1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MARIA DE LA LUZ BAUTISTA-PEREZ, Case No. 20-cv-01613-HSG et al., 8 ORDER GRANTING MOTION TO Plaintiffs, DISMISS 9 v. Re: Dkt. No. 82 10 JUUL LABS, INC., et al., 11 Defendants. 12 13 Pending before the Court is Defendant Juul Labs, Inc.’s (“JLI”) motion to dismiss (Dkt. 14 No. 79, “Motion”) Plaintiffs’ First Amended Complaint (Dkt. No. 78, “FAC”).1 For the following 15 reasons, the Court GRANTS the motion with leave to amend as to the claims against JLI.2 16 I. BACKGROUND 17 On July 3, 2019, the Coalition for Reasonable Vaping Regulation (“CRVR”) was 18 incorporated for the purpose of “advocating for the enforcement of strong and coherent laws, 19 regulations and policies which will prevent the use of e-cigarettes and other tobacco products by 20 youth under the age of 21, while allowing adults the choice to continue purchasing these products 21 1 Defendant Coalition for Reasonable Vaping Regulation (“CRVR”) filed a joinder through which 22 it seeks to join JLI’s motion to dismiss by “adopt[ing] and incorporate[ing] all the statements and arguments set forth in JLI’s motion that explain why the FAC should be dismissed as against 23 CRVR.” Dkt. No. 83 2:7-8. The Court finds that CRVR’s attempt to join JLI’s motion to dismiss is flawed. CRVR is differently situated than JLI with regarding to key legal and factual issues, 24 including but not limited to (1) the relationships between CRVR, Long Ying, David Ho, the Yes on C Campaign, and Plaintiffs; and (2) CRVR’s “usual course of business.” Further, the argument 25 made by JLI and CRVR that they are not each other’s alter egos is undermined by CRVR’s attempt to rely on JLI’s motion practice. Accordingly, the Court rejects CRVR’s purported 26 joinder, and declines to consider whether any claims against CRVR should be dismissed, because no proper motion to dismiss has been filed as to those claims. If CRVR seeks to dismiss the 27 claims against it in the FAC or a future amended complaint, it needs to bring its own motion. 1 in brick and mortar stores and online.” FAC ¶ 15. CRVR is an “alliance of San Francisco 2 residents, businesses, and community leaders who believe in common sense regulation preventing 3 youth access and preserving adult choice.” Id. CRVR was formed to pass Proposition C, which 4 would have overturned a San Francisco ordinance suspending the sale of electronic cigarettes and 5 vapor products in the city. Id. ¶¶ 4, 15. 6 JLI is a San Francisco-based company that manufactures electronic nicotine delivery 7 devices. Id. ¶ 14. Plaintiffs allege that JLI’s Vice President of Supply and Demand Planning filed 8 Proposition C. Id. ¶ 23. Plaintiffs assert that the CEO of CRVR is also a JLI employee, and that 9 JLI gave zero-interest loans and non-monetary contributions to CRVR. Id. ¶ 16. Plaintiffs allege 10 that “[CRVR] and [JLI] are each other’s alter egos and form a single enterprise.” Id. ¶ 16. 11 The FAC alleges that “[JLI] and/or the [CRVR]” hired David Ho, a political consultant, 12 and his company Long Ying International, Inc. (“Long Ying”), a San Francisco-based strategic 13 consultancy, to provide campaign consulting and field management services in connection with 14 the Yes on C Campaign. Id. ¶ 24. Plaintiffs allege that CRVR paid Long Ying over $4 million in 15 2019 for its campaign work. Id. ¶ 17. Plaintiffs also allege that JLI paid David Ho $20,000 for 16 lobbying activity that occurred before “JLI and/or the Coalition” allegedly hired Ho and Long 17 Ying. Id. ¶¶ 18, 24. 18 Plaintiffs allege that CRVR advertised “Campaign Worker Positions online describing job 19 responsibilities as phone banking, direct in-person voter contact, and campaign visibility” for 20 “$25.00 per hour.” Id. ¶ 26. In the months preceding the November 5, 2019 election, Plaintiffs 21 allege that they were interviewed and hired by “[CRVR] and/or Long Ying” as independent 22 contractors to provide canvassing services for CRVR in connection with the Yes on C Campaign. 