Igarashi v. H.I.S. Guam Inc.

• Court: District Court, D. Guam
• Decided: February 6, 2023
• Docket: 1:21-cv-00025
• Status: Unknown

Opinion

7 THE DISTRICT COURT OF GUAM

8 OSAMU IGARASHI, CIVIL CASE NO. 21-00025 9 Plaintiff, 10 vs. DECISION AND ORDER RE 11 DEFENDANT’S MOTION TO STRIKE H.I.S. GUAM INC., CLASS CERTIFICATION, ECF NO. 10 12 Defendant. 13

14 Before the court is Defendant H.I.S. Guam, Inc.’s Motion to Strike Class Certification 15 Pursuant to F.R.C.P. 12(f), 23(a), 23(b)(3), 23(c)(1)(A) and 23(d)(1)(D). See ECF No. 10. The 16 motion is fully briefed, and the court deems it suitable for submission without oral argument. For 17 the reasons stated herein, the motion is DENIED. 18 I. Background 19 On September 16, 2021, Plaintiff Osamu Igarashi filed the instant action as a class action. 20 Compl., ECF No. 1. Plaintiff alleges that Defendant H.I.S. Guam, Inc., former employer of 21 Plaintiff, violated the Worker Adjustment and Retraining Notification Act (“WARN Act”), when 22 Plaintiff and other “affected employees” were terminated without advanced notice on or about 23 May 31, 2020. Compl. at ¶¶ 6, 14-15, 33. Defendant operated as a travel service agency and 24 1 e mployed more than 100 employees. Id. at ¶ 16. 2 On October 7, 2021, Defendant filed an Answer to the Complaint. Answer, ECF No. 5. 3 Thereafter, on April 20, 2022, Defendant filed the instant motion. Mot., ECF No. 10. Plaintiff 4 filed an opposition to the motion on May 20, 2022, ECF No. 12; and Defendant filed a reply on 5 June 10, 2022, ECF No. 19.

6 II. Rule 12(b)(6) Standard 7 Federal Rule of Civil Procedure 12(b)(6) permits the dismissal of a claim for “failure to 8 state a claim upon which relief can be granted[.]” Fed. R. Civ. P. 12(b)(6). Whether a party has 9 sufficiently stated a claim for relief is viewed in light of Federal Rule of Civil Procedure 8. Bell 10 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pursuant to Rule 8, a claim for relief must 11 include “a short and plain statement of the claim showing that the pleader is entitled to relief.” 12 Fed. R. Civ. P. 8(a)(2). The pleading standard under Rule 8 “does not require detailed factual 13 allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me 14 accusation.” Ashcroft v. Iqbal, 555 U.S. 662, 678 (2009) (internal quotation marks omitted).

15 On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and 16 construed in the light most favorable to the nonmoving party. Twombly, 550 U.S. at 571. 17 “[F]actual challenges to a plaintiff's complaint have no bearing on the legal sufficiency of the 18 allegations under Rule 12(b)(6).” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). 19 “As a general rule, ‘a district court may not consider any material beyond the pleadings in 20 ruling on a Rule 12(b)(6) motion.’” Id. (citations omitted). As it pertains to a Rule 12(b)(6) 21 motion, Rule 12(d) expressly provides that when “matters outside the pleadings are presented to 22 and not excluded by the court, the motion must be treated as one for summary judgment under 23 Rule 56.” Fed. R. Civ. P. 12(d) (emphasis added).

