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Dimercurto v. Equilon Enterprises LLC

United States District Court, N.D. California

January 15, 2020

MARCO DIMERCURIO, et al., Plaintiffs,
v.
EQUILON ENTERPRISES LLC, Defendant.

          ORDER RE: DEFENDANT'S MOTION TO DISMISS RE: DKT. NO. 19

          JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE

         Marco Dimercurio, Charles Gaeth, John Langlitz, and Malcolm Synigal (collectively, “Plaintiffs”) sue Equilon Enterprises LLC dba Shell Oil Products U.S. (“Defendant” or “Shell”) alleging various wage and hour violations under California law. (Dkt. No. 18.)[1] Now before the Court is Defendant's motion to dismiss Plaintiffs' first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).[2] (Dkt. No. 19.) After careful consideration of the parties' briefing and having had the benefit of oral argument on January 15, 2020, the Court DENIES Defendant's motion.

         BACKGROUND

         I. Complaint Allegations

         Plaintiffs are current or former employees of Shell, which operates an oil refinery in Martinez, California. (Dkt. No. 18 at ¶ 1, 10-14.) Plaintiffs work or worked at the Martinez facility as refinery operators. (Id. at ¶ 1.) Shell requires its refinery operators “to work regular 12hour shifts.” (Id. at ¶ 2.) “In addition to their regular 12-hour shifts, operators at Shell's Martinez refinery must regularly be available for designated 12-hour standby shifts twice a day.”[3] (Id.)

         When assigned to cover standby shifts, operators must “be at the ready to receive calls during two 1.5-hour time periods” (“standby periods”) that “commence 30 minutes prior to the start of the scheduled shift and end an hour after the standby shift has started.” (Id. at ¶ 3.) If an operator is called during these standby periods but cannot be reached, “the operator is considered absent without leave and is subject to disciplinary action.” (Id.) If an operator is reached and asked to work the scheduled standby shift during one of these standby periods, the operator must report for duty at the refinery within 2 hours. (Id.) Operators are not compensated during these standby periods and are instead paid only “when actually required to work the standby shift.” (Id. at ¶¶ 3, 9.) Further, Shell's standby shift requirements “significantly limit employees' ability to earn other income, take classes, care for dependent family members, and enjoy time for recreation.” (Id. at ¶ 7.)

         The gravamen of Plaintiffs' complaint is that Shell's failure to compensate Plaintiffs for the standby periods violates reporting-time pay requirements under California law. Plaintiffs bring this action on behalf of themselves and “[a]ll operators working at the [Martinez] refinery . . . at any time from four years prior to the filing of [the] complaint” and final judgment. (Id. at ¶ 25.)

         II. Procedural History

         In June 2019, Plaintiffs filed their original class action complaint in California state court bringing a claim for “Failure to Pay Reporting Time Pay” in violation of Industrial Welfare Commission (“IWC”) Wage Order 1-2001 (“IWC Wage Order”), and derivative claims for “Failure to Pay All Wages Earned at Termination” in violation of California Labor Code §§ 200-203; “Failure to Provide Accurate Wage Statements” in violation of Labor Code §§ 226, 226.3; and “Unfair Business Practices” in violation of California's Unfair Competition Law (“UCL), California Business and Professions Code § 17200. (Dkt. No. 1, Ex. A at 19.) Defendant timely removed the complaint pursuant to the diversity jurisdiction provisions of the Class Action Fairness Act, 28 U.S.C. §§ 1332(d), and purported federal question jurisdiction under 28 U.S.C. § 1331. (Dkt. No. 1 at ¶¶ 2, 3.)

         Plaintiffs filed the operative first amended complaint (“complaint”) in October 2019, asserting their previous claims and adding a claim under California's Private Attorneys General Act (“PAGA”), Labor Code § 2698. (Dkt. No. 18.) Defendant filed the instant motion to dismiss thereafter. (Dkt. No. 19.) The motion is fully briefed, (see Dkt. Nos. 20 & 21), and the Court heard oral argument on January 15, 2020.

         REQUEST FOR JUDICIAL NOTICE

         Generally, “district courts may not consider material outside the pleadings when assessing the sufficiency of a complaint under Rule 12(b)(6).” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018). When such materials “‘are presented to and not excluded by the court,' the 12(b)(6) motion converts into a motion for summary judgment under Rule 56.” Id. (quoting Fed.R.Civ.P. 12(d)). There are, however, “two exceptions to this rule: the incorporation-by-reference doctrine, and judicial notice under Federal Rule of Evidence 201.” Id. As relevant here, courts may take judicial notice of an “adjudicative fact” pursuant to the Federal Rules of Evidence if that fact is one “that is not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b)(1), (2).