23 Id. ¶¶ 28-32. Plaintiffs allege that, “[a]s part of the hiring process,” they each signed and agreed to 24 “Independent Contractor Agreements” to work as “independent contractor[s]” with Long Ying. 25 Id. ¶ 30. The agreements were signed by Plaintiffs and “David Ho on behalf of Long Ying”. Id. 26 The Independent Contractor Agreements are not alleged to have been signed by CRVR or JLI. 27 Plaintiffs allege that the campaign workers started working on the Yes on C Campaign 1 2019. Id. ¶ 59. During the 1.5-month campaign, Plaintiffs and other campaign workers allegedly 2 worked as canvassers, phone bankers, or both. Id. ¶¶ 34, 36. Plaintiffs allege that the “phone 3 banking and canvassing operations were run on a day-to-day basis by a group of Campaign 4 managers and administrators that were paid in part or in whole by the Coalition” and that “David 5 Ho oversaw the phone banking and canvassing operations at the office.” Id. ¶¶ 33-34. Plaintiffs 6 allege that phone bankers reported to a “Campaign office,” used equipment from the “Campaign,” 7 and were provided with scripts from the “Campaign.” Id. ¶¶ 37-39. Plaintiffs further allege that 8 canvassers were provided with “Campaign materials and tablets” from CRVR, but otherwise 9 received directions from the “Campaign.” Id. ¶¶ 44-46. The campaign workers received bi- 10 weekly paychecks from Long Ying. Id. ¶ 56. The campaign, as well as all work performed by the 11 campaign workers, ended on September 30, 2020. Id. ¶ 59. Plaintiffs generally allege that 12 Defendants failed to pay the campaign workers minimum wages, separation wages, overtime 13 wages, meal periods, and business expenses. Id. ¶¶ 73-138. 14 Based on these allegations, Plaintiffs assert individual and class claims against JLI, CRVR, 15 Long Ying, and David Ho under the California Labor Code for (1) failure to pay wages owed at 16 separation, (2) failure to furnish accurate wage statements, (3) failure to pay minimum wages, (4) 17 failure to pay San Francisco minimum wage, (5) failure to pay overtime wages, (6) failure to 18 reimburse business expenses, and (7) failure to provide meal periods. Plaintiffs also assert a claim 19 for (8) violations of California’s Unfair Competition Law. Further, Plaintiffs assert a claim for (9) 20 failure to pay overtime wages under the federal Fair Labor Standards Act. Finally, Plaintiffs seek 21 (10) civil penalties under the Private Attorneys General Act, Cal. Labor Code § 2698 et seq. 22 II. LEGAL STANDARD 23 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 24 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 25 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 26 granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is 27 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support 1 Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a 2 claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 3 A claim is facially plausible when a plaintiff pleads “factual content that allows the court to draw 4 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 5 556 U.S. 662, 678 (2009).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MARIA DE LA LUZ BAUTISTA-PEREZ, Case No. 20-cv-01613-HSG et al., 8 ORDER GRANTING MOTION TO Plaintiffs, DISMISS 9 v. Re: Dkt. No. 82 10 JUUL LABS, INC., et al., 11 Defendants. 12 13 Pending before the Court is Defendant Juul Labs, Inc.’s (“JLI”) motion to dismiss (Dkt. 14 No. 79, “Motion”) Plaintiffs’ First Amended Complaint (Dkt. No. 78, “FAC”).1 For the following 15 reasons, the Court GRANTS the motion with leave to amend as to the claims against JLI.2 16 I. BACKGROUND 17 On July 3, 2019, the Coalition for Reasonable Vaping Regulation (“CRVR”) was 18 incorporated for the purpose of “advocating for the enforcement of strong and coherent laws, 19 regulations and policies which will prevent the use of e-cigarettes and other tobacco products by 20 youth under the age of 21, while allowing adults the choice to continue purchasing these products 21 1 Defendant Coalition for Reasonable Vaping Regulation (“CRVR”) filed a joinder through which 22 it seeks to join JLI’s motion to dismiss by “adopt[ing] and incorporate[ing] all the statements