24 1 III. Discussion1

2 a. Motion to Strike Defendant moves to strike the class allegations in the Complaint pursuant to Federal 3 Rules of Civil Procedure 12(f), 23(a), 23(b)(3), 23(c)(1)(A), and 23(d)(1)(D) “and dismiss the 4 case in its entirety should the Court agree that the [WARN Act] does not apply to Defendant.” 5 Mot. at 8, ECF No. 10. 6 Under Rule 12(f), the court “may strike from a pleading an insufficient defense or any 7 redundant, immaterial, impertinent, or scandalous matter . . . on motion made by a party either 8 before responding to the pleading or, if a response is not allowed, within 21 days after being 9 served with the pleading.” Fed. R. Civ. P. 12(f)(2) (emphasis added). 10 Here, Defendant responded to the pleading, i.e., filed an Answer to the Complaint on 11 October 7, 2021. See Answer, ECF No. 5. Defendant thereafter filed the instant motion to strike 12 on April 20, 2022. See Mot., ECF No. 10. Because Defendant filed an Answer prior to filing the 13 motion to strike pursuant to Rule 12(f), Defendant’s motion is procedurally improper. 14 b. Motion to Dismiss 15 In Defendant’s Reply, Defendant concedes that the motion to strike pursuant to Rule 16 12(f) was procedurally improper and that “Defendant’s Motion should have been brought under 17 FRCP 12(b)(6) for failure to state a claim for class action and lack of standing.” Reply at 1-2, 18 ECF No. 19. Defendant requests that the court construe Defendant’s motion to strike under Rule 19 12(f) as a motion to dismiss under Rule 12(b)(6). Id. at 2. 20 Defendant puts forth the following arguments: (1) Defendant is not subject to the WARN 21 Act because it does not have 100 or more full-time employees, or 100 or more employees who in 22 the aggregate work at least 4,000 hours per week; and (2) assuming Defendant is subject to the 23 24 1 Page citation herein is based on the CM/ECF page numbering system. 1 W ARN Act, Defendant falls under the WARN Act exceptions of “unforeseen business 2 circumstances” and “natural disaster”. See Mot. at 10-11, ECF No. 10. Defendant goes into 3 factual details of how it employed reasonable business judgment and that the “unforeseen nature 4 of the pandemic cannot be reasonably disputed.” Id. at 11-12. Defendant is also asking this court 5 to make a factual finding that for purposes of the WARN Act, the COVID-19 pandemic qualifies

6 as a natural disaster, because “[t]here has not been any conclusive proof that it is a man made 7 [sic] event or caused by human error” and that the “logical conclusion is that the Pandemic virus 8 . . . was a naturally occurring event in nature that infected humans and, thus, is a natural 9 disaster.” Id. at 13-15. 10 Defendant also spent a good amount of time in its motion, refuting what was contained in 11 the Complaint. Defendant somewhat turned its motion into a quasi-Answer to the Complaint, 12 rebutting certain paragraphs in the Complaint. See e.g., Mot. at 16:4-8; 16:9-19; and 15:18-23. 13 As noted above, Defendant wants this court to construe its motion to strike under Rule 14 12(f) as a motion to dismiss under Rule 12(b)(6). Therefore, the court will review Defendant’s

15 arguments under Rule 12(b)(6) standard. 16 On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and 17 construed in the light most favorable to the nonmoving party. Twombly, 550 U.S. at 571. As 18 such, Defendant’s attempt to refute the factual allegations in the Complaint has no place in a 19 Rule 12(b)(6) motion. “[F]actual challenges to a plaintiff's complaint have no bearing on the 20 legal sufficiency of the allegations under Rule 12(b)(6).” Lee, 250 F.3d at 688. 21 The sole count of the Complaint is a claim for relief under the WARN Act. Compl. at 5- 22 9, ECF No. 1. The WARN Act requires a 60-day written notice to each affected employee and to 23 a designated state entity prior to a mass layoff. 29 U.S.C. § 2102(a). A “mass layoff” is defined 24 as a reduction in work force which is not the result of a plant closing and results in an 1 e mployment loss of a certain threshold. 29 U.S.C. § 2101(a)(3). An “affected employee” is 2 defined as an employee who may reasonably be expected to experience an employment loss due 3 to a proposed plant closing or mass layoff by their employer. 29 U.S.C. § 2101(a)(5). An 4 “employment loss” is defined as an employment termination, a layoff exceeding six months, or a 5 reduction in hours of work that meets a certain threshold. 29 U.S.C. § 2101(a)(6). An employer

6 is subject to the WARN Act if it employs 100 or more full-time employees, or 100 or more 7 employees who in aggregate work at least 4,000 hours per week. 29 U.S.C. § 2101(a)(1). 8 The Complaint alleges that Plaintiff and proposed class members were employed and 9 were terminated by Defendant on or about May 31, 2020, without the required 60-day notice 10 under the WARN Act. ¶¶ 6 and 33 of Compl., ECF No. 1. A “separation notice” was issued to 11 Defendant’s employees on May 30, 2020, with the “furlough status” being effective on May 31, 12 2020. Id. at ¶ 32. The Complaint further alleges that Defendant “projected a sense of relative 13 normalcy to its employees”, id. at ¶ 26, and that despite the public health emergency, Defendant 14 gave its employees a sense that their employment would continue, id. at ¶ 37. The Complaint

