JAMIE JOHNSON v. SAN FRANCISCO HEALTH CARE AND REHAB INC.
Case No. 22-cv-01982-JSC
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
July 15, 2022
JACQUELINE SCOTT CORLEY United States District Judge
ORDER RE: MOTIONS TO DISMISS AND REMAND; Re: Dkt. Nos. 15, 18
BACKGROUND
Plaintiff worked for Defendant for six months in 2021. According to the complaint, Defendant frequently failed to pay minimum wages, pay overtime wages, provide meal breaks and rest periods, timely pay final wages, and provide accurate itemized wage statements. (Dkt. No. 1 at 51.) Defendant and the Service Employees International Union (“SEIU“) have a collective bargaining agreement (the “SEIU CBA“).2 Plaintiff filed this putative class action, alleging California Labor Code violations and a violation of California‘s unfair competition law. (Id.)
Plaintiff sued Defendant in San Francisco Superior Court. (Id.) Defendant filed a notice of removal (“NOR“) and removed the case to federal court. (Id. at 1.) Plaintiff then amended the complaint in the state court. (Dkt. No. 10 at 108.) Defendant filed an amended NOR in this Court. (Dkt. No. 10 at 1.) Plaintiff filed a motion to remand the case back to the state court. (Dkt. No. 15.) Defendant opposed remand and filed a motion to dismiss. (Dkt. Nos. 27, 18.)
DISCUSSION
I. Motion to Remand
“Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); see also
A. The LMRA Preemption Standard
Defendant argues that the Labor Management Relations Act (“LMRA“) provides federal jurisdiction in this case because the LMRA preempts Plaintiff‘s state law claims. LMRA § 301 provides federal jurisdiction over “suits for violation of contracts between an employee and a labor organization.”
The LMRA preemption inquiry has two parts. First, a court determines “whether the asserted cause of action involves a right conferred upon an employee by virtue of state law, not by a CBA. If the right exists sоlely as a result of the CBA, then the claim is preempted.” Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059-60 (9th Cir. 2007). Second, if the right underlying the state claim exists independently of the CBA, the claim is preempted if the state law right is
B. Claims at Issue
Defendant argues the LMRA preempts Plaintiff‘s state law claims because the SEIU CBA preempts Plaintiff‘s various claims for relief. (Dkt. No. 1 ¶ 1.) Plaintiff objects that Defendant may only establish federal jurisdiction based on the claims specifically referenced in Defendant‘s original NOR: (1) the overtime claim; (2) the meal break claims; and (3) the rest break claims. (Id.) To support this position, Plaintiff citеs ARCO Environmental Remediation, L.L.C. v. Department of Health & Environmental Quality of Montana, 213 F.3d 1108 (9th Cir. 2000). (Dkt. No. 36 at 6.) In ARCO, the Ninth Circuit held that the NOR cannot be amended to add a new basis of jurisdiction after a 30-day period expires. Id. at 1117 (citing O‘Halloran v. University of Washington, 856 F.2d 1375, 1381 (9th Cir. 1988)). The Court requested supplemental briefing addressing whether, under ARCO, Defendant waived removal arguments as to claims not specified in the initial NOR. (Dkt. No. 42.)
ARCO does not apply here. In ARCO, the defendant initially removed the case based on
Because Defendant removed this action on the basis of federal question jurisdiction under
C. California Labor Code § 510
Defendant argues that Plaintiff‘s claim for unpaid overtime wages arises from the SEIU CBA because California Labor Code § 514 bars Plaintiff‘s overtime claim under Labor Code § 510. (Dkt. No. 27 at 16.) Alternatively, Defendant contends that Plaintiff‘s state law claim requires interpretation of the SEIU CBA. Defendant has not met its burden on either point.
1. Does the claim exist solely as a result of the SEIU CBA?
Plaintiff alleges that Defendant failed to pay overtime wages in violation of California Labor Code § 510. (Dkt. No. 1-1 at 62.) California Labor Code § 510(a) provides a default rule for overtime pay. Curtis v. Irwin Indus., Inc., 913 F.3d 1146, 1153 (9th Cir. 2019). It does not, however, apply to employees “working pursuant to . . . [a]n alternative workweek schedule adopted pursuant to a collective bargaining agreement pursuant to Section 514.”
Sections 510 and 511 do not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditiоns of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.
