Lazares v. Shopify (USA), Inc.

Opinion

1 2 3 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. 29 11 Defendant.

12 13 Pending before the Court is Defendant Shopify (USA) Inc.’s second motion for judgment 14 on the pleadings. Dkt. No. 29. 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. 18 Plaintiff Matthew Lazares initially filed this putative class action in the Superior Court of 19 San Mateo. See Dkt. No. 1 at ¶ 1. The Court previously granted Defendant’s motion for judgment 20 on the pleadings, Dkt. No. 22, and Plaintiff filed a second amended complaint. Dkt. No. 23 21 (“SAC”). The factual allegations are largely unchanged. 22 Plaintiff alleges as before that Defendant misclassified him and other commissioned sales 23 employees as “exempt,” in violation of California law. See id. at ¶¶ 23–34. As a result, Plaintiff 24 asserts that they were not properly paid for overtime or sick time, did not receive proper meal and 25 rest breaks due to their work obligations, were regularly forced to work seven consecutive days 26 without a day off, and were not timely paid. See id. at ¶¶ 35–51, 89–100. Plaintiff also alleges 27 that Defendant would frequently alter the Commission Plans, which include sales quotas for 1 ¶¶ 52–57. These employees, therefore, could not effectively calculate their commissions or track 2 their progress toward sales targets. See id. at ¶ 57. Plaintiff also identifies several aspects of the 3 Commission Plans and other written agreements that he says are unlawful. See, e.g., id. at ¶¶ 58– 4 88. For example, Plaintiff alleges that Defendant required him and other putative class members 5 to sign unlawful confidentiality and non-compete agreements. Id. 6 Based on these allegations, Plaintiff brings several causes of action for violations of the 7 California Labor Code and California Wage Orders, and as relevant here, violations of the 8 California Unlawful Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. (“UCL”). See id. 9 at ¶¶ 111–233. Defendant once again has moved for judgment on the pleadings as to Plaintiff’s 10 UCL claim and requests for equitable relief. Dkt. No. 29. 12 “After the pleadings are closed—but early enough not to delay trial—a party may move for 13 judgment on the pleadings.” Fed. R. Civ. P. 12(c). Granting a judgment on the pleadings is 14 proper when, “taking all the allegations in the pleadings as true, the moving party is entitled to 15 judgment as a matter of law.” Gregg v. Haw., Dep’t of Pub. Safety, 870 F.3d 883, 887 (9th Cir. 16 2017) (quoting Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1998)). “Because a Rule 17 12(c) motion is functionally identical to a Rule 12(b)(6) motion, the same standard of review 18 applies to motions brought under either rule.” Id. (quoting Cafasso v. Gen. Dynamics C4 Sys., 19 Inc., 637 F.3d 1047, 1054, n.4 (9th Cir. 2011) ) (quotation omitted). 20 “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable 21 legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela 22 Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); see also Fed. R. Civ. P. 8(a) (requiring that 23 a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to 24 relief”). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to 25 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim 26 is facially plausible when a plaintiff pleads “factual content that allows the court to draw the 27 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 1 allegations in the complaint as true and construe the pleadings in the light most favorable to the 2 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 3 2008). Nonetheless, courts do not “accept as true allegations that are merely conclusory, 4 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 5 F.3d 1049, 1055 (9th Cir. 2008). 7 The Court previously dismissed Plaintiff’s UCL claim under Rule 12(c), finding that 8 Plaintiff had failed to allege that he lacked adequate legal remedies and had failed to allege that he 9 had standing to pursue equitable relief. See Dkt. No. 22. Defendant argues that Plaintiff has failed 10 to remedy these deficiencies, and the Court agrees. 11 A. Equitable Jurisdiction 12 Defendant first argues that Plaintiff cannot seek equitable relief under the UCL because he 13 has failed to allege that he lacks an adequate remedy at law. See Dkt. No. 29 at 5–9. “In order to 14 entertain a request for equitable relief, a district court must have equitable jurisdiction, which can 15 only exist under federal common law if the plaintiff has no adequate legal remedy.” Guzman v. 16 Polaris Indus., 49 F.4th 1308, 1313 (9th Cir. 2022). 