1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 KENNETH HILL, No. 2:23–cv–306–DAD–KJN PS 12 Plaintiff, FINDINGS AND RECOMMENDATIONS; ORDER STAYING DISCOVERY 13 v. (ECF No. 7.) 14 PEOPLEREADY, INC, 15 Defendant. 16 17 Presently before the court are the scope of the pleadings and scheduling of this case.1 18 Regarding the former, the court has considered the parties’ positions from their briefing 19 and the arguments made at the May 16, 2023 hearing. (ECF Nos. 6, 7, 11.) For the reasons 20 stated below, the court recommends plaintiff’s motion to amend be DENIED and the case be 21 allowed to proceed on plaintiff’s claim under Cal. Lab. Code § 98.6 only. The court also 22 recommends that the doe defendants be DISMISSED from this case. 23 Regarding scheduling, all discovery in this matter, including the parties’ obligations to 24 transmit initial disclosures, is STAYED until resolution of these findings and recommendations 25 by the district judge. Once the F&Rs are resolved, the undersigned will lift the stay and issue the 26 scheduling order for this case. 27 1 This matter was referred to the undersigned per 28 U.S.C. § 636(c) and Local Rule 302(c)(21). 28 1 Background 2 Plaintiff filed a complaint in California Superior Court against defendant PeopleReady, 3 Inc. and two Doe defendants, asserting claims under (i) 42 U.S.C. § 1983 for an alleged violation 4 of his First Amendment rights and (ii) Cal. Labor Code § 98.6, which prohibits retaliation against 5 employees who report violations of state or federal laws or regulations. Plaintiff alleges he was 6 fired in 2022 after he informed his supervisors he would be contacting the Labor department to 7 report PeopleReady’s alleged failure to pay him his full wages. Defendant denies the allegations, 8 contending it fired plaintiff pursuant to his status as an at-will employee. (See ECF Nos. 1; 10.) 9 Shortly after answering the complaint, defendant removed to this court pursuant to both 10 federal question and diversity jurisdiction. (ECF No. 1.) The court found the case ripe for 11 scheduling and ordered a joint statement from the parties. (ECF No. 6.) 12 Plaintiff then moved to amend his complaint, seeking to add a Title VII retaliation claim 13 and to clarify his § 1983 claim based on similar facts stated in the original complaint. (ECF No. 14 7.) Defendant opposed, arguing the Title VII and § 1983 claims were not cognizable and so 15 amendment would be futile. (ECF No. 8.) Defendant also contended a motion on the pleadings 16 would be proper on the First Amendment claim asserted in the original complaint, as § 1983 17 claims cannot lie against private parties like PeopleReady. Finally, PeopleReady contended the 18 court should dismiss Doe defendants (two of plaintiff’s former supervisors) because they are 19 disfavored in federal court. (Id.) The court stated it would take up the scope of the pleadings at 20 the upcoming scheduling conference. (ECF No. 9.) 21 At the May 16, 2023 hearing, plaintiff reasserted his intent to seek amendment of the 22 complaint and maintain his First Amendment claim under § 1983, contending it, the Title VII 23 claim, and the Labor Code claim were all viable claims. Defendant admitted that the Labor Code 24 claim should proceed to discovery, but reasserted its opposition to amendment and requested the 25 court clarify the scope of the pleadings.2 26 2 The court construes the parties briefing and statements at the May 16th hearing as defendant’s 27 request for judgment on the pleadings on the § 1983 claim in the original complaint. See Fed. R. Civ. P. 7(b) (noting a motion must be made (A) in writing unless made during a hearing or trial; 28 (B) state with particularity the grounds for seeking the order; and (C) state the relief sought). 1 I. Scope of the Pleadings 2 Legal Standards 3 After the first amended pleading of right, “a party may amend its pleading only with the 4 opposing party's written consent or the court's leave.” Fed. R. Civ. P. 15(a)(2). Leave to amend 5 “shall be freely given when justice so requires.” AmerisourceBergen Corp. v. Dialysist West, 6 Inc., 465 F.3d 946, 951 (9th Cir. 2006). However, leave to amend may be denied when any of the 7 following factors are at play: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, 8 (4) futility of amendment, and (5) whether there has been previous amendment. United States v. 9 Corinthian Colleges, 655 F.3d 984, 995 (9th Cir. 2011). A plaintiff’s proposed amendments are 10 futile if the amended complaint would be subject to dismissal. Corinthian Colleges, 655 F.3d at 11 995. “The test for futility is identical to the one used when considering the sufficiency of a 12 pleading challenged under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” Karol v. Med- 13 Trans, 2012 WL 3862148, at *4 (E.D. Cal. Sept. 5, 2012). 