1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PLAZA HOME MORTGAGE, Case No.: 3:20-cv-01352-WQH-DEB INC., a California corporation, 12 ORDER Plaintiff, 13 v. 14 AUTOMATED DATA 15 PROCESSING, INC., a Delaware 16 corporation doing business as ADP, LLC; and DOES 1 through 17 20, inclusive, 18 Defendants. 19 HAYES, Judge: 20 The matter pending before the Court is the Motion to Dismiss filed by Defendant 21 Automated Data Processing, Inc. (ECF No. 13). 22 I. PROCEDURAL BACKGROUND 23 On March 16, 2020, Plaintiff Plaza Home Mortgage, Inc. initiated this action by 24 filing a Complaint against Defendants Automated Data Processing, Inc. (“ADP”) and 25 DOES 1 through 20, inclusive, in the Superior Court of California for the County of San 26 Diego, where it was assigned case number 37-2020-00016686-CU-BC-CTL. (ECF No. 1- 27 2). On July 16, 2020, Defendant ADP removed the action to this Court pursuant to 28 28 1 U.S.C. §§ 1332 (diversity jurisdiction), 1441, and 1446. (ECF No. 1). On July 23, 2020, 2 Defendant ADP filed a Motion to Dismiss Plaintiff’s Complaint for failure to state a claim 3 upon which relief can be granted pursuant to Federal Rules of Civil Procedure 12(b)(6) and 4 9(b). (ECF No. 5). 5 On August 13, 2020, Plaintiff filed a First Amended Complaint, which is the 6 operative pleading in this case. (ECF No. 12). Plaintiff alleges that “[a]s a result of 7 [Defendant] ADP’s negligently designed and implemented payroll software, [Plaintiff] 8 suffered harm . . . .” Id. at 2. Plaintiff brings the following five causes of action against 9 Defendant ADP: (1) breach of contract, (2) express indemnity, (3) equitable indemnity, (4) 10 unfair competition in violation of Business & Professions Code § 17200 et seq., and (5) 11 declaratory relief. See id. at 8-16. Plaintiff seeks compensatory, incidental, consequential, 12 and non-economic damages; attorneys’ fees; costs; pre-judgment and post-judgment 13 interest; “a judicial determination and declaration that [Defendant] ADP must indemnify, 14 defend and hold [Plaintiff] harmless from and against any and all third party liabilities, 15 claims, penalties, damages, forfeitures, suits, and the costs and expenses incident thereto”; 16 and “such other and further relief as the Court deems just and proper.” Id. at 17. 17 On August 27, 2020, Defendant ADP filed a Motion to Dismiss Plaintiff’s First 18 Amended Complaint for failure to state a claim upon which relief can be granted pursuant 19 to Federal Rules of Civil Procedure 12(b)(6) and 9(b). (ECF No. 13). On August 31, 2020, 20 the Court issued an Order denying Defendant ADP’s Motion to Dismiss (ECF No. 5) as 21 moot. (ECF No. 14). On September 21, 2020, Plaintiff filed a Response in opposition. 22 (ECF No. 15). On September 28, 2020, Defendant ADP filed a Reply. (ECF No. 16). 23 II. ALLEGATIONS OF THE FIRST AMENDED COMPLAINT 24 Defendant “ADP is a payroll and human resources services provider . . . .” (ECF 25 No. 12 at 2). Defendant “ADP represents itself as a leader in time and attendance and 26 compliance services.” Id. at 3. Plaintiff “relied on [Defendant] ADP’s expertise and paid 27 significant sums for that service, which included Enhanced Payroll, Essential Time, Payroll 28 & Tax Support, Payroll Specialist, and Workforce Now Performance, among others.” Id. 1 at 2-3. “On May 22, 2017, [Plaintiff] and [Defendant] ADP entered into the ADP 2 Workforce Now Comprehensive Services Master Services Agreement, including an 3 Addendum” (“the 2017 Agreement”). Id. at 4. 4 Plaintiff’s “internal policies were designed to comply with California wage and hour 5 laws, and [Plaintiff] used [Defendant ADP’s] [s]ervices to comply with those legal and 6 regulatory requirements.” Id. Plaintiff “ensured all time and labor data inputted was 7 accurate, complete, and delivered on time.” Id. Plaintiff “provided [Defendant] ADP all 8 necessary information and guidance related to its time and attendance policies and 9 guidelines, and coordinated with [Defendant] ADP to establish standards for [Defendant] 10 ADP in its execution of the [s]ervices.” Id. 11 “When [Plaintiff] began using [Defendant] ADP’s services, [Defendant] ADP did 12 not ask [Plaintiff] to select the laws it wanted [Defendant] ADP to incorporate into its 13 services.” Id. at 5. “Further, [Defendant] ADP never informed [Plaintiff] that it would not 14 implement aspects of California wage and hour laws, including, without limitation, meal 15 period penalties, unless specifically requested to do so.” Id. Plaintiff “purchased the ‘peace 16 of mind’ [Defendant] ADP was selling, and [Plaintiff] reasonably expected [Defendant] 17 ADP’s software to be free from defects with respect to its ability to catch and account for 18 wage and hour violations.” Id. 19 Plaintiff’s “employees entered their time in [Defendant] ADP[’s] ‘TA Module,’ and 20 [Defendant] ADP assigned a pay code based on the data provided.” Id. Defendant “ADP 21 programed the pay codes, and the pay codes dictated how the employees were paid.” Id. 22 “Under California law, when an employer fails to provide a proper meal break to a 23 nonexempt employee, the premium (penalty) owed is one hour of extra pay for each work 24 day that this occurs.” Id. 25 “In September of 2016, [Plaintiff] notified [Defendant] ADP that [Defendant] ADP 26 was not identifying missed meal periods, meaning [Defendant] ADP’s software was not 27 recognizing the need to pay those premiums.” Id. “On September 7, 2016, [Defendant] 28 1 ADP advised that changes were made to comply with the Meal Period law for California.” 2 Id. 3 “[I]n April 2018[,] [Plaintiff] later discovered another defect within [Defendant] 4 ADP’s system.” Id. Defendant “ADP’s negligently designed software would only flag 5 and pay meal period premiums for the 5 hour premium, regardless of a missed 10 hour 6 premium.” Id. “To mitigate its potential liability, in the spring of 2018, [Plaintiff] paid 7 missed meal period premiums to approximately 104 current and former employees.” Id. 8 at 5-6. 9 “On . . . April 3, 2018, [Plaintiff] received a wage and hour demand from counsel 10 representing multiple [ ] ex-employees.” Id. at 6. “On April 12, 2018, [Plaintiff] sent 11 [Defendant] ADP a litigation hold notice and put [Defendant] ADP on notice of the 12 demand.” Id. Plaintiff “requested a litigation hold be placed on any and all [Plaintiff]- 13 related wage and hour records maintained by [Defendant] ADP for a period of four years, 14 with a starting date of March 28, 2018.” Id. Defendant “ADP failed to respond, and 15 [Plaintiff] sent a follow up e-mail on April 25, 2018.” Id. “More stunning was [Defendant] 16 ADP’s April 26, 2018 refusal to agree to the preservation demand.” Id. 17 “[O]n . . . April 23, 2018, Leslie McDonough filed a class action complaint against 18 [Plaintiff] alleging seven causes of action, including the violation of Labor Code §§ 226.7 19 and 512(a) (unpaid meal period premiums).[]” Id. “On . . . June 6, 2018, Mario Guerrero 20 filed a separate representative action pursuant to the Private Attorneys General Act 21 (PAGA), also alleging a violation of Labor Code §§ 226.7 and 512(a).[]” Id. 22 Plaintiff “provided copies of the McDonough and Guerrero complaints to 23 [Defendant] ADP and requested that [Defendant] ADP confirm it would honor its 24 agreement to indemnify, defend, and hold [Plaintiff] harmless pursuant to the terms of their 25 agreement.” Id. Defendant “ADP sought to prevent performance under the 2017 26 Agreement and withhold its benefits from [Plaintiff] by providing a bad-faith reason in 27 support of its decision to deny [Plaintiff]’s request for indemnity.” Id. Defendant “ADP 28 responded by saying [Defendant] ADP had the accurate design to comply with the legal 1 and regulatory requirements of California law, however, [Defendant] ADP claimed 2 [Plaintiff] ‘failed to give instructions to implement it.’” Id. at 7. “As a result of [Defendant] 3 ADP’s bad-faith denial of its obligation to indemnify [Plaintiff], [Plaintiff] has had to pay, 4 and continues to pay, defense costs out-of-pocket – costs which [Defendant] ADP still has 5 not paid for no defensible reason.” Id. 6 “Subsequent to the filing of the McDonough and Guerrero complaints, [Plaintiff] 7 uncovered additional meal period flagging errors by [Defendant] ADP’s negligently 8 designed software for the period of time after [Defendant] ADP confirmed changes were 9 made . . . ‘to comply with the Meal Period law for California.’” Id. Specifically, 10 (a) If an employee never entered a meal period and simply entered a full day of work, [Defendant] ADP failed to identify a meal period violation. For 11 example, an employee’s time entry of 8:00 a.m. to 4:00 p.m. would not result 12 in [Defendant] ADP flagging a meal period violation for the missed meal period; 13 (b) [Defendant] ADP failed to flag missed and short second meal periods. 14 This affected a group of employees who worked shifts longer than 10 hours; (c) “Short” meal periods that were between 20-29 minutes in length did not 15 result in a meal period premium payment; 16 (d) Employees were not paid for late meal periods that were taken at 5 hours and 1 minute (or more) into the employee’s shift. A meal period that starts 5 17 hours and 1 minute into the shift would be considered “late” and should have 18 resulted in [Defendant] ADP flagging the late meal period so [Plaintiff] could pay the employee a meal period premium payment. 19
