Jaquez v. Site Safety Traffic Safety and Signs

Opinion

GERARDO JAQUEZ, as an individual No. 2:23-cv-01933-DJC-DB and on behalf of all employees similarly situated,

Plaintiff, ORDER v. SITE SAFE TRAFFIC SAFETY AND SIGNS, a California Corporation; and DOES 1 through 50, inclusive, Defendants.

Pending before this Court is Plaintiff Gerardo Jaquez’s Motion to Remand this

matter to the California Superior Court. (ECF No. 3.)

Having considered the Parties’ briefings and arguments, the Court hereby

GRANTS remand. Plaintiff was employed by Defendant Site Safe Traffic Safety and Signs as a foreman at different job sites around California from 2018 to April 21, 2022. (First Am. Compl. (ECF No. 1 at 5–44) ¶ 11.) At all relevant times, Plaintiff’s employment was subject to a Collective Bargaining Agreement (“CBA”) between the Laborers International Union of North America (the “Union”) and Defendant. (Not. Removal (ECF No. 1 at 1–4) ¶¶ 5–6.) The existing CBA was extended and modified by a

Memorandum of Understanding (“MOU”) on March 15, 2022. (Lodel Decl., Ex. B (ECF

No. 4-2 at 68–79), at 1.)

Plaintiff originally filed this matter in the Solano County Superior Court on April

21, 2023. (Mot. Remand (ECF No. 3) at 2.) While the CBA governed Plaintiff’s

employment at the time of the events which gave rise to these claims, Plaintiff did not

bring claims alleging violations of the CBA, but rather alleged seven causes of action

under the California Labor Code (the “Labor Code”): (1) violations of Labor Code

§§ 204, 246, 510, 1194, 1198 (Failure to Pay All Wages and Sick Pay); (2) violations of

Labor Code §§ 226.7, 512 (Failure to Provide Meal Periods); (3) violation of Labor

Code § 226.7 (Failure to Provide Rest Periods); (4) violation of Labor Code § 226

(Failure to Keep Accurate Itemized Wage Statements); (5) violations of Labor Code

§§ 201–203 (Failure to Pay Wages Upon Termination of Employment); (6) violation of

Labor Code § 2802 (Failure to Reimburse for Necessary Expenditures); and

(7) violation of Business and Professional Code § 17200 et seq. (Unfair Business

Practices). (Id.)

On August 11, 2023, pursuant to a joint stipulation, Plaintiff filed a First

Amended Complaint (“FAC”) adding an eighth cause of action for civil penalties under

the California Private Attorneys General Act of 2004 (“PAGA”). (Id. at 2–3.) In between

Plaintiff filing the initial Complaint and the FAC, Defendant filed two answers to

Plaintiff’s Complaint, and the Parties began conducting class discovery, with Plaintiff

serving Special Interrogatories and Requests for Production on Defendant on June 14,

2023, and Defendant serving responses to the Special Interrogatories on August 8,

2023. (Id.; see also Tunyan Decl., Ex. B (ECF No. 3-1 at 7–25); Tunyan Decl., Ex. C (ECF

No. 3-1 at 26–53).)

On September 8, 2023, Defendant removed this action to federal court on the

basis of federal question jurisdiction, alleging that section 301 of the Federal Labor

Management Relations Act (“LMRA”), 29 U.S.C. § 185(a), preempts Plaintiff’s newly added PAGA claim because this claim is subject to the grievance procedures in the

CBA. (See Not. Removal ¶¶ 1–10.)

Plaintiff brings the present Motion to Remand arguing (1) Defendant’s removal

is untimely as Defendant’s basis for asserting federal jurisdiction was already present

in the initial Complaint; (2) Defendant waived their right to remove this action by filing

two responsive pleadings and engaging in discovery in state court; and (3) the rights

asserted do not arise under or rely on the interpretation of the CBA and are therefore

not preempted by the LMRA. (Mot. Remand at 1–2.) The Court heard argument on

October 26, 2023, with Lilit Tunyan appearing for Plaintiff, and Randal Barnum

appearing for Defendant.