14 Under Rule 12(b)(6), a complaint fails to state a claim if it either lacks a cognizable legal 15 theory or sufficient facts to allege a cognizable legal theory. Mollett v. Netflix, Inc., 795 F.3d 16 1062, 1065 (9th Cir. 2015). To avoid dismissal for failure to state a claim, a complaint must 17 contain more than “naked assertions,” “labels and conclusions,” or “a formulaic recitation of the 18 elements of a cause of action.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). In 19 other words, “[t]hreadbare recitals of the elements of a cause of action, supported by mere 20 conclusory statements do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Thus, a 21 complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is 22 plausible on its face.” Id. Under Rule 12(b)(6), the court must accept the well-pleaded factual 23 allegations as true, Erickson v. Pardus, 551 U.S. 89, 94 (2007), and construe the complaint in the 24 light most favorable to the plaintiff, see Papasan v. Allain, 478 U.S. 265, 283 (1986). The court is 25 not, however, required to accept as true “conclusory [factual] allegations that are contradicted by 26 documents referred to in the complaint,” or “legal conclusions merely because they are cast in the 27 form of factual allegations.” Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). 28 /// 1 After the pleadings are closed—but early enough not to delay trial—a party may move for 2 judgment on the pleadings. The court inquires whether the complaint at issue contains “sufficient 3 factual matter, accepted as true, to state a claim of relief that is plausible on its face.” Harris v. 4 Cnty. of Orange, 682 F.3d 1126, 1131 (9th Cir.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 KENNETH HILL, No. 2:23–cv–306–DAD–KJN PS 12 Plaintiff, FINDINGS AND RECOMMENDATIONS; ORDER STAYING DISCOVERY 13 v. (ECF No. 7.) 14 PEOPLEREADY, INC, 15 Defendant. 16 17 Presently before the court are the scope of the pleadings and scheduling of this case.1 18 Regarding the former, the court has considered the parties’ positions from their briefing 19 and the arguments made at the May 16, 2023 hearing. (ECF Nos. 6, 7, 11.) For the reasons 20 stated below, the court recommends plaintiff’s motion to amend be DENIED and the case be 21 allowed to proceed on plaintiff’s claim under Cal. Lab. Code § 98.6 only. The court also 22 recommends that the doe defendants be DISMISSED from this case. 23 Regarding scheduling, all discovery in this matter, including the parties’ obligations to 24 transmit initial disclosures, is STAYED until resolution of these findings and recommendations 25 by the district judge. Once the F&Rs are resolved, the undersigned will lift the stay and issue the 26 scheduling order for this case. 27 1 This matter was referred to the undersigned per 28 U.S.C. § 636(c) and Local Rule 302(c)(21). 28 1 Background 2 Plaintiff filed a complaint in California Superior Court against defendant PeopleReady, 3 Inc. and two Doe defendants, asserting claims under (i) 42 U.S.C. § 1983 for an alleged violation 4 of his First Amendment rights and (ii) Cal. Labor Code § 98.6, which prohibits retaliation against 5 employees who report violations of state or federal laws or regulations. Plaintiff alleges he was 6 fired in 2022 after he informed his supervisors he would be contacting the Labor department to 7 report PeopleReady’s alleged failure to pay him his full wages. Defendant denies the allegations, 8 contending it fired plaintiff pursuant to his status as an at-will employee. (See ECF Nos. 1; 10.) 9 Shortly after answering the complaint, defendant removed to this court pursuant to both 10 federal question and diversity jurisdiction. (ECF No. 1.) The court found the case ripe for 11 scheduling and ordered a joint statement from the parties. (ECF No. 6.) 12 Plaintiff then moved to amend his complaint, seeking to add a Title VII retaliation claim 13 and to clarify his § 1983 claim based on similar facts stated in the original complaint. (ECF No. 14 7.) Defendant opposed, arguing the Title VII and § 1983 claims were not cognizable and so 15 amendment would be futile. (ECF No. 8.) Defendant also contended a motion on the pleadings 16 would be proper on the First Amendment claim asserted in the original complaint, as § 1983 17 claims cannot lie against private parties like PeopleReady. Finally, PeopleReady contended the 18 court should dismiss Doe defendants (two of plaintiff’s former supervisors) because they are 19 disfavored in federal court. (Id.) The court stated it would take up the scope of the pleadings at 20 the upcoming scheduling conference. (ECF No. 9.) 