20 Id. at 7-8. 21 “On . . . January 24, 2020, Guerrero dismissed his complaint and filed a new class- 22 action complaint along with McDonough, alleging unpaid meal period premiums.[]” Id. 23 at 8. “The cases were combined into one.” Id. 24 III. STANDARD OF REVIEW 25 Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a 26 claim upon which relief can be granted . . . .” Fed. R. Civ. P. 12(b)(6). Federal Rule of 27 Civil Procedure 8(a) provides that “[a] pleading that states a claim for relief must contain . 28 . . a short and plain statement of the claim showing that the pleader is entitled to relief . . . 1 .” Fed. R. Civ. P. 8(a)(2). “A district court’s dismissal for failure to state a claim under 2 Federal Rule of Civil Procedure 12(b)(6) is proper if there is a lack of a cognizable legal 3 theory or the absence of sufficient facts alleged under a cognizable legal theory.” 4 Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011). “All allegations of 5 material fact are taken as true and construed in the light most favorable to the nonmoving 6 party.” Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002) (citing Sprewell v. Golden 7 State Warriors, 266 F.3d 979, 988 (9th Cir.), opinion amended on denial of reh’g, 275 F.3d 8 1187 (9th Cir. 2001)). 9 “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ 10 requires more than labels and conclusions, and a formulaic recitation of the elements of a 11 cause of action will not do . . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 12 (second alteration in original) (citation omitted). When considering a motion to dismiss, a 13 court must accept as true all “well-pleaded factual allegations . . . .” Ashcroft v. Iqbal, 556 14 U.S. 662, 679 (2009). However, a court is not “required to accept as true allegations that 15 are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” 16 Sprewell, 266 F.3d at 988. “In sum, for a complaint to survive a motion to dismiss, the 17 non-conclusory ‘factual content,’ and reasonable inferences from that content, must be 18 plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 19 572 F.3d 962, 969 (9th Cir. 2009) (quoting Ashcroft, 556 U.S. at 678). 20 IV. DISCUSSION 21 a. Breach of Contract (claim 1) 22 Defendant ADP contends that Plaintiff breached its contractual obligations to 23 Defendant ADP. Defendant ADP contends that Plaintiff is responsible for how it uses 24 Defendant ADP’s services to comply with legal and regulatory requirements and that 25 Plaintiff’s own failures have exposed Plaintiff to potential liability. Defendant ADP 26 contends that Plaintiff’s right to indemnification only arises from Defendant ADP’s 27 negligence or willful misconduct, neither of which Plaintiff has sufficiently alleged. 28 Defendant ADP contends that actions taken before the 2017 Agreement, Plaintiff’s 1 corrective payments to mitigate potential liability, and Plaintiff’s failure to confirm the 2 accuracy of submitted data fail to establish Defendant ADP’s negligence. Defendant ADP 3 contends that Plaintiff failed to promptly notify Defendant ADP in writing of a suit or cause 4 of action, failed to permit Defendant ADP to control negotiations and defense, and failed 5 to take all reasonable steps to mitigate any potential damages that may result. 6 Plaintiff contends that it entered into the 2017 Agreement With Defendant ADP. 7 Plaintiff contends that it performed all conditions, covenants, and promises required by the 8 2017 Agreement. Plaintiff contends that Defendant ADP breached the 2017 Agreement 9 and that Plaintiff suffered damages. Plaintiff contends that it has sufficiently alleged 10 Defendant ADP’s negligence or willful misconduct. Plaintiff contends that it took all 11 reasonable steps to mitigate any potential damages. Plaintiff contends that it put Defendant 12 ADP on notice of the wage and hour demand and the McDonough and Guerrero actions. 13 Plaintiff contends that promptness of notice is a disputed fact issue that cannot be resolved 14 at the pleading stage. 15 Under New York state law, “[t]he elements of a breach of contract include the 16 existence of a contract, the plaintiff’s performance thereunder, the defendant’s breach 17 thereof, and resulting damages . . . .” Morningside Acquisition I, LLC v. Gandy, 66 Misc. 18 3d 276, 281 (N.Y. Sup. Ct. 2019) (citation omitted).1 “As a general matter, the objective 19 of contract interpretation is to give effect to the expressed intentions of the parties.” Hunt 20 Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989). “Where the 21 language of the contract is unambiguous, and reasonable persons could not differ as to its 22 meaning, the question of interpretation is one of law to be answered by the court.” Id. 23 “Contract language is not ambiguous if it has a definite and precise meaning, unattended 24 by danger of misconception in the purport of the [contract] itself, and concerning which 25 26 27 1 The parties agree that the 2017 Agreement is governed by the laws of New York and that there is no conflict between the laws of New York and California regarding breach of contract for purposes of this 28 1 there is no reasonable basis for a difference of opinion.” Id. (alteration in original). 