A defendant may remove a state court civil action to federal court so long as

that case could have originally been filed in federal court based on either diversity or

federal question jurisdiction. 28 U.S.C. § 1441(a); City of Chicago v. Int'l Coll. of

Surgeons, 522 U.S. 156, 163 (1997). Federal question jurisdiction is satisfied where

the action arises under “the Constitution, laws, or treaties of the United States.” 28

U.S.C. § 1331. “The presence or absence of federal-question jurisdiction is governed

by the ‘well-pleaded complaint rule,’ which provides that federal jurisdiction exists

only when a federal question is presented on the face of the plaintiff's properly

pleaded complaint.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).

Remand to the state court is proper if there are doubts as to the right of

removal. Geographic Expeditions, Inc. v. Est. of Lhotka ex rel. Lhotka, 599 F.3d 1102,

1107 (9th Cir. 2010). The defendant seeking removal of an action from state court

bears the burden of establishing grounds for federal jurisdiction by a preponderance

of the evidence, see id. at 1106–07, and the district court must remand the case “[i]f at

any time before final judgment it appears that the district court lacks subject matter

jurisdiction[.]” 28 U.S.C. § 1447(c); see also Smith v. Mylan Inc., 761 F.3d 1042, 1044

(9th Cir. 2014). Additionally, 28 U.S.C. § 1446(b)(1) dictates that a “notice of removal of a civil

action or proceeding shall be filed within 30 days after the receipt by the defendant,

through service or otherwise, of a copy of the initial pleading setting forth the claim for

relief upon which such action or proceeding is based . . . .” An exception is made “if

the case stated by the initial pleading is not removable,” in which case “a notice of

removal may be filed within 30 days after receipt by the defendant, through service or

otherwise, of a copy of an amended pleading, motion, order or other paper from

which it may first be ascertained that the case is one which is or has become

removable.” 28 U.S.C. § 1446(b)(3). The 30-day time limit “is mandatory and a timely

objection to a late petition will defeat removal . . . .” Fristoe v. Reynolds Metals Co.,

615 F.2d 1209, 1212 (9th Cir. 1980). “[A] defendant does not have a duty of inquiry if

the initial pleading or other document is ‘indeterminate’ with respect to removability.”

Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121, 1125 (9th Cir. 2013) (citing

Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 693–94 (9th Cir. 2005)). Defendants

are not charged “with notice of removability until [they have] received a paper that

gives them enough information to remove.” Kenny v. Wal-Mart Stores, Inc., 881 F.3d

786, 791 (9th Cir. 2018) (quoting Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d

1136, 1141 (9th Cir. 2013)). At the same time, “a defendant is required ‘to apply a

reasonable amount of intelligence in ascertaining removability.’” Garcia v. Wal-Mart

Stores Inc., 207 F. Supp. 3d 1114, 1129–30 (C.D. Cal. 2016) (quoting Kuxhausen, 707

F.3d at 1140). “A defendant should not be able to ignore pleadings or other

documents from which removability may be ascertained and seek removal only when

it becomes strategically advantageous for it to do so.” Roth, 720 F.3d at 1125.

The Court agrees with Plaintiff that removal of this action to federal court was

untimely as federal question jurisdiction was present based on the facts in the initial

Complaint. As such, the Court will grant remand on timeliness grounds, and declines

to reach Plaintiff’s arguments concerning waiver and preemption. As explained above, the “presence or absence of federal-question jurisdiction

is governed by the ‘well-pleaded complaint rule,’ which provides that federal

jurisdiction exists only when a federal question is presented on the face of the

plaintiff's properly pleaded complaint.” Caterpillar, 482 U.S. at 392. However, “there

is a corollary to the well-pleaded complaint rule under the ‘complete preemption’

doctrine, ‘applied primarily under § 301 of the LMRA.’” Lopez v. Fox Television

Animation, Inc., 76 F. App’x 769, 771 (9th Cir. 2003) (quoting Balcorta v. Twentieth

Century-Fox Film Corp., 208 F.3d 1102, 1107 (9th Cir. 2000)). Section 301(a) of the

