Bendau v. Sequoia One PEO, LLC

• Court: District Court, N.D. California
• Decided: August 16, 2024
• Docket: 3:21-cv-09580
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 GREGORY BENDAU, Case No. 21-cv-09580-TLT

8 Plaintiff, FINAL ORDER DISMISSING ACTION 9 v. Re: ECF Nos. 44, 46 10 CEREBRAL MEDICAL GROUP, A PROFESSIONAL CORPORATION, et al., 11 Defendants. 12 13 INTRODUCTION 14 Before the Court is Plaintiff’s Notice of Motion and Motion for Preliminary Approval of 15 Class Action and PAGA Settlement, ECF No. 44 and the parties’ Joint Stipulation to Vacate 16 Hearing for Final Approval of Class Action Settlement Set for March 19, 2024, and Reset for 17 Status Conference Re: Preliminary Approval. ECF No. 70. On October 17, 2023, the Court held 18 a motion hearing regarding ECF No. 44 and set a Final Approval Hearing. See ECF Nos. 67 and 19 69. During the October 17, 2023, hearing, the Court found the class counsel adequate and the 20 plaintiff adequate for the purposes of the provider class. However, the Court took the vacation 21 class determination under submission. ECF No. 67. The court further requested Counsel submit 22 to the Court the name of a cy pres recipient within 7-10 days for the notice, which was submitted 23 on October 26, 2023, and the Court granted the stipulated order. ECF Nos. 68, 69. 24 On March 18, 2024, Defendant Cerebral Medical Group, PC and Cerebral Medical Group, 25 PA filed a Response to the Court’s Tentative Ruling and Questions. Upon review, it appeared that 26 the Court lacked jurisdiction given the lack of minimal diversity. It also appeared the Court 27 should stay the matter, abstain, or dismiss the action, given the duplicative litigation in the state 1 On March 5, 2024, the Court issued a Notice of Tentative Ruling and Questions re ECF 2 Nos. 44 and 70. ECF No. 71. On March 18, 2024, Defendant Cerebral Medical Group, PC and 3 Cerebral Medical Group, PA responded to this notice with partial responses. ECF No. 74. 4 However, Plaintiff did not respond to the Court’s Notice. See Docket generally. 5 At the request of the parties’ briefs, previous oral arguments, relevant legal authority and 6 for the reasons stated above, the Court DISMISSES this action sua sponte. 7 BACKGROUND 8 On June 6, 2023, Plaintiff Bendau filed a First Amended Class Action Complaint (“FAC”) 9 against Sequoia One PEO, LLC (California Citizen), Cerebral Medical Group, a Professional 10 Corporation (California Citizen), Cerebral Medical Group, PA fka South Lemon Provider Group, 11 PA (“South Lemon”) (Dual Citizen of California and Florida), and DOES 1 through 10, inclusive. 12 See ECF No. 52 (FAC) ¶ 12; ECF No. 74. The first amended complaint is the operative 13 complaint. The initial complaint was filed on December 10, 2021, against the same defendants. 14 ECF No. 1. 15 The Class Period is alleged to be four years prior to the complaint. ECF No. 52 (FAC) ¶ 1. 16 The complaint brings claims under the California Labor Code based on Defendants’ alleged: (1) 17 failure to pay wages for all hours worked; (2) failure to pay accrued and unused vacation time to 18 separated employees; (3) failure to keep accurate payroll records and provide accurate itemized 19 wage statements; (4) failure to pay wages due at separation of employment; (5) failure to 20 indemnify for business expenditures; and (6) unfair business practices under California’s Unfair 21 Competition Law (“UCL”) codified in the California Business & Professions Code § 17200 et seq. 22 Plaintiff also brings a Private Attorney General Act (“PAGA”) claim. See ECF No. 16 (Joint Case 23 Management Statement); see also ECF No. 52 (FAC). The class members are composed of 24 workers who worked in California during the Class Period. ECF No. 44-1 (Exh. A to Plaintiff’s 25 Motion for Preliminary Approval of Class Action and PAGA Settlement), at 17. 