17 In the SAC, Plaintiff seeks “equitable restitutionary damages” and “disgorgement of 18 profits” based on Defendant’s alleged violations of California labor laws. See SAC at ¶¶ 189–203, 19 214, Prayer for Relief at pp.43–44. Plaintiff urges that, although his UCL claim is premised on 20 labor law violations, he nevertheless lacks an adequate remedy at law because the California 21 Labor Code only has a three-year statute of limitations whereas the UCL has a four-year statute of 22 limitations. See id. at ¶¶ 189–197; see also Dkt. No. 35 at 2, 5–8. In other words, Plaintiff asserts 23 that he lacks an adequate remedy of law as to the additional fourth year for which damages are 24 unavailable under the Labor Code’s statute of limitations. Id. 25 The Ninth Circuit has previously rejected reliance on a statute of limitations as a basis for 26 considering legal relief inadequate. See Guzman, 49 F.4th at 1312. In Guzman, the Court 27 explained that “equitable relief must be withheld when an equivalent legal claim would have been 1 claim in federal court when his California Consumers Legal Remedies Act (“CLRA”) claim, based 2 on the same conduct, had been dismissed as time barred. Id. at 1311–12. The Court reasoned that 3 the plaintiff had an adequate legal remedy in the time-barred CLRA claim. Id. The Ninth Circuit 4 explained that the “failure to have timely pursued [a legal] claim cannot confer equitable 5 jurisdiction on a federal court to entertain [a] UCL claim.” Id. at 1312. 6 Relying on such reasoning, courts in this district have rejected the same argument that 7 Plaintiff makes here. See, e.g., Cook v. Matrix Absence Mgmt., Inc., 737 F. Supp. 3d 885, 892 8 (N.D. Cal. 2024); Mish v. TForce Freight, Inc., No. 21-CV-04094-EMC, 2021 WL 4592124, at *7 9 (N.D. Cal. Oct. 6, 2021); Hassell v. Uber Techs., Inc., No. 20-CV-04062-PJH, 2021 WL 2531076, 10 at *21 (N.D. Cal. June 21, 2021). The Court finds the reasoning of these cases persuasive and 11 adopts it here. “[T]he fact that the statute of limitations has now lapsed [as to this fourth year] 12 does not, on its own, render the more limited legal remedies now available to [him] inadequate.” 13 Cook, 737 F. Supp. 3d at 893. 14 Plaintiff has failed to identify any binding authority to support his assertion that he lacks 15 adequate remedies at law based solely on a difference in the statute of limitations applicable to a 16 direct Labor Code claim and a UCL claim based on Labor Code violations. Plaintiff relies heavily 17 on two state court cases that predate Guzman. See Cortez v. Purolator Air Filtration Prods. Co., 18 23 Cal. 4th 163 (Cal. 2000), and Aryeh v. Canon Business Solutions, Inc., 55 Cal. 4th 1185 (Cal. 19 2013). But even if California courts permit plaintiffs to use the UCL to bridge the gap in statutes 20 of limitations, that is not germane to the Court’s equitable jurisdiction here. As the Ninth Circuit 21 explained in Guzman, “even if the relevant state court would allow the equitable claims to 22 proceed, the federal court must apply federal principles governing equity jurisdiction.” Guzman, 23 49 F.4th at 1312 (citing Sonner v. Premier Nutrition Corp., 971 F.3d 834, 841–44 (9th Cir. 2020)). 24 Notably, the only federal cases that Plaintiff has identified do not appear to support his 25 argument either: 26 27 • Plaintiff purportedly quotes Zeiger v. WellPet LLC, 526 F. Supp. 3d 652, 687 (N.D. 1 Cal. 2021),1 but the quoted language does not appear in Zeiger at all. Moreover, the 2 case does not address the question of whether equitable relief is available, or legal 3 remedies are considered inadequate for purposes of equitable jurisdiction, for conduct 4 falling outside the statute of limitations. Rather, the court in Zeiger acknowledged that 5 equitable restitution may sometimes be barred where “equitable restitution [] seek[s] to 6 compensate a plaintiff for the same past harm as monetary damages.” Id. 7 8 • Plaintiff cites Roper v. Big Heart Pet Brands, Inc., 510 F. Supp. 3d 903, 918–19 (E.D. 9 Cal. 2020), indicating that the court “den[ied a] motion to dismiss [a] UCL claim 10 where [the] legal claim was barred by time and UCL provided the only available 11 remedy.” Dkt. No. 35 at 7. But here too, the case did not address whether legal 12 remedies are inadequate for purposes of equitable jurisdiction based on a statute of 13 limitations. The court simply concluded that equitable relief was available to address 14 alleged future harm. Id. 15 16 • Plaintiff cites “Adkins v. Comcast Corp., 2021 WL 4451451, at *4 (N.D. Cal. Sept. 29, 17 2021).” See Dkt. No. 35 at 7, 17. But this Westlaw citation is for an unrelated state 18 criminal case, entitled People v. Escobar, 2021 WL 4451451 (Cal. Ct. App. Sept. 29, 19 2021). 20 21 • Plaintiff similarly cites “Wilcox v. Harbor UCLA Med. Ctr. Guild, No. 2:23-cv-02802- 22 MCS-JC, 2023 WL 8359623, at *4 (C.D. Cal. Nov. 28, 2023).” Dkt. No. 35 at 1. But 23 this Westlaw citation is for an unrelated New Jersey state court case, entitled 257-261 24 20th Ave. Realty, LLC v. Roberto, 477 N.J. Super. 339, 349 (App. Div. 2023), aff’d as 25 modified, 259 N.J. 417 (2025). The Court also reviewed the Wilcox docket in PACER, 26

