Opinion
Civil Action 22-838
03-09-2023
CHRISTIAN RODRIGUEZ and ISAAC DIAZ, on behalf of themselves and all others similarly situated, Plaintiffs, v. PPG INDUSTRIES, INC., Defendant.
Re: ECF No. 23
REPORT AND RECOMMENDATION
MAUREEN P. KELLY, MAGISTRATE JUDGE
I. RECOMMENDATION
Plaintiffs Christian Rodriguez (“Rodriguez”) and Isaac Diaz (“Diaz”) (collectively, “Plaintiffs”) bring this action individually and on behalf of a proposed class of similarly situated individuals. Plaintiffs claim their employer, Defendant PPG Industries, Inc. (“PPG”), failed to pay overtime wages and maintain accurate records in violation of the Fair Labor Standards Act of 1938, as amended (“FLSA”), as well as the state laws of Nevada, California, and “the materially similar laws and their implementing regulations in effect in other States.” ECF No. 11.
Presently before the Court is PPG's Motion to Dismiss Plaintiffs' Amended Complaint in Part under Rule 12(b) and to Strike Portions of the Amended Complaint under Rule 12(f) (“Motion to Dismiss”). ECF No. 23. For the reasons below, it is respectfully recommended that PPG's Motion be denied.
II. REPORT
A. FACTUAL AND PROCEDURAL BACKGROUND
1. Factual Allegations
In the operative First Amended Complaint, Plaintiffs assert that PPG is “a global supplier of paints, coatings, optical products, and specialty materials.” ECF No. 11 ¶ 28. Plaintiff Rodriguez, a Nevada resident, was employed by PPG from approximately March 2019 to May 2022 as an “hourly production supervisor employee” in Sparks, Nevada. Id. ¶¶ 26, 35. Plaintiff Diaz, a California resident, was employed by PPG from approximately January 2016 to January 2022 as an “hourly delivery driver employee and sales associate” in and around Los Angeles, California. Id. ¶¶ 26, 35.
Plaintiffs' claims arise out of a malfunction that occurred with PPG's timekeeper system for non-exempt workers. Id. ¶¶ 7,11. The timekeeping system is called Kronos. Id. ¶ 4. Kronos is a service provided by HR management company UKG, a third party to whom PPG pays a fee for use of the time-keeping service. Id. Using Kronos, PPG records its non-exempt employees' time in a method similar to traditional “punch-in” time clocks. Id. ¶ 5. In each location where its non-exempt employees work, there is a shared Kronos device that each non-exempt employee uses daily to clock in and clock out by swiping an electronic card. Id.
PPG relies on the time data recorded by the Kronos system to calculate its non-exempt employees' weekly pay. This varies by week based on the actual number of hours its employees worked, including overtime hours. Id. ¶ 9.
Beginning around December 11, 2021, Kronos became inoperative because of a ransomware attack. Id., ¶ 10. As such, Kronos advised its clients to “evaluate and implement alternative business continuity protocols.” Id., As a result of this outage, Plaintiffs claim that PPG could not access the daily timekeeping records of its non-exempt employees from December 11, 2021 through February 2022. Id. ¶ 11. Because PPG did not adopt a functional back-up plan, it failed to accurately pay its non-exempt employees during the outage period. Id. ¶¶ 12-13.
2. Legal Claims
In this action, Plaintiffs bring two claims. In Count I, Plaintiffs allege failure to pay overtime wages under the FLSA. Id. ¶¶ 76-82. In Count II, Plaintiffs allege wage and hour violations under California law, Nevada law, and “the materially similar laws and their implementing regulations in effect in other States.” Id. ¶¶ 83-88.
Plaintiffs bring their FLSA claim, Count I, individually and as part of the following proposed collective group of employees.
All current and former non-exempt (including but not limited to commission-based, hourly and salaried) employees of Defendant in the United States since the onset of the Kronos ransomware attack, from on or about December 1, 2021 to the present, whose weekly work hours were usually or would usually have been tracked by the Kronos timekeeping system, and who were not paid overtime compensation in the amount of one and one-half times the employee's regular rate or pay for all hours worked over forty (40) in any workweek during the Kronos outage period.IcL ¶ 64.
Plaintiffs also propose the following Rule 23 class action.
All current and former non-exempt (including but not limited to commission-based, hourly and salaried) employees of Defendant in the United States since the onset of the Kronos ransomware attack, from on or about December 1, 2021 to the present, whose weekly work hours were usually or would usually have been tracked by the Kronos timekeeping system, who were not paid their actual earned wages- including overtime wages and non-overtime wages-during the Kronos outage period, and who were not paid overtime compensation in the amount of one and one-half times the employee's regular rate of pay for all hours worked over forty (40) in any workweek and/or not paid for all their hours worked.Id. ¶ 69.