As a preliminary matter, § 514 applies to employees who are subject to a qualifying CBA but are not “working pursuant to . . . [a]n alternative workweek schedule.”
b. The CBA Does not Satisfy Section 514
Under § 514, a qualifying CBA: (1) “expressly provides for the wages, hours of work, and working conditions of the employees“; (2) “provides premium wage rates for all overtime hours worked“; and (3) provides “a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.”
First, Defendant argues that “Plaintiff makes no allegation, nor can she, that she was not in fact always paid at least 130% of the minimum wage.” (Dkt. No. 27 at 18.) But Plaintiff‘s wages do not dictate whether the § 514 exemption applies. Rather, a CBA “must sаtisfy Section 514‘s substantive requirements with respect to all covered employees in order to render Section 510 inapplicable to any particular employee.” Baltazar v. Ace Parking Mgmt., Inc., 2022 WL 1589297, at *3 (S.D. Cal. Mar. 14, 2022) (collecting cases).
Section 514‘s text and legislative history dictate that a CBA must satisfy § 514 as to all employees to render § 510 inapplicable to any particular employee. Textually, the Court agrees with the statutory interpretation of § 514 provided in Huffman v. Pacific Gateway Concessions LLC,
First, it is clear that Section 514 exempts application of Section 510 to “an employee covered by a valid collective bargaining agreement” if certain conditions are met. Here, defendant is seeking to exempt application of Section 510 to plaintiff—a covered employee.
Second, the CBA must “expressly provide[ ] for the wages, hours of work, and working conditions of the employees[.]” Cal. Lab. Code § 514. Although “the employees” is not explicitly defined, it stands in stark contradistinction to the earlier reference to “an employee.” Rather than referring to “such employee” or “that employee,” the statute instead refers to plural “employees” and requires that the CBA expressly provide for the wages, hours, and working conditions of all employees covered by the CBA.
Third, the аgreement must provide a premium rate for overtime and regular wages exceeding the state‘s minimum wage “for those employees.” The plural term “those employees” refers back the statute‘s earlier use of “the employees” which, as discussed above, means all employees covered by the CBA.
It is apparent from the statute‘s plain language that a CBA must satisfy Section 514‘s substantive requirements with respect to all covered employees in order to render Section 510 inapplicable to any particular employee. Put another way, Section 514 concerns the merits of the agrеement itself, not its treatment of any individual employee.
Id. The legislative history also supports this interpretation. See Sarmiento v. Sealy, Inc., 2019 WL 3059932, at *8 (N.D. Cal. July 12, 2019) (reviewing changes to the statutory scheme and finding that the legislature chose the plural phrase “the employees” rather than the singular phrase “such employee“). Thus, the SEIU CBA must satisfy § 514‘s requirements as to all employees to render § 510 inapplicable to any particular employee. See Huffman, 2019 WL 2563133, at *5-6.
Defendant has not established that the SEIU CBA meets the criteria established in § 514 as to all employees. Specifically, the SEIU CBA does not provide a “regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.”
Defendant contends that a series of “savings clauses” keep the SEIU CBA within the requirements of § 514 “despite an issue with any one clause.” (Dkt. No. 27 at 18 & n.24.) Specifically, in Article 17.2, the SEIU CBA states that “[i]n the event California or Federal Law is modified or amended during the term of this Agreement so that the law requires payment of wages higher than specified herein, the Employer shall comply therewith.” (Dkt. No. 1-1 at 22.) Likewise, Defendant points to Article 31, a general clause that severs unlawful portions of the SEIU CBA from the rest of the contract, (id. at 32), and Appendix A, subpart E, which provides that “the Company shall pay overtime in accordance with federal and state laws,” (id. at 40).
Defendant‘s argument is unpersuasive. Article 17.2 does not “prоvide” a minimum hourly wage compliant with § 514.3 The upward progression in California‘s minimum wage law did not “require” Defendant to provide all of its employees with a base wage of 130 percent of minimum wage or greater; instead, it merely required Defendant to pay the minimum wage. See
Likewise, Article 31 does not make the SEIU CBA compliant with § 514. Article 31 states in full:
If any provision of this Agreement or the application of such provision to any person or circumstance be ruled contrary to law by any Federal or State court or duly authorized agency, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby.
(Dkt. No. 1-1 at 32.) Defendant provides no explanation as to how this provision requires Defendant to pay 130 percent of minimum wage and its plain language does not. Thus, this “savings clause” does not bring the CBA into compliance with § 514.