26 The Court held a hearing on the Motion for Preliminary Approval of Class Action 27 Settlement on September 7, 2023. ECF No. 56. After that, the Court asked some follow up 1 October 16, 2023, which included ECF No. 62 (Declaration of Katherine J. Odenbriet in Support 2 of Plaintiff’s Motion for Preliminary Approval of Class Action and PAGA Settlement Pursuant to 3 Court’s Order (“Odenbriet DCN”)). The Odenbriet DCN shows there are pending state court 4 actions against the same defendants in this action that are based on defendants’ alleged violation 5 of the same California Labor Code provisions that are alleged to have been violated in this case. 6 ECF No. 62 (Odenbriet DCN) ¶ 3. In addition, the pending state court actions also have UCL and 7 PAGA claims alleged based on the same or overlapping set of facts for work performed by the 8 Class Members during the same or overlapping period, or the Class Period. In the San Francisco 9 Superior Court, a Class Action and PAGA action were brought against both Cerebral Medical 10 Group, PA and Cerebral Medical Group, PC (with no fictitiously known as (“fka”) South Lemon 11 named). ECF No. 62-1 (Exh. A to Odenbriet DCN), at 2 ¶¶1.1, 1.4, 1.5, 2.1, and 2.3. In Los 12 Angeles Superior Court, apparently, just a PAGA claim was brought against Cerebral Medical 13 Group, PC. ECF No. 62-2, Exh. B. On February 28, 2024, the parties filed a stipulation with a 14 proposed order to vacate the hearing scheduled for March 19, 2024 for Final Approval of 15 Settlement. ECF No. 70. 16 Plaintiff Bendau, and at least two out of the three defendants (if not all), are California 17 citizens. ECF No. 52 ¶¶ 7, 8, 12. Plaintiff Bendau was employed by one or more of the 18 defendants from March 16, 2021 through May 28, 2021 as an Associate Therapist. ECF No. 52 19 (FAC) ¶ 18. 20 South Lemon has dual citizenship during the pendency of this action, as a citizen of 21 Florida and California. ECF No. 52 (FAC) ¶ 5; ECF No. 74, at 2:18-25 (“South 22 Lemon[’s]…principal place of business is listed as California in the 2/14/22 Florida Corporation 23 Annual Report….Since [this is a] snapshot[], counsel for Defendants is seeking further specifics 24 including the specific dates on which the principal place of business changed.”) 25 The complaint states “[u]pon information and belief, South Lemon provides an online 26 platform in which it delivers services such as online prescriber visits, care counseling and 27 prescription deliver.” Id. As stated, in the San Francisco Superior Court, a Class Action and 1 Group, PC (with no fictitiously known as South Lemon named). ECF No. 62-1 (Exh. A to 2 Odenbriet DCN), at 2 ¶¶ 1.1, 1.4, 1.5, 2.1, and 2.3. And, in Los Angeles Superior Court 3 apparently only a PAGA claim was brought; it was seemingly brought against only one defendant, 4 Cerebral Medical Group, PC. ECF No. 62-2 (Exh. B to Odenbriet DCN); ECF No. 45 5 (Defendants Notice of Related Case), at 2. 6 Martha Methu is the worker who brought the PAGA Action in Los Angeles County 7 Superior Court. Methu was employed by Defendants with the title of Associate Therapist from on 8 or about November 15, 2021 through on or about September 9, 2022. See Methu v. Cerebral 9 Medical Group, a PC, et al, Case No. 23-PSCV-00082 (PAGA Complaint filed on January 11, 10 2023); see also ECF No. 45 (Defendants Cerebral Medical Professional Corporation, and Cerebral 11 Medical Group PA’s Notice of Related Case). According to Plaintiff’s counsel in this action, the 12 class is not defined in Methu (ECF No. 62 (Odenbriet DCN), at 5:11-18); but, as stated in further 13 detail below, counsel adds that Methu has no impact on the settlement before this court. Id. at 14 4:10-24. 15 Kaycie Crossley is the worker who brought the Class Action and PAGA Action in the San 16 Francisco County Superior Court; she is a citizen of California employed by Defendants from 17 April 2021 through August 2021 as a Care Counselor. See Crossley v. Cerebral Medical Group, 18 P.A. et al, Case No. CGC-22-599132, at p.3, ¶ 6 (Class Action Complaint filed on April 11, 2022, 19 in San Francisco Superior Court against same defendants); see also Crossley v. Cerebral Medical 20 Group, P.A. et al, Case No. CGC-22-600627 (PAGA Complaint filed on July 11, 2022, in the 21 same court, by the same plaintiff, against the same defendants). 22 On October 12, 2023, the Court gave notice to the parties of questions for the hearing on 23 the Motion for Preliminary Approval. ECF No. 60 (“Odenbriet DCN”). In one of the responsive 24 declarations, Plaintiff’s Counsel in this action states that the settled classes in “Crossley are 25 confined to persons who were classified as an independent contractor.” ECF No. 62 (bold 26 emphasis omitted). Plaintiff’s Counsel further declares she is of the opinion that “Methu has no 27 impact on the settlement before this court…” Id. at 4:10-12. She also states that she and the 1 different people and therefore the claims do not overlap or impact the other.” Id. at 3:16-23. 