and arguments set forth in JLI’s motion that explain why the FAC should be dismissed as against 23 CRVR.” Dkt. No. 83 2:7-8. The Court finds that CRVR’s attempt to join JLI’s motion to dismiss is flawed. CRVR is differently situated than JLI with regarding to key legal and factual issues, 24 including but not limited to (1) the relationships between CRVR, Long Ying, David Ho, the Yes on C Campaign, and Plaintiffs; and (2) CRVR’s “usual course of business.” Further, the argument 25 made by JLI and CRVR that they are not each other’s alter egos is undermined by CRVR’s attempt to rely on JLI’s motion practice. Accordingly, the Court rejects CRVR’s purported 26 joinder, and declines to consider whether any claims against CRVR should be dismissed, because no proper motion to dismiss has been filed as to those claims. If CRVR seeks to dismiss the 27 claims against it in the FAC or a future amended complaint, it needs to bring its own motion. 1 in brick and mortar stores and online.” FAC ¶ 15. CRVR is an “alliance of San Francisco 2 residents, businesses, and community leaders who believe in common sense regulation preventing 3 youth access and preserving adult choice.” Id. CRVR was formed to pass Proposition C, which 4 would have overturned a San Francisco ordinance suspending the sale of electronic cigarettes and 5 vapor products in the city. Id. ¶¶ 4, 15. 6 JLI is a San Francisco-based company that manufactures electronic nicotine delivery 7 devices. Id. ¶ 14. Plaintiffs allege that JLI’s Vice President of Supply and Demand Planning filed 8 Proposition C. Id. ¶ 23. Plaintiffs assert that the CEO of CRVR is also a JLI employee, and that 9 JLI gave zero-interest loans and non-monetary contributions to CRVR. Id. ¶ 16. Plaintiffs allege 10 that “[CRVR] and [JLI] are each other’s alter egos and form a single enterprise.” Id. ¶ 16. 11 The FAC alleges that “[JLI] and/or the [CRVR]” hired David Ho, a political consultant, 12 and his company Long Ying International, Inc. (“Long Ying”), a San Francisco-based strategic 13 consultancy, to provide campaign consulting and field management services in connection with 14 the Yes on C Campaign. Id. ¶ 24. Plaintiffs allege that CRVR paid Long Ying over $4 million in 15 2019 for its campaign work. Id. ¶ 17. Plaintiffs also allege that JLI paid David Ho $20,000 for 16 lobbying activity that occurred before “JLI and/or the Coalition” allegedly hired Ho and Long 17 Ying. Id. ¶¶ 18, 24. 18 Plaintiffs allege that CRVR advertised “Campaign Worker Positions online describing job 19 responsibilities as phone banking, direct in-person voter contact, and campaign visibility” for 20 “$25.00 per hour.” Id. ¶ 26. In the months preceding the November 5, 2019 election, Plaintiffs 21 allege that they were interviewed and hired by “[CRVR] and/or Long Ying” as independent 22 contractors to provide canvassing services for CRVR in connection with the Yes on C Campaign. 23 Id. ¶¶ 28-32. Plaintiffs allege that, “[a]s part of the hiring process,” they each signed and agreed to 24 “Independent Contractor Agreements” to work as “independent contractor[s]” with Long Ying. 25 Id. ¶ 30. The agreements were signed by Plaintiffs and “David Ho on behalf of Long Ying”. Id. 26 The Independent Contractor Agreements are not alleged to have been signed by CRVR or JLI. 27 Plaintiffs allege that the campaign workers started working on the Yes on C Campaign 1 2019. Id. ¶ 59. During the 1.5-month campaign, Plaintiffs and other campaign workers allegedly 2 worked as canvassers, phone bankers, or both. Id. ¶¶ 34, 36. Plaintiffs allege that the “phone 3 banking and canvassing operations were run on a day-to-day basis by a group of Campaign 4 managers and administrators that were paid in part or in whole by the Coalition” and that “David 5 Ho oversaw the phone banking and canvassing operations at the office.” Id. ¶¶ 33-34. Plaintiffs 6 allege that phone bankers reported to a “Campaign office,” used equipment from the “Campaign,” 7 and were provided with scripts from the “Campaign.” Id. ¶¶ 37-39. Plaintiffs further allege that 8 canvassers were provided with “Campaign materials and tablets” from CRVR, but otherwise 9 received directions from the “Campaign.” Id. ¶¶ 44-46. The campaign workers received bi- 10 weekly paychecks from Long Ying. Id. ¶ 56. The campaign, as well as all work performed by the 11 campaign workers, ended on September 30, 2020. Id. ¶ 59. Plaintiffs generally allege that 12 Defendants failed to pay the campaign workers minimum wages, separation wages, overtime 13 wages, meal periods, and business expenses. Id. ¶¶ 73-138. 