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Berlanga v. Equilon Enterprises LLC

United States District Court, N.D. California

August 31, 2017

DAVID BERLANGA, ET AL., Plaintiffs,
v.
EQUILON ENTERPRISES LLC, et al., Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO DISMISS

          MAXINE M. CHESNEY, UNITED STATES DISTRICT JUDGE

         Before the Court is defendants Shell Pipeline Company LP, Equilon Enterprises LLC, CRI U.S. LP and CRI Catalyst Company LP's (collectively, "Shell") Motion to Dismiss Plaintiffs' Amended Complaint, filed June 26, 2017, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiffs David Berlanga ("Berlanga"), Brandon Ehresman ("Ehresman"), Charles Gaeth ("Gaeth"), Michael Gonzalez ("Gonzalez"), John Langlitz ("Langlitz") and Christopher Palacio ("Palacio") have filed opposition, to which Shell has replied. Thereafter, with leave of court, plaintiffs filed a surreply. Having read and considered the papers filed in support of and in opposition to the motion, the Court rules as follows.[1]

         BACKGROUND

         Plaintiffs are six individuals who work as "operators at Shell's refining and distribution facilities, shipping and storage terminal facilities, and catalyst production plants" in California. (See First Amended Class Action Complaint ("FAC") ¶¶ 11.) Plaintiffs allege Berlanga works at the "Carson Terminal" (see FAC ¶ 38), Ehresman works at the "Criterion Catalyst Plant" (see FAC ¶ 39), and Gaeth, Gonzalez, Langlitz and Palacio work at the "Martinez Refinery" (see FAC ¶¶ 40-43). Plaintiffs allege they "are scheduled for and work 12-hour shifts, during which Shell uniformly requires them to remain on duty the entire shift." (See FAC ¶ 22.) In particular, according to plaintiffs, they "are required to remain attentive, carry radios, and be reachable at all times during their shifts" and are "required to remain in contact with supervisors and other employees working in their units throughout their shifts." (See FAC ¶ 23.) Further, plaintiffs allege, "Shell does not authorize or permit [p]laintiffs to take off-duty rest breaks for every four-hour work period or major fraction thereof" and "does not pay [p]laintiffs an extra hour of wages for each work day during which they are not provided the off-duty rest breaks." (See FAC ¶¶ 24, 26.)

         Based on the above allegations, plaintiffs assert four Claims for Relief, all arising under state law and titled, respectively, "Failure to Authorize and Permit Rest Periods, " "Failure to Furnish Accurate Wage Statements, " "Private Attorneys General Act, " and "Unfair Business Practice and Unfair Competition."

         LEGAL STANDARD

         Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure "can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). Rule 8(a)(2), however, "requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). Consequently, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." See id. Nonetheless, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." See id. (internal quotation, citation, and alteration omitted).

         In analyzing a motion to dismiss, a district court must accept as true all material allegations in the complaint, and construe them in the light most favorable to the nonmoving party. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). "To survive a motion to dismiss, a complaint must contain sufficient factual material, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "Factual allegations must be enough to raise a right to relief above the speculative level[.]" Twombly, 550 U.S. at 555. Courts "are not bound to accept as true a legal conclusion couched as a factual allegation." See Iqbal, 556 U.S. at 678 (internal quotation and citation omitted).

         DISCUSSION

         By the instant motion, Shell seeks, pursuant to Rule 12(b)(6), dismissal of all claims alleged in the FAC.

         A. All Claims: Complete Preemption Defense

         Plaintiffs' claims, all of which, as noted, arise under state law, are based on the allegation that Shell has a "policy or practice of failing to authorize and permit [p]laintiffs . . . to take the rest periods to which they are entitled under California law." (See FAC ¶ 48; see also FAC ¶ 36 (alleging "all of [p]laintiffs' claims arise out of [Shell's] failure to authorize or permit rest periods").) Shell argues that, under the doctrine of complete preemption, plaintiffs' state law claims must be treated as federal claims.