2 “Language whose meaning is otherwise plain does not become ambiguous merely because 3 the parties urge different interpretations in the litigation.” Id. “The court is not required 4 to find the language ambiguous where the interpretation urged by one party would strain[ 5 ] the contract language beyond its reasonable and ordinary meaning.” Id. (alteration in 6 original). In other words, “if an agreement is complete, clear and unambiguous on its face[, 7 it] must be enforced according to the plain meaning of its terms.” Eternity Glob. Master 8 Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (alteration in 9 original). 10 The 2017 Agreement states that 11 Design of the Services. ADP will design the Services, including the functions and processes applicable to the performance of the Services, to assist the 12 Client in complying with its legal and regulatory requirements applicable to 13 the Services, and ADP will be responsible for the accuracy of such design. Client and not ADP will be responsible for (i) how it uses the Services to 14 comply with its legal and regulatory requirements and (ii) the consequences 15 of any instructions that it gives or fails to give to ADP, including as part of the implementation of the Services, provided ADP follows such instructions. 16 Services do not include any legal, financial, regulatory, benefits, accounting 17 or tax advice.
18 (ECF No. 13-1 at 37) (emphasis omitted). The 2017 Agreement further states that 19 End of the Pay Period Administration; Resolution of Error Exceptions. Client 20 acknowledges and agrees that Client will be responsible for ensuring that all time and labor data input submitted by Client to ADP is accurate, complete 21 and delivered on time. . . . 22 Data Administration. All data entry, adjustment and corrections to the TA 23 module must be made by Client. ADP can make adjustments in the Payroll 24 module only. Prior to commencement of Services, Client shall provide to ADP all necessary information and guidance relating to its time and 25 attendance policies and guidelines and coordinate with ADP to establish 26 standards for ADP in its execution of the Services.
27 Id. at 51 (emphasis omitted). The Addendum to the 2017 Agreement states that 28 1 Section 7 of ANNEX A – ADP Workforce Now Comprehensive Services – General Terms and Conditions (together with Statements of Core and 2 Optional Services) of the Agreement is hereby amended by the addition of the 3 following as Section 7.C.: “C. General Indemnity. Subject to monetary limit on damages in Section 7.A. of the Annex A of the Agreement, ADP will 4 indemnify, defend and hold Client harmless from and against any and all third 5 party liabilities, claims, penalties, damages, forfeitures, suits, and the costs and expenses incident thereto (including the costs and expenses of defense, 6 settlement and reasonable attorneys’ fees), arising from the negligence or 7 willful misconduct of ADP in its performance of the Services including any Incident provided that, (i) ADP is promptly notified in writing of such suit or 8 cause of action, (ii) ADP controls any negotiations or defense and Client 9 assists ADP as reasonably required by ADP, and (iii) Client takes all reasonable steps to mitigate any potential damages that may result.” 10
11 Id. at 34-35. 12 In the First Amended Complaint, Plaintiff alleges that 13 Plaza has performed all conditions, covenants and promises required on its part to be performed in accordance with the terms and conditions of the 14 2017 Agreement. This includes, without limitation, Plaza ensured all time 15 and labor data inputted was accurate, complete, and delivered on time. Plaza provided ADP all necessary information and guidance related to its time and 16 attendance policies and guidelines, and coordinated with ADP to establish 17 standards for ADP in its execution of the Services.
18 (ECF No. 12 at 8). Plaintiff further alleges that 19 ADP has breached the 2017 Agreement by failing to provide the 20 Services in a good, diligent and professional manner in accordance with industry standards, utilizing personnel with a level of skill commensurate with 21 the Services to be performed. 22 As alleged above, Plaza employees entered their time in the ADP “TA 23 Module,” and ADP assigned a pay code based on the data provided. ADP 24 programed the pay codes, and the pay codes dictated how the employees were paid. . . . In September of 2016, Plaza notified ADP that ADP was not 25 identifying missed meal periods, meaning ADP’s software was not 26 recognizing the need to pay those premiums.