Finally, Appendix A subpart E does not make the SEIU CBA compliant with § 514 either. Appendix A subpart E provides, in part, “[t]he Company shall pay the employee overtime in accordance with the federal and state laws.” (Id. at 40.) On its face, this provision does not provide a minimum hourly wage greater than 130 percent of the state minimum wage. And, as with the other “savings clauses,” Defendant provides no explanаtion as to how this provision requires compliance with § 514‘s exemption criteria.
It is Defendant‘s burden, not Plaintiff‘s, to show that the § 514 exemption applies. Ramirez, 20 Cal.4th at 794-795. Defendant has not met that burden. Instead, Defendant states that “[t]he use of savings clauses is also consistent with courts not requiring every provision be constantly updated – especially when the COVID 19 pandemic hit.” (Dkt. No. 27 at 18.) But Defendant did not cite a single case to support that claim—let alone a case where “savings clauses” put a non-qualifying CBA into compliance with § 514. In Huffman, the court considered a clause similar to Article 17.2, which accompanied a non-qualifying CBA. Huffman, 2019 WL 2563133, at *7. There, the parties agreed that the pay rates were non-compliant under § 514. Id.
In sum, because the SEIU CBA does not meet the criteria set out in Labor Code § 514, Plaintiff‘s claim under § 510 remains.4 Thus, Plaintiff‘s “right to overtime” does not exist “solely
2. Does the state law right “substantially depend” on analysis of the CBA?
Under the second step of the two-part test, the Court inquires whether Plaintiff‘s claim can be resolved by simply looking at the CBA versus interpreting it. See Curtis, 913 F.3d at 1153. The Ninth Circuit has “stressed that ‘interpretation’ is construed narrowly in this context.” Id. “[I]t means something more than consider, refer to, or apply.” Kobold v. Good Samaritan Reg‘l Med. Ctr., 832 F.3d 1024, 1033 (9th Cir. 2016) (cleaned up). “At this second step of the analysis, claims are only preempted to the extent there is an active dispute over the meaning of contract terms.” Curtis, 913 F.3d at 1153 (cleaned up).
Defendant cites generally to the CBA without identifying precise terms that require interpretation. For example, Defendant contends that “[t]he CBA‘s general scope, along with the terms of its specific articles, clearly govern every statutory right alleged in the FAC.” (Dkt. No. 27 at 20.) This statement is insufficient to meet Defendant‘s burden. See Mkoma v. Ace Parking Management, Inc., 2022 WL 104282, at *6 (S.D. Cal. Jan. 11, 2022) (“Mere reference to the CBA is insufficient to show a claim is substantially dependent on the CBA.“) Similarly, Defendant states that Plaintiff “ignores the CBA‘s broad grievance procedures for resolving overtime and other disputes falling within its scope.” (Dkt. No. 27 at 20.) But Defendant does not explain why “interpretation” of that provision will be necessary to resolve Plaintiff‘s § 510 claim.
Rather, the closest Defendant comes to identifying terms that must be interpreted is the following paragraph:
A review of the whole CBA shows it works just fine to uphold all Plaintiff‘s overtime rights, non-negotiable rights, substantive rights, and all other rights in its broad scope. Plaintiff cannot establish
otherwise by ignoring most of the CBA, especially provisions specifically touching on issues she raises in her motion, including scope (CBA Introduction and Arts. 1 and 32), grievances (Art. 28) and savings clauses (Section 17.2 and Art. 31).
(Id. at 21.) But a court need not interpret these sections of the SEIU CBA to determine whether § 510 applies. It is not “interpretation” to look at a CBA‘s wage chart and determine whether the CBA meets the hourly wage criteria under § 514. Huffman, 2019 WL 2563133, at *5 n.4. And a court need not “interpret” Article 17.2 to determine that § 514 does not apply here. See id at *7 (reviewing a clause like Article 17.2 and holding that “the word ‘required’ does not call for interpretation” because “[m]inimum wages statutes invariably carry an effective date after which compliance is required“).
In sum, “[i]t is not enоugh for Defendant[] to provide a laundry list of provisions that they allege the Court must interpret to resolve Plaintiff‘s claims; Defendant[] must explain why interpretation, as opposed to mere reference to the CBA, is necessary.” Wilson-Davis v. SSP Am., Inc., 434 F. Supp. 3d 806, 813 (C.D. Cal. 2020) (emphasis in original). Because Defendant has not met its burden, LMRA § 301 does not preempt Plaintiff‘s claim under Labor Code § 510.