         In conjunction with its motion to dismiss, Defendant requests judicial notice of: (1) collective bargaining agreements and related agreements (collectively, “CBA”) between Plaintiffs' union and Defendant, which were previously filed with the Court in support of Defendant's notice of removal, (see Dkt. No. 4, Exs. A-C); and (2) court documents filed in connection with the settlement in Berlanga, et al. v. Equilon Enterprises LLC dba Shell Oil Products US, et al., N.D. Cal. Case No. 3:17-cv-00282-MMC (“Berlanga”), (see Dkt. Nos. 19-2 - 19-6, Exs. A-E). Plaintiff opposes Defendant's request for judicial notice because the documents are not “relevant” to adjudicating the instant motion.[4] The Court disagrees in part.

         The CBA is relevant in this wage-and-hour case because its terms govern the employment relationship between Plaintiffs and Defendant. It is also relevant to resolving the instant motion as Defendant asserts that dismissal is warranted because section 301(a) of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185(a), preempts Plaintiffs' claims. See Johnson v. Sky Chefs, Inc., No. 11-CV-05619-LHK, 2012 WL 4483225, at *1 n.1 (N.D. Cal. Sept. 27, 2012) (“Courts routinely take judicial notice of the governing collective bargaining agreement where necessary to resolve issues of [LMRA] preemption.”). Courts also routinely take judicial notice of CBAs at the motion to dismiss stage. See, e.g., Sarmiento v. Sealy, Inc., 367 F.Supp.3d 1131, 1142-43 (N.D. Cal. 2019) (“Courts regularly take judicial notice of a CBA in evaluating a motion to dismiss.”) (internal quotation marks and citation omitted); Densmore v. Mission Linen Supply, 164 F.Supp.3d 1180, 1187 (E.D. Cal. 2016); Hernandez v. Sysco Corp., No. 16-cv-06723-JSC, 2017 WL 1540652, at *2 (N.D. Cal. Apr. 28, 2017); Jones v. AT&T, No. C 07-3888 JF (PR), 2008 WL 902292, at *2 (N.D. Cal. Mar. 31, 2008). Accordingly, the Court grants Defendant's request for judicial notice of the CBA because it is a proper subject of judicial notice under Federal Rule of Evidence 201(b).

         The court documents filed in Berlanga would also ordinarily constitute proper subjects of judicial notice. See Harris v. Cty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (noting that judicial notice is appropriate for “undisputed matters of public record, including documents on file in federal or state courts”) (internal citation omitted); see also Bennet v. Medtronic, Inc., 285 F.3d 801, 803 n.2 (9th Cir. 2002) (recognizing that courts “may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.”). Two of the named plaintiffs in Berlanga-Charles Gaeth and John Langlitz-are Plaintiffs in this action. Thus, their release in Berlanga of all wage-related claims against Shell for a specified time period is directly related to this case and is indeed relevant. However, the Court agrees with Plaintiffs that the Berlanga documents are not relevant to resolving the instant motion.

         Defendant's motion cites the Berlanga documents in a footnote in the “Statement of Facts” and asserts that “[t]he Berlanga settlement bars Gaeth and Langlitz from pursuing claims for the period through September 2, 2018.” (Dkt. No. 19 at 11 n.2.) The motion does not otherwise cite the Berlanga documents in support of Defendant's arguments regarding dismissal, nor does Defendant's reply cite the documents. Because the Berlanga documents are not necessary to resolve Defendant's motion to dismiss, the Court concludes that judicial notice of those documents is inappropriate. See CYBERSitter, LLC v. People's Republic of China, 805 F.Supp.2d 958, 964 (C.D. Cal. 2011) (declining to take judicial notice of facts irrelevant to defendants' motions to dismiss); see also Synopsys, Inc. v. InnoGrit, Corp., No. 19-CV-02082-LHK, 2019 WL 4848387, at *6 (N.D. Cal. Oct. 1, 2019) (same); Hitachi Kokusai Elec. Inc. v. ASM Int'l, N.V., No. 17-cv-06880-BLF, 2018 WL 6099953, at *3 (N.D. Cal. Nov. 21, 2018) (same).

         Accordingly, the Court grants Defendant's request for judicial notice of the CBAs and related agreements because they are proper subjects of judicial notice under Federal Rule of Evidence 201(b). The Court declines to take judicial notice of the Berlanga documents at this time because they are not relevant to the instant motion.

         DISCUSSION

         The IWC Wage Order[5] at issue provides, in pertinent part:

Reporting Time Pay
(A) Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee's usual or scheduled day's work, the employee shall be paid for half the usual or scheduled day's work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee's regular rate of pay, which shall not be less than the minimum wage.