LMRA gives federal courts exclusive jurisdiction to hear “[s]uits for violation of

contracts between an employer and a labor organization.” 29 U.S.C. § 185(a). Section

301 “mandate[s] resort to federal rules of law in order to ensure uniform interpretation

of collective-bargaining agreements, and thus to promote the peaceable, consistent

resolution of labor-management disputes.” Lingle v. Norge Div. of Magic Chef, Inc.,

486 U.S. 399, 404 (1988). If a claim is preempted, section 301 “displace[s] entirely any

state cause of action for ‘violation of contracts between an employer and a labor

organization,’” Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr., 463

U.S. 1, 23 (1983), such that “any claim purportedly based on [a] pre-empted state law

is considered, from its inception, a federal claim, and therefore arises under federal

law.” Caterpillar, 482 U.S. at 393.

To further the goal of uniform interpretation of labor contracts, the preemptive

effect of section 301 has been extended beyond suits that allege the violation of a

collective bargaining agreement. See Allis-Chalmers Corp. v. Lueck, 471 U.S. 202,

210–11 (1985) (“The interests in interpretive uniformity and predictability that require

that labor-contract disputes be resolved by reference to federal law also require that

the meaning given a contract phrase or term be subject to uniform federal

interpretation.”). The Ninth Circuit has articulated a two-part test to determine

whether a cause of action is preempted by the LMRA. First, the court must determine

“whether the asserted cause of action involves a right conferred upon an employee by virtue of state law, not by a CBA.” Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059

(9th Cir. 2007). If the right exists solely as a result of the collective bargaining

agreement, then the claim is preempted, and the analysis ends there. Id. (first citing

Lueck, 471 U.S. at 212; and then citing Caterpillar, 482 U.S. at 394). “If, however, the

right exists independently of the CBA, [the court] must still consider whether it is

nevertheless ‘substantially dependent on analysis of a collective-bargaining

agreement.’ If such dependence exists, then the claim is preempted by section 301; if

not, then the claim can proceed under state law.” Id. at 1059–60 (first citing

Caterpillar, 482 U.S. at 394 (citation omitted); and then citing Lueck, 471 U.S. at 213).

Because all of Plaintiff’s claims allege violations of California law and not a

breach of the CBA, the Court must determine whether any of the rights asserted by

Plaintiff meet the Burnside test such that removal is proper. In determining whether

the claims are preempted, the Court may look beyond the pleadings, and in this

instance, will refer to the documents included in the Defendant’s Notice of Removal

and Opposition, including the relevant CBA and MOU. See Lippitt v. Raymond James

Fin. Servs., Inc., 340 F.3d 1033, 1041 (9th Cir. 2003), as amended (Sept. 22, 2003).

Defendant argues that Plaintiff’s right to a PAGA remedy, which was raised for

the first time in the FAC, is preempted because there is a provision in the CBA which

requires all disputes under PAGA to be resolved by the CBA’s grievance and

arbitration procedures as set forth in Section 9 of the CBA. (See Opp’n Remand (ECF

No. 4) at 5–6.) Thus, Defendant contends Plaintiff’s right to pursue a PAGA claim

arises solely under the CBA by way of the grievance procedures. (Id.) Specifically,

Defendant points to paragraphs 21–23 of the MOU, and page 19 of the CBA. (Id.)

The relevant language dictates that:

In addition to Contractual Disputes that may be brought by the Union as described above, all employee disputes

concerning violations of, or arising under Wage Order 16 (except as noted immediately preceding paragraph), the

California Labor Code Sections identified in California Labor Code Section 2699.5 as amended, the California Private

Attorney General Act (Labor Code Section 2698, et. Seq.), and federal, state, and local law concerning wage-hour requirements, wage payment and meal or rest periods, including claims arising under the Fair Labor Standards Act (hereinafter “Statutory Dispute” or “Statutory Disputes”) shall be subject to and must be processed by the employee pursuant to the procedures set forth in Section 9 as the sole and exclusive remedy.