27 1 Plaintiff attributes the following quotation to Zeiger: “Sonner does not prohibit the assertion of 1 and no order appears to have been filed on November 28, 2023. Elsewhere in the 2 opposition brief, Plaintiff provides two other Westlaw citations for Wilcox. See Dkt. 3 No. 35 at 5, 13. But these citations are also wrong: one is a New York state court reply 4 brief and the other does not appear related to any case. 5 6 In short, Plaintiff offers no legal support for his argument that his legal remedies should be 7 considered inadequate simply because the statute of limitations under the Labor Code is shorter 8 than the statute of limitations under the UCL 2 9 Plaintiff also argues that he lacks adequate legal remedies to the extent his UCL claim is 10 premised on alleged violations of California Business & Professions Code § 16600.1. See Dkt. 11 No. 35 at 8–12; see also SAC at ¶¶ 72–83, 99–100. Plaintiff alleges that Defendant failed to 12 provide him with notice that its non-compete agreements are void, as required under § 16600.1. 13 See id. Plaintiff points out that § 16600.1 explicitly states that “[a] violation of this section 14 constitutes an act of unfair competition.” Cal. Bus. & Prof. Code § 16600.1(c). Relying on this 15 language, Plaintiff appears to suggest that he does not have adequate legal remedies because the 16 statute itself assumes that plaintiffs will bring a UCL claim to enforce their statutory rights. See 17 Dkt. No. 35 at 8–12. 18 But Plaintiff’s argument misses the mark. As Defendant points out, a plaintiff “may bring 19 a private action to enforce this chapter [which includes § 16600.1,] for injunctive relief or the 20 recovery of actual damages, or both.” Cal. Bus. & Prof. Code § 16600.5(e)(1) (emphasis added). 21 Although Plaintiff may not be seeking actual damages under § 16600.5(e)(1), see Dkt. No. 35 at 22 11, such relief is still statutorily available to him. See McKesson HBOC, Inc. v. New York State 23