D. Rest and Meal Periods
Plaintiff alleges Defendant failed to provide rest and meal periods or compensation in lieu thereof under California Labor Code §§ 226.7 and 512. Defendant contends that the LMRA preempts these claims because the claims are inextricably intertwined with the SEIU CBA and require intеrpretation of the SEIU CBA.
Defendant has not established that the first step of the LMRA preemption test is met. “Plaintiff‘s meal and rest break claims arise under state law and not solely by virtue of the CBA—that the CBA includes provisions regarding meal and rest breaks is insufficient for preemption.” Hernandez v. Sysco Corp., 2017 U.S. Dist. LEXIS 65279, at *11; see also Vasserman v. Henry Mayo Newhall Mem‘l Hosp., 65 F. Supp. 3d 932, 960 (C.D. Cal. 2014) (“California state law claims alleging meal period violations are not preempted even where the CBA includes language entitling employees to such breaks” and collecting cases re: the same).
With respect to the second step of the LMRA preemption test, Defendant insists that the SEIU CBA‘s references to meal and rest breaks mean that resolution of Plaintiff‘s meal and rest
Defendant‘s argument misinterprets the relevant inquiry at step two of the LMRA preemption test. The question is not whether a SEIU CBA term must be interpreted to determine whether Defendant complied with the SEIU CBA. Rather, a claim is preempted under step two where interpreting a CBA is necessary to determine whether Plaintiff can state a claim under state law. For example, district courts finding break claims preempted at step two have “generally reasoned that determining whether a plaintiff is entitled to meal period protections of the California Labor Code or is exempted from meal period protections under Labor Code § 512(e), requires interpreting the provisions of the particular CBA at issue.” Stone v. Sysco Corp., 2016 U.S. Dist. LEXIS 154424, at *17 (E.D. Cal. Nov. 4, 2016) (collecting cases). In those cases, the plaintiffs’ state law right substantially depended on whether the exemption in § 512(e) applied. Id. To decide if the exemption applied, those courts needed to interpret ambiguous terms in the CBAs. Id. Here, by contrast, the state law rights are independent of the cited CBA term. In other words, Defendant does not explain why Plaintiff‘s state law break rights depend on the term “emergency” in the SEIU CBA. Thus, because the right at issue here is not substantially dependent on analysis of a collective bargaining agreement, Plaintiff‘s claims are not preempted under LMRA § 301.
E. Minimum Wage
Defendant‘s preemption arguments regarding the minimum wage claims similarly fail. First, Defendant fails to explain why the Court would need to intеrpret specific SEIU CBA provisions to adjudicate Plaintiff‘s state law right to minimum wage payments. Defendant‘s reference to “the existence of wages in the CBA” is insufficient to show the state law rights are “substantially dependent” on an analysis of the SEIU CBA. (Dkt. No. 27 at 23.) Moreover, as noted above, the “savings clause” in Article 17.2 does not need interpretation to resolve the state law minimum wage claim. See Huffman, 2019 WL 2563133, at *7. Second, Defendant argues
F. California Labor Code § 204(c)
Finally, Defendant argues that Labor Code § 204(c) exempts Defendant from Plaintiff‘s claims under California Labor Code §§ 201, 202, 203, 204, and 226. (Dkt. No. 27 at 23; Dkt. No. 18 at 19.) These provisions govern the timing of wage payments and the content of wage statements. Section 201 sets baseline rules for payment of wages upon discharge or layoff. Section 202 sets rules for payment of wages upon resignation. Section 203 sets penalties for willful violations of those and other provisions. Section 226 requires employers to provide itemized wage statements. And § 204 provides baseline rules for the timing of semimonthly payments under the Labor Code. Section 204(a) states:
All wages, other than those mentioned in Section 201, 201.3, 202, 204.1, or 204.2, earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays. Labor performed between the 1st and 15th days, inclusive, of any calendar month shall be paid for between the 16th and the 26th day of the month during which the labor was performed, and labor performed between the 16th and the last day, inclusive, of any calendar month, shall be paid for between the 1st and 10th day of the following month.