21 At the May 16, 2023 hearing, plaintiff reasserted his intent to seek amendment of the 22 complaint and maintain his First Amendment claim under § 1983, contending it, the Title VII 23 claim, and the Labor Code claim were all viable claims. Defendant admitted that the Labor Code 24 claim should proceed to discovery, but reasserted its opposition to amendment and requested the 25 court clarify the scope of the pleadings.2 26 2 The court construes the parties briefing and statements at the May 16th hearing as defendant’s 27 request for judgment on the pleadings on the § 1983 claim in the original complaint. See Fed. R. Civ. P. 7(b) (noting a motion must be made (A) in writing unless made during a hearing or trial; 28 (B) state with particularity the grounds for seeking the order; and (C) state the relief sought). 1 I. Scope of the Pleadings 2 Legal Standards 3 After the first amended pleading of right, “a party may amend its pleading only with the 4 opposing party's written consent or the court's leave.” Fed. R. Civ. P. 15(a)(2). Leave to amend 5 “shall be freely given when justice so requires.” AmerisourceBergen Corp. v. Dialysist West, 6 Inc., 465 F.3d 946, 951 (9th Cir. 2006). However, leave to amend may be denied when any of the 7 following factors are at play: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, 8 (4) futility of amendment, and (5) whether there has been previous amendment. United States v. 9 Corinthian Colleges, 655 F.3d 984, 995 (9th Cir. 2011). A plaintiff’s proposed amendments are 10 futile if the amended complaint would be subject to dismissal. Corinthian Colleges, 655 F.3d at 11 995. “The test for futility is identical to the one used when considering the sufficiency of a 12 pleading challenged under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” Karol v. Med- 13 Trans, 2012 WL 3862148, at *4 (E.D. Cal. Sept. 5, 2012). 14 Under Rule 12(b)(6), a complaint fails to state a claim if it either lacks a cognizable legal 15 theory or sufficient facts to allege a cognizable legal theory. Mollett v. Netflix, Inc., 795 F.3d 16 1062, 1065 (9th Cir. 2015). To avoid dismissal for failure to state a claim, a complaint must 17 contain more than “naked assertions,” “labels and conclusions,” or “a formulaic recitation of the 18 elements of a cause of action.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). In 19 other words, “[t]hreadbare recitals of the elements of a cause of action, supported by mere 20 conclusory statements do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Thus, a 21 complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is 22 plausible on its face.” Id. Under Rule 12(b)(6), the court must accept the well-pleaded factual 23 allegations as true, Erickson v. Pardus, 551 U.S. 89, 94 (2007), and construe the complaint in the 24 light most favorable to the plaintiff, see Papasan v. Allain, 478 U.S. 265, 283 (1986). The court is 25 not, however, required to accept as true “conclusory [factual] allegations that are contradicted by 26 documents referred to in the complaint,” or “legal conclusions merely because they are cast in the 27 form of factual allegations.” Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). 28 /// 1 After the pleadings are closed—but early enough not to delay trial—a party may move for 2 judgment on the pleadings. The court inquires whether the complaint at issue contains “sufficient 3 factual matter, accepted as true, to state a claim of relief that is plausible on its face.” Harris v. 4 Cnty. of Orange, 682 F.3d 1126, 1131 (9th Cir. 2012) A Rule 12(c) motion follows the same 5 standard as a motion to dismiss under Rule 12(b)(6). Chavez v. United States, 683 F.3d 1102, 6 1108 (9th Cir. 2012). Thus, it may be predicated on either (1) the lack of a cognizable legal 7 theory, or (2) insufficient facts to support a cognizable legal claim. Mays v. Wal-Mart Stores, 8 Inc., 354 F. Supp. 3d 1136, 1141 (C.D. Cal. 2019) (citing Balistreri v. Pacifica Police Dep't, 901 9 F.2d 696, 699 (9th Cir. 1990)). 10 Analysis 11 Accepting the facts asserted in plaintiff’s proposed first amended complaint as true, 12 allowing plaintiff to amend and assert the claims therein would be futile. Corinthian Colleges, 13 655 F.3d at 995. Additionally, the § 1983 claim in the original complaint is not cognizable and 14 should be dismissed. Harris, 682 F.3d at 1131. 15 For plaintiff’s proposed retaliation claim under Title VII, the court looks to the text of the 16 retaliation statute. 42 U.S.C. § 2000e-3 “Other unlawful employment practices” provides: 17 It shall be an unlawful employment practice for an employer to discriminate against any of his employees ... because he has 18 opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, 19 or participated in any manner in an investigation, proceeding, or hearing under this subchapter. 