Cal. Code Regs., tit. 8, § 11010 subd. 5 (2001). There is no dispute that Plaintiffs' claim for reporting-time pay consists of three elements: (1) the employee is required to report for work; (2) the employee does report; and (3) the employee is not put to work. Plaintiffs argue that they “report[ed] for work” under the meaning of the Wage Order by being available telephonically during the standby periods as required by Shell and that Shell violated the Wage Order by failing to compensate them for that time. (Dkt. No. 20 at 6.) Plaintiffs acknowledge that their other claims are derivative of the reporting-time pay claim. (Id.)

         Defendant moves to dismiss the complaint pursuant to Rule 12(b)(6) on the grounds that: (1) section 301(a) of the LMRA preempts Plaintiffs' claims; and (2) the complaint otherwise fails to state a claim for the wage and hour violations alleged. (Dkt. No. 19 at 7-8.) The Court addresses each argument in turn.

         I. Preemption under the LMRA

         Section 301 of the LMRA, codified at 29 U.S.C. § 185(a), states in relevant part that “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . may be brought in any district court of the United States having jurisdiction of the parties.” Preemption of state law claims under section 301 applies to “claims founded directly on rights created by collective-bargaining agreements, ” and “claims substantially dependent on analysis of a collective-bargaining agreement.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 394 (1987); see also McCray v. Marriot Hotel Servs., Inc., 902 F.3d 1005, 1010 (9th Cir. 2018) (“[Section] 301 generally preempts state law claims that implicate a collective-bargaining agreement, except for claims that (1) arise independently of a CBA, and (2) don't substantially depend on analysis of a CBA.”).

         Courts apply a two-part test for determining whether a claim is preempted by section 301. Burnside v. Kiewit Pacific Corp., 491 F.3d 1053, 1060 (9th Cir. 2007). First, the court determines “whether the asserted cause of action involves a right conferred upon an employee by virtue of state law, not by a CBA. Id. at 1059. “If the right exists solely as a result of the CBA, then the claim is preempted, and [the] analysis ends there.” Id. If the right exists independent of the CBA, the court turns to the second prong: whether the claim is “substantially dependent on analysis of a collective-bargaining agreement.” Id. (internal quotation marks and citation omitted). If the claim does not depend on analysis of a collective bargaining agreement, the claim is not preempted and may proceed under state law. The court's decision in this regard is based on “whether the claim can be resolved by ‘look[ing] to' versus interpreting the CBA.” Id. (quoting Livadas v. Bradshaw, 512 U.S. 107, 121 (1994)). “[T]he bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished.” Livadas, 512 U.S. at 124; see also Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 691 (9th Cir. 2001) (“If the claim is plainly based on state law, § 301 preemption is not mandated simply because the defendant refers to the CBA in mounting a defense.”).

         Here, Defendant does not dispute that Plaintiffs' claim for reporting-time pay concerns a right conferred by state law. (See Dkt. No. 21 at 6 (recognizing “the existence of a state law mandate to pay reporting time wages” when the Wage Order's provisions are met), 9 (“The LMRA preemption issue is whether it is necessary to interpret the CBA to determine whether the employee possesses that right in the first instance”).) Because Plaintiffs' claim for reporting-time pay arises under state law and would exist with or without the CBA, the first prong of the Burnside test is not met. Thus, the Court turns to the second prong to determine whether Plaintiffs' reporting-time pay claim is “substantially dependent on analysis” of the CBA. See Burnside, 491 F.3d at 1059. It is not.

         Defendant argues that whether Plaintiffs are owed reporting-time pay “depends on whether the mutually agreed standby system amounts to an employer-imposed requirement that operators on standby ‘report for work.'” (Dkt. No. 19 at 16.) Thus, Defendant asserts that Plaintiffs' reporting-time pay claim is preempted by the LMRA because resolution of the claim requires interpretation of the CBA's terms. The Court agrees that whether Plaintiffs are entitled to reporting-time pay pursuant to the Wage Order hinges on whether Shell's standby shift policy required Plaintiffs to “report for work” by being available telephonically during the standby periods. However, Defendant has not demonstrated that determining the answer to that question requires interpretation of the CBA; instead, it requires interpretation of the Wage Order and California case law. In other words, the dispositive issue-whether merely being on standby and available telephonically constitutes “report[ing] for work” under the meaning of the Wage Order-is a question of law. The CBA offers no guidance on that score. Indeed, Defendant recognizes as much and fails to cite any specific provisions of the CBA that are in dispute and require interpretation. (See Dkt. No. 19 at 9-10 (“[T]he CBA does not expressly define ‘report.' Rather, to glean a definition would require careful review and construction ...


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