14 Based on these allegations, Plaintiffs assert individual and class claims against JLI, CRVR, 15 Long Ying, and David Ho under the California Labor Code for (1) failure to pay wages owed at 16 separation, (2) failure to furnish accurate wage statements, (3) failure to pay minimum wages, (4) 17 failure to pay San Francisco minimum wage, (5) failure to pay overtime wages, (6) failure to 18 reimburse business expenses, and (7) failure to provide meal periods. Plaintiffs also assert a claim 19 for (8) violations of California’s Unfair Competition Law. Further, Plaintiffs assert a claim for (9) 20 failure to pay overtime wages under the federal Fair Labor Standards Act. Finally, Plaintiffs seek 21 (10) civil penalties under the Private Attorneys General Act, Cal. Labor Code § 2698 et seq. 22 II. LEGAL STANDARD 23 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 24 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 25 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 26 granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is 27 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support 1 Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a 2 claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 3 A claim is facially plausible when a plaintiff pleads “factual content that allows the court to draw 4 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 5 556 U.S. 662, 678 (2009). 6 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 7 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 8 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, 9 Courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 10 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 11 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). Even if the 12 court concludes that a 12(b)(6) motion should be granted, the “court should grant leave to amend 13 even if no request to amend the pleading was made, unless it determines that the pleading could 14 not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th 15 Cir. 2000) (en banc) (quotation omitted). 16 III. DISCUSSION 17 JLI contends that the FAC should be dismissed in its entirety because it fails to allege any 18 theory under which JLI would be liable to Plaintiffs or the putative class as to any of their ten 19 causes of action. According to JLI, each of Plaintiffs’ causes of action relies on the assumption 20 that JLI was, in some capacity, an “employer” of Plaintiffs and the campaign workers with some 21 say in how they were classified. FAC ¶¶ 14, 74-76, 82, 85-86, 92-93, 100, 105, 107, 110-11, 114- 22 16, 121, 128-30, 135-36. JLI further argues that Plaintiffs fail to adequately allege that JLI and 23 CRVR are each other’s alter egos, and that even if they were, the FAC fails to allege any basis for 24 liability against CRVR. 25 Plaintiffs acknowledge that their claims against JLI are predicated on their allegations that 26 JLI and CRVR are a single enterprise or each other’s alter egos and that CRVR employed 27 Plaintiffs. See Dkt. No. 89 (“Opp.”) 11:17-19. Because Plaintiffs fail to adequately plead a single 1 whether CRVR employed Plaintiffs for purposes of California employment law or the FLSA. 2 Plaintiffs argue in the alternative that JLI is a joint employer, but Plaintiffs also fail to adequately 3 plead facts that would support this theory of employment. 4 A. Plaintiffs Fail To Adequately Allege That JLI and CRVR Are A Single Enterprise Or Each Other’s Alter Egos 5 6 Plaintiffs allege that that JLI and CRVR “are each other’s alter egos and form a single 7 enterprise.” FAC ¶ 16. JLI contends that Plaintiffs’ pleading is insufficient to overcome the 8 presumption of corporate separateness. Mot. at 10. 