20 21 42 U.S.C.A. § 2000e–3 (emphasis added). In other words, this provision only protects employees 22 “from retaliation for complaining about the types of discrimination [Title VII] prohibits.” Harris 23 v. Treasure Canyon Calcuim Company, 132 F.Supp.3d 1228, 1246 (D. Id. 2015) (citing Hamm v. 24 Weyauwega Milk Products, Inc., 332 F.3d 1058, 1066 (7th Cir. 2003) (overruled on other 25 grounds)). Plaintiff’s proposed retaliation claim would fail because he alleges defendant 26 retaliated against him after plaintiff threatened to report the company’s failure to pay wages to the 27 Labor Department, and Title VII does not protect against this kind of act. Thus, the district judge 28 should deny plaintiff’s proposed amendment as futile. Corinthian Colleges, 655 F.3d at 995. 1 As to plaintiff’s proposed claim under 42 U.S.C. § 1983, these generally do not lie against 2 a private individual or business entity that does not act under color of state law. See Franklin v. 3 Fox, 312 F.3d 423, 444 (9th Cir. 2002). Therefore, plaintiff cannot allege a claim for violations 4 of his First Amendment rights against defendant PeopleReady. Given this fact, the district judge 5 should deny plaintiff’s motion to amend and dismiss the Section 1983 claim from the original 6 complaint. Corinthian Colleges, 655 F.3d at 995; Harris, 682 F.3d at 1131. 7 II. Doe Defendants 8 Named defendant PeopleReady seeks dismissal of the two Doe defendants described in 9 the complaint. The court concurs. The use of Doe pleading is disfavored in federal court, 10 especially where the complaint would be dismissed on other grounds. Gillespie v. Civiletti, 629 11 F.2d 637, 642 (9th Cir. 1980). Under California law, a cause of action for retaliation “lies only 12 against the employer, not against the supervisor through whom the employer commits the tort.” 13 Lloyd v. Cnty. of Los Angeles, 172 Cal. App. 4th 320, 330 (2009). 14 If plaintiff uncovers information during discovery that indicates a named individual may 15 be liable for a claim associated with this case, plaintiff may file a motion to amend the complaint 16 to add these individuals and claims. 17 III. Case Scheduling and Discovery Obligations 18 The court will table the scheduling order for the time being, and will not order the parties 19 to a settlement conference at this time. As discussed at the hearing, the scope of this case is 20 pegged to the district judge’s final order on these findings and recommendations, which require 21 an objections period and time for the district judge to review. Given that the district judges in this 22 court are dealing with a backlog of criminal and civil matters, resolution of these findings and 23 recommendations may take some time. Because of this likely delay, the undersigned finds it 24 unwise to set discovery dates in this case at this time. Initial disclosures are not required at this 25 time either, as those disclosures may look different depending on the ultimate scope of the claims. 26 Finally, though the court appreciates the parties’ willingness to attend a settlement conference 27 with a magistrate judge, ordering the parties to one now is unwise until after the pleadings are set, 28 as the scope of any settlement will also depend on the scope of the claims found cognizable. ] Therefore, the court finds good cause to stay all discovery obligations until the district 2 || judge rules on these findings and recommendations. Once the pleadings are set, the undersigned 3 || will lift the stay and issue further orders regarding scheduling. At that point, the parties can 4 || consider whether they wish to participate in a settlement conference with a magistrate judge. 5 ORDER and RECOMMENDATIONS 6 Accordingly, it is hereby ORDERED that all pleading, motion, and discovery in this case 7 || is STAYED until the district judge has resolved these findings and recommendations. 8 Further, it is RECOMMENDED that: 9 1. Plaintiff's motion to amend the pleadings (ECF No. 7) be DENIED as futile; 10 2. Plaintiff's Section 1983 claim, as stated in the original complaint, be DISMISSED for 1] failure to state a claim and further leave to amend be denied on this claim; 12 3. Doe defendants be DISMISSED from the original complaint; and 13 4. The parties be allowed to proceed on plaintiffs claim under Cal. Labor Code Section 98.6 14 as against defendant PeopleReady. 15 || These findings and recommendations are submitted to the United States District Judge assigned to 16 || the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) days after 17 || being served with these findings and recommendations, any party may file written objections with 18 || the court and serve a copy on all parties. Such a document should be captioned “Objections to 19 | Magistrate Judge’s Findings and Recommendations.” Any reply to the objections shall be served 20 | onall parties and filed with the court within fourteen (14) days after service of the objections. 21 || The parties are advised that failure to file objections within the specified time may waive the right 22 || to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); 23 || Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 24 || Dated: May 17, 2023 Foci) Aharon 2% KENDALL J. NE UNITED STATES MAGISTRATE JUDGE 27 lewi.1927 28