(Lodel Decl., Ex. A (ECF No. 4-2), at 19; see also Lodel Decl., Ex. B, at 5.) Further, the

CBA states that PAGA “claims shall be resolved exclusively through the procedures set

forth in Section 9 and shall not be brought in a court of law or before any

administrative agency such as the California Labor Commissioner.” (Lodel Decl., Ex.

A, at 19; Lodel Decl., Ex. B, at 5.)

Plaintiff counters that Defendant’s removal was untimely because, under this

theory, Plaintiff’s right to pursue most of the Labor Code claims asserted in Plaintiff’s

initial complaint would have also arisen solely under the CBA, thereby creating federal

jurisdiction. (Mot. Remand at 5.) The FAC does not allege any additional facts, it only

adds a PAGA cause of action which seeks civil penalties for the Labor Code violations

alleged in the initial Complaint. (Id.)

Defendant argues in opposition that the PAGA claim is distinct from Plaintiff’s

Labor Code claims, and that it was the inclusion of the PAGA cause of action that

raised the issue of removability for the first time because the grievance procedure in

the CBA was not clearly applicable to Plaintiff’s Labor Code claims. (Opp’n Remand at

5–6 (first citing Wilson-Davis v. SSP Am., Inc., 434 F. Supp. 3d 806, 817 (C.D. Cal.

2020); and then citing Vasserman v. Henry Mayo Newhall Mem’l Hosp., 65 F. Supp. 3d

932, 964 (C.D. Cal. 2014)).)

“The existence of an arbitration clause in a CBA does not necessarily implicate

§ 301 preemption.” Meyer v. Irwin Indus., Inc., 723 F. Supp. 2d 1237, 1246 (C.D. Cal.

2010). In order for the arbitration provision to preempt claims under the LMRA, the

provision must “clearly and unmistakably” waive plaintiff’s statutory right to a judicial

forum to pursue those claims. Munoz v. Atl. Express of L.A., Inc., No. 12-CV-6074-

GHK-FMOX, 2012 WL 5349408, at *4 (C.D. Cal. Oct. 30, 2012); see also Wright v. Universal Mar. Serv. Corp., 525 U.S. 70, 80–81 (1998) (holding that waiver of an

individual’s right to pursue their claims in a judicial forum under a collective

bargaining agreement must be explicit in order to implicate preemption).

Where there is no clear waiver, but the defendant asserts that the court must

interpret the agreement to determine whether the grievance and/or arbitration

provision should nonetheless apply to plaintiff’s claims, the claims are not preempted

under section 301 because a defense cannot serve as the basis for federal jurisdiction.

See Dall v. Albertson's, Inc., 234 F. App'x 446, 449 (9th Cir. 2007); Angeles v. Kik Int'l

LLC, No. 2:22-CV-07342-SB-AFM, 2022 WL 17547781, at *4 (C.D. Cal. Dec. 9, 2022).

The admittedly fine distinction is that where the grievance and/or arbitration provision

is clear and unmistakable, that grievance and/or arbitration procedure becomes the

sole method by which a plaintiff may pursue their legal remedies, and the plaintiff’s

rights to a remedy necessarily arise out of the collective bargaining agreement. On

the other hand, where the defendant looks to a vague or unclear bargaining

agreement in mounting their defense, it is the defendant inserting a federal question.

See Meyer, 723 F. Supp. 2d at 1247 (where it was not clear that plaintiff’s claims were

subject to binding arbitration there was no section 301 preemption); Dall, 234 F.

App’x at 448–49 (rejecting employer’s argument that claims were preempted because

they were “substantially dependent on interpreting the Settlement Agreement to

determine if the release provisions apply to [employees’] individual claims” because

the agreement was “only relevant to Appellees' asserted defenses of waiver, release,

and duty to arbitrate”).

