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Arroyo v. International Paper Co.

United States District Court, N.D. California, San Jose Division

May 30, 2018

ELISA ARROYO, Plaintiff,
v.
INTERNATIONAL PAPER COMPANY, Defendant.

          ORDER VACATING HEARING ON MOTION TO DISMISS; AND GRANTING MOTION IN PART AND DENYING MOTION IN PART, WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART [RE: ECF 11]

          BETH LABSON FREEMAN UNITED STATES DISTRICT JUDGE

         Plaintiff Elisa Arroyo (“Arroyo”) brings this putative class action against Defendant International Paper Company (“IPC”), asserting wage and hour and unfair competition claims based on IPC's alleged practices of failing to pay employees for time spent donning and doffing protective gear and failing to reimburse employees for monies expended on uniforms.

         Arroyo was a class member in a prior wage and hour class action against IPC, Letuligasenoa v. International Paper Company, et al., which resulted in a settlement and release of all claims which were or could have been brought in that action for the class period October 4, 2009 through January 27, 2017. IPC asserts that all of the claims asserted in the present action were or could have been brought in Letuligasenoa and thus that Arroyo is barred from asserting those claims for time periods which overlap the Letuligasenoa class period. IPC moves to dismiss Arroyo's first amended complaint (“FAC”), and specifically Claims 4 and 5, to the extent that Arroyo seeks damages and penalties for time periods prior to January 27, 2017. IPC also seeks dismissal of the entire FAC for failure to state a claim upon which relief may be granted.

         The Court having determined that the motion is appropriate for disposition without oral argument, the hearing set for June 7, 2018 is VACATED. See Civ. L.R. 7-1(b). For the reasons discussed below, the motion is GRANTED IN PART AND DENIED IN PART, WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART.

         I.CLAIMS 4 AND 5 - TIME PERIODS PRIOR TO JANUARY 27, 2017

         IPC moves to dismiss Claim 4, alleging violations of California Labor Code § 226, and Claim 5, brought under California's Private Attorney General Act (“PAGA”), Cal. Labor Code § 2698 et seq., to the extent they seek damages and penalties for time periods prior to January 27, 2017. IPC argues that dismissal is appropriate under both Federal Rule of Civil Procedure 12(b)(1), for lack of subject matter jurisdiction, and Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim. The Court agrees that to the extent Claims 4 and 5 were released in Letuligasenoa, dismissal is appropriate under Rule 12(b)(1) on the basis that no case or controversy exists, see Gator.com Corp. v. L.L. Bean, Inc., 398 F.3d 1125, 1132 (9th Cir. 2005), and under Rule 12(b)(6) on the basis that Letuligasenoa raises a collateral estoppel bar to and extinguishes the claims, see Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 750 (9th Cir. 2006).

         The Letuligasenoa settlement released “all wage-and-hour claims . . . arising during the Class Period, which were or could have been raised based on the facts, conduct, and/or omissions alleged in the Complaint.” Def.'s RJN Exh. B, Letuligasenoa Settlement ¶ CC, ECF 11-2.[1] The Letuligasenoa complaint alleged numerous violations of the California Labor Code based failure to pay employees for pre-shift and post-shift duties, including donning and doffing gear, failure to provide required meal and rest breaks, failure to provide vacation pay, and failure to provide accurate wage statements. Def.'s RJN Exh. A, Letuligasenoa Complaint ¶¶ 20-37, ECF 11-2. The Letuligasenoa complaint expressly asserted claims under California Labor Code § 226 and PAGA, the same provisions under which Arroyo's current Claims 4 and 5 are asserted. Def.'s RJN Exh. A, Letuligasenoa Complaint ¶¶ 119-29, 138-53, ECF 11-2.

         A.Claim 4 - California Labor Code § 226

         The Court concludes that the Letuligasenoa settlement and release bars Claim 4, asserting violations of § 226, to the extent it seeks damages and penalties for time periods prior to January 27, 2017. Section 226 requires employers to provide employees with accurate written itemized statements showing certain information, including the employer's name and address, total hours worked, and applicable hourly rates. Cal. Lab. Code § 226(a). Arroyo argues that the § 226 claim asserted in Letuligasenoa was based solely on IPC's failure to comply with § 226(a)(8), requiring that the itemized statement include the employer's name and address, and did not expressly encompass her current claims based on §§ 226(a)(2) and (a)(9), requiring that the itemized statement include total hours worked and applicable hourly rates. Compare Def.'s RJN Exh. A, Letuligasenoa Complaint ¶ 124, ECF 11-2, with FAC ¶ 47, ECF 9. This argument, however, ignores the Letuligasenoa complaint's numerous allegations that the itemized statements provided by IPC did not provide accurate information about total hours worked and applicable hourly rates. See, e.g., Def.'s RJN Exh. A, Letuligasenoa Complaint ¶¶ 32-34, ECF 11-2. Thus Arroyo's current claims under §§ 226(a)(2) and (a)(9) could have been raised in the Letuligasenoa action based on the facts, conduct, and/or omissions alleged in the Letuligasenoa complaint.

         Arroyo's reliance on the identical factual predicate doctrine is misplaced. A settlement agreement in an earlier action may preclude a party from bringing claims in a later action “where those claims depend[] on the same set of facts as the claims that gave rise to the settlement.” Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010). The Letuligasenoa complaint asserted a PAGA claim based in part on IPC's alleged failure to provide itemized wage statements including total hours worked and applicable hourly rates. Def.'s RJN Exh. A, Letuligasenoa Complaint ¶ 149, ECF 11-2. Under the identical factual predicate doctrine, Arroyo is precluded from bringing other claims based on the same set of facts for the same class period.

         Accordingly, the motion to dismiss is GRANTED WITHOUT LEAVE TO AMEND as to Claim 4 to the extent it seeks damages and penalties for time periods prior to January 27, 2017.

         B.Claim 5 - PAGA

         The Court concludes that the Letuligasenoa settlement and release bars the bulk of Claim 5, asserted under PAGA, to the extent it seeks damages and penalties for time periods prior to January 27, 2017. The Letuligasenoa complaint asserted a PAGA claim based on most of the same California Labor Code sections, and the same facts, which give rise to the PAGA claim asserted by Arroyo in Claim 5 of the FAC. Compare Def.'s RJN Exh. A, Letuligasenoa Complaint ¶¶ 138-53, ECF 11-2, with FAC ¶¶ 49-52, ECF 9. The bar does not extend, however, to the portions of Claim 5 based on IPC's alleged practice of failing to reimburse employees for monies expended on uniforms. The Letuligasenoa complaint did not contain any claims based on, or any factual allegations regarding, failure to reimburse employees for such expenses. Because the Letuligasenoa settlement released only those claims “which were or could have been raised based on the facts, conduct, and/or omissions alleged in the Complaint, ” it could not have released claims based on different factual allegations. See Def.'s RJN Exh. B, Letuligasenoa Settlement ¶ CC, ECF 11-2.

         This ruling is consistent with decisions of other courts in this district. In Ser Lao, the defendant argued that a release of a Labor Code waiting time claim in a prior class action barred a Labor Code waiting time claim in a subsequent action, relying on broad language similar to that contained in the Letuligasenoa release. Ser Lao v. H&M Hennes & Mauritz, L.P., No. 5:16-CV-00333-EJD, 2017 WL 4808814, at *4 (N.D. Cal. Oct. 25, 2017). The court rejected that argument, concluding that the later waiting time claim based on security checks, incorrect pay rate, and ...


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