Tan v. Grubhub, Inc.

          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 ...