TRAMON WILSON-DAVIS, individually and on behalf of all others similarly situated, Plaintiff, v. SSP AMERICA, INC., et al., Defendants.
Case No. 2:19-cv-04375-ODW(RAOx)
January 21, 2020
O JS-6
ORDER GRANTING PLAINTIFF‘S MOTION TO REMAND [14] AND DENYING DEFENDANTS’ MOTION TO DISMISS AS MOOT [16]
I. INTRODUCTION
This matter comes before the Court on Plaintiff‘s Motion to Remand Action to
II. BACKGROUND
Defendants SSP America, Inc. and SSP America LAX, LLC staff and operate restaurants in airports throughout California. (Decl. of Denise Visconti, Ex. A (“Compl.“) ¶ 2, ECF No. 3-1.) Plaintiff Tramon Wilson-Davis worked for Defendants in Los Angeles, California. (Compl. ¶ 10.) On March 13, 2019, Wilson-Davis filed a putative class action against SSP America, Inc., SSP America LAX, LLC, and other unnamed Defendants in the Superior Court of the State of California for the County of Los Angeles. (See generally Compl.) Wilson-Davis alleges eight causes of action under California law, including: (1) failure to pay minimum wages; (2) failure to pay overtime wages; (3) failure to provide meal periods; (4) failure to permit rest breaks; (5) failure to reimburse business expenses; (6) failure to provide accurate itemized wage statements; (7) failure to pay all wages due upon separation from employment; and (8) violations of Business and Professions Code sections 17200, et seq. (See Compl. ¶¶ 37–101.) Wilson-Davis seeks to represent a class of “[a]ll California citizens currently or formerly employed by Defendants as non-exempt employees in the State of California within four years prior to the filing of this action to the date the class is certified” and who “were affected by Defendants’ Labor Code, Business and Professions Code §§ 17200, and IWC Wage Order violations.” (Compl. ¶¶ 18, 20.)
On May 20, 2019, Defendants removed the action to federal court pursuant to
III. LEGAL STANDARD
A federal court may exercise removal jurisdiction over a case only if jurisdiction existed over the suit as originally brought by the plaintiffs.
Whether removal jurisdiction exists must be determined by reference to the “well-pleaded complaint.” Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986). The
There is, however, an exception to the “well-pleaded complaint” rule. Under the “artful pleading” doctrine, a plaintiff cannot defeat removal of a federal claim by disguising or pleading it artfully as a state law cause of action. Federated Dep‘t Stores, Inc. v. Moitie, 452 U.S. 394, 397 n.2 (1981). If the claim arises under federal law, the federal court will re-characterize it and uphold removal. Id. The “artful pleading” doctrine applies to state claims that are completely preempted by federal law. See Caterpillar, 482 U.S. at 393 (“Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law.“).
To support a finding of complete preemption, the preemptive force of the federal statute at issue must be “extraordinary.” See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987). For this reason, the complete preemption doctrine is narrowly construed. See Holman v. Laulo-Rowe Agency, 994 F.2d 666, 668 (9th Cir. 1993) (“The [complete preemption] doctrine does not have wide applicability; it is a narrow exception to the ‘well-pleaded complaint rule’ . . . .“). “[O]nly three areas have been deemed areas of complete preemption by the United States Supreme Court: (1) claims under the Labor Management Relations Act; (2) claims under the Employment Retirement and Insurance Security Act (ERISA); and (3) certain Indian land grant rights.” Gatton v. T-Mobile USA, Inc., No. CV 03-130-DOC, 2003 WL 21530185, at *5 (C.D. Cal. Apr. 18, 2003) (citations omitted); see also Robinson v. Mich. Consol. Gas Co., 918 F.2d 579, 585 (6th Cir. 1990).
IV. DISCUSSION
Plaintiff moves to remand this action back to state court on the grounds that “the Court lacks subject matter jurisdiction and that no federal-question jurisdiction exists.” (Mot. 1.) Specifically, Plaintiff argues that the LMRA does not preempt his state law claims. (Mot. 1)
The LMRA gives federal courts exclusive jurisdiction of “[s]uits for violation of contracts between an employer and a labor organization.”
The Ninth Circuit has articulated a two-part test to determine whether a cause of action is preempted by the LMRA. Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007). First, the Court must determine if the “asserted cause of action involves a right conferred upon an employee by virtue of state law,” independent of a CBA. Id. If the right exists solely because of the CBA, then the claim is preempted, and analysis ends. Id. Second, if the right exists independently of the CBA, the Court must then consider whether resolving the dispute is nevertheless “substantially dependent on [the] analysis of a [CBA].” Id. “If such dependence exists, then the claim is preempted by section 301; if not, then the claim” is left to state courts to handle in accordance with state law. Id. at 1059–60.
