (Id.)

Additionally, Plaintiffs allege that Defendants made false statements in conjunction with Plaintiffs' employment that harmed Plaintiffs. (Id. ¶ 49.) Plaintiffs allege that Defendants falsely told Plaintiffs that (1) they would be employed and hired by FedEx, and (2) that they were employed by FedEx. (Id. ¶ 50.) Plaintiffs also allege that Defendants' representations to Plaintiffs included a badge on which the FedEx logo was printed but that stated: "NOTICE: The holder of this badge is a VENDOR to FedEx Ground. The holder is not an employee of FedEx Ground. This badge is not to be duplicated." (Id. ¶ 51 & Exh. E.) Plaintiffs further allege that Defendants posted various job listings that clearly stated that Plaintiffs would be working for FedEx. (Id. ¶ 52 & Exh. F.) Plaintiffs also allege that FedEx made it appear as if the Trucking Companies were the sole employers of Plaintiffs and instructed the Trucking Companies to issue W-2s and paychecks to Plaintiffs, despite the fact that Plaintiffs were employees of FedEx. (Id. ¶¶ 58, 60.)

Plaintiffs allege, that due to FedEx's misclassification of Plaintiffs and FedEx's driver policies, Defendants violated various California labor code provisions and committed fraud. Plaintiffs TAC alleges ten causes of action against Defendants: (1) fraud; (2) failure to pay earned wages, in violation of Labor Code § 204; (3) failure to pay overtime wages, in violation of Labor Code § 1194; (4) failure to provide meal periods, in violation of Labor Code §§ 512, 226.7, 204, and 1198; (5) failure to provide rest periods, in violation of Labor Code §§ 226.7, 204, and 1198; (6) recovery of deductions from wages, pursuant to Labor Code §§ 221 and 223; (7) waiting time penalties, pursuant to Labor Code § 203; (8) failure to provide accurate itemized statements, in violation of Labor Code § 226; (9) unlawful, unfair and fraudulent business practices, in violation of Business & Professions Code § 17200, et seq.; and (10) violation of the Labor Code Private Attorneys General Act of 2004 and Labor Code § 2698.

Defendant FedEx Ground now moves to dismiss for failure to state a claim Plaintiffs' first cause of action for fraud, and further moves to strike portions of the FAC. (Dkt. No. 23.)


A 12(b)(6) motion to dismiss requires the court to determine the sufficiency of the plaintiff's complaint and whether or not it contains a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Under Rule 12(b)(6), a court must (1) construe the complaint in the light most favorable to the plaintiff, and (2) accept all well-pleaded factual allegations as true, as well as all reasonable inferences to be drawn from them. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001), amended on denial of reh'g, 275 F.3d 1187 (9th Cir. 2001); Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998).

In order to survive a 12(b)(6) motion to dismiss, the complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. Dismissal is proper if the complaint "lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); see also Twombly, 550 U.S. at 561-63 (dismissal for failure to state a claim does not require the appearance, beyond a doubt, that the plaintiff can prove "no set of facts" in support of its claim that would entitle it to relief). A complaint does not suffice "if it tenders naked assertion[s]' devoid of further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court ...

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