Michael Scheiman v. Edward Don & Company, LLC, et al.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MICHAEL SCHEIMAN, Case No. 26-cv-00220-TSH

8 Plaintiff, ORDER GRANTING IN PART AND 9 v. DENYING IN PART MOTION TO DISMISS 10 EDWARD DON & COMPANY, LLC, et al., Re: Dkt. No. 15 11 Defendants. 12 13 I. INTRODUCTION 14 Plaintiff Michael Scheiman is a former sales executive who alleges Defendants Edward 15 Don & Company, LLC and Sysco Corporation failed to pay him earned commissions and did not 16 timely provide his personnel and payroll records. Pending before the Court is Defendants’ Motion 17 to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No.15. Plaintiff filed an 18 Opposition (ECF No. 20) and Defendants filed a Reply (ECF No. 22). The Court finds this 19 matter suitable for disposition without oral argument pursuant to Civil Local Rule 7-1(b) and 20 VACATES the March 5, 2026 hearing. For the reasons stated below, the Court GRANTS IN 21 PART and DENIES IN PART the motion.1 22 II. BACKGROUND 23 Plaintiff began his employment with Myers Restaurant Supply on or about May 21, 2013. 24 First Am. Compl. (FAC) ¶ 19, ECF No. 1-10. In or around 2022, Edward Don acquired Myers, 25 integrating its operations, accounts, and personnel. Id. Following this acquisition, Plaintiff 26 continued in the same role. Id. Plaintiff was assigned to Edward Don’s Alameda, California 27 1 location. Id. 2 Edward Don is a commercial food‑service equipment and supply distributor whose 3 business includes designing commercial kitchens, supplying equipment and supplies, and 4 providing project management services. Id. ¶ 20. As part of this model, Edward Don offers 5 fee‑based design services and then sells recommended equipment and supplies. Id. Sysco 6 acquired Edward Don in October 2023. Id. ¶ 13. 7 Plaintiff worked as a sales executive from December 18, 2022, to December 23, 2024, 8 creating client‑specific designs that generated design fee revenue and facilitating subsequent 9 equipment sales. Id. ¶ 2. His compensation structure, as set forth in an Employment Salesperson 10 Agreement and Commission Plan Addendum, provided a 20% direct margin commission on 11 equipment sales and a 10% direct margin commission on design revenue. Id. ¶ 22; Proctor Decl., 12 Ex. A (Employment Salesperson Agreement), ECF No. 20-1. On October 10, 2024, Edward 13 Don’s Vice President increased Plaintiff’s annual draw from $250,000 to $325,000. FAC ¶ 24. 14 Plaintiff’s employment agreement provided that commissions on orders received before 15 termination and shipped within 60 days remained payable, subject to a 120‑day reconciliation 16 period. Id. ¶ 7. 17 Plaintiff alleges “Defendants” terminated his employment on December 23, 2024. Id. ¶ 6. 18 He alleges that for orders received before his termination and shipped within 60 days thereafter, he 19 earned commissions totaling $359,000, comprised of $352,100 in project‑based equipment sales 20 commissions at a 20% direct margin rate and $6,900 in design fee commissions at a 10% direct 21 margin rate, and that Defendants have not paid these amounts despite expiration of the 120‑day 22 reconciliation period. Id. ¶¶ 25-26. 23 On July 11, 2025; Plaintiff requested his personnel file. Id. ¶ 30. Defendants sent a 24 confidentiality agreement on August 12, Plaintiff returned a signed agreement on August 18, and 25 Defendants countersigned on August 29, indicating records would be provided the following 26 week. Id. ¶¶ 31-33. Plaintiff sent follow‑up requests on September 11 and 12. Id. ¶ 34. On 27 September 12 Defendants indicated they would share the records that same day and later followed 1 additional requests on October 1 and 2. Id. ¶¶ 37-38. 2 On October 16, 2025, Plaintiff filed his initial complaint in Alameda Superior Court 3 seeking, among other relief, injunctive relief requiring production of his personnel file and 4 statutory penalties and fees. ECF No. 1-2. Defendants made an initial production on November 5 12, but it did not include wage statements or payroll records. FAC ¶ 40. Plaintiff requested 6 complete production that day, and Defendants produced the full personnel file on November 13, 7 2025. Id. ¶¶ 40-41. 