1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MATTHEW LAZARES, Case No. 24-cv-07125-HSG
8 Plaintiff, ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS 9 v. Re: Dkt. No. 12 10 SHOPIFY (USA), INC., 11 Defendant.
12 13 Pending before the Court is Defendant Shopify (USA) Inc.’s motion for judgment on the 14 pleadings. Dkt. No. 12. The Court finds this matter appropriate for disposition without oral 15 argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons detailed 16 below, the Court GRANTS the motion. 17 I. BACKGROUND 18 Plaintiff Matthew Lazares initially filed this putative class action in the Superior Court of 19 San Mateo. See Dkt. No. 1 at ¶ 1. In the amended complaint, Plaintiff alleges that Defendant 20 misclassified him and other commissioned sales employees as “exempt,” in violation of California 21 law. See Dkt. No. 1-2 (“FAC”) at ¶¶ 23–34. As a result, Plaintiff asserts that they were not 22 properly paid for overtime or sick time, did not receive proper meal and rest breaks due to their 23 work obligations, and were not timely paid. See id. at ¶¶ 35–51, 86–95. Plaintiff also alleges that 24 Defendant would frequently alter the Commission Plans, which include sales quotas for 25 commissioned employees, without the agreement of or notice to the affected employees. See id. at 26 ¶¶ 52–57. These employees, therefore, could not effectively calculate their commissions or track 27 their progress toward sales targets. See id. at ¶ 57. 1 agreements that he says are unlawful. He alleges: 2 • The Commission Plans require California sales employees to waive their right to bring 3 a claim for unpaid wages. See id. at ¶¶ 58–62. The Plans also limit the notice period 4 for calculating entitlements under the Plans. Id. 5 • The Intellectual Property Rights Agreement (“IP Agreement”) prohibits employees 6 from discussing the Commission Plans, therefore preventing employees from 7 discussing key terms and conditions of their employment (namely, their wages) with 8 anyone. See id. at ¶¶ 63–66. Plaintiff also contends that the IP Agreement’s broad 9 confidentiality requirements operate as a de fact non-compete agreement and the IP 10 Agreement contains an unlawful non-solicitation clause. See id. at ¶¶ 71–77. Plaintiff 11 further alleges that the IP Agreement does not contain the notice required under 12 California Labor Code § 2870 for agreements that require an employee to assign his 13 rights in any invention to his employer. Id. at ¶¶ 82–85. 14 • The Performance Improvement Plan (“PIP”) requires that employees keep the PIP 15 “strictly confidential,” which prevents employees from discussing the terms and 16 conditions of their employment with anyone. See id. at ¶¶ 67–68. 17 Based on these allegations, Plaintiff brings several causes of action for violations of the 18 California Labor Code and California Wage Orders, and as relevant here, violations of the 19 California Unlawful Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. (“UCL”). See id. 20 at ¶¶ 107– 210. Defendant has moved to dismiss Plaintiff’s UCL claim. Dkt. No. 12. 21 II. LEGAL STANDARD 22 “After the pleadings are closed—but early enough not to delay trial—a party may move for 23 judgment on the pleadings.” Fed. R. Civ. P. 12(c). Granting a judgment on the pleadings is 24 proper when, “taking all the allegations in the pleadings as true, the moving party is entitled to 25 judgment as a matter of law.” Gregg v. Haw., Dep’t of Pub. Safety, 870 F.3d 883, 887 (9th Cir. 26 2017) (quoting Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1998)). “Because a Rule 27 12(c) motion is functionally identical to a Rule 12(b)(6) motion, the same standard of review 1 Inc., 637 F.3d 1047, 1054, n.4 (9th Cir. 2011) ) (quotation omitted). 2 “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable 3 legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela 4 Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); see also Fed. R. Civ. P. 8(a) (requiring that 5 a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to 6 relief”). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to 7 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim 8 is facially plausible when a plaintiff pleads “factual content that allows the court to draw the 9 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 10 556 U.S. 662, 678 (2009). In reviewing the plausibility of a complaint, courts “accept factual 11 allegations in the complaint as true and construe the pleadings in the light most favorable to the 12 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 13 2008). Nonetheless, courts do not “accept as true allegations that are merely conclusory, 14 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 15 F.3d 1049, 1055 (9th Cir. 2008). 