Here, Defendants argue that the LMRA preempts Plaintiff‘s claims under both steps of the Burnside analysis. The Court will consider Defendants’ arguments under each step in turn.
A. BURNSIDE STEP ONE
Defendants’ only argument under step one of the Burnside analysis is that the CBA, not state law, creates Plaintiff‘s right to overtime compensation. (Opp‘n to Mot. (“Opp‘n“) 6, ECF No. 17.) For support, Defendants rely on California Labor Code section 514, which provides that:
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 conditions 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.
See also Wage Order No. 5-2001(3)(L) (same). Section 514 is an affirmative defense that must be raised by Defendants. Vasserman v. Henry Mayo Newhall Mem‘l Hosp., 65 F. Supp. 3d 932, 954 (C.D. Cal. 2014).
Defendants’ argument fails at step one of the Burnside analysis because simply asserting the section 514 exemption as a defense is not a basis for preemption. It is well established that “a defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated.” Caterpillar, 482 U.S. at 399. Accordingly, “a defense based on the terms of a CBA is not enough to require preemption.” Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 690 (9th Cir. 2001) (citing Caterpillar, 482 U.S. at 399). In the next section, the Court will analyze Defendants’ argument that interpretation of the CBA is nonetheless necessary to determine whether the exemption applies.
B. BURNSIDE STEP TWO
The bulk of Defendants’ preemption arguments are based on step two of the
1. Minimum Wage and Overtime Claims
As an initial matter, Defendants argue that the LMRA preempts Plaintiff‘s minimum wage claims but fail to explain why. (See Opp‘n 8-10.) There is no indication that the Court would have to look at anything other than Schedule A of the CBA or the employees’ pay stubs to determine whether Defendants paid their employees at least the minimum wage set under California law. See Burnside, 491 F.3d at 1060 (distinguishing between merely “looking to” versus interpreting the CBA); (see Opp‘n 9 (admitting that “Schedule A of the CBA sets forth the ‘minimum’ rates of pay for each position“).)
As to overtime, Defendants argue that if the section 514 exemption does not apply, the Court will nevertheless have to interpret the CBA to determine the “regular rate” for purposes of section 510. (Opp‘n 9.) According to Defendants, to determine the “regular rate,” the Court would have to interpret several provisions, including: rate increases by supervisors (see Decl. of Pat Banducci Ex. 1 (“CBA“), art. 4.6, ECF No. 4); rate increases based on years of service (see CBA, sched. A); tips and gratuities (see CBA, arts. 4.4, 12.10); rates for relief employees (see CBA, art. 4.5); rates for time between meetings and the start of the shift (see CBA, art. 4.9); reporting time (see CBA, art. 4.9); and rates for work less than scheduled shift (see CBA, art. 5.9). (Opp‘n 9.)
The Court is not convinced. It is not enough for Defendants to provide a laundry list of provisions that they allege the Court must interpret to resolve Plaintiff‘s claims; Defendants must explain why interpretation, as opposed to mere reference to the CBA, is necessary. See Burnside, 491 F.3d at 1071 (rejecting preemption after a “cursory examination” of provisions in three different CBAs).
To begin, what constitutes the “regular rate” is a question of law. See Bart v. Parkview Cmty. Hosp. Med. Ctr., No. EDCV 14-1614-JGB (DTBx), 2014 WL 12703022, at *3 (C.D. Cal. Sept. 18, 2014) (“Depending on California‘s definition of ‘regular rate,’ ‘a court can calculate the exact amount of overtime pay that is owed by looking to the CBA[s] and the past wages paid.“); see also Alonzo v. Maximus, Inc., 832 F. Supp. 2d 1122 (C.D. Cal. 2011) (noting that courts look to the federal Fair Labor Standards Act to interpret “regular rates” under California law). Thus, the real inquiry is whether, once the reviewing court determines the universe of factors to be included in the calculation of regular rate, it must then interpret the CBA to ascertain those factors.
In Raphael v. Tesoro Refining and Marketing Co., this Court denied the plaintiff‘s motion to remand based on the “plethora of provisions in need of interpretation throughout the eight separate CBAs covering Raphael and the aggrieved employees he seeks to represent.” 2015 WL 3970293, at *6. The defendant in that case “describe[d] the complexity involved in calculating the proper wage and premium wage rates under only a single CBA, highlighting essential terms that . . . need[ed] to be interpreted.” Id. (emphasis added). The Court concluded that those provisions “paint[ed] a picture far from ‘straightforward and clear,’ and that picture becomes increasingly muddied as the seven other CBAs at issue come into play.” Id.
