San Francisco Division MITCHELL ERBLICH, Case No. 23-cv-01265-LB
Plaintiff, ORDER TO SHOW CAUSE REGARDING SERVICE AND v. GRANTING MOTION TO DISMISS IN PART RAJ GANDHI, et al., Re: ECF No. 27 Defendants. The plaintiff, a programmer, sued his former employer Netlist and two Netlist executives in state court for failing to comply with federal and state laws governing overtime, meal and rest breaks, and expense reimbursement. Netlist removed the case to federal court, asserting federal- question jurisdiction.1 In an earlier order, the court dismissed the claims under Landers v. Quality Commc’ns Inc., which requires more than bare assertions of wage-and-hours violations. See 771 F.3d 638, 644–45 (9th Cir. 2014). The plaintiff also had not served defendant Raj Gandhi (and still has not served him).2 The plaintiff then filed an amended complaint, dropping one defendant and naming only Netlist and Mr. Gandhi as defendants. The defendants moved to dismiss, raising the 1 Notice of Removal – ECF No. 1. Citations refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page numbers at the top of documents. lack of service of Mr. Gandhi and asserting that the allegations still are too conclusory.3 The court can decide the motion without oral argument. N.D. Cal. Civ. L.R. 7-1(b). The court orders the plaintiff to show cause in writing within six weeks why the case against Mr. Gandhi should not be dismissed for failure to serve him. The plaintiff otherwise plausibly pleads claims against Netlist (but not Mr. Gandhi). The court dismisses the claims against Mr. Gandhi with leave to amend within three weeks. The plaintiff worked for Netlist as a software programmer from February 22, 2022, to June 10, 2022, at an hourly rate of $85 with benefits that included paid time off, medical benefits, and 10,000 shares of restricted stock units.4 Netlist did not give him an employee handbook or any “introduction to work rules.”5 Netlist set an eight-hour-per-day, forty-hour-per-week work schedule: 9:00 a.m. to 6:00 p.m., Monday through Friday, with one one-hour lunch break, Monday to Friday.6 He worked more than eight hours every day and forty hours every week.7 For example, he “recorded in a notebook and recalls that he worked four hours and 15 minutes . . . over his regular 40 hours a week on Sunday, March 6, 2022.”8 He similarly “recalls and recorded” that on May 30, 2022, he worked for seven extra hours (for a total of fifteen hours) “in part due to a Windows update [that] Netlist Defendants required him to process.”9 That day, he did not take the two thirty-minute lunch breaks required by California law.10 Netlist required him to read a book called “Programming Persistent Memory,” which was a comprehensive guide for developers. It took him thirty-two hours to read the book, but they did 3 Second Am. Compl. (SAC) – ECF No. 26; Mot. – ECF No. 27. 4 SAC – ECF No. 26 at 3 (¶¶ 9–13), 7 (¶ 49). 5 Id. (¶ 14). 6 Id. (¶¶ 15–16). 7 Id. (¶ 17). 8 Id. (¶ 18). 9 Id. (¶ 19). not pay him for the time. Similarly, Netlist required him to watch a security video that took 1.5 hours and did not pay him.11 On March 3, 2022, the plaintiff wrote to Netlist’s HR department and told them that Mr. Gandhi refused to pay him overtime for hours that he was required to work and alerted them that his job requirements entailed a work week of more than fifty hours a week, not including five hours for administrative tasks for his Netlist computer.12 He asked for clarification about whether he was entitled to overtime for hours over the nine-to-six core hours.13 Netlist thus knew that he was working overtime and did not pay him for it.14 In addition to the specific lunch breaks he missed on May 30, 2022, Netlist “allowed its various departments to schedule continuous meetings with Plaintiff approximately four out of five days of every week,” which meant he could not take his thirty-minute lunch break.15 When he did not receive his thirty-minute lunch break, Netlist did not pay him the “one hour of premium pay and his regular rate of pay.”16 Netlist required him to use an Intel Linux computer and Mac computer to operate, test, and document Netlist’s software, which meant that he had to buy a Mac mini computer and an Intel computer for about $4,000. Netlist refused to reimburse him for the computer expenses “and other required expenses to perform his work.”17 Netlist thus did not give him accurate pay stubs or reimburse his business expenses.18 The claims are all asserted against Netlist and Mr. Gandhi: (1) failure to properly pay overtime wages, in violation of Cal. Lab. Code §§ 510, 1194, 1194.2; (2) failure to provide accurate, itemized wage statements, in violation of Cal. Lab. Code § 201, and subject to a penalty under 11 Id. (¶¶ 21–23). 12 Id. (¶¶ 24–26). 13 Id. (¶ 28). 14 Id. at 5 (¶¶ 29–36). 15 Id. at 6 (¶¶ 37–38). 16 Id. (¶¶ 38–39). 17 Id. at 6–7 (¶¶ 41–46). Cal. Lab. Code § 203; (4) failure to provide lunch periods, in violation of Cal. Lab. Code § 226; (5) failure to reimburse expenses, in violation of Cal. Lab. Code § 2802; (6) a violation of California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, predicated on the wage-and-hour violations; and (7) failure to pay overtime wages at one-and-one-half times the plaintiff’s regular rate, in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216(b).19 All parties (including Mr. Gandhi, who consented without waiving his challenges to service) consented to magistrate-judge jurisdiction under 28 U.S.C. § 636(c).20 A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief” to give the defendant “fair notice” of (1) what the claims are and (2) the grounds upon which they rest. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, “[a] complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory.” Woods v. U.S. Bank N.A., 831 F.3d 1159, 1162 (9th Cir. 2016). A complaint does not need detailed factual allegations, but “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. Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (cleaned up). A complaint must contain factual allegations that, when accepted as true, are sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc., 838 F. App’x 231, 234 (9th Cir. 2020). “[O]nly the claim needs to be
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San Francisco Division MITCHELL ERBLICH, Case No. 23-cv-01265-LB
Plaintiff, ORDER TO SHOW CAUSE REGARDING SERVICE AND v. GRANTING MOTION TO DISMISS IN PART RAJ GANDHI, et al., Re: ECF No. 27 Defendants. The plaintiff, a programmer, sued his former employer Netlist and two Netlist executives in state court for failing to comply with federal and state laws governing overtime, meal and rest breaks, and expense reimbursement. Netlist removed the case to federal court, asserting federal- question jurisdiction.1 In an earlier order, the court dismissed the claims under Landers v. Quality Commc’ns Inc., which requires more than bare assertions of wage-and-hours violations. See 771 F.3d 638, 644–45 (9th Cir. 2014). The plaintiff also had not served defendant Raj Gandhi (and still has not served him).2 The plaintiff then filed an amended complaint, dropping one defendant and naming only Netlist and Mr. Gandhi as defendants. The defendants moved to dismiss, raising the 1 Notice of Removal – ECF No. 1. Citations refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page numbers at the top of documents. lack of service of Mr. Gandhi and asserting that the allegations still are too conclusory.3 The court can decide the motion without oral argument. N.D. Cal. Civ. L.R. 7-1(b). The court orders the plaintiff to show cause in writing within six weeks why the case against Mr. Gandhi should not be dismissed for failure to serve him. The plaintiff otherwise plausibly pleads claims against Netlist (but not Mr. Gandhi). The court dismisses the claims against Mr. Gandhi with leave to amend within three weeks. The plaintiff worked for Netlist as a software programmer from February 22, 2022, to June 10, 2022, at an hourly rate of $85 with benefits that included paid time off, medical benefits, and 10,000 shares of restricted stock units.4 Netlist did not give him an employee handbook or any “introduction to work rules.”5 Netlist set an eight-hour-per-day, forty-hour-per-week work schedule: 9:00 a.m. to 6:00 p.m., Monday through Friday, with one one-hour lunch break, Monday to Friday.6 He worked more than eight hours every day and forty hours every week.7 For example, he “recorded in a notebook and recalls that he worked four hours and 15 minutes . . . over his regular 40 hours a week on Sunday, March 6, 2022.”8 He similarly “recalls and recorded” that on May 30, 2022, he worked for seven extra hours (for a total of fifteen hours) “in part due to a Windows update [that] Netlist Defendants required him to process.”9 That day, he did not take the two thirty-minute lunch breaks required by California law.10 Netlist required him to read a book called “Programming Persistent Memory,” which was a comprehensive guide for developers. It took him thirty-two hours to read the book, but they did 3 Second Am. Compl. (SAC) – ECF No. 26; Mot. – ECF No. 27. 4 SAC – ECF No. 26 at 3 (¶¶ 9–13), 7 (¶ 49). 5 Id. (¶ 14). 6 Id. (¶¶ 15–16). 7 Id. (¶ 17). 8 Id. (¶ 18). 9 Id. (¶ 19). not pay him for the time. Similarly, Netlist required him to watch a security video that took 1.5 hours and did not pay him.11 On March 3, 2022, the plaintiff wrote to Netlist’s HR department and told them that Mr. Gandhi refused to pay him overtime for hours that he was required to work and alerted them that his job requirements entailed a work week of more than fifty hours a week, not including five hours for administrative tasks for his Netlist computer.12 He asked for clarification about whether he was entitled to overtime for hours over the nine-to-six core hours.13 Netlist thus knew that he was working overtime and did not pay him for it.14 In addition to the specific lunch breaks he missed on May 30, 2022, Netlist “allowed its various departments to schedule continuous meetings with Plaintiff approximately four out of five days of every week,” which meant he could not take his thirty-minute lunch break.15 When he did not receive his thirty-minute lunch break, Netlist did not pay him the “one hour of premium pay and his regular rate of pay.”16 Netlist required him to use an Intel Linux computer and Mac computer to operate, test, and document Netlist’s software, which meant that he had to buy a Mac mini computer and an Intel computer for about $4,000. Netlist refused to reimburse him for the computer expenses “and other required expenses to perform his work.”17 Netlist thus did not give him accurate pay stubs or reimburse his business expenses.18 The claims are all asserted against Netlist and Mr. Gandhi: (1) failure to properly pay overtime wages, in violation of Cal. Lab. Code §§ 510, 1194, 1194.2; (2) failure to provide accurate, itemized wage statements, in violation of Cal. Lab. Code § 201, and subject to a penalty under 11 Id. (¶¶ 21–23). 12 Id. (¶¶ 24–26). 13 Id. (¶ 28). 14 Id. at 5 (¶¶ 29–36). 15 Id. at 6 (¶¶ 37–38). 16 Id. (¶¶ 38–39). 17 Id. at 6–7 (¶¶ 41–46). Cal. Lab. Code § 203; (4) failure to provide lunch periods, in violation of Cal. Lab. Code § 226; (5) failure to reimburse expenses, in violation of Cal. Lab. Code § 2802; (6) a violation of California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, predicated on the wage-and-hour violations; and (7) failure to pay overtime wages at one-and-one-half times the plaintiff’s regular rate, in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216(b).19 All parties (including Mr. Gandhi, who consented without waiving his challenges to service) consented to magistrate-judge jurisdiction under 28 U.S.C. § 636(c).20 A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief” to give the defendant “fair notice” of (1) what the claims are and (2) the grounds upon which they rest. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, “[a] complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory.” Woods v. U.S. Bank N.A., 831 F.3d 1159, 1162 (9th Cir. 2016). A complaint does not need detailed factual allegations, but “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. Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (cleaned up). A complaint must contain factual allegations that, when accepted as true, are sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc., 838 F. App’x 231, 234 (9th Cir. 2020). “[O]nly the claim needs to be plausible, and not the facts themselves. . . .” NorthBay, 838 F. App’x at 234 (citing Iqbal, 556 U.S. at 696); see Interpipe Contracting, Inc. v. Becerra, 898 F.3d 879, 886–87 (9th Cir. 2018) (the court must accept the factual allegations in the 19 Id. at 7–14. The court cites the page numbers and not the paragraph numbers because the paragraph numbers are off in claim seven. complaint “as true and construe them in the light most favorable to the plaintiff”) (cleaned up). Put another way, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “Where a complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of ‘entitlement to relief.’” Id. (cleaned up). If a court dismisses a complaint because of insufficient factual allegations, it should give leave to amend unless “the pleading could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990). If a court dismisses a complaint because its legal theory is not cognizable, the court should not give leave to amend. United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1184 (9th Cir. 2016); see Steele-Klein v. Int’l Bhd. of Teamsters, Loc. 117, 696 F. App’x 200, 202 (9th Cir. 2017) (leave to amend may be appropriate if the plaintiff “identifie[s] how she would articulate a cognizable legal theory if given the opportunity”). There are two issues: service on Mr. Gandhi and whether the plaintiff plausibly pleads claims. The court orders the plaintiff to show cause why the case should not be dismissed against Mr. Gandhi for failure to serve him. Otherwise, the claims survive against Netlist. 1. Service As set forth in the earlier order, the time to serve was sixty days after the complaint was filed on December 16, 2022, meaning, by February 14, 2023. Cal. R. Ct. 3.110(b). The plaintiff tried to serve Mr. Gandhi at his home on February 14 and 15. To the extent that there was delay, it did not warrant dismissal.21 Cf. Cal. Civ. Proc. Code § 583.420(a)(1) (dismissal is discretionary if the summons and complaint are not served within two years after commencement of the action). Still, service must be effected. The court orders the plaintiff to show cause by filing a written submission within six weeks why the case against Mr. Gandhi should not be dismissed for failure to serve him. See Chang v. Beauchamp, No. 19-cv-07068-JSW, 2021 WL 667498, at *5 (N.D. Cal. Jan. 19, 2021) (in removed case, dismissed case for failing to serve an individual defendant). 2. Failure to State a Claim The relevant standard was in the court’s earlier order and is set forth again below.22 In Landers v. Quality Commc’ns Inc., 771 F.3d 638, 644–45 (9th Cir. 2014), the Ninth Circuit set forth the standard for pleading wage-and-hour claims post-Twombly and Iqbal. The plaintiff alleged that his employer violated the minimum-wage and overtime requirements of the FLSA. Id. at 639–40. Specifically, the complaint alleged: The named plaintiff was entitled to a minimum wage and an overtime hourly wage of time and one-half his regular hourly wage for all hours worked in excess of forty hours per week, the named plaintiff worked more than 40 hours per week for the defendants, and the defendants willfully failed to make said overtime and/or minimum wage payments. Id. at 646 (cleaned up). The Ninth Circuit held that this recitation did not state a claim in light of Twombly and Iqbal. Id. It noted “the Supreme Court’s pronouncement in Iqbal that a [p]laintiff’s pleading burden cannot be discharged by a pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action.” Id. at 644 (cleaned up). It held that “although plaintiffs in these types of cases cannot be expected to allege with mathematical precision the amount of overtime compensation owed by the employer, they should be able to allege facts demonstrating there was at least one workweek in which they worked in excess of forty hours and were not paid overtime wages.” Id. at 643 (cleaned up). A complaint that “merely alleges that [a plaintiff] was not paid for overtime hours worked,” without more, does not plead a plausible claim. Id. at 646. Twombly and Iqbal apply to all civil claims in federal court, and thus federal courts apply the Twombly/Iqbal standard as delineated in Landers to minimum-wage, overtime, meal-breaks, and rest-period claims under the California Labor Code. Courts have held that to state a claim, a plaintiff must plead facts demonstrating, in the alternative, (a) she was not paid minimum wage for at least one workweek, or (b) she worked in excess of forty hours and was not paid overtime, or (c) she was impeded from taking a meal break or rest period. See, e.g., Cortez v. United Nat. Foods, Inc., No. 18-cv-04603-BLF, 2019 WL 955001, at *10, *12 (N.D. Cal. Feb. 27, 2019) (applying Landers to California Labor Code minimum-wage, overtime, meal-break, and rest-period claims); Suarez v. Bank of Am. Corp., No. 18-cv-01202-MEJ, 2018 WL 2431473, at *4–7 (N.D. Cal. May 30, 2018) (same). Courts have held that general allegations that a plaintiff “regularly” worked without being adequately compensated, without more facts, are conclusory and insufficient to state a claim. See, e.g., Bush v. Vaco Tech. Servs., No. 17-cv-05605-BLF, 2018 WL 2047807, at *9 (N.D. Cal. May 2, 2018) (the plaintiff’s “bare assertion that she ‘regularly’ worked more than the statutory requirement is conclusory and insufficient under the standard set forth in Landers”). Similarly, general allegations that the defendant “required” a plaintiff to work without being adequately compensated, without more facts, are conclusory and insufficient to state a claim. Id. at *8 (allegations that the plaintiff “was required to report to [the defendant]’s headquarters” at certain times “is another way of saying that [the plaintiff] and the putative class ‘regularly’ worked excess hours, and does not amount to an allegation that [the plaintiff] actually worked” excess hours”); McMillian v. Overton Sec. Servs., No. 17-cv-03354-JSC, 2017 WL 4150906, at *2 (N.D. Cal. Sept. 19, 2017) (allegations that plaintiff “was required to work in excess of 40 hours per week” do not state a plausible claim). There are two issues: (1) whether the plaintiff generally plausibly pleads claims against Netlist and (2) whether he pleads claims against the individual defendant, Mr. Gandhi. First, for the claims against Netlist, at the pleadings stage, the plaintiff has said enough. For the overtime and missed meal breaks, the plaintiff alleged that he had to work overtime to complete his job responsibilities, he gave specific examples of when he worked overtime and missed lunch breaks, and he told HR that he was working overtime (and that his supervisor did not sufficient at the pleadings stage. Bowerman v. Field Asset Servs., Inc., No. 3:13-cv-00057-WHO, 2023 WL 5111961, at *2–3 (N.D. Cal. Aug. 9, 2023) (denying motion to dismiss when complaint alleged the length of an average work week (fifty to sixty hours a week) and “provided specific examples and reasons why [the plaintiff] was not paid for overtime,” including the need to accomplish his assigned tasks within a three-day period, the threats of consequences if he did not do so, and his payment by the job task, not by the hour); Sablowsky v. Auto-Chlor Sys., LLC, No. 23-cv-02555-AGT, 2023 WL 4828009, at *1 (N.D. Cal. July 26, 2023) (denying motion to dismiss when the two plaintiffs each identified one workweek where they worked overtime (sixty and fifty hours, respectively)). The plaintiff also states a claim for reimbursement of expenses under Cal. Labor Code § 2802. An employer must reimburse an employee “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” Cal. Lab. Code § 2802(a). “Merely alleging failure to reimburse unspecified work-related expenses is not enough to state a Section 2802 claim.” Tan v. GrubHub, Inc., 171 F. Supp. 3d 998, 1005 (N.D. Cal. 2016) (collecting cases). “Instead, Section 2802 claims are sufficiently pled where the complaint identifies the particular expenses that were not reimbursed and affirmatively alleges that the expenses were part of the plaintiff’s job duties.” Id. (collecting cases). The plaintiff did that: he alleged that Netlist required him to use an Intel Linux computer and Mac computer to operate, test, and document Netlist’s software, which meant that he had to buy a computer equipment for about $4,000. Netlist did not reimburse him for these expenses. The remaining claims are derivative claims and survive to the extent that the predicate claims do. Second, as to Mr. Gandhi, assuming that service can be accomplished, the issue is whether the plaintiff plausibly pleaded Mr. Gandhi’s personal involvement.23 Cal. Labor Code §§ 558(a), 558.1(a); Rios v. Linn Star Transfer, Inc., No. 19-cv-07009-JSC, 2020 WL 1677338, at *4–6 (N.D. ] Cal. Apr. 6, 2020) (liability under § 558.1 extends to an “owner, director, officer, or managing aget 2 of the employer” who “violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, 3 or 2802” of the Labor Code; plaintiffs must “allege specific facts to establish that [the individual 4 Defendant] was personally involved in the alleged violations;” granted motion to dismiss because 5 allegations were conclusory and relied only on the individual defendants’ positions as owners, 6 directors, officers, or managing agents); Usher v. White, 64 Cal. App. 5th 883, 895 (2021). 7 Similarly, under the FLSA, only an employer is subject to liability. Boucher v. Shaw, 572 F.3d 8 1087, 1091 (9th Cir. 2009). The allegations against Mr. Gandhi are too conclusory to show that he 9 was actually responsible as the equivalent of an employer, especially given the apparent escalation 10 of the issue to HR. 1] CONCLUSION 12 The court dismisses the claims against Mr. Gandhi with leave to amend within three weeks. An 13 amended complaint must contain a blackline of the new complaint against the current complaint. 14 The plaintiff must show cause in writing within six weeks why he has not effected service on Mr. 15 Gandhi. Given that the claims survive against the employer, and given the relatively spare a 16 || allegations of overtime and missed breaks, the court wonders whether claims against Mr. Gandhi 17 || are necessary. The need for an individual defendant is different than it is in, for example, a Z 18 || retaliatory discharge case. 19 This disposes of ECF No. 27. 21 Dated: September 22, 2023 LAUREL BEELER 22 United States Magistrate Judge 23 24 25 26 27 28