16 III. DISCUSSION 17 Plaintiff’s UCL claim is premised on several purportedly unlawful practices, including 18 misclassifying employees and requiring them to sign employment documents that contain 19 unlawful provisions. See FAC at ¶¶ 178–192. Plaintiff seeks injunctive relief under the UCL to 20 prevent Defendants from continuing such practices. See id. at ¶ 190; see also Prayer for Relief at 21 p.39. In its motion for judgment on the pleadings, Defendant raises several procedural problems 22 with Plaintiff’s UCL claim. See Dkt. No. 12. 23 A. Equitable Relief 24 Defendant first argues that Plaintiff cannot seek equitable relief under the UCL because he 25 has failed to allege that he lacks an adequate remedy at law. See Dkt. No. 12 at 5–7. “In order to 26 entertain a request for equitable relief, a district court must have equitable jurisdiction, which can 27 only exist under federal common law if the plaintiff has no adequate legal remedy.” Guzman v. 1 claim is premised on the same Labor Code violations for which he is seeking monetary damages, 2 Plaintiff has an adequate remedy at law. See Dkt. No. 12 at 5–6. Plaintiff appears to agree that he 3 must plead an inadequate legal remedy to pursue equitable relief under the UCL. See Dkt. No. 16 4 at 6. Instead, he responds that he is seeking (1) injunctive relief and (2) restitution, which are 5 distinct from any monetary damages for the Labor Code violations. See id. 6 As an initial matter, Plaintiff does not explicitly allege that he lacks an adequate remedy at 7 law. See generally FAC. Nor is this necessarily apparent from the rest of the FAC. Requesting 8 equitable relief is not same as pleading inadequate legal remedies. Even considering Plaintiff’s 9 requested equitable relief, however, the FAC remains deficient.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MATTHEW LAZARES, Case No. 24-cv-07125-HSG
8 Plaintiff, ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS 9 v. Re: Dkt. No. 12 10 SHOPIFY (USA), INC., 11 Defendant.
12 13 Pending before the Court is Defendant Shopify (USA) Inc.’s motion for judgment on the 14 pleadings. Dkt. No. 12. The Court finds this matter appropriate for disposition without oral 15 argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons detailed 16 below, the Court GRANTS the motion. 17 I. BACKGROUND 18 Plaintiff Matthew Lazares initially filed this putative class action in the Superior Court of 19 San Mateo. See Dkt. No. 1 at ¶ 1. In the amended complaint, Plaintiff alleges that Defendant 20 misclassified him and other commissioned sales employees as “exempt,” in violation of California 21 law. See Dkt. No. 1-2 (“FAC”) at ¶¶ 23–34. As a result, Plaintiff asserts that they were not 22 properly paid for overtime or sick time, did not receive proper meal and rest breaks due to their 23 work obligations, and were not timely paid. See id. at ¶¶ 35–51, 86–95. Plaintiff also alleges that 24 Defendant would frequently alter the Commission Plans, which include sales quotas for 25 commissioned employees, without the agreement of or notice to the affected employees. See id. at 26 ¶¶ 52–57. These employees, therefore, could not effectively calculate their commissions or track 27 their progress toward sales targets. See id. at ¶ 57. 1 agreements that he says are unlawful. He alleges: 2 • The Commission Plans require California sales employees to waive their right to bring 3 a claim for unpaid wages. See id. at ¶¶ 58–62. The Plans also limit the notice period 4 for calculating entitlements under the Plans. Id. 5 • The Intellectual Property Rights Agreement (“IP Agreement”) prohibits employees 6 from discussing the Commission Plans, therefore preventing employees from 7 discussing key terms and conditions of their employment (namely, their wages) with 8 anyone. See id. at ¶¶ 63–66. Plaintiff also contends that the IP Agreement’s broad 9 confidentiality requirements operate as a de fact non-compete agreement and the IP 10 Agreement contains an unlawful non-solicitation clause. See id. at ¶¶ 71–77. Plaintiff 11 further alleges that the IP Agreement does not contain the notice required under 12 California Labor Code § 2870 for agreements that require an employee to assign his 13 rights in any invention to his employer. Id. at ¶¶ 82–85. 14 • The Performance Improvement Plan (“PIP”) requires that employees keep the PIP 15 “strictly confidential,” which prevents employees from discussing the terms and 16 conditions of their employment with anyone. See id. at ¶¶ 67–68. 17 Based on these allegations, Plaintiff brings several causes of action for violations of the 18 California Labor Code and California Wage Orders, and as relevant here, violations of the 19 California Unlawful Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. (“UCL”). See id. 20 at ¶¶ 107– 210. Defendant has moved to dismiss Plaintiff’s UCL claim. Dkt. No. 12. 