Unlike the CBAs in Raphael, which created a contractual labyrinth of provisions, the single CBA here presents a straightforward map to determining an employee‘s regular rate, with Schedule A as the starting
Defendants’ contention that the Court will have to interpret the CBA “to determine when employees actually worked ‘overtime’ and the premium payments owed if they did” is also unpersuasive. (Opp‘n 9.) First, Defendants’ argument as to the amount of premium payments owed is duplicative of the previous inquiry into regular rates. Second, if the state court decides that the section 514 exemption does not apply, the question of whether the employees actually worked overtime is determined solely by reference to state law and the employees’ evidence of hours worked (e.g., time records and testimonial evidence).
Defendants cite Firestone v. Southern California Gas Company where the Ninth Circuit agreed that preemption applied where the Court would have to interpret the CBA to determine what the employees’ “regular rate” was. 219 F.3d 1063, 1066 (9th Cir. 2000). Firestone is distinguishable for two main reasons. First, the parties there disputed the method for calculating the regular rate, which would then be used to determine the required overtime premium. See id. at 1065–66 (“The method of calculating compensation for these hours is the subject of some dispute by the parties.“). There is no evidence in the record about such a dispute here. Second, the compensation formula in that case was complicated because it was based on a “flat rate per meter read” variable that nonetheless incorporated actual hours worked when calculating overtime. See id. (“[T]he unassigned overtime hours posted were computed as follows: (assigned hours/actual hours) X .3334 X (actual hours-8) . . .
For these reasons, the LMRA does not preempt Plaintiff‘s state law minimum wage and overtime claims.
2. Meal Period and Rest Break Claims
Defendants raise two main arguments as to Plaintiff‘s meal period and rest break claims.5 First, Defendants contend that because the Court must interpret the CBA to determine the employees’ “regular rate,” see supra Part IV.B.1, it follows that interpretation is needed to calculate the “premium” payment that the Labor Code‘s meal and rest break provisions require. (Opp‘n 10.) Second, Defendants argue that the Court will need to “interpret and apply the terms in the CBA governing meal and rest periods to determine whether Defendants provided the opportunity to take meal periods and authorized and permitted rest breaks in accordance with California law.” (Opp‘n 10.)
As to Defendants’ first argument, the Labor Code and applicable Wage Order require employers to provide meal and rest breaks subject to certain conditions. See
Defendants’ first argument fails because the Court already concluded that no interpretation is necessary to determine an employee‘s “regular rate.” Accordingly, the Court can also calculate the “premium” payment required under section 226.7(b) and the applicable wage order without interpreting the CBA.
As to the second argument, the CBA is unmistakably clear regarding meal and rest breaks. It provides that “[t]he Employer will comply with wage and hour laws with regard to breaks and meal periods.” (CBA, art. 5.11.) That further factual disputes or questions of interpretation of California law may arise does not justify preemption. The CBA cannot be clearer.
Accordingly, the LMRA does not preempt Plaintiff‘s meal and rest period claims.
3. Business Expense Reimbursement Claims
Defendants argue that “Plaintiff‘s business expense reimbursement claim is entirely dependent on interpretation of the CBA.” (Opp‘n 11.) Again, their argument is conclusory and unpersuasive.
Section 2802 of the California Labor Code requires employers to indemnify their employees “for all necessary expenditures or losses incurred by the employee[s] in direct consequence of the discharge of [their] duties.”
Here, Defendants do not explain why the Court would need to reference the CBA at all, let alone interpret it. See Hoover v. Am. Income Life Ins. Co., No. EDCV 10-1442-GW (PLAx), 2010 WL 11556799, at *4 (C.D. Cal. Dec. 2, 2010) (rejecting argument that court would have to interpret CBA to resolve business expense reimbursement claim). The CBA provides for reimbursement for some expenses, such as uniforms and work shoes. (See CBA, art. 14.) However, these negotiated concessions do not establish preemption. See Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 412–13 (1988) (“[T]he mere fact that a broad contractual protection . . . may provide a remedy for conduct that coincidentally violates state-law does not make the existence or the contours of the state law violation dependent upon the terms of the private contract.“); see also Burnside, 491 F.3d at 1071. For these reasons, Defendants’ argument as to reimbursement of business expenses fails.
4. Waiting Time Penalty, Wage Statements, and UCL Claims
As to Plaintiff‘s remaining claims under Labor Code sections 201 to 203 (“waiting time” claims) and 226 (“Wage Statement” claims), and Business and Professions Code sections 17200 et seq. (“UCL” claims), Plaintiff argues they are derivative of his first five claims, and thus, also not subject to preemption. (Reply 8, ECF No. 18.) Defendants agree that these claims are derivative. (Opp‘n 12.) However, because Defendants contend that the underlying claims are preempted, they argue that these remaining claims are also preempted by derivation. (Opp‘n 12.)