3. Procedural History
Plaintiffs filed this action on June 8, 2022. ECF No. 1. Plaintiffs later filed the operative First Amended Complaint on June 29, 2022. ECF No. 11.
PPG filed this Motion to Dismiss and Brief in Support on August 19, 2022. ECF Nos. 23 and 24. Plaintiffs filed a Brief in Opposition to the Motion to Dismiss on September 12, 2022. ECF No. 33. PPG filed a Reply. ECF No. 34.
PPG also filed an Answer to Plaintiffs' First Amended Complaint on August 19, 2022. ECF No. 26.
The Motion to Dismiss is now ripe for consideration.
B. LEGAL STANDARD
1. Rule 12(b)(6)
In assessing the sufficiency of a complaint pursuant to a motion to dismiss under Rule 12(b)(6), the Court must accept as true all material allegations in the complaint and all reasonable factual inferences must be viewed in the light most favorable to the plaintiff. Odd v. Malone, 538 F.3d 202, 205 (3d Cir. 2008). The Court, however, need not accept bald assertions or inferences drawn by the plaintiff if they are unsupported by the facts set forth in the complaint. See Cal. Pub. Employees' Ret. Sys, v. The Chubb Corp., 394 F.3d 126, 143 (3d Cir. 2004) (citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)). Nor must the Court accept legal conclusions set forth as factual allegations. Bell Atl. Corp, v. Twombly, 550 U.S. 544, 555 (2007). Rather, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. (citing Papasan v. Allain, 478 U.S. 265,286 (1986)). Indeed, the United States Supreme Court has held that a complaint is properly dismissed under Rule 12(b)(6) where it does not allege “enough facts to state a claim to relief that is plausible on its face,” Id. at 570, or where the factual content does not allow the court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (finding that, under Twombly, “labels, conclusions, and a formulaic recitation of the elements of a cause of action” do not suffice but, rather, the complaint “must allege facts suggestive of [the proscribed] conduct” and that are sufficient “to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s] of his claim”).
2. Rule 12(b)(1)
Under Federal Rule of Civil Procedure 12(b)(1), “a court must grant a motion to dismiss if it lacks subject-matter jurisdiction to hear a claim.” In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235,243 (3d Cir. 2012). Rule 12(b)(1) motions can raise either a facial or factual challenge to the Court's subject-matter jurisdiction. Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016). A facial attack challenges the sufficiency of the pleadings, whereas a factual attack challenges the sufficiency of jurisdictional facts. Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015). In resolving a facial attack, the Court must accept Plaintiffs well-pleaded factual allegations as true and draw all reasonable inferences in Plaintiff s favor. In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 633 (3d Cir. 2017). When resolving a factual attack, however, the Court may weigh and consider evidence outside the pleadings. Gould Elecs. Inc, v. United States, 220 F.3d 169, 176 (3d Cir. 2000).
3. Rule 12(f)
Under Rule 12(f), the Court may “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “The purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.” McInerney v. Moyer Lumber & Hardware, Inc., 244 F.Supp.2d 393, 402 (E.D. Pa. 2002). Whether to grant a motion to strike is within the Court's discretion, but such relief “will usually be denied unless the allegations have no possible relation to the controversy, will cause unfair prejudice, or will confuse the issues in the case.” Reardon v. ClosetMaid Corp., No. 2:08-cv-01730, 2013 WL 6231606, at *4 (W.D. Pa. Dec. 2, 2013).
C. DISCUSSION
For purposes of this Motion to Dismiss, PPG does not challenge Plaintiffs' claims for PPG's alleged violations of the FLSA or the state laws of Nevada and California. PPG only moves to dismiss Count II to the extent it arises under the laws of states other than California and Nevada. PPG also moves to strike all references to the laws of states other than California and Nevada.
In support of the Motion to Dismiss, PPG points out that Plaintiffs Rodriguez and Diaz only lived and worked in Nevada and California. To the extent Plaintiffs assert claims under the laws of any other states, PPG argues, they do not satisfy the pleading requirements of Federal Rule of Civil Procedure 8 and fail to state a claim. ECF No. 24 at 4. PPG also argues that Rodriguez and Diaz lack standing to bring claims under various other states' laws, where they did not personally suffer any injury. Id. at 4-6.