9 “Corporate entities are presumed to have a separate existence, and the corporate form will 10 be disregarded only when the ends of justice require this result.” Toho–Towa Co. v. Morgan Creek 11 Prods., Inc., 217 Cal.App.4th 1096, 1107 (2013). “California recognizes alter ego liability where 12 two conditions are met: First, where ‘there is such a unity of interest and ownership that the 13 individuality, or separateness, of the said person and corporation has ceased;’ and, second, where 14 ‘adherence to the fiction of the separate existence of the corporation would ... sanction a fraud or 15 promote injustice.’” In re Schwarzkopf, 626 F.3d 1032, 1038 (9th Cir. 2010) (quoting Wood v. 16 Elling Corp., 572 P.2d 755, 761 n. 9 (1977)). 17 The single enterprise theory has been characterized as a version of alter ego liability in 18 which “there is really only one corporation.” See Mossimo Holdings LLC v. Haralambus, No. CV 19 14-05912 DDP JEMX, 2015 WL 476298, at *3 (C.D. Cal. Feb. 3, 2015) (quoting Mesler v. Bragg 20 Mgmt. Co., 39 Cal.3d 290, 301 (1985)). “In effect what happens is that the court, for sufficient 21 reason, has determined that though there are two or more personalities, there is but one 22 enterprise; and that this enterprise has been so handled that it should respond, as a whole, for the 23 debts of certain component elements of it.” Las Palmas Associates v. Las Palmas Ctr. Associates, 24 235 Cal.App.3d 1220, 1249–50 (1991); see also Toho–Towa Co., 217 Cal.App.4th at 1108 (“The 25 ‘single-business-enterprise’ theory is an equitable doctrine applied to reflect partnership-type 26 liability principles when corporations integrate their resources and operations to achieve a 27 common business purpose.”). 1 i. Unity of Interest and Ownership 2 Unity of interest and ownership is a fact-intensive analysis that requires the Court to 3 consider numerous factors, including inadequate capitalization, commingling of funds and other assets of the two entities, the holding 4 out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and 5 employees, use of one as a mere conduit for the affairs of the other, disregard of corporate formalities, lack of segregation of corporate 6 records, and identical directors and officers. 7 Virtualmagic Asia, Inc. v. Fil-Cartoons, Inc., 99 Cal. App. 4th 228, 245 (2002). “No single factor 8 is determinative, and instead a court must examine all the circumstances to determine whether to 9 apply the doctrine.” Id. 10 Here, Plaintiffs allege that the CEO of CRVR is “also a Senior Director of Public Affairs at 11 Juul.” FAC ¶ 16. Plaintiffs also allege that (1) JLI made “$15,500,000 in zero-interest loans” to 12 CRVR; (2) that JLI made other unspecified “non-monetary contributions” to CRVR; and (3) that 13 JLI is the only creditor for CRVR’s outstanding debts. Id. Plaintiffs contrast JLI’s contributions 14 to CRVR with the $950 that CRVR received from other sources, such as the Chinese American 15 Democratic Club and individual donors. Id. 16 The Court finds that Plaintiffs fail to adequately plead unity of interest and ownership 17 between JLI and CVRV. Alter ego liability is fundamentally an equitable doctrine, and Plaintiffs’ 18 allegations about funding and a single shared employee are insufficient to overcome the 19 presumption of respect for the corporate form. See Stewart v. Screen Gems-EMI Music, Inc., 81 F. 20 Supp. 3d 938, 960 (N.D. Cal. 2015) (“In determining whether a complaint has adequately pleaded 21 alter ego liability, courts start from the premise that ‘[a]lter ego is a limited doctrine, invoked only 22 where recognition of the corporate form would work an injustice.’”). 23 ii. Inequitable Result 24 JLI contends that the FAC is devoid of allegations stating that treating JLI and CRVR as 25 separate corporations would lead to an inequitable result. Mot. at 12. JLI contends that Plaintiffs 26 would be unable to amend to assert such allegations because Plaintiffs have other defendants 27 against whom they seek a remedy even if the claims against JLI are dismissed. Id. Plaintiffs 1 inequitable result because CRVR is undercapitalized with only $377,669.15 in cash on hand. 2 Opp. at 13. 