The Court agrees with Plaintiff. “When a district court remands a case to state court based on a preemption analysis of the relevant wage claims, it is unnecessary to conduct an analysis of related state law claims[] . . . .” Bonilla v. Starwood Hotels & Resorts Worldwide, Inc., 407 F. Supp. 2d 1107, 1113–14 (C.D. Cal. 2005). Defendants, however, raise an argument that appears to contradict the holding in Bonilla and require an analysis of Plaintiff‘s waiting time claims.
Defendants claim that the LMRA preempts Plaintiff‘s waiting time claims because the Court would have to interpret the CBA‘s compensation provisions to determine whether Defendants “willfully” failed to pay Plaintiff and the class their owed wages. (Opp‘n 11–12.) According to Defendants, “a failure to pay is not ‘willful’ if the amount of wages owed to the employee is unclear.” (Opp‘n 11 (citing Barnhill v. Robert Saunders & Co., 125 Cal. App. 3d 1, 8–9 (1981)).) Under Labor Code section 203, “[i]f an employer willfully fails to pay . . . any wages of an employee who is discharged
Here, the Court concluded already that the CBA‘s compensation provisions are clear and unambiguous, and thus require no interpretation. It appears, however, that Defendants are arguing that a defendant can establish preemption simply by adopting a different interpretation of the CBA, no matter how wrong or unsupported. Not so. “[A] hypothetical connection between the claim and the terms of the CBA is not enough to preempt the claim.” Cramer, 255 F.3d at 692. Defendants’ “proffered interpretation argument must reach a reasonable level of credibility.” Id. (quoting Livadas, 512 U.S. at 125) (“The argument does not become credible simply because the court may have to consult the CBA to evaluate it; ‘look[ing] to’ the CBA merely to discern that none of its terms is reasonably in dispute does not require preemption.“). Thus, Defendants’ argument for preemption of the waiting time claims fails, and the Court finds that the LMRA does not preempt Plaintiff‘s derivative claims.
5. Grievance Procedures Under the CBA
Finally, according to Defendants, the CBA establishes a mandatory grievance and arbitration procedure that covers all of Plaintiff‘s claims. (Opp‘n 13.) Defendants argue that the Court will need to “interpret and apply the CBA to determine whether Plaintiff has complied with the mandatory grievance and arbitration procedures governing his employment and, if not, whether he can continue to pursue a claim for relief.” (Opp‘n 13.)
“[A] court may look to the CBA to determine whether it contains a clear and unmistakable waiver of state law rights without triggering section 301 preemption.” Burnside, 491 F.3d at 1060. Thus, “for a grievance or arbitration provision to implicate preemption, the ‘union-negotiated waiver of employees’ statutory right to a judicial forum’ must be ‘clear and unmistakable.‘” Munoz v. Atl. Express of L.A., Inc., No. CV 12-6074-GHK (FMOx), 2012 WL 5349408, at *4 (C.D. Cal. Oct. 30, 2012) (quoting Wright v. Universal Mar. Serv. Corp., 525 U.S. 70, 80–81 (1998)).
The CBA defines a “grievance” as “any claim or dispute between the Employer and the Union or between the Employer and any employee which involves interpretation, application or enforcement of this Agreement disputed between the parties.” (CBA, art. 10.1.) The CBA also outlines a two-step procedure for the handling of grievances. (See CBA, art. 10.2.) If the parties cannot resolve the grievance through the procedure in article 10.2, they may agree to mediation. (See CBA, art. 10.3.) A party may also elect to proceed to arbitration by notifying the other party within fifteen days from receipt of a written response after step two of the grievance procedure or within fifteen days after the mediation hearing. (See CBA, art. 11.1.)
Defendants cite no cases preempting a plaintiff‘s state law claims based on an analogous version of a grievance or arbitration provision.7 And for good reason.
In summary, the Court would not need to interpret the Parties’ CBA to resolve any of Plaintiff‘s state law claims. Thus, the Court does not have subject matter jurisdiction to hear his class claims.8
V. CONCLUSION
For the foregoing reasons, Plaintiff‘s Motion to Remand is GRANTED (ECF No. 14), and Defendants’ Motion to Dismiss is DENIED AS MOOT (ECF No. 16). It is hereby ordered that this action is REMANDED to the Superior Court of California, County of Los Angeles, Case No. 19STCV08579, located at 111 North Hill Street, Los Angeles, California 90012. The Clerk of the Court shall close the case.
IT IS SO ORDERED.
January 21, 2020
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE