United States District Court, N.D. California
ORDER RE: DEFENDANTS’ MOTION TO DISMISS SECOND
AMENDED COMPLAINT Re: Dkt., 50
JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE
In this
putative class action, Plaintiffs Andrew Tan
(“Tan”) and Raef Lawson (“Lawson, ”
and together, “Plaintiffs”) sue Grub Hub Holdings
Inc. and GrubHub Inc. (“GrubHub” or
“Defendants”), a service that provides food
delivery to customers via an on demand dispatch system. The
gravamen of Plaintiffs’ Second Amended Complaint
(“SAC”) is that the delivery driver plaintiffs
were misclassified as independent contractors and denied the
benefits of California wage-and-hour laws. (Dkt. No.
41.[1])
Now pending before the Court is Defendants’ motion to
dismiss Counts II to V of the SAC for failure to state a
claim. (Dkt. No. 50.) Having considered the parties’
submissions, and having had the benefit of oral argument on
July 31, 2016, the Court DENIES the motion to dismiss.
Plaintiffs have pleaded sufficient facts to plausibly support
their claims.
BACKGROUND
The
Court previously discussed the factual background of this
case in a previous order and incorporates that discussion
here. (See Dkt. No. 38 at 1-3.) Following the
Court’s dismissal of Plaintiffs’ First Amended
Complaint (“FAC”) with leave to amend, Plaintiff
filed the SAC, which provides additional details regarding
delivery drivers’ obligations during their work shifts.
According
to the SAC, drivers working for GrubHub are required to sign
up for work shifts ahead of time (such as 2.5, 3, or 4 hour
blocks). (SAC ¶ 14.) During work shifts, drivers must be
within a particular assigned area-in Lawson’s case, a
30 square mile area-and be available to accept delivery
assignments; drivers are not permitted to leave their zones
unless instructed by a GrubHub dispatcher to perform a
delivery outside of the assigned area. (Id.
¶¶ 14-15.) Drivers are typically assigned between
two and four or more delivery jobs per hour during a shift,
with each delivery assignment typically taking between 30
minutes and an hour and a half to complete. (Id.
¶ 16.) If drivers fail to accept at least 75% of all
delivery orders assigned to them, GrubHub will terminate
them. (Id. ¶ 17.) Further, drivers risk
termination if they fail to arrive at restaurants by a
certain time designated by GrubHub. (Id. ¶ 18.)
Given these restrictions, drivers are required to be in or
very near to their cars at all times during their shifts and,
as a result, are unable to engage in personal non-work
activities. (Id. ¶¶ 18-19.) Thus,
Plaintiffs allege, the entirety of drivers’ shift times
is compensable working time. (Id. ¶ 14.)
The SAC
sets forth five causes of action: (1) failure to reimburse
for business expenses in violation of California Labor Code
§ 2802; (2) unlawful and/or unfair business practices
under California Business and Professions Code §§
17200-17208; (3) failure to pay minimum wage in violation of
California Labor Code §§ 1197 and 1194; (4) failure
to pay overtime in violation of California Labor Code
§§ 1194, 1198, 510, and 554; and (5) claim for
penalties pursuant to the Private Attorney General Act
(PAGA), Cal. Lab. Code § 2698, et seq. Lawson
alone brings the first four causes of action; Plaintiffs
together bring the PAGA claims.
DISCUSSION
Defendants
move to dismiss portions of the SAC on grounds that: (1)
Lawson fails to state plausible claims for relief under
California’s minimum wage and overtime laws (Counts III
and IV); (2) Lawson fails to state a claim under the UCL
(Count II) to the extent it relies upon his defective wage
claims; and (3) Plaintiffs fail to state a plausible claim
under PAGA (Count V).
I.
Counts III & IV: California Minimum Wage & Overtime
Laws
The
Court previously dismissed Plaintiff’s minimum wage and
overtime claims because Plaintiffs failed to allege
sufficient facts that give rise to a plausible inference that
they were not paid minimum wage or overtime during at least
one work week. (Dkt. No. 38 at 6-12.) Specifically, the Court
noted that “[t]here are no allegations about what
period of time or type of conduct Plaintiffs are counting as
hours worked. Without these basic factual allegations, the
Court cannot conclude that Plaintiffs’ minimum wage or
overtime claims are plausible.” (Id. at 9.)
Moreover, to the extent Plaintiffs contended that all of
their shift hours are compensable (this had not been pled in
the FAC), the Court was unable to make that determination
“absent allegations about the number and timing of
assignments, geographical restrictions, and what happens when
a driver does not accept an assignment.” (Id.
at 12.)
Plaintiffs
now allege that all of their shift hours are compensable work
hours (SAC ¶ 14) and, as noted above, they provide
additional facts relating to drivers’ work shifts: in
particular, the number and timing of assignments (between two
and four or more delivery jobs per hour during a shift, each
job typically taking 30 minutes to an hour and a half to
complete (id. ¶ 16)), geographical restrictions
(drivers must be within a particular assigned area and in or
near their cars at all times during their shifts
(id. ¶¶ 14-15, 18-19)), and what happens
when a driver does not accept an assignment (GrubHub
terminates drivers with less than a 75% acceptance rate of
orders (id. ¶ 17)). Defendants argue that, even
with these additional allegations, Plaintiffs wage-and-hour
claims remain deficient.