27 On September 7, 2016, ADP advised that changes were made to comply 28 with the Meal Period law for California. Prior to that time, as admitted by 1 ADP, its Services were not capturing missed meal periods. Contrary to ADP’s representations of error-free payroll processing, ADP’s software was 2 negligently designed and implemented. 3 After the pay code changes were allegedly implemented to comply with 4 California wage and hour laws, in April 2018 Plaza later discovered another 5 defect within ADP’s system. ADP’s negligently designed software would only flag and pay meal period premiums for the 5 hour premium, regardless 6 of a missed 10 hour premium. To mitigate its potential liability, in the spring 7 of 2018 Plaza paid missed meal period premiums to approximately 104 current and former employees. 8
9 Plaza uncovered additional meal period flagging errors by ADP’s negligently designed software for the period of time after ADP confirmed 10 changes were made to Pay Class CAHRLY, CAPTHRLY, and 11 CATEMPHRLY “to comply with the Meal Period law for California.” . . .
12 If ADP’s Services were designed in a good, diligent and professional 13 manner in accordance with industry standards, utilizing personnel with a level of skill commensurate with the Services to be performed, the above errors 14 would not have occurred. 15 Id. at 9-10. Plaintiff further alleges that 16 On or around April 3, 2018, Plaza received a wage and hour demand 17 from counsel representing multiple Plaza ex-employees. On April 12, 2018, 18 Plaza sent ADP a litigation hold notice and put ADP on notice of the demand. Plaza requested a litigation hold be placed on any and all Plaza-related wage 19 and hour records maintained by ADP for a period of four years, with a starting 20 date of March 28, 2018. ADP failed to respond, and Plaza sent a follow up e- mail on April 25, 2018. More stunning was ADP’s April 26, 2018 refusal to 21 agree to the document preservation demand. 22 Thereafter, on or around April 23, 2018, Leslie McDonough filed a 23 class action complaint against Plaza alleging seven causes of action, including 24 the violation of Labor Code §§ 226.7 and 512(a) (unpaid meal period premiums).[] On or around June 6, 2018, Mario Guerrero filed a separate 25 representative action pursuant to the Private Attorneys General Act (PAGA), 26 also alleging a violation of Labor Code §§ 226.7 and 512(a).[]
27 Plaza provided copies of the McDonough and Guerrero complaints to 28 ADP and requested that ADP confirm it would honor its agreement to 1 indemnify, defend, and hold Plaza harmless pursuant to the terms of their agreement. ADP breached its obligations to Plaza, including, without 2 limitation, its breach of the 2017 Agreement by refusing to indemnify, defend, 3 and hold Plaza harmless for the claims asserted in the McDonough and Guerrero actions that arise from ADP’s negligent performance of the Services. 4
5 On information and belief, ADP sought to prevent performance under the 2017 Agreement and withhold its benefits from Plaza by providing a bad- 6 faith reason in support of its decision to deny Plaza’s request for indemnity. 7 Contrary to the terms of the 2017 Agreement and the written correspondence between the parties, ADP responded by saying ADP had the accurate design 8 to comply with the legal and regulatory requirements of California law, 9 however, ADP claimed Plaza “failed to give instructions to implement it.” As a result of ADP’s bad-faith denial of its obligation to indemnify Plaza, Plaza 10 has had to pay, and continues to pay, defense costs out-of-pocket – costs 11 which ADP still has not paid for no defensible reason. On information and belief, ADP has failed to undertake its obligation to indemnify, defend, and 12 hold Plaza harmless because it is more interested in avoiding the obligation, 13 and thus, put its own interests above that of Plaza.