21 II. LEGAL STANDARD 22 “After the pleadings are closed—but early enough not to delay trial—a party may move for 23 judgment on the pleadings.” Fed. R. Civ. P. 12(c). Granting a judgment on the pleadings is 24 proper when, “taking all the allegations in the pleadings as true, the moving party is entitled to 25 judgment as a matter of law.” Gregg v. Haw., Dep’t of Pub. Safety, 870 F.3d 883, 887 (9th Cir. 26 2017) (quoting Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1998)). “Because a Rule 27 12(c) motion is functionally identical to a Rule 12(b)(6) motion, the same standard of review 1 Inc., 637 F.3d 1047, 1054, n.4 (9th Cir. 2011) ) (quotation omitted). 2 “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable 3 legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela 4 Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); see also Fed. R. Civ. P. 8(a) (requiring that 5 a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to 6 relief”). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to 7 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim 8 is facially plausible when a plaintiff pleads “factual content that allows the court to draw the 9 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 10 556 U.S. 662, 678 (2009). In reviewing the plausibility of a complaint, courts “accept factual 11 allegations in the complaint as true and construe the pleadings in the light most favorable to the 12 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 13 2008). Nonetheless, courts do not “accept as true allegations that are merely conclusory, 14 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 15 F.3d 1049, 1055 (9th Cir. 2008). 16 III. DISCUSSION 17 Plaintiff’s UCL claim is premised on several purportedly unlawful practices, including 18 misclassifying employees and requiring them to sign employment documents that contain 19 unlawful provisions. See FAC at ¶¶ 178–192. Plaintiff seeks injunctive relief under the UCL to 20 prevent Defendants from continuing such practices. See id. at ¶ 190; see also Prayer for Relief at 21 p.39. In its motion for judgment on the pleadings, Defendant raises several procedural problems 22 with Plaintiff’s UCL claim. See Dkt. No. 12. 23 A. Equitable Relief 24 Defendant first argues that Plaintiff cannot seek equitable relief under the UCL because he 25 has failed to allege that he lacks an adequate remedy at law. See Dkt. No. 12 at 5–7. “In order to 26 entertain a request for equitable relief, a district court must have equitable jurisdiction, which can 27 only exist under federal common law if the plaintiff has no adequate legal remedy.” Guzman v. 1 claim is premised on the same Labor Code violations for which he is seeking monetary damages, 2 Plaintiff has an adequate remedy at law. See Dkt. No. 12 at 5–6. Plaintiff appears to agree that he 3 must plead an inadequate legal remedy to pursue equitable relief under the UCL. See Dkt. No. 16 4 at 6. Instead, he responds that he is seeking (1) injunctive relief and (2) restitution, which are 5 distinct from any monetary damages for the Labor Code violations. See id. 6 As an initial matter, Plaintiff does not explicitly allege that he lacks an adequate remedy at 7 law. See generally FAC. Nor is this necessarily apparent from the rest of the FAC. Requesting 8 equitable relief is not same as pleading inadequate legal remedies. Even considering Plaintiff’s 9 requested equitable relief, however, the FAC remains deficient. 10 Plaintiff has alleged that in addition to monetary damages, he and the putative classes “are 11 entitled to preliminary and permanent injunctive relief enjoining Defendants from continuing to 12 commit their illegal acts, and for an accounting for and restitution of the monies unlawfully 13 withheld and retained by Defendants and other appropriate relief available . . . .” See FAC at 14 ¶ 190; Prayer for Relief at p. 39. However, “a former employee has no claim for injunctive relief 15 addressing the employment practices of a former employer absent a reasonably certain basis for 16 concluding he or she has some personal need for prospective relief.” Bayer v. Neiman Marcus 17 Grp., Inc., 861 F.3d 853, 865 (9th Cir. 2017). 