2 However, later as discussed in further detail below, Plaintiff’s counsel states it is possible there is 3 overlap among the class members. ECF No. 62 (Odenbriet DCN), at 4:19-28. 4 Plaintiff’s Counsel states there are 394 members here, and the settlement fund is $350,000. 5 ECF No. 63 (Supplemental Declaration of Kevin Mahoney), at 3. In the Crossley class, there are 6 218 class members with $1,200,000 fund. ECF No. 62-1 (Exh. A to Odenbriet DCN) ¶ 3. Here, 7 the “[c]lass means all individuals who work or previously worked for Defendants in California 8 and were classified as an independent contractor at any time during the Class Period.” ECF No. 9 62-1 (Exh. A to Odenbriet DCN) ¶ 1.5. Plaintiff’s Counsel states it is possible a class member 10 could be paid from the settlement in Crossley and from a settlement here. ECF No. 62 (Odenbriet 11 DCN), at 4:19-28 (“Further, to the extent a class member in this case was also classified as an 12 independent contractor and is a class member in the Crossley case, both settlements provide for 13 payment to be allocated for [weeks] class members worked for Defendants within the confines of 14 the relevant class period.”). 15 On October 6, 2023, the Clerk of the San Francisco Superior Court filed the Notice of 16 Entry of Final Judgment, in which the Class that settled was described as: “All individuals who 17 work or previously worked for Defendants in California and were classified as an independent 18 contractor at any time during the Class Period. The Class Period is April 11, 2018 through April 19 24, 2023.” Crossley v. Cerebral Medical Group, P.A. et al, Case No. CGC-22-599132, Exh. 2 to 20 the Notice of Entry of Final Judgment ¶ 1 (Order Granting Final Approval of Class Action 21 Settlement, signed October 5, 2023). 22 STANDARD 23 Class Action Fairness Act (“CAFA”) Jurisdiction & CAFA Abstention 24 Section 1332(d)(2) provides that “‘[o]riginal jurisdiction’ [exists] where amount in 25 controversy exceeds $5 million and minimal diversity exists.” Serrano v. 180 Connect, Inc., 478 26 F.3d 1018, 1022 (9th Cir. 2007). For the class, there must be at least “100 or more persons.” Id. 27 at 1021. Serrano continues to state: “… § 1332(d)(3)[ ] describes situations where district courts 1 circumstances; and Section 1332(d)(4) sets out two circumstances that require district courts to 2 decline jurisdiction, the so-called local controversy and home-state controversy exceptions. 3 Implicit in both subsections (d)(3) and (d)(4) is that the court has jurisdiction, but the court either 4 may or must decline to exercise such jurisdiction. See § 1332(d)(3)-(4).” Id. (emphasis in 5 original) (brackets added) (footnote omitted). “‘The local controversy’ exception provides that ‘a 6 district court shall decline to exercise jurisdiction’ over a class action in which the plaintiff class 7 and at least one defendant meet certain characteristics that essentially make the case a local 8 controversy.[ ]” Id. at 1022 (9th Cir. 2007) (emphasis in original) (brackets added) (footnote 9 omitted). 10 Another exception to CAFA jurisdiction is the “home-state controversy” exception: “A 11 district court shall decline to exercise jurisdiction under [§ 1332(d)(2)] ... (B) where two-thirds or 12 more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, 13 are citizens of the State in which the action was originally filed. § 1332(d)(4)(B) (emphasis 14 added).” Id. at 1022–23 (brackets in original). 15 These provisions in CAFA “ensur[e] that where appropriate, state courts can adjudicate 16 certain class actions that have a truly local focus.” Adams v. West Marine Prods., Inc., 958 F.3d 17 1216, 1221 (9th Cir. 2020) (within the context of a remand, the appellate Court affirmed the 18 district court’s finding to remand action to state court when it was “[f]ar more likely than not, the 19 class exceeds that [one-third] threshold,” and therefore the district court did not abuse its 20 discretion in declining to exercise jurisdiction pursuant to the discretionary home state exception). 