14 Id. at 10-11. 15 Plaintiff alleges that it “performed all conditions, covenants and promises required 16 on its part to be performed in accordance with the terms and conditions of the 2017 17 Agreement” by “ensur[ing] all time and labor data inputted was accurate, complete, and 18 delivered on time” and by “provid[ing] [Defendant] ADP all necessary information and 19 guidance related to its time and attendance policies and guidelines, and coordinat[ing] with 20 [Defendant] ADP to establish standards for [Defendant] ADP in its execution of the 21 [s]ervices.” (ECF No. 12 at 8). Plaintiff alleges that it provided Defendant ADP with 22 “instructions”, “including as part of the implementation of the [s]ervices,” as required by 23 the 2017 Agreement. (ECF No. 13-1 at 37). Plaintiff sufficiently alleges performance of 24 its obligations pursuant to the 2017 Agreement regarding Defendant ADP’s alleged 25 “fail[ure] to provide the [s]ervices in a good, diligent and professional manner in 26 accordance with industry standards, utilizing personnel with a level of skill commensurate 27 with the [s]ervices to be performed.” (ECF No. 12 at 9). 28 1 Plaintiff alleges that it “performed all conditions, covenants and promises required 2 on its part to be performed in accordance with the terms and conditions of the 2017 3 Agreement” by “sen[ding] [Defendant] ADP a litigation hold notice and put[ting] 4 [Defendant] ADP on notice of the [wage and hour] demand” on April 12, 2018 and by 5 “provid[ing] copies of the McDonough and Guerrero complaints to [Defendant] ADP . . . 6 .” (ECF No. 12 at 8, 10-11). Plaintiff alleges that it “promptly notified [Defendant ADP] 7 in writing of such suit or cause of action . . . .” (ECF No. 13-1 at 34-35). Plaintiff 8 sufficiently alleges performance of its obligations pursuant to the 2017 Agreement 9 regarding Defendant ADP’s alleged “bad-faith denial of its obligation to indemnify” 10 Plaintiff and Defendant ADP’s alleged “fail[ure] to undertake its obligation to indemnify, 11 defend, and hold [Plaintiff] harmless . . . .” (ECF No. 12 at 11). 12 The Court finds that the 2017 Agreement “is complete, clear and unambiguous on 13 its face” regarding Plaintiff’s obligation to provide Defendant ADP with “instructions”, 14 “including as part of the implementation of the [s]ervices,” and Plaintiff’s obligation to 15 “promptly notif[y] [Defendant ADP] in writing of such suit or cause of action . . . .” 16 Eternity Glob. Master Fund Ltd., 375 F.3d at 177; ECF No. 13-1 at 34-35, 37. The Court 17 finds that the 2017 Agreement “must be enforced according to the plain meaning of its 18 terms.” Eternity Glob. Master Fund Ltd., 375 F.3d at 177. The Court finds that Plaintiff 19 sufficiently alleges performance of its obligations pursuant to the 2017 Agreement and 20 Defendant ADP’s breach of the 2017 Agreement. The Court concludes that Plaintiff 21 alleges a plausible claim for breach of contract against Defendant ADP. 22 b. Express Indemnity (claim 2) 23 Defendant ADP contends that Plaintiff’s claim for express indemnity relies on the 24 indemnification provision of the 2017 Agreement. Defendant ADP contends that Plaintiff 25 is not entitled to indemnification because indemnification is not owed pursuant to the terms 26 of the contract. Plaintiff contends that it sufficiently alleges a claim for express indemnity. 27 Plaintiff contends that Defendant ADP negligently performed its services and that third- 28 party suits arose from Defendant ADP’s negligence. Plaintiff contends that the express 1 language of the 2017 Agreement controls and requires Defendant ADP to provide defense 2 and indemnity. 3 In the First Amended Complaint, Plaintiff alleges that 4 On or around May 22, 2017, Plaza and ADP entered into the 2017 Agreement, whereby ADP agreed to indemnify, defend and hold Plaza 5 harmless from and against any and all third party liabilities, claims, penalties, 6 damages, forfeitures, suits, and the costs and expenses incident thereto (including the costs and expenses of defense, settlement and reasonable 7 attorneys’ fees), arising from the negligence or willful misconduct of ADP in 8 its performance of the Services including any Incident.
9 Thereafter, due to ADP’s negligence and/or willful misconduct, as 10 alleged herein, ADP failed to provide the Services in a good, diligent and professional manner in accordance with industry standards, utilizing 11 personnel with a level of skill commensurate with the Services to be 12 performed.
13 On or around April 3, 2018, Plaza received a wage and hour demand 14 from counsel representing multiple Plaza ex-employees. On April 12, 2018, Plaza sent ADP a litigation hold notice and put ADP on notice of the demand. 15 Plaza requested a litigation hold be placed on any and all Plaza-related wage 16 and hour records maintained by ADP for a period of four years, with a starting date of March 28, 2018. ADP failed to respond, and Plaza sent a follow up e- 17 mail on April 25, 2018. More stunning was ADP’s April 26, 2018 refusal to 18 agree to the preservation demand.
19 On or around April 23, 2018, Leslie McDonough filed a class action 20 complaint against Plaza alleging seven causes of action, including the violation of Labor Code §§ 226.7 and 512(a) (unpaid meal period premiums). 21
22 On or around June 6, 2018, Mario Guerrero filed a separate representative action pursuant to the Private Attorneys General Act (PAGA), 23 also alleging a violation of Labor Code §§ 226.7 and 512(a). 24 On or around January 24, 2020, Guerrero dismissed his complaint and 25 filed a new class-action complaint along with McDonough, alleging unpaid 26 meal period premiums.