24 2 The Court has serious concerns that several of Plaintiff’s authorities are miscited or misquoted. As detailed above, this does not appear to be an isolated clerical mistake. Moreover, counsel 25 appears to have filed inaccurate citations in other cases in this district. Judge Orrick recently required counsel to explain how false quotations ended up in their opposition to a motion to 26 dismiss in Moons v. WalkMe, Inc., a Delaware corporation, Case No. 24-cv-07798-WHO, Dkt. No. 44. The Court therefore ORDERS Plaintiff’s counsel to SHOW CAUSE why they should 27 not be sanctioned for providing inaccurate citations in their opposition brief. Counsel shall also 1 Common Ret. Fund, Inc., 339 F.3d 1087, 1093 (9th Cir. 2003) (“Whether [a plaintiff] chooses to 2 pursue [legal] remedies . . . does not alter the availability of the remedies at law.”). And critically, 3 Plaintiff does not explain why such legal remedies—actual damages—are inadequate here to 4 address any failure to provide him the required notice. To the extent Plaintiff suggests that there is 5 some ongoing or future harm for which an injunction is needed, see Dkt. No. 35 at 10, the Court 6 addresses this in Section III.B below. 7 B. Standing 8 Setting aside his request for restitution and disgorgement of profits, Plaintiff also argues 9 that he can still seek injunctive relief under the UCL to prevent Defendant from continuing its 10 allegedly illegal practices. See Dkt. No. 35 at 1–4, 10, 14–15; see SAC at ¶¶ 196, 206, 213; see 11 also Prayer for Relief at pp.43–44. Plaintiff urges that legal remedies are inadequate to protect 12 him—and others—from Defendant’s ongoing conduct. See Dkt. No. 35 at 3–4. Defendant argues, 13 however, that Plaintiff still lacks standing to seek such relief. See Dkt. No. 29 at 9–11. The Court 14 agrees. 15 To establish standing under Article III of the Constitution, a plaintiff must allege an “injury 16 in fact,” which is concrete and particularized, and neither conjectural nor hypothetical. See Lujan 17 v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). Additionally, to have standing to seek prospective 18 injunctive relief, a plaintiff must “demonstrate a real and immediate threat of repeated injury in the 19 future.” Chapman v. Pier 1 Imports (U.S.) Inc., 631 F.3d 939, 946 (9th Cir. 2011) (quotation 20 omitted). 21 As before, Plaintiff has not alleged how he, as a former employee, personally is at risk of 22 any future injury. Plaintiff does not allege that Defendant has enforced, attempted to enforce, or 23 will attempt to enforce any aspect of the allegedly unlawful agreements against him. Nor has he 24 alleged that he somehow altered his behavior as a result of these agreements. Plaintiff claims that 25 he has alleged a credible risk of future harm because he suffered “restrictions on his ability to 26 pursue work, communicate with former colleagues, and protect his own creative output.” Dkt. No. 27 35 at 15. But none of these allegations are in the SAC. Plaintiff also asserts that he “is not 1 See id. But Plaintiff’s own case indicates that “pre-enforcement review” is permissible for 2 purposes of Article III only “under circumstances that render the threatened enforcement 3 sufficiently imminent.” See Susan B. Anthony List v. Driehaus, 573 U.S. 149, 159 (2014). 4 Plaintiff has failed to explain the imminency of any enforcement of the agreements against him. 5 In addition to the requirements of Article III standing, the UCL has additional standing 6 requirements that require a plaintiff to (1) plead an economic injury and (2) show that the injury 7 was caused by the challenged conduct. See Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 8 (Cal. 2011). Here, Plaintiff does not allege how he suffered any economic injury due to 9 Defendant’s allegedly unlawful agreements. Plaintiff states that he “received an exit letter 10 affirming that the unlawful provisions [of the agreements] remain in effect.” See Dkt. No. 35 at 15 11 (citing SAC ¶¶ 70–71). But he has not alleged how he has suffered any economic injury as a 12 result of the agreements or this exit letter. 14 The Court GRANTS the motion for judgment on the pleadings. Dkt. No. 29. As with a 15 Rule 12(b)(6) motion to dismiss, a court granting judgment on the pleadings under Rule 12(c) 16 should grant leave to amend even if no request for leave to amend has been made, unless it is clear 17 that amendment would be futile. See Pac. W. Grp., Inc. v. Real Time Solutions, Inc., 321 Fed. 18 App’x 566, 569 (9th Cir. 2008). The Court finds, however, that further leave to amend would be 19 futile. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (“[W]here 20 the Plaintiff has previously been granted leave to amend and has subsequently failed to add the 21 requisite particularity to its claims, [t]he district court’s discretion to deny leave to amend is 22 particularly broad.” (quotation omitted)). The Court already gave Plaintiff an opportunity to 23 amend, and cautioned him to “fully plead his best case.” See Dkt. No. 22 at 6. Although Plaintiff 24 asks for another opportunity to amend, see Dkt. No. 35 at 16, he offers no explanation of what 25 new allegations he would plead to support his UCL claim. The Court therefore DISMISSES the 26 UCL claim without leave to amend and without prejudice to refiling in state court, as Guzman 27 instructs. See 49 F.4th at 1314–15. The scheduling order, Dkt. No. 34, remains in effect. 1 cause by May 23, 2025, as discussed in footnote 2 above. 3 || Dated: 5/14/2025 4 . ° ee S. GILLIAM, JR. / ! 5 United States District Judge 6 7 8 9 10 ll a 12

13 14

15 16 € = 17 6 Zz 18 19 20 21 22 23 24 25 26 27 28