21 DISCUSSION 22 CAFA Jurisdiction & CAFA Abstention. In this action, it appears that at least two of 23 the three defendants are California citizens, if not all of them. South Lemon is alleged to be a 24 provider of an “online platform” through which the medical services are provided; therefore, it 25 does not appear to be a primary defendant, or even necessary party, to this federal court action. It 26 is noteworthy that South Lemon was not a party in at least one of the state actions, nor was it, as a 27 fictitiously named entity, named as a defendant in either of the state court actions. Moreover, 1 settled, the Class Action and PAGA Action brought in San Francisco Superior Court. See ECF 2 No. 62-1, at 2. Within the removal context, under 28 U.S.C. § 1441, the citizenship of fictitious 3 names does not defeat removal jurisdiction and therefore is not relevant to that jurisdictional 4 analysis. Within the context of determining original diversity jurisdiction, “courts ‘must disregard 5 nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the 6 controversy.’” Bates v. Mortg. Elec. Registration Sys., Inc., 694 F.3d 1076, 1080 (9th Cir. 2012) 7 (citing Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461 (1980)). There is another apparently related 8 Cerebral entity with California citizenship that has recently been sued: Cerebral, Inc., a 9 subscription-based telehealth company, which is alleged in at least one other action to be a citizen 10 of California and Delaware. ECF No. 1 (Notice of Removal) ¶¶ 1, 19 filed in Cullors et al v. 11 Cerebral, Inc. et al, No. 22-cv-09143-DSF-PD (C.D. Cal. Dec. 16, 2022). This shows there is 12 insufficient diversity of citizenship under CAFA since the primary defendants are citizens in the 13 state where the action was initially filed. 14 Additionally, the class in this action (394 persons) and the class in at least two other state 15 court actions are composed of workers who worked in California for the same employer during the 16 same or overlapping period. One of those state actions had 218 persons in the class. The other 17 state actions (or any other administrative or arbitration proceedings) pending or closed (due to 18 settlement or payment of amounts) could include any of the 394 class members. And, those 19 included class members already could have received payment or released their claims. So, it is 20 possible there are not at least 100 persons in the class here. See Serrano, 478 F.3d at 1022. Under 21 the local controversy exception, this Court a “shall decline to exercise jurisdiction” because it is a 22 “class action in which the plaintiff class and at least one defendant meet certain characteristics that 23 essentially make the case a local controversy.” Id. at 1022 (emphasis in original) (internal 24 quotation marks omitted). Given the above, this matter appears to be a local controversy. The 25 facts relating to the citizenship of the class members, along with the citizenship of Defendants, 26 also appear to show the Court must abstain or dismiss under 28 U.S.C. § 1332(d)(2)-(4). See 27 Adams, 958 F.3d at 1216 (when two-thirds or more of the class members were from the 1 CONCLUSION 2 Due to the foregoing, the Court DISMISSES the action sua sponte without prejudice. 3 The Court understands that it is possible that, since the Court’s Notice of Tentative Ruling 4 || in March of this year, Defendants have reached a global settlement resolving multiple lawsuits. It 5 is also possible that, through one of the state actions (or other proceedings), the members of this 6 || class, or a portion of the members in this class, have already settled or released their claims. If 7 settlement has been reached, the parties are encouraged to file a Notice of Settlement. 8 ECF No. 46 is Plaintiff's Amended Motion and Motion for Preliminary Approval of Class 9 Action and PAGA Settlement, which was intended to amend ECF No. 44. The Court does not 10 || find in this Order whether ECF No. 46 amends ECF No. 44. 11 Having carefully considered the parties’ briefs, previous oral arguments, relevant legal 12 authority and for the reasons stated above, the case is DISMISSED. 5 13 The Clerk of the Court is ordered to close the case and terminate the matter. All future 14 || dates are hereby vacated and the remaining motions are rendered MOOT. 3 15 This ORDER resolves ECF Nos. 44 and 46. a 16 || ITISSO ORDERED 3 17 Dated: August 16, 2024 HON: ; PSON 19 United States District Judge 20 21 22 23 24 25 26 27 28