27 If McDonough, Guerrero, and any member of the defined class 28 sustained damages as alleged in their complaints, these damages were caused, 1 entirely or in part, by Defendants’ negligently and/or intentionally designed and implemented software, and the alleged damages are due to no fault of 2 Plaza. 3 Plaza gave written notice to ADP of the commencement of the 4 McDonough and Guerrero complaints, requesting ADP honor its agreement 5 to indemnify, defend, and hold Plaza harmless pursuant to the terms of the 2017 Agreement. ADP refused to indemnify, defend, and hold Plaza harmless 6 pursuant to the terms of the 2017 Agreement. 7 Plaza has performed all the conditions and obligations to be performed 8 on its part under the 2017 Agreement. 9 (ECF No. 12 at 12-13). 10 The Court has found that Plaintiff sufficiently alleges performance of its obligations 11 pursuant to the 2017 Agreement regarding Defendant ADP’s alleged “bad-faith denial of 12 its obligation to indemnify” Plaintiff and Defendant ADP’s alleged “fail[ure] to undertake 13 its obligation to indemnify, defend, and hold [Plaintiff] harmless . . . .” Id. at 11. The Court 14 concludes that Plaintiff alleges a plausible claim for express indemnity against Defendant 15 ADP. 16 c. Equitable Indemnity (claim 3) 17 Defendant ADP contends that Plaintiff’s claim for equitable indemnity arises outside 18 of the 2017 Agreement because Plaintiff seeks relief regarding events which occurred 19 between April 23, 2014 and May 21, 2017. Defendant contends that between April 23, 20 2014 and May 21, 2017, the parties’ relationship was governed by other contracts that did 21 not provide for indemnification. Defendant ADP contends that equitable indemnity is 22 barred by Plaintiff’s failure to sufficiently allege a basis for tort liability against Defendant 23 ADP. Plaintiff contends that it sufficiently alleges a claim for equitable indemnity. Plaintiff 24 contends that it faces liability to a third party through no fault of its own for Defendant 25 ADP’s negligent or intentional conduct. Plaintiff contends that its equitable indemnity 26 claim is limited to a narrow timeframe that predates the 2017 Agreement because the 27 28 1 equitable indemnity claim is limited to members of the defined classes in the McDonough 2 and Guerrero actions from April 23, 2014 to May 21, 2017. 3 In the First Amended Complaint, Plaintiff alleges that 4 On or around April 23, 2018, Leslie McDonough filed a class action complaint against Plaza alleging seven causes of action, including the 5 violation of Labor Code §§ 226.7 and 512(a) (unpaid meal period premiums). 6 On or around June 6, 2018, Mario Guerrero filed a separate 7 representative action pursuant to the Private Attorneys General Act (PAGA), 8 also alleging a violation of Labor Code §§ 226.7 and 512(a).
9 On or around January 24, 2020, Guerrero dismissed his complaint and 10 filed a new class-action complaint along with McDonough, alleging unpaid meal period premiums, defining the proposed class as all current and former 11 hourly-paid or non-exempt employees who worked at Plaza within the State 12 of California at any time during the period from April 23, 2014 to final judgment. 13
14 If McDonough, Guerrero, and any member of the defined class during the period of April 23, 2014 to May 21, 2017 sustained damages as alleged in 15 the complaints, these damages were caused, entirely or in part, by Defendants’ 16 negligently and/or intentionally designed and implemented software, and the alleged damages are due to no fault of Plaza. 17
18 Plaza gave written notice to ADP of the commencement of the McDonough and Guerrero complaints, requesting ADP indemnify, defend, 19 and hold Plaza harmless. ADP refused. 20 Plaza has performed all the conditions and obligations to be performed 21 on its part. 22 (ECF No. 12 at 14). 23 The Court has found that Plaintiff sufficiently alleges performance of its obligations 24 pursuant to the 2017 Agreement regarding Defendant ADP’s alleged “bad-faith denial of 25 its obligation to indemnify” Plaintiff and Defendant ADP’s alleged “fail[ure] to undertake 26 its obligation to indemnify, defend, and hold [Plaintiff] harmless . . . .” Id. at 11. The Court 27 28 1 concludes that Plaintiff alleges a plausible claim for equitable indemnity against Defendant 2 ADP. 3 d. Declaratory Relief (claim 5) 4 Defendant ADP contends that Plaintiff’s declaratory relief claim fails because the 5 relief sought concerns a hypothetical controversy regarding Defendant ADP’s alleged 6 obligation to indemnify Plaintiff. Defendant ADP contends that it has an obligation to 7 indemnify Plaintiff only when all contractual conditions in the 2017 Agreement have been 8 satisfied and that Plaintiff fails to establish that the conditions have been met. Plaintiff 9 contends that it sufficiently alleges a claim for declaratory relief and seeks a judicial 10 determination of the parties’ future rights and obligations. Plaintiff contends that it has 11 identified the subject on which declaratory relief is needed, has articulated the parties’ 12 respective positions on the subject, and has asked the Court to issue a declaration about the 13 future rights and legal obligations of the parties. 