15 further alleges that Defendant is a Guam corporation who employs more than 100 full-time 16 employees. Id. at ¶ 16. 17 All that Rule 12(b)(6) requires is a short and plain statement of the claim that will give 18 the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests. Fed. 19 R. Civ. P. 8(a)(2). It does not require detailed factual allegations. Iqbal, 555 U.S. at 678. The 20 court finds that Plaintiff has met this requirement. The motion to dismiss under Rule 12(b)(6) is 21 denied. 22 c. Extrinsic Evidence 23 Defendant submitted two declarations, along with exhibits, see ECF Nos. 10-1 and 10-2, 24 and also requested that this court take judicial notice of the Government of Guam’s Executive 1 O rders and “the unforeseen world wide [sic] COVID-19 pandemic, quarantines and border 2 closure responses from the Government of Guam, and other countries and nations, that impacted 3 Guam, its businesses and its citizens [sic] lives for the past two years and continuing forward.” 4 Mot. at 9-10, ECF No. 10. 5 “As a general rule, ‘a district court may not consider any material beyond the pleadings in

6 ruling on a Rule 12(b)(6) motion.’” Lee, 250 F.3d at 688 (citations omitted). The court declines 7 to consider the extrinsic evidence as part of Defendant’s Rule 12(b)(6) motion, because they 8 have no bearing on the legal sufficiency of the allegations under Rule 12(b)(6). Accordingly, the 9 court will not convert this motion to a summary judgment motion under Rule 56. See Fed. R. 10 Civ. P. 12(d). 11 d. Article III Standing 12 Defendant moves this court for a motion to dismiss under Rule 12(b)(6), see Reply at 1-2, 13 and part of its arguments under this motion is that Plaintiff and proposed class members lack 14 standing. Standing falls under Rule 12(b)(1). See Maya v. Centex Corp., 658 F.3d 1060, 1067

15 (9th Cir. 2011) (“[L]ack of Article III standing requires dismissal for lack of subject matter 16 jurisdiction under Federal Rule of Civil Procedure 12(b)(1).”). Therefore, Defendant’s motion is 17 procedurally improper. Nonetheless, the court will entertain Defendant’s standing arguments and 18 will analyze it under Rule 12(b)(1). Under Rule 12(b)(1), the court is not confined to the contents 19 of the Complaint. Id. at 1067. 20 “The standing question is whether the plaintiff has alleged such a personal stake in the 21 outcome of the controversy as to warrant his invocation of federal-court jurisdiction.” Immigrant 22 Assistance Project of Los Angeles County Federation of Labor (AFL-CIO) v. I.N.S., 306 F.3d 23 842, 859 (9th Cir. 2002) (quotation marks, editorial brackets, and citations omitted). 24 “[T]o satisfy Article III's standing requirements, a plaintiff must show (1) it has suffered 1 a n “injury in fact” that is (a) concrete and particularized and (b) actual or imminent, not 2 conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of 3 the defendant; and (3) it is likely, as opposed to merely speculative, that 4 the injury will be redressed by a favorable decision. Hall v. Norton, 266 F.3d 969, 975 (9th Cir. 5 2001).

6 Here, Defendant argues that the first part of the standing requirement is not met. That is, 7 Plaintiff and proposed class members do not have standing because there is no “injury in fact.” 8 Mot. at 19, ECF No. 10. Specifically, Defendant asserts that even though its employees did not 9 work after March 20, 2020, it paid its employees their complete wages beginning March 24, 10 2020. See id. at 12 and 19, ECF No. 10. 11 In a nutshell, Defendant wants this court to count backwards, with the 60 days having 12 commenced prior to the alleged violation. Plaintiff alleges that the violation occurred on or 13 around May 31, 2020,2 the effective date of the “furlough status[,]” when he and other 14 employees received a “separation notice” on May 30, 2020, and no notice was given under the

15 WARN Act. See Compl. at ¶¶ 32-33, ECF No. 1. As such, for purposes of this Article III 16 Standing analysis, the court will use May 31, 2020 as the date of the alleged violation. 17 The statute provides that “[s]uch liability shall be calculated for the period of the 18 violation, up to a maximum of 60 days[.]” 29 U.S.C. § 2104(a)(1). Defendant is not arguing that 19 Plaintiff and proposed class members were furloughed or terminated prior to May 31, 2020.3 In 20