Defendant contends there has been a clear and unmistakable waiver of

Plaintiff’s right to a judicial forum for his PAGA claim under the CBA. (Opp’n Remand

at 5–6.) Specifically, Defendant argues that the PAGA claim is preempted because

“the parties to the CBA agreed that all employee disputes concerning alleged PAGA

violations ‘shall be subject to and must be processed by the employee pursuant to’

the grievance and arbitration procedures set forth in Section 9.” (Id. at 9.) The Court agrees with Plaintiff, however, that if “Defendant argues the PAGA waiver language in

the CBA triggered the removal, the same language should have triggered removal

when Plaintiff filed his initial complaint” because the CBA grievance procedure

references the Labor Code claims brought in Plaintiff’s initial Complaint and applies

the same or similar waiver language for those claims as for the PAGA claims. (Reply

Remand (ECF No. 5) at 1.)

Specifically, the CBA grievance provision applies to “all employee disputes

concerning violations of, or arising under Wage Order 16 . . . the California Labor

Code Sections identified in California Labor Code Section 2699.5 as amended, the

California Private Attorney General Act (Labor Code Section 2698, et. Seq.), and

federal, state, and local law concerning wage-hour requirements, wage payment and

meal or rest periods . . . .” (Lodel Decl., Ex. A, at 19.) While courts have held that a

grievance and/or arbitration provision does not lead to federal preemption unless it

directly references the relevant statutes at issue, see Johnson v. S.F. Health Care and

Rehab Inc., No. 22-CV-01982-JSC, 2022 WL 2789809, at *5 n.4 (N.D. Cal. July 15,

2022), the CBA provision here references “the California Labor Code Sections

identified in California Labor Code Section 2699.5.” Section 2699.5 lists almost all of

the Labor Code sections cited in the initial Complaint, including: (1) sections 204, 510,

1194, 1198 (Failure to Pay All Wages and Sick Pay); (2) sections 226.7, 512 (Failure to

Provide Meal Periods); (3) section 226.7 (Failure to Provide Rest Periods); (4) section

226 (Failure to Keep Accurate Itemized Wage Statements); (5) sections 201–203

(Failure to Pay Wages Upon Termination of Employment); and (6) section 2802

(Failure to Reimburse for Necessary Expenditures). (Mot. Remand at 2;) see Cal. Lab.

Code § 2699.5; cf. Wright, 525 U.S. at 80–81 (concluding that a collective bargaining

agreement that purported to “cover all matters affecting wages, hours, and other

terms and conditions of employment” did not contain a clear and unmistakable waiver

of the covered employees’ rights to a judicial forum to assert discrimination claims

under the Americans with Disabilities Act). Further, Defendant conceded at the hearing that Plaintiff’s Labor Code claims are subject to the grievance provision in the

CBA. Given this, the Court agrees with Plaintiff that Defendant’s reasoning concerning

preemption of Plaintiff’s PAGA claim also extends to Plaintiff’s Labor Code claims. See

Olea v. Teichert Pipelines, Inc., No. 2:21-CV-01675-RGK-PD, 2021 WL 1839683, at *4–

5 (C.D. Cal. May 7, 2021) (holding a collective bargaining agreement’s arbitration

provision clearly and unmistakably waived plaintiff’s right to a judicial forum for his

statutory claims when it referenced claims arising under “the California Labor Code

Sections identified in California Labor Code section 2699.5,” reasoning that while

arbitration provisions are generally not clear when they ”do not reference any statute

at all or attempt to provide a blanket waiver to all federal and state causes of action,”

the provision at-issue was clear because it identified a statute, section 2699.5, and

specifically stated the waiver applied to the Labor Code sections within that statute).1

Defendant argued at the hearing that preemption of the Labor Code claims

was not clear on the face of the initial Complaint because California law is adverse to

enforcement of arbitration agreements encompassing statutory wage and hour rights,