8 On December 9, 2025, Plaintiff filed the operative First Amended Complaint, alleging six 9 causes of action: (1) withholding of wages in violation of California Labor Code section 206; (2) 10 breach of contract; (3) unjust enrichment; (4) withholding of wages in violation of California 11 fundamental public policy; (5) failure to timely provide payroll records in violation of California 12 Labor Code section 226; and (6) failure to timely provide personnel file in violation of California 13 Labor Code section 1198.5. Id. ¶¶ 42-77. Defendants removed the case to this Court on January 14 8, 2026. 15 Defendants filed the present motion on January 15, 2026. They argue dismissal is 16 appropriate on two grounds. First, they argue all six claims must be dismissed against Sysco 17 because Plaintiff has failed to plausibly allege it was his employer at any point during his tenure. 18 Mot. at 1. Second, they argue his causes of action for unjust enrichment and withholding of wages 19 in violation of fundamental public policy must be dismissed as to both Defendants because they 20 are not recognized as actionable claims under California law. Id. 21 III. LEGAL STANDARD 22 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal 23 sufficiency of a claim. A claim may be dismissed only if it appears beyond doubt that the plaintiff 24 can prove no set of facts in support of his claim which would entitle him to relief.” Cook v. 25 Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011) (citation and quotation marks omitted). Rule 8 26 provides that a complaint must contain a “short and plain statement of the claim showing that the 27 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Thus, a complaint must plead “enough facts 1 570 (2007). Plausibility does not mean probability, but it requires “more than a sheer possibility 2 that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 687 (2009). A complaint 3 must therefore provide a defendant with “fair notice” of the claims against it and the grounds for 4 relief. Twombly, 550 U.S. at 555 (quotations and citation omitted). 5 In considering a motion to dismiss, the court accepts factual allegations in the complaint as 6 true and construes the pleadings in the light most favorable to the nonmoving party. Manzarek v. 7 St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008); Erickson v. Pardus, 551 8 U.S. 89, 93–94 (2007). However, “the tenet that a court must accept as true all of the allegations 9 contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements 10 of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 11 678. 12 If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no 13 request to amend the pleading was made, unless it determines that the pleading could not possibly 14 be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en 15 banc) (citations and quotations omitted). A court “may exercise its discretion to deny leave to 16 amend due to ‘undue delay, bad faith or dilatory motive on part of the movant, repeated failure to 17 cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . . ., 18 [and] futility of amendment.’” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892–93 (9th 19 Cir. 2010) (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). 20 IV. DISCUSSION 21 A. Whether Sysco Employed Plaintiff 22 Defendants first argue Plaintiff fails to assert any facts that would support his contention 23 that he was ever employed by Sysco. Mot. at 3. They note he alleges he “was employed by 24 Defendants,” worked for “Defendants” beginning on December 18, 2022, and that “Sysco 25 acquired Edward Don in October 2023,” but he fails to allege that both Edward Don and Sysco 26 shared control over the same employees, and more specifically, shared control over Plaintiff. Id. 27 at 4 (quoting FAC ¶¶ 2, 16, 18). Defendants also argue Plaintiff contradicts his own allegations by 1 alleges that Sysco did not acquire Edward Don until October 2023. Id. (citing FAC ¶¶ 2, 16, 18). 2 They argue “[t]he mere fact that Sysco later acquired Edward Don is entirely insufficient to 3 establish that Sysco subsequently employed Plaintiff or that Sysco was a party to the Agreement.” 4 Id. They also argue “Plaintiff explicitly acknowledges that Edward Don and Sysco are distinct 5 corporate entities, namely that Edward Don is a Delaware limited liability company and Sysco is a 6 Delaware corporation.” Id. (citing FAC ¶¶ 17, 18). 