         "[W]here the preemptive force of a [federal] statute is so strong that it completely preempts an area of state law, " a claim purportedly based on "a preempted state law is considered, from its inception, a federal claim." See Valles v. Ivy Hill Corp., 410 F.3d 1071, 1075 (9th Cir. 2005) (internal citations, quotations, and alteration omitted). The Labor Management Relations Act ("LMRA") includes 29 U.S.C. § 185(a), a federal statute that completely preempts state laws claims, specifically, claims "founded directly on rights created by collective-bargaining agreements ['CBAs'], and also claims substantially dependent on analysis of a [CBA]." See Caterpillar Inc. v. Williams, 482 U.S. 386, 394 (1987) (internal quotation and citation omitted). Here, Shell argues, resolution of plaintiffs' claims is substantially dependent on an analysis of the terms of the applicable CBAs. Plaintiffs, in response, argue that their claims are dependent solely on an analysis of state law, in particular, the California Labor Code.

         Under the California Labor Code, "[a]n employer shall not require an employee to work during a . . . rest . . . period mandated pursuant to an . . . order of the Industrial Welfare Commission ("IWC"). See Cal. Lab. Code § 226.7(b). The IWC, in a regulation titled "Wage Order 1-2001, " has ordered that "[e]very employer shall authorize and permit all employees to take rest periods, " and that "[t]he authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof." See 8 Cal. Code Regs. tit. 8, § 11010(12)(A). In Augustus v. ABM Security Services, Inc., 2 Cal. 5th 257');">2 Cal. 5th 257 (2016), the California Supreme Court interpreted the above-quoted statute and regulation to require employers to provide "off-duty rest periods"; in other words, "during rest periods employers must relieve employees of all duties and relinquish control over how employees spend their time." See id. at 269. Consistent therewith, the Supreme Court further held that an employer may not "require[ ] its employees to remain on call" during a rest period, for the reason that "one cannot square the practice of compelling employees to remain at the ready, tethered by time and policy to particular locations or communication devices, with the requirement to relieve employees of all work duties and employer control during 10-minute rest periods." See id.

         The alleged Shell policy challenged by plaintiffs requires them to "remain attentive, carry radios, and be reachable at all times during their shifts" and to "remain in contact with supervisors and other employees working in their units throughout their shifts." (See FAC ¶ 23.) Although such alleged policy, if proven, would appear to be unlawful under, and arise under, state law, see Augustus, 2 Cal. 5th at 269, Shell, as discussed above, argues that plaintiffs' claims must be treated as federal claims arising under the LMRA. The Court next turns to that question and, as discussed below, finds Shell has failed to show the challenged claims are preempted.[2]

         1. Contractual Term "Uninterrupted"

         Each CBA on which Shell's preemption argument is based defines the term "Rest Period" as follows: "'Rest Period' shall mean an uninterrupted period of ten (10) consecutive minutes, in accordance with California law or other legal obligations." (See Layne Decl. Ex. H ¶ 1(b).)[3] According to Shell, a dispute exists as to "whether 'uninterrupted' rest breaks is interpreted to mean 'off-duty, ' or whether it was understood to allow the carrying of radios." (See Defs.' Reply at 5:21-22.) Shell contends such dispute must be resolved in order to determine whether any failure by Shell to comply with state law was "knowing and intentional." (See Defs.' Reply at 6:8-11). The Court disagrees.

         As plaintiffs note, Shell's argument appears to pertain to the Second Claim for Relief, wherein plaintiffs allege Shell failed to provide plaintiffs with "an accurate itemized statement" of "gross wages earned, " see Cal. Lab. Code § 226(a), which claim requires plaintiffs, in order to obtain monetary relief, to show such alleged failure was "knowing and intentional" as used in the Labor Code, see Cal. Lab. Code § 226(e)(1). Consequently, resolution of plaintiffs' claim that they did not receive rest periods is not substantially dependent on the meaning of the term "uninterrupted" as used in the CBA. In particular, even assuming the contractual term "uninterrupted" has a meaning different from the statutory definition, such difference would have no bearing on the question of Shell's state of mind under the Labor Code, as California's rest period provision is a "state-mandated minimum labor standard" that parties to a CBA cannot "waive, " see Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949, 959-60 (2005); cf. Valles, 410 F.3d at 1081 (holding "the right to meal breaks [under California law] is a generally applicable labor standard that is not subject to waiver by agreement"), and the LMRA "does not grant the parties to a [CBA] the ability to contract for what is illegal under state law, " see Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 212 (1985).

         2. ...


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