The SEIU CBA does establish a slightly different pay arrangement from the terms in Section 204(a). The SEIU CBA provides that paydays shall be on the 10th and 25th day of every month. (Dkt. No. 1-1 at 23.) It further provides that if a payday falls on a Sunday, the paychecks will be handed out the following Monday. (Id.) In such a scenario, the pay for work completed in a previous month could fall on the 11th day of the following month—e.g. the Monday following a Sunday that is the 10th day of a month. That scenario, contemplated in the CBA, is a different pay
Where a statutory exemption to the Labor Code applies, the right exists as a result of the CBA, not the Labor Code. See Curtis, 913 F.3d at 1155. Defendant argues that because Section 204(c) applies, Plaintiff‘s claims under §§ 201, 202, 203, and 226 are preempted under step one of the LMRA preemption test. Defendant also argues that Plaintiff‘s claim under § 204 is preempted. The Court disagrees as to §§ 201, 202, 203, and 226 but agrees as to § 204.
1. Plaintiff‘s claims under §§ 201, 202, 203, and 226 are not preemptеd
Section 204(c) states: “However, when employees are covered by a collective bargaining agreement that provides different pay arrangements, those arrangements shall apply to the covered employees.” Defendant urges the Court to adopt an interpretation of the words “different pay arrangements” as referring to pay arrangements different from any provision of the Labor Code, not just § 204. (Dkt. No. 27 at 23 n.37.) In other words, Defendant‘s position would mean that Section 204(c) is a blanket exemption from any pay arrangement law where the CBA‘s terms differ from those of the Labor Code. Defendant provides no statutory analysis to support that interpretation. Nor would any reasonable interpretation of § 204 support such a broad interpretation.
Rather, § 204(c) provides that a CBA‘s terms apply rather than the content of § 204, when an employee is covered by a CBA with different pay arrangements from those stated in § 204. Section 204(c) does not mention any other statutory provisions and its text gives no indication that the provision should apply to any other section of the Labor Code. To read a broad exemption from all “pay arrangement” laws into § 204(c)‘s silence would be an error. In the Labоr Code, cross-provision exemptions are explicit. See
The limited authority that Defendant cites is unconvincing. First, Defendant cites Gillette v. Stater Brothers Markets, 2019 WL 8017735 (C.D. Cal. Sept. 23, 2019). There, the court wrote that “California Labor Code Sections 201–204 do not apply if a collective bargaining agreement provides for different pay arrangements.
In sum, Plaintiff‘s claims under §§ 201, 202, 203 and 226 arе not preempted under step one of the LMRA preemption test because 204(c) does not provide an exemption to those statutes. Moreover, Defendant has not met its burden to show that interpreting the SEIU CBA is necessary to resolve Plaintiff‘s claims under prong two. Thus, LMRA § 301 does not preempt Plaintiff‘s claims under §§ 201, 202, 203 and 226.
2. Plaintiff‘s claim under § 204 is preempted
As discussed above, the statutory exemption in § 204(c) applies. Because the exemption applies, Plaintiff‘s rights under § 204(a) stem not from that statute, but from the arrangements agreed upon in the SEIU CBA. Thus, under Curtis, LMRA § 301 preempts Plaintiff‘s § 204(a) claim. See Curtis, 913 F.3d at 1155.
II. Defendant‘s Motion to Dismiss
A claim preempted by § 301 of the LMRA should be dismissed if brought by an employee who failed to exhaust the applicable CBA‘s grievance and arbitration process. See Kobold, 832 F.3d at 1036-37, 1041-42 (failure to exhaust, or allege valid excuse for failure to exhaust, a claim preempted by section 301 precludes pursuing that claim in court). Because Plaintiff has not alleged exhaustion under the SEIU CBA for the § 204 clаim, that claim is dismissed. To the extent Plaintiff‘s claim under
III. Supplemental Jurisdiction
As discussed above, Plaintiff‘s remaining causes of action are state law claims. Because the Court has not considered the merits of Plaintiff‘s allegations, judicial economy favors declining to exercise supplemental jurisdiction. See
CONCLUSION
For the reasons stated above, Plaintiff‘s motion for remand is DENIED. Defendant‘s motion to dismiss is GRANTED in part and DENIES in part: Plaintiff‘s Labor Code § 204 is dismissed as preempted by the LMRA and in all other respects the motion to dismiss is denied. Because the Court declines supplemental jurisdiction over the remaining claims, the case is remanded to the San Francisco Superior Court.
This Order disposes of Docket Nos. 15, 18.
IT IS SO ORDERED.
Dated: July 15, 2022
JACQUELINE SCOTT CORLEY
United States District Judge