3 As an initial matter, Plaintiffs’ undercapitalization argument relies on assertions not 4 included in, incorporated by reference into, or the subject of a request for judicial notice regarding 5 the FAC. Id.; see Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008) (“In 6 general, the inquiry is limited to the allegations in the complaint, which are accepted as true and 7 construed in the light most favorable to the plaintiff.”). Further, the relevant Ninth Circuit case 8 law regarding undercapitalization applies to a parent-subsidiary relationship, which JLI and 9 CRVR are not alleged to have. Slottow v. Am. Cas. Co. of Reading, Pennsylvania, 10 F.3d 1355, 10 1360 (9th Cir. 1993) (“inadequate capitalization of a subsidiary may alone be a basis for holding 11 the parent corporation liable for the acts of the subsidiary.”). Here, Plaintiffs do not allege a 12 parent-subsidiary corporate structure between JLI and CRVR. 13 Accordingly, Plaintiffs’ allegations, even taken as true, fail to establish that CRVR is an 14 alter ego of, or a single enterprise with, JLI. Plaintiffs’ failure to allege facts plausibly supporting 15 either (1) a unity of interest and ownership; or (2) an inequitable result is fatal to Plaintiffs’ alter 16 ego claim against JLI. However, because the Court cannot conclude that amendment would be 17 futile, the Court will allow leave to amend. 18 B. Plaintiffs Fail To Adequately Allege An Employment Relationship With JLI 19 i. Joint Employer Theory 20 Plaintiffs argue in the alternative that JLI is a joint employer. Opp. at 16. Under the 21 relevant standard, JLI can be liable under a joint employment theory only if it (1) “exercise[s] 22 control over the wages, hours, or working conditions”; or (2) “suffer[s] or permit[s] [] work”; or 23 (3) “engage[s]” workers to perform labor. Henderson v. Equilon Enterprises, LLC, 40 Cal. App. 24 5th 1111, 1117 (2019) (citing Martinez v. Combs, 49 Cal. 4th 35, 64 (2010)). “Engage,” in this 25 context, is “construed as the common law definition of an employment relationship.” Id. 26 Plaintiffs do not allege a direct common law employment relationship between JLI and the 27 campaign workers. As a result, JLI is not alleged to have “engaged” the campaign workers to 1 Similarly, the FAC does not allege that JLI exercised control over the wages, hours, or 2 working conditions of the campaign workers. Plaintiffs’ allegations of control over working 3 conditions primarily concern David Ho, the principal of Long Ying, and unidentified campaign 4 staff. FAC ¶¶ 33-34 (“The phone banking and canvassing operations were run on a day-to-day 5 basis by a group of Campaign managers and administrators that were paid in part or in whole by 6 the Coalition….David Ho oversaw the phone banking and canvassing operation at the office.”). 7 Phone bankers reported to a “Campaign office,” used equipment from the “Campaign,” and were 8 provided with scripts from the “Campaign,” but the “Campaign” is not linked to any specific 9 defendant. Id. ¶¶ 37-39. Plaintiffs also allege that canvassers were provided with “Campaign 10 materials and tablets” from CRVR, but otherwise received directions from the “Campaign.” Id. ¶¶ 11 44, 46. The campaign workers received bi-weekly paychecks from Long Ying. Id. ¶ 56. In sum, 12 the FAC is devoid of allegations of control by JLI. Plaintiffs’ arguments to the contrary rely on 13 allegations of control by CRVR rather than by JLI.3 Opp. at 18. As discussed above, allegations 14 against CRVR are insufficient to state a claim against JLI. 15 ii. Client Employer Theory 16 Plaintiffs’ theory that JLI is liable as a “Client Employer” under Labor Code § 2810.3 also 17 fails. Section 2810.3 imposes joint liability where a defendant (client employer) receives labor 18 from another contractor (labor employer) that is “within [the client employer’s] usual course of 19 business.” Cal. Labor Code § 2810.3(a)(1)(A) (“‘Client employer’ means a business entity, 20 regardless of its form, that obtains or is provided workers to perform labor within its usual course 21 of business from a labor contractor.”). The statute further recognizes that “[u]sual course of 22 business” means the “regular and customary work of a business, performed within or upon the 23 premises or worksite of the client employer.” Cal. Labor Code § 2810.3(a)(6). 24