18 In his opposition brief, Plaintiff suggests that despite no longer working for Defendant, he 19 is seeking protection from Defendant’s ongoing enforcement of its unlawful agreements against 20 him. See Dkt. No. 16 at 6–11. Specifically, Plaintiff states that he and other former employees 21 “are presently unable to assert property rights over their own inventions” based on language in the 22 IP Agreement, and cannot apply for, have to forgo, or are denied “more renumerative positions” 23 because of the non-compete clause. See id. at 7–8, 11. But none of this is alleged in the FAC. 24 Plaintiff does not allege that he has any inventions over which he is unable to assert property 25 rights. Nor does he allege how, if at all, his job search has been affected by any non-compete 26 clause or threat of its enforcement. The FAC does not explain how Defendant continues to 27 enforce its agreements against Plaintiff at all. Cf. Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1 they may not represent a class seeking that relief.”). The FAC only includes a conclusory 2 statement that “Defendants have enforced and continued to enforce their illegal non-compete 3 clauses as well as their overly broad IP Agreement that operates as a non-compete agreement.” 4 See FAC at ¶ 76. This is not enough, and Plaintiff may not amend the complaint through his 5 opposition brief. 6 Plaintiff also suggests in passing that he is seeking restitutionary damages. See Dkt. No. 7 16 at 8–11. He states that “Defendant is in possession of funds that belong to Plaintiff and the 8 California Sales Employees, namely their earned and due commissions . . . .” Id. at 9. Yet 9 critically, Plaintiff fails to explain how such monetary damages are distinct in any way from the 10 monetary award he would obtain in unpaid wages if he was successful in proving his Labor Code 11 claims. 12 B. Standing 13 Although Plaintiff’s UCL claim fails for the reasons detailed above, for efficiency, the 14 Court will briefly consider Defendant’s remaining arguments. To the extent Plaintiff’s UCL 15 claims are premised on Defendant’s enforcement of its agreements, Defendant urges that Plaintiff 16 has failed to allege that he has standing to bring such a claim. See Dkt. No. 12 at 7–9. 17 To establish standing under Article III of the Constitution, a plaintiff must allege an “injury 18 in fact,” which is concrete and particularized, and neither conjectural nor hypothetical. See Lujan 19 v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). Additionally, to have standing to seek prospective 20 injunctive relief, a plaintiff must “demonstrate a real and immediate threat of repeated injury in the 21 future.” Chapman v. Pier 1 Imports (U.S.) Inc., 631 F.3d 939, 946 (9th Cir. 2011) (quotation 22 omitted). As already explained above, Plaintiff has not alleged how he personally is at risk of any 23 future injury. Plaintiff does not allege that Defendant has enforced, attempted to enforce, or will 24 attempt to enforce any aspect of the agreements against him. 25 In addition to the requirements of Article III standing, the UCL has additional standing 26 requirements that require a plaintiff to (1) plead an economic injury and (2) show that the injury 27 was caused by the challenged conduct. See Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 1 Agreement or the PIP. Plaintiff's suggestion that he was forced “to forego lucrative positions that 2 || compete with Defendant” and that he could not “profit off of [his] inventions,” see Dkt. No. 16 at 3 13, is simply not pleaded in the FAC. 4 || IV. CONCLUSION 5 The Court GRANTS the motion for judgment on the pleadings. Dkt. No. 12. As witha 6 || Rule 12(b)(6) motion to dismiss, a court granting judgment on the pleadings under Rule 12(c) 7 should grant leave to amend even if no request for leave to amend has been made, unless it is clear 8 that amendment would be futile. See Pac. W. Grp., Inc. v. Real Time Solutions, Inc., 321 Fed. 9 || App’x 566, 569 (9th Cir. 2008). At this stage in the litigation, the Court cannot say that 10 || amendment would be futile. Plaintiff may therefore file an amended complaint within 21 days of 11 the date of this order. Plaintiff is cautioned that he should fully plead his best case as there is no 12 || guarantee that the Court will grant further leave to amend. 5 13 The Court further SETS case a case management conference on April 1, 2025, at 2:00 p.m. 14 || The hearing will be held by Public Zoom Webinar. All counsel, members of the public, and 3 15 media may access the webinar information at https://www.cand.uscourts.gov/hsg. All attorneys 16 || and pro se litigants appearing for the case management conference are required to join at least 15 3 17 minutes before the hearing to check in with the courtroom deputy and test internet, video, and 18 || audio capabilities. The parties are further DIRECTED to file a joint case management statement 19 || by March 25, 2025. 20 IT IS SO ORDERED. 21 || Dated: 2/4/2025 22 Abeiprerl 73 HAYWOOD S. GILLIAM, JR. United States District Judge 24 25 26 27 28