14 In the First Amended Complaint, Plaintiff alleges that 15 An actual and substantial controversy has arisen and now exists regarding ADP’s obligation to indemnify, defend and hold Plaza harmless 16 from and against any and all third party liabilities, claims, penalties, damages, 17 forfeitures, suits, and the costs and expenses incident thereto (including the costs and expenses of defense, settlement and reasonable attorneys’ fees), 18 arising from the negligence or willful misconduct of ADP in its performance 19 of the Services including any Incident, including, without limitation, with respect to the McDonough and Guerrero complaints. 20
21 Plaza contends that ADP must indemnify, defend and hold Plaza harmless from and against any and all third party liabilities, claims, penalties, 22 damages, forfeitures, suits, and the costs and expenses incident thereto 23 (including the costs and expenses of defense, settlement and reasonable attorneys’ fees), arising from the negligence or willful misconduct of ADP in 24 its performance of the Services including any Incident, including, without 25 limitation, with respect to the McDonough and Guerrero complaints. ADP denies such obligation. 26
27 By reason for the foregoing controversy, Plaza respectfully requests the Court make a judicial determination to settle the parties’ future rights and legal 28 1 obligations with respect to whether ADP must indemnify, defend and hold Plaza harmless from and against any and all third party liabilities, claims, 2 penalties, damages, forfeitures, suits, and the costs and expenses incident 3 thereto (including the costs and expenses of defense, settlement and reasonable attorneys’ fees), arising from the negligence or willful misconduct 4 of ADP in its performance of the Services including any Incident, including, 5 without limitation, with respect to the McDonough and Guerrero complaints.
6 Such a judicial determination is necessary at this time in order for the 7 parties to resolve their dispute as expressed in the instant action, and it will obviate the need for multiple future lawsuits between the same parties. 8
9 (ECF No. 12 at 15-16). 10 The Court has found that Plaintiff sufficiently alleges performance of its obligations 11 pursuant to the 2017 Agreement regarding Defendant ADP’s alleged “bad-faith denial of 12 its obligation to indemnify” Plaintiff and Defendant ADP’s alleged “fail[ure] to undertake 13 its obligation to indemnify, defend, and hold [Plaintiff] harmless . . . .” Id. at 11. The Court 14 concludes that Plaintiff alleges a plausible claim for declaratory relief against Defendant 15 ADP. 16 V. Unfair Competition in Violation of Business & Professions Code § 17200 et 17 seq. (claim 4) 18 Defendant ADP contends that Plaintiff’s unfair competition claim fails because 19 Plaintiff has fails to allege facts sufficient to show unlawful or unfair conduct or unfair, 20 deceptive, untrue, or misleading advertising by Defendant ADP. Plaintiff states that it 21 “does not oppose [Defendant] ADP’s motion with respect to its fourth cause of action for 22 [u]nfair [c]ompetition.” (ECF No. 15 at 20). 23 Courts will grant a motion to dismiss when the non-moving party files a notice of 24 non-opposition. See CivLR 7.1(f)(3)(a); see e.g., Palomares v. Bear Stearns Residential 25 Mortg. Corp., No. 07cv01899 WQH (BLM), 2008 WL 686683, at *3 (S.D. Cal. Mar. 13, 26 2008) (same). The Court will grant Defendant ADP’s Motion to Dismiss Plaintiff’s fourth 27 cause of action for unfair competition in violation of Business & Professions Code § 17200 28 et seq. because Plaintiff has made a clear statement of non-opposition to dismissal of this 1 ||claim. See ECF No. 15 at 20; see e.g., Palomares, 2008 WL 686683, at *3 (“The Court 2 || will grant the Motion to Dismiss the causes of action against Bear Stearns for violation of 3 || California Civil Code sections 1920 and 1921, concealment, negligent misrepresentation, 4 ||negligence and breach of the implied covenant of good faith and fair dealing because 5 || Plaintiffs have made a clear statement of non-opposition to dismissal of these claims.”’). 6 VI. CONCLUSION 7 IT IS HEREBY ORDERED that the Motion to Dismiss filed by Defendan 8 || Automated Data Processing, Inc. (ECF No. 13) is GRANTED as to Plaintiff’s fourth caus 9 || of action for unfair competition in violation of Business & Professions Code § 17200 et seq 10 is otherwise DENIED. 11 |} Dated: January 4, 2021 BME: ie Z. A a 12 Hon. William Q. Hayes 13 United States District Court 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28