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Russell v. Government Employees Insurance Co.

United States District Court, S.D. California

July 11, 2017

MARISHA RUSSELL, individually and on behalf of others similarly situated, Plaintiff,
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY, a Maryland corporation; and DOES 2-20, inclusive, Defendants.

          ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6)

          Hon. Janis L. Sammartino United States District Judge.

         Presently before the Court is Defendant Government Employees Insurance Company's (“GEICO”) Notice of Motion (“MTD Notice”), (ECF No. 8), and Motion to Dismiss Plaintiff's First Amended Complaint (“MTD”), (ECF No. 8-1); Plaintiff's Opposition to Defendant's Motion to Dismiss Complaint (“Opp'n”), (ECF No. 16); and Defendant's Reply in Support of Its Motion to Dismiss Plaintiff's First Amended Complaint (“Reply”), (ECF No. 17). Having considered the parties' arguments and the law, the Court rules as follows.

         BACKGROUND

         Plaintiff Marisha Russell asserts that Defendant GEICO, her former employer, retained overtime wages and other benefits in violation of the California Labor Code, the California Business and Professions Code Section 17200 et seq., and the Fair Labor Standards Act, 29 U.S.C. Section 201, et seq. (“FLSA”). (Notice of Removal, Ex. N (“FAC”) 1-2, ECF No. 1.) Plaintiff brings her claims both individually and on behalf of all other allegedly aggrieved employees under California's Private Attorneys General Act (“PAGA”) and as a collective action under 29 U.S.C. § 216(b). (Id. at 4-5.)

         Defendant, a national insurance provider, employed Plaintiff in a non-exempt, hourly clerical position from April 18, 2011 through December 1, 2014. (Id. at 8.) During her employment, Plaintiff was at times required to work overtime hours in excess of eight hours per workday and/or forty hours per week. (Id. at 10.) Plaintiff received compensation in two forms: (1) an hourly wage and (2) an annual bonus through Defendant's “Revised Profit Sharing Plan for the Employees of the Government Employees Companies” (the “PSP”). (Id. at 9.)

         The terms of the PSP identify-among other things-how the Defendant makes contributions to the PSP fund and how the Defendant calculates and allocates the amount of each employee's annual PSP bonus from the fund. (Id. at 9-10, Ex. A (“Ex. A”).) Defendant's companies' contributions to the fund come from each calendar year's (“Plan Year's”) net profits and the contribution amount is “determined by the Board in its sole discretion.” (Ex. A ¶ 5.1(a); FAC 9.) Defendant's companies then allocate funds to each of their “Planning Centers” (i.e., organizational units within the companies) based on rankings determined by a numerical value “assigned annually to each Planning Center by the President of the Corporation acting on the advice of the Corporation's senior management.” (Ex. A ¶ 5.2; FAC 9.) The total bonus amount that each Planning Center receives is based on a ratio of “(i) each Planning Center's [ranking] multiplied by the total earnings of eligible employees in that Planning Center to (ii) the sum of the products of each Planning Center's [ranking] and the total earnings of all eligible participants in such Planning Center.” (FAC 9-10; Ex. A ¶ 5.2.) Defendant then apportions an annual bonus to each eligible employee within a Planning Center as “a proportionate share of the Planning Center's bonus money, calculated as the ratio of (i) the employee's earnings during the Plan Year to (ii) the total earnings of all eligible employees within the Planning Center.” (FAC 10; Ex. A ¶ 5.2.)

         The employee's earnings in the above apportionment include “all regular or basic pay, overtime pay, and shift differential earned during the Plan Year, and all bonuses earned during the Plan Year except the profit sharing payments themselves.” (FAC 10; Ex. A ¶ 1.9.) In order for an employee to receive the PSP bonus, the employee is “required to remain employed until the payout date of the bonus.” (FAC 10; Ex. A ¶ 5.1.) The annual payout date for the bonus is “typically late in the February following the Plan Year.” (FAC 11.) If an employee does not remain employed with Defendant until the payout date, the employee “forfeits his or her bonus - even if the employee worked the entire Plan Year (through December 31) and was otherwise eligible for a bonus.” (Id.)

         Plaintiff believes that Defendant's administration of its compensation mechanisms is legally flawed and thus filed this action alleging claims that Defendant (1) failed to pay overtime wages pursuant to California Labor Code Section 1194; (2) failed to timely pay wages for all hours worked pursuant to California Labor Code sections 204 and 1194; (3) failed to provide accurate itemized wage statements pursuant to California Labor Code section 226; (4) failed to pay all wages due and owed upon termination pursuant to California Labor Code sections 201, 202, and 203; (5) violated California Labor Code sections 201, 202, 203, 204, 226, and 1194, entitling Plaintiff to recover civil penalties pursuant to California Labor Code section 2698, et seq.; (6) violated California Business and Professions Code section 17200, et seq.; and (7) violated relevant provisions of the FLSA. (Id. at 12-19.) Additionally, Plaintiff seeks a declaratory judgment that Defendant's PSP bonuses were “not excludable from the regular rate of pay” as percentage bonuses and that Defendant's administration of its PSP bonus resulted in “underpayment of overtime wages.” (Id. at 19-20.)

         Plaintiff originally filed this action on December 23, 2015-seeking only state-law- based relief-in San Diego Superior Court. Plaintiff amended her complaint on February 16, 2017, adding new claims under the FLSA and thus setting the stage for Defendant's April 3, 2017 removal to this Court on the basis of federal question jurisdiction. (ECF No. 1.) Shortly after removal, Defendant filed the instant Motion to Dismiss.

         LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the defense that the complaint “fail[s] to state a claim upon which relief can be granted, ” generally referred to as a motion to dismiss. The Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual allegations, ' . . . it [does] demand more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A complaint will not suffice “if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.' ” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557).

         In order to survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Id. (quoting Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible when the facts pled “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 556). That is not to say that the claim must be probable, but there must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent with' a defendant's liability” fall short of a plausible entitlement to relief. Id. (quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” contained in the complaint. Id. This review requires context-specific analysis involving the Court's “judicial experience and common sense.” Id. at 678 (citation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.' ” Id.

         Where a complaint does not survive 12(b)(6) analysis, the Court will grant leave to amend unless it determines that no modified contention “consistent with the challenged pleading . . . [will] cure the deficiency.” DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schriber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).

         ANALYSIS

         Defendant's primary argument is that Plaintiff's first, second, fourth, and seventh causes of action should be dismissed because the PSP bonus was “paid as a percentage of both overtime and regular wages” and therefore “as a matter of law, Plaintiff has already been paid all wages owed her.” (MTD Notice 2-3.) This necessarily also means, as Defendant further argues, that Plaintiff's remaining causes of action should be dismissed because they are “wholly derivative of her causes of action for unpaid wages and cannot survive their dismissal.” (Id.) Accordingly, because Defendant's argument that it properly excluded the PSP bonus when calculating Plaintiff's regular rate of pay-and therefore her corresponding overtime pay rate as well-has the potential to dispose all of Plaintiff's causes of action, the Court addresses that argument first.

         I. Whether Defendant Properly Calculated Plaintiff's ...


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