7 Plaintiff argues he has alleged sufficient facts to state a plausible claim against Sysco under 8 theories of successor liability and joint employment liability. Opp’n at 3. He notes his allegations 9 “that following Sysco’s October 2023 acquisition of Edward Don, as when Edward Don acquired 10 Myers Restaurant Supply in 2022, he continued in the same role, performing substantially 11 identical work, managing the same customers, and selling the same products and services without 12 interruption.” Id. at 4 (citing ¶¶ 13, 18-19). 13 At this point in the proceedings, the Court finds Plaintiff has pled enough facts to state a 14 claim against Sysco that is plausible on its face. While Defendants claim Plaintiff’s allegations are 15 contradictory because he alleges working for “Defendants” starting in December 2022 while also 16 alleging Sysco did not acquire Edward Don until October 2023, this argument mischaracterizes 17 the FAC. Plaintiff alleges he was employed by Edward Don beginning December 18, 2022, that 18 Sysco subsequently acquired Edward Don in October 2023, and that he worked for Defendants as 19 a “sales executive . . . from December 18, 2022 to December 23, 2024.” FAC ¶¶ 1-2, 18. Indeed, 20 Defendants’ Notice of Removal appears to establish a corporate relationship between Edward Don 21 and Sysco. See Notice of Removal ¶ 16(a), ECF No. 1 (establishing company’s ownership 22 structure); Blasgen Decl. ¶ 3, ECF No. 5 (same). As this case proceeds through discovery, it may 23 turn out that Sysco cannot be held liable for these claims. But at this stage, the Court is unwilling 24 to make this determination. See Superior Care Facilities v. Workers’ Comp. Appeals Bd., 27 Cal. 25 App. 4th 1015, 1027 (1994) (“We therefore conclude that under appropriate circumstances, a 26 successor entity may be held liable for the remedies provided in Labor Code section 132a. . . . 27 “[W]e reject a blanket application of the successor doctrine; liability must be determined on a case 1 that controls the business enterprise may be an employer even if it did not ‘directly hire, fire or 2 supervise’ the employees.”) (citing Guerrero v. Superior Ct., 213 Cal. App. 4th 912, 950 (2013)). 3 In the context of a motion to dismiss under Rule 12(b)(6), the Court evaluates only whether the 4 complaint, on its face, sufficiently pleads claims for relief, not whether Plaintiff will ultimately 5 succeed on the merits. As Plaintiff has met his burden, the Court DENIES Defendants’ motion to 6 dismiss on this ground.2 7 B. Unjust Enrichment 8 In his third cause of action for unjust enrichment, Plaintiff alleges he “performed 9 substantial sales services that directly benefited Defendants, which under the Plan, triggered 10 Plaintiff’s entitlement to commission compensation.” FAC ¶ 58. He further alleges “Defendants, 11 with knowledge and appreciation for Plaintiff’s services, retained the benefit of Plaintiff’s work, 12 including substantial revenue generated from the sales, while failing and refusing to remit the 13 commissions Plaintiff earned,” and that “[a]s a result, Defendants have been unjustly enriched at 14 Plaintiff’s expense. Defendants’ retention of benefits without compensating Plaintiff for earned 15 commission would be unjust and inequitable.” Id. ¶¶ 59-60. Plaintiff seeks “restitution to make 16 him whole.” Id. ¶ 61. 17 Defendants argue Plaintiff’s unjust enrichment claim “is not a properly recognized cause of 18 action under California law, and for that reason alone should be dismissed” without leave to 19 amend. Mot. at 4. However, the Ninth Circuit and the California Supreme Court have allowed 20 claims for unjust enrichment to proceed as quasi-contract claims seeking restitution. See Bruton v. 21 Gerber Prods. Co., 703 F. App’x 468, 470 (9th Cir. 2017) (citing Hartford Cas. Ins. Co. v. J.R. 22 Mktg., L.L.C., 61 Cal. 4th 988, 1000 (2015)); see also City of Oakland v. Oakland Raiders, 83 Cal 23 App. 5th 458, 477 (2022) (“There is no cause of action in California labelled ‘unjust enrichment.’ . 