Tan v. Grubhub, Inc.

171 F. Supp. 3d 998, 2016 WL 1110236, 2016 U.S. Dist. LEXIS 37200
CourtDistrict Court, N.D. California
DecidedMarch 22, 2016
DocketCase No. 15-cv-05128-JSC
StatusPublished
Cited by54 cases

This text of 171 F. Supp. 3d 998 (Tan v. Grubhub, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tan v. Grubhub, Inc., 171 F. Supp. 3d 998, 2016 WL 1110236, 2016 U.S. Dist. LEXIS 37200 (N.D. Cal. 2016).

Opinion

ORDER GRANTING IN PART MOTION TO DISMISS FIRST AMENDED COMPLAINT

JACQUELINE SCOTT CORLEY, United States Magistrate Judge

In this putative class action, Plaintiffs Andrew Tan (“Tan”) and Raef Lawson (“Lawson,” and together, “Plaintiffs”) sue Grub Hub Holdings Inc. and GrubHub Inc. (“GrubHub” or “Defendants”), a service that provides food delivery to customers via an on demand dispatch system. The gravamen of Plaintiffs’ First Amended Complaint (“FAC”) is that the delivery driver plaintiffs were misclassified as independent contractors and denied the benefits of California wage-and-hour laws. (Dkt. No. 15.)1 Now pending before the Court is Defendants’ motion to dismiss. Defendants seek to dismiss the entire FAC for failure to state a claim, and ask the Court to dismiss or, alternatively, stay the PAGA claims under the Colorado River abstention doctrine. (Dkt. No. 21.) Having considered the parties’ submissions, the Court concludes that oral argument is unnecessary, see Civ. L.R. 7-l(b), and GRANTS IN PART the motion to dismiss and declines to stay the PAGA claim for the reasons explained as set forth below.

BACKGROUND

The following background is based on the FAC allegations and judicially noticeable documents.2 Defendants removed the ease to federal court from the San Francisco Superior Court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). (Dkt. No. 1 ¶3.) Plaintiffs subsequently filed the FAC, which alleges that Defendants mischaracterize delivery drivers as independent contractors instead of employees in violation of California law and, as a result of the misclassification, have violated a number of California Labor Code provisions. (Dkt. No. 15 ¶ 2.) Lawson alone brings the first five counts under the Labor Code, while both Lawson and Tan [1004]*1004bring the PAGA claim alleged in the sixth count.

Drivers receive a flat fee for each completed delivery plus gratuities, although Defendants do not provide an itemized wage statement showing as much. (Id. ¶ 12.) Defendants require drivers to sign up for shifts of blocks of hours in advance and require that drivers remain within a designated area and be available to accept delivery assignments during those shifts. (Id. ¶ 13.) Defendants also direct drivers’ work in detail, instructing them where to report for shifts, how to dress, where to go to pick up or await deliveries, and to follow requirements regarding food handling and delivery timing or risk termination. (Id.) As Defendants’ business is providing food delivery services, the drivers’ services are integrated into Defendants’ business, which would not exist without them. (Id. ¶ 14.)

As for the specific Labor Code violations, Lawson first alleges that Defendants have violated Section 2802 by failing to reimburse drivers for expenses they paid that Defendants should have borne, including expenses for their vehicles, gas, parking, phone data, and other expenses.” (Id. ¶ 15.)

Next, Lawson alleges that Defendants have violated Section 226(a) by failing to provide proper itemized wage statements. (Id. ¶ 12 & Count II.)

Lawson also alleges violations of Sections 1197 and 1194 for failing to pay the drivers the California minimum wage. Because drivers are paid by delivery and have been required to bear the expenses of their employment, “their weekly pay rates have fallen below California’s minimum wage in many weeks.” (Id. ¶ 16.) In particular, Tan’s wages fell below minimum wage- “during several weeks since he began working for GrubHub in June 2015, as a result of his fuel and vehicle maintenance costs.” (Id.). Lawson’s weekly wages have likewise fallen below minimum wage in “numerous weeks because of the expenses that he has been required to bear, such as fuel and vehicle maintenance costs.” (Id.)

Fourth, Lawson alleges that Defendants failed to compensate drivers for overtime hours worked in violation of Labor Code Sections 1194, 1198, 510, and 554. Lawson and other drivers “have regularly worked more than eight (8) and even twelve (12) hours per day and forty (40) hours per week” without receiving overtime pay. (Id. ¶ 17.) Tan has “regularly worked in excess of sixty hours per week” and “routinely worked more than twelve (12) hours in a day” without receiving time-and-a-half pay for the hours beyond 40 or twice his hourly rate, respectively. (Id.) Lawson worked 45 hours the week of November 30, 2015 and was not paid at time-and-a-half for the hours beyond 40. (Id.)

In Count Y, Lawson alleges that Defendants’ Labor Code violations also constitute unlawful business practices in violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200. Lawson and other drivers have lost money and property including business expenses and unpaid wages. Lastly, in the sixth count Plaintiffs seek penalties under PAGA for all of the Labor Code violations. Defendants move to dismiss all six counts.

DISCUSSION

Defendants do not dispute that Plaintiffs have adequately pleaded misclassifieation — that is, that the FAG includes sufficient allegations to plausibly establish that GrubHub classified its drivers as independent contractors when they were actually employees. Instead, Defendants contend that all six FAC counts fail because Plaintiffs have not included enough facts to state a claim for any of the alleged violations. Separately, Defendants urge the Court to abstain from adjudicating Plain[1005]*1005tiffs’ PAGA claims due to the existence of an earlier-filed action by another GrubHub driver asserting the same — and more— PAGA claims against Defendants.

As a threshold matter, Plaintiffs did not substantively respond to Defendants’ argument regarding Count II, the Section 226 claim; instead, Plaintiffs state only that “Lawson will not press his claim for violation of [Section] 226(a).” (Dkt. No. 36 at 10 n.3.) The Court will therefore dismiss Plaintiffs’ Section 226 claim with prejudice.

I. Whether Plaintiffs’ Claims are Sufficiently Pled

A. Count I: Labor Code Section 2802

California Labor Code Section 2802 requires an employer to “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” Merely alleging failure to reimburse unspecified work-related expenses is not enough to state a Section 2802 claim. See, e.g., Lenk v. Monolithic Power Sys., Inc., No. 15-cv-01148-NC, 2015 WL 7429498, at *9 (N.D.Cal. Nov. 23, 2015); Hennighan v. Insphere Ins. Solutions, Inc., No. 13-cv-00638-JST, 2013 WL 1758934, at *5 (N.D.Cal. Apr. 24, 2013) (same). Instead, Section 2802 claims are sufficiently pled where the complaint identifies the particular expenses that were not reimbursed and affirmatively alleges that the expenses were part of the plaintiffs job duties. See, e.g., Taylor v. W. Mar. Prods., Inc., No. C 13-04916 WHA, 2014 WL 1779279, at *5-6 (N.D.Cal.

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Bluebook (online)
171 F. Supp. 3d 998, 2016 WL 1110236, 2016 U.S. Dist. LEXIS 37200, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tan-v-grubhub-inc-cand-2016.