21 2 In Plaintiff’s Opposition to the motion, it refers to a termination date of July 6, 2020 (“they were terminated on July 6, 2020.” Opp’n. at 11, ECF No. 12), based on Exhibit 1 to Pangelinan’s declaration, ECF No. 10-1 at 33. That portion of the exhibit is an email dated July 6, 2020, with a termination date effective August 1, 2020. Assuming 22 arguendo that the July 6, 2020 email qualifies as a WARN Act Notice, Plaintiff and proposed class members still suffered partial harm, because July 6, 2020 (date of notice) to August 1, 2020 (termination date) is less than 60 days. 23 3 Throughout the motion (not in the Article III Standing section itself) and in its Reply, Defendant appears to imply 24 or argue that it gave some type of notice to its employees beginning March 24, 2020. See Mot. at 9 and 15, ECF No. 10; and Reply at 7, ECF No. 19. Plaintiff, in response, argues that emails and such do not equate to a WARN Act 1 f act, Defendant treated the period from March 24, 2020 to May 30, 2020, wherein employees 2 were paid their wages and benefits, as “crisis leave with pay.” See Pangelinan Decl. at ¶¶ 7-8, 3 ECF No. 10-1; Ex. 1 to Pangelinan Decl. at 15, 18, 20, ECF No. 10-1. Defendant did not view 4 this period as a furlough4 or termination, but rather a paid leave. 5 The court finds that the Complaint contained particularized allegations of fact deemed

6 supportive of Plaintiff’s standing. That on May 30, 2020, Defendant’s employees received a 7 notice informing them of a “furlough status” effective May 31, 2020. See Compl. at ¶¶ 32-33, 8 ECF No. 1. That prior to this, no notice was provided to them under the WARN Act. Id. at ¶ 37. 9 That as a result of this, Plaintiff alleges that he and the proposed class members suffered harm. 10 Id. The alleged harm suffered by Plaintiff and proposed class members is “in an amount equal to 11 at least the amounts provided in section 29 U.S.C. § 2104(a)[.]” Id. at 9. 12 Accordingly, the court finds that Plaintiff and the proposed class members have Article 13 III standing. 14 e. Class Certification

15 In Defendant’s motion to strike under Rule 12(f), which Defendant then converted to a 16 motion to dismiss under Rule 12(b)(6), Defendant moves the court to entertain the class 17 certification issue given that Plaintiff has yet to file a class certification motion under Rule 23. 18 See Mot. at 22, ECF No. 10. In response, Plaintiff goes through the factors of Rule 23 for 19 certification. See Opp’n at 15-17, ECF No. 12. 20 As Defendant correctly recognized, class certification requires a rigorous analysis. See 21 Notice. Opp’n at 11, ECF No. 12. The issue of sufficiency of a WARN Act Notice is a separate issue from an Article III standing. See Maya, 658 F.3d at 1068 (“The jurisdictional question of standing precedes, and does not 22 require, analysis of the merits.” (editorial brackets and citation omitted)). Accordingly, the court will not address the issue of sufficiency of a WARN Act Notice. 23 4 Merriam-Webster dictionary defines “furlough” as “a temporary leave from work that is not paid and is often for a 24 set period of time.” (emphasis added). Page 9 of 9 1 || Mot. at 23, ECF No. 10. See Ellis v. Costco Wholesale Corp., 657 F.3d 970, 980 (9th Cir. 2011) 2 || (District courts must engage in a “rigorous analysis” of each Rule 23(a) factor when deciding to 3 || certify a class). Given that Defendant’s motion has been procedurally improper (both under Rule 4 || 12(f) and Rule 12(b)(6)), with conflating arguments on various issues, the court declines to 5 || address the class certification in Defendant’s instant motion. The court prefers to start with a 6 record. Accordingly, the court expects Plaintiff to file a separate Rule 23(a) motion.° 7 IV. Conclusion 8 Based on the foregoing, the court DENIES Defendant’s motion to dismiss under Fed. R.

g || Civ. P. 12(b)(6). A trial scheduling order will be issued separately. 10 SO ORDERED. 1 & Sg /s/ Frances M. Tydingco-Gatewood 12 na. Chief Judge | ?’ & Dated: Feb 06, 2023 13 aie

14 15 16 17 18 19 20 21 22 23 ||> For purposes of the argument on “as soon as practicable” under Rule 23, the court will not consider the time period between the date Defendant filed the instant motion and the date of this order as a delay. The court finds that 94 || addressing Defendant’s dispositive motion first is judicially efficient than to expect Plaintiff to file a motion for class certification while a dispositive motion is pending.