25 3 The Court notes that Plaintiffs, in the FAC and Opposition, often seem to conflate control over Plaintiffs’ employment by the Yes on C Campaign with control by CRVR. Plaintiffs do not link 26 the “Campaign” and “Campaign staff” with any particular defendant. See Corazon v. Aurora Loan Servs., LLC, No. 11-00542 SC, 2011 WL 1740099, at *4 (N.D. Cal. May 5, 2011) 27 (dismissing complaint because plaintiff failed to sufficiently differentiate pleading against multiple 1 The FAC does not allege that the work for which Long Ying retained Plaintiffs constitutes 2 work within JLI’s “usual course of business.” JLI is alleged to be in the business of being “an 3 electronic cigarette producer.” FAC ¶ 14. The FAC nowhere alleges that phone banking and 4 canvassing fall within JLI’s “usual course of business” of being “an electronic cigarette producer,” 5 id., or that the work was performed on JLI’s premises or worksite. Conversely, Long Ying, the 6 entity with whom Plaintiff admits they signed Independent Contractor Agreements, is engaged in 7 the business of providing “a full complement of public affairs and advocacy services.” Id. ¶ 17. 8 Plaintiff does not allege how public affairs and advocacy services fall within the “usual course of 9 business” of producing electronic cigarettes. This notion is further undermined by the fact that the 10 Yes on C Campaign lasted no more than one and a half months. Id. ¶ 59. As a result, the FAC 11 fails to adequately allege a theory of recovery against JLI under Cal. Labor Code § 2810.3. 12 C. UCL Cause of Action 13 Plaintiffs’ claim under California’s Unfair Competition Law (“UCL”) is based on the same 14 alleged statutory violations as Plaintiffs’ other causes of action. Accordingly, at this stage, 15 Plaintiffs’ UCL claim fails for the same reasons. See, e.g., Obesity Research Inst., LLC v. Fiber 16 Research Int’l, LLC, 165 F. Supp. 3d 937, 953 (S.D. Cal. 2016) (“When a statutory claim fails, a 17 derivative UCL claim also fails.”). Therefore, the Court need not now reach the merits of the UCL 18 cause of action. 19 D. FLSA Cause of Action 20 Plaintiffs’ causes of action—including their cause of action under the FLSA—are 21 predicated on whether Plaintiffs were employed by JLI. Plaintiffs nonetheless contend that the 22 FLSA applies a separate standard for employment. Opp. at 10. The existence of a separate 23 standard is not supported by Ninth Circuit law. Rosenfield v. GlobalTranz Enterprises, Inc., 811 24 F.3d 282, 285 (9th Cir. 2015) (“The FLSA defines ‘employee’ as ‘any individual employed by an 25 employer’ and, in turn, defines ‘employ’ as including ‘to suffer or permit to work.’”); Torres- 26 Lopez v. May, 111 F.3d 633, 639 (9th Cir. 1997) (“The term ‘employ’ has the same meaning under 27 the AWPA as under the FLSA. The term includes ‘to suffer or permit to work.’”). The “suffer or 1 law. See, e.g., Curry v. Equilon Enterprises, LLC, 23 Cal. App. 5th 289, 311 (2018) (holding that 2 || under California law, an entity may be liable where it “suffered or permitted” the work of the 3 || plaintiff). Accordingly, the deficiencies in Plaintiffs’ state law claims apply with equal force to 4 || their claim under the FLSA. 5 || IV. CONCLUSION 6 For the foregoing reasons, the motion to dismiss is GRANTED with leave to amend. 7 || Plaintiff may not add any new causes of action or defendants to an amended complaint, and any 8 amended complaint must be filed within 28 days from the date of this Order 9 IT IS SO ORDERED. 10 || Dated: 12/18/2020 11 7 Maepuread 3B. Ad, ab. HAYWOOD S. GILLIAM, JR. 12 United States District Judge
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