First,
Defendants insist that Plaintiffs continue to provide
insufficient detail regarding a specific work week in which
they were not paid overtime or were not paid minimum wages.
(Dkt. No. 50 at 5.) According to Defendants, Landers v.
Quality Communications, Inc., 771 F.3d 638 (9th Cir.
2014), as amended (Jan. 26, 2015), requires
Plaintiffs to allege facts “establishing the
particular workweek in which minimum wage and
overtime violations purportedly occurred.” (Dkt. No. 50
at 5 (emphasis in original)). But, as the Court previously
noted, Landers does not require Plaintiffs to
identify an exact calendar week or particular instance of
denied overtime or minimum wage; instead, the allegations
need only give rise to a plausible inference that there was
such an instance. (Dkt. No. 38 at 8-9; see also Boon v.
Canon Bus. Solutions, Inc., 592 F. App’x 631, 632
(9th Cir. 2015); Varsam v. Lab. Corp. of Am., 120
F.Supp.3d 1173, 1178 (S.D. Cal. 2015).) Drawing all
inferences in Plaintiffs’ favor, Manzarek v. St.
Paul Fire & Mar. Ins. Co., 519 F.3d 1025, 1031 (9th
Cir. 2008), Plaintiffs’ allegations give rise to the
plausible inference that such an instance exists. For
example, Plaintiffs allege that “Lawson worked
approximately forty-five hours” during the week of
November 30, 2015 and “was not paid at time-and-a-half
for the hours in excess of forty.” (Id. ¶
23.) Taking as true Plaintiffs’ allegations that
drivers are unable to perform personal non-work activities
during a shift (SAC ¶¶ 18-19), one could reasonably
infer that Defendants violated the minimum wage and overtime
laws where Lawson’s entire 45-hour work week in
November 2015 was compensable.
Second,
Defendants contend that Plaintiffs’ new factual
allegations are implausible and do not establish that all of
Plaintiffs’ shift hours are compensable. (Dkt. No. 50
at 6-8.) Defendants argue that: (a) the allegations that
drivers are “typically assigned . . . between two and
four or more delivery jobs per hour” and that each
assignment “would typically take between 30 minutes and
an hour and a half to complete” are contradictory and
thus implausible; (b) the ability of drivers to decline up to
25% of assigned orders means that 25% of shift hours are
drivers’ personal time; and (c) because Lawson worked a
30 square mile area, he was thus “free to roam”
and not geographically restricted. Defendants are essentially
asking the Court, on a motion to dismiss, to draw all
inferences in their favor. The Court cannot do so.
Manzarek, 519 F.3d at 1031. Drawing all inferences
in Plaintiffs’ favor as required, each of the
above allegations supports the reasonable inference that all
shift time was compensable. For example: (a) while Plaintiffs
allege the typical number of assignments per hour
and the typical time to complete each assignment, it
is plausible that the time to complete assignments may in
fact be less for some drivers, such that drivers could
complete four or more assignments in an hour; (b) drivers
could plausibly decline up to 25% of their assigned orders
because they are otherwise already busy with orders (and not
simply taking personal time); and (c) although Lawson’s
working area was a 30 square mile area, he could still have
been restricted-and not free to roam, as Defendants
suggest-because drivers were required to be in or very near
to their vehicles during shifts (SAC ¶¶ 18-19).
While Defendants’ view of the facts may ultimately
prevail, the Court cannot presently conclude that the SAC
allegations are facially implausible.
Third,
Defendants claim that Plaintiffs have not provided the
requisite detail regarding “what hourly and regular
rates of pay they used to compute minimum wage and overtime
pay, how they calculated those rates, or which records they
consulted in doing so.” (Dkt. No. 50 at 14.) At the
pleading stage, the level of detail Defendants seek is not
required. As the Court noted before, the Ninth Circuit in
Boon rejected the district court’s requirement
that a complaint “contain an estimate of how much
uncompensated time was worked, how often, and at what rate to
survive a motion to dismiss.” 592 F. App’x at 632
(internal quotation marks and alteration omitted). Again, the
complaint allegations need only give rise to a plausible
inference that Plaintiffs were not paid minimum wage or
overtime during at least one work week. (Dkt. No. 38 at 9.)
Defendants’ reliance on Yucesoy v. Uber
Technologies, Inc. does not compel a different result.
No. 15-CV-00262-EMC, 2015 WL 6955140 (N.D. Cal. Nov. 10,
2015). There, the court dismissed plaintiffs’ minimum
wage and overtime claims because they had not pleaded
specific facts to support their contention that their waiting
time was compensable. Id. at *3-4. Thus, it was
unclear as to what plaintiffs contended was compensable
“work” time and, in turn, the court could not
discern the basis for plaintiffs’ theories for their
wage and ...