24 . . But common law principles of restitution require a party to return a benefit when the retention 25 2 In their reply brief, Defendants argue Plaintiff’s breach of contract claim against Sysco should be 26 dismissed because Sysco was not a party to the employment contract. As they did not raise this 27 argument in their motion, the Court declines to consider it here. See Cedano-Viera v. Ashcroft, 324 F.3d 1062, 1066 n.5 (9th Cir. 2003) (“[W]e decline to consider new issues raised for the first time in a 1 of such benefit would unjustly enrich the recipient; a typical cause of action involving such 2 remedy is ‘quasi-contract.’”) (cleaned up); Lawyer v. Homary Int’l Ltd., 2025 WL 1571856, at *6 3 (N.D. Cal. June 2, 2025) (“Since ‘the theory underlying’ an unjust enrichment claim is ‘that a 4 defendant has been unjustly conferred a benefit ‘through mistake, fraud, coercion, or request’ . . . 5 [t]he return of that benefit is the remedy ‘typically sought in a quasi-contract cause of action.’”) 6 (quoting Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015)). As such, the 7 Court finds Plaintiff may plead a claim for unjust enrichment. See ESG Capital Partners, LP v. 8 Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016) (“To allege unjust enrichment as an independent 9 cause of action, a plaintiff must show that the defendant received and unjustly retained a benefit at 10 the plaintiff’s expense.”) (citation omitted). 11 At the same time, a quasi-contract claim for unjust enrichment “‘cannot lie where there 12 exists between the parties a valid express contract covering the same subject matter.’” Rutherford 13 Holdings, LLC v. Plaza Del Rey, 223 Cal. App. 4th 221, 231 (2014) (quoting Lance Camper Mfg. 14 Corp. v. Republic Indem. Co., 44 Cal. App. 4th 194, 203 (1996)); see also Durell v. Sharp 15 Healthcare, 183 Cal. App. 4th 1350, 1370 (2010) (“As a matter of law, an unjust enrichment claim 16 does not lie where the parties have an enforceable express contract.”); Hughes v. Apple, Inc., 2024 17 WL 4828072, at *6 (N.D. Cal. Nov. 18, 2024) (“Because the remedy for unjust enrichment is 18 restitution, the plaintiffs must show that they lack an adequate remedy at law.”) (citations 19 omitted). Thus, while Plaintiff may alternatively plead both a breach of contract claim and a 20 quasi-contract claim, see Fed. R. Civ. P. 8(d)(2), to do so he “must allege that the supposed 21 contract between him and [Defendants] was unenforceable or void.” Nguyen v. Stephens Inst., 529 22 F. Supp. 3d 1047, 1057 (N.D. Cal. 2021) (“Here, Nguyen alleges an enforceable contract existed 23 between him and AAU but fails to allege that the same contract was unenforceable or void. 24 Accordingly, the Court finds he does not adequately plead his unjust enrichment claim.”) (citing 25 Saroya v. Univ. of the Pac., 503 F. Supp. 3d 986, 998-99 (N.D. Cal. 2020) (noting a plaintiff may 26 alternatively plead a breach of contract claim and quasi-contract claim only if “the plaintiff also 27 pleads facts suggesting that the contract may be unenforceable or invalid”). ] to allege in the alternative that the same contract was unenforceable or void, the Court finds he 2 || does not adequately plead an unjust enrichment claim. Accordingly, the Court GRANTS 3 Defendants’ motion to dismiss Plaintiff's unjust enrichment claim. Dismissal is WITH LEAVE 4 || TO AMEND, but only if Plaintiff can plausibly allege the parties’ contract was void or 5 || unenforceable. 6 C, Withholding of Wages in Violation of Fundamental Public Policy 7 Tn his fourth claim, Plaintiff alleges Defendants’ withholding of his wages “violates 8 fundamental and long-established public policy in California that requires payment of wages to 9 || workers.” FAC § 63 (citing Gould v. Maryland Sound Indus., Inc., 31 Cal. App. 4th 1137, 1147 10 || (1995), as modified (Feb. 9, 1995) (“The prompt payment of wages due an employee is a 11 fundamental public policy of this state.”)). Defendants argue this claim must be dismissed 12 || because they are unaware of any such cause of action under California law. Mot. at 5. In 13 || response, Plaintiff states he “does not oppose dismissal of the Fourth Cause of Action for 14 || Withholding of Wages in Violation of Fundamental Public Policy.” Opp’n at 5 n.1. Accordingly, 2 15 || the Court GRANTS Defendants’ motion as to Plaintiffs claim for Withholding of Wages in a 16 || violation of Fundamental Public Policy. 2 17 Vv. CONCLUSION Z 18 For the reasons stated above, the Court GRANTS IN PART and DENIES IN PART 19 || Defendants’ motion. If Plaintiff chooses to do so, he may file an amended complaint by March 20 19, 2026. 21 IT IS SO ORDERED. 22 23 Dated: February 17, 2026

THOMAS S. HIXSON 25 United States Magistrate Judge 26 27 28