citing Vasserman v. Henry Mayo Newhall Memorial Hospital, 8 Cal. App. 5th 236

1 The Court notes that at least one court has disagreed with the holding in Olea. See Bartlett v. All Am. Asphalt, No. EDCV 20-1449-JGB-KKx, 2020 WL 6118818, at *8 (C.D. Cal. Oct. 16, 2020) (finding a collective bargaining agreement’s arbitration provision did not clearly and unmistakably waive plaintiff’s right to a judicial forum for his Labor Code claims, even though it referenced claims arising under the sections identified in Labor Code section 2699.5, because it did “not directly reference the statutes at issue” such that incorporation of the statutory provisions was one step removed from their incorporation in the arbitration provision). The Court disagrees with Bartlett’s reasoning. In holding that a collective bargaining agreement’s arbitration provision must directly reference the relevant statutes in order to amount to a “clear and express” waiver of a judicial forum, Bartlett relied on Martinez v. J. Fletcher Creamer & Son, Inc., which found there was no clear waiver of plaintiff’s right to litigate their Labor Code claims in court because the arbitration provision only referenced claims brought under Wage Order 16 and thus did not “expressly reference any of the statutory provisions at issue.” No. CV 10-0968-PSG-FMOx, 2010 WL 3359372, at *5 (C.D. Cal. Aug. 13, 2010). The court reasoned that the reference to Wage Order 16 was insufficient, even though Wage Order 16 incorporated some of th e statutory provisions upon which plaintiff based his claims, because (1) the alleged incorporation of the statutory provisions in Wage Order 16 was one step removed from their alleged incorporation in the collective bargaining agreement, and (2) Wage Order 16 did not clearly incorporate the relevant statutory provisions as only Labor Code section 512 was explicitly referenced. Id. Here, by contrast, the grievance provision expressly references the Labor Code sections identified in section 2699.5, which clearly lists the sections at-issue. This establishes a clear intent to subject those Labor Code sections to the grievance procedures in the CBA. The Court therefore agrees with Olea that this constitutes a “clear and unmistakable” waiver. 2021 WL 1839683, at *5. (2017), Vasserman, 65 F. Supp. 3d, and Valles v. Ivy Hill Corp., 410 F.3d 1071 (9th Cir.

2005). However, these cases do not stand for the proposition that state courts would

not have enforced the arbitration provision in the CBA.2 Rather, these cases concern

whether or not the collective bargaining agreements at issue contained a “clear and

unmistakable waiver of the covered employees’ rights to a judicial forum relating to

the statutory claims alleged in the complaint.” Vasserman, 8 Cal. App. 5th at 246

(internal quotations omitted); see also Vasserman, 65 F. Supp. 3d at 964 (“In order for

a grievance and arbitration provision to implicate preemption, the union-negotiated

waiver of employees' statutory right to a judicial forum must be clear and

unmistakable.”) (cleaned up) (quoting Wright v. Universal Maritime Serv. Corp., 525

U.S. 70, 80–81 (1998)). This is, of course, the same standard that federal courts

routinely employ, and nothing in these cases suggests a different outcome had

Defendants removed the initial Complaint to this Court.

As stated above, to trigger the 30-day removal period under 28 U.S.C.

§ 1446(b)(1), the facts supporting removal must be evident on the face of a complaint.

Harris, 425 F.3d at 695. For the reasons set forth above, the Court finds that

Defendant’s arguments demonstrate that removal should have been sought based on

the Labor Code allegations included in Plaintiff’s initial Complaint filed on April 21,

2023. Therefore, Defendant’s attempt to remove this action for the first time on

September 8, 2023, over four months later, is untimely. The Court will grant remand

on this basis. See Fristoe, 615 F.2d at 1212; see also Durham v. Lockheed Martin

Corp., 445 F.3d 1247, 1253 (9th Cir. 2006) (remand is proper if a defendant's notice of

removal is untimely).

////

////

2 While Valles explained that section 301 does not permit parties to a collective bargaining agreement to waive nonnegotiable state rights, it did not discuss any adversity to arbitration of those rights. See generally 410 F.3d. at 1076. Accordingly, IT IS HEREBY ORDERED that Plaintiff's Motion to Remand (ECF No. 3) is GRANTED. The Clerk of Court is directed to remand the case to the Superior Court of the State of California, County of Solano and close this case. j IT IS SO ORDERED. Dated: _ December 4, 2023 “Daniel A CoD Hon. Daniel alabretta ? UNITED STATES DISTRICT JUDGE Duca -jaquez23cv1933.MotRemand 12