In response, Plaintiffs argue that PPG ignores that Article III standing in this circumstance is not only a “surprisingly difficult question” but one that the “Third Circuit has not definitively answered.” ECF No. 33 at 1-2. Nevertheless, they argue, the weight of authority-including decisions by the First, Second, Fourth and Seventh Circuit Courts of Appeal-does not support granting PPG's motion. Id. at 2. Because “the claims of the named plaintiffs parallel those of the putative class members in the sense that, assuming a proper class is certified, success on the claim under one state's law will more or less dictate success under another state's law,” Plaintiffs argue, the issues PPG raises should be considered instead as questions of typicality and predominance at the class certification stage. Id. at 6-8 (quoting Suber v. Liberty Mut. Ins. Grp., No. 21-4750,2022 WL 952889, at *6 (E.D. Pa. March 20, 2022)).
In Reply, PPG argues that Plaintiffs have not even specifically identified which state law claims are at issue. ECF No. 34 at 2. PPG also disputes that success under one state's law would necessarily dictate success under another's, given differences in wage and hour laws among the states. Id. at 3-4. Finally, PPG contends that the inquiry into standing is a threshold inquiry that should not be deferred until class certification. Id. at 4-6.
1. Standing
First, the Court considers whether Plaintiffs have standing to bring claims under the laws of states other than Nevada and California. Article III of the United States Constitution governs constitutional standing and limits federal courts to deciding “cases” and “controversies.” Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 358 (3d Cir. 2015) (citing U.S. Const, art. Ill. § 2, cl. 1). “Article III requires a plaintiff to demonstrate: (1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision.” Id. at 358-59 (quoting Susan B. Anthony List v. Driehaus, 573 I.S. 149, 158 (2014)) (internal quotations and brackets omitted).
“In the context of a class action, Article III must be satisfied ‘by at least one named plaintiff.'” Id. at 361 (quoting McNair v. Synapse Grp. Inc., 672F.3d213 (3d Cir. 2012)). But once Article III standing “is determined vis-a-vis the named parties,” there is “no further separate class standing requirement in the constitutional sense.” Id. (quoting In re Prudential Ins. Co. v. Am. Sales Prac. Litig. Agent Actions, 148 F.3d 283, 306-07 (3d Cir. 1998)). Thus, “putative class members need not establish Article III standing.” Id. at 362.
In this case, PPG does not challenge Plaintiffs' standing to bring their own claims under Nevada or California law. It is undisputed that Plaintiffs Diaz and Rodriguez suffered an alleged injury as a result of PPG's failure to adequately record and compensate for hours worked, that PPG's alleged conduct caused this injury, and that they seek damages in this suit that would redress that injury.
Rather, PPG contends that Plaintiffs have no standing to assert claims on behalf of putative class members with potential claims under the laws of other states. As courts have recognized, whether named plaintiffs have standing to bring claims on behalf of a class under the laws of states where they were not injured “is a murky area of law lacking Third Circuit precedent and populated by the divergent conclusions of district courts.” Gress v. Freedom Mortg. Corp., 386 F.Supp.3d 455, 461-62 (M.D. Pa. 2019); In re Sensipar, No. 2895, 2022 WL 736250, at *16 n. 24 (D. Del. Mar. 11, 2022) (“The issue of Article III standing in class action lawsuits presents an unsettled question on which courts, including in the Third Circuit, are split.”). Thus, while PPG's position finds support in cases decided by district courts in this Circuit, so does Plaintiffs' position.
Plaintiffs Diaz and Rodriguez do not appear to suggest they are bringing any claims individually under the laws of states other than Nevada and California. Thus, the Court focuses this inquiry on whether the named Plaintiffs have standing to assert those claims on behalf of putative class members.
See, e.g., In re Sensipar, 2022 WL 736250, at *17-18; In re Insulin Pricing Litig., No. 3:17-cv-699, 2019 WL 643709, at *16-17 (D. N.J. Feb. 15,2019); In re Niaspan Antitrust Litig., MDL No. 2460,2015 WL 8150588, at *2-3 (E.D.Pa. Dec. 8, 2015).
See, e.g., Gress, 386 F.Supp.3d at 461-62; Suber v. Liberty Mut. Ins. Grp., No. 21-4750,2022 WL 952889, at *6-7; (E.D. Pa. March 20,2022); In re Generic Pharmaceuticals Pricing Antitrust Litig., 368 F.Supp.3d 814, 828-31 (E.D. Pa. 2019); In re Thalomid & Revlimid Antitrust Litig., 14-6997, 2015 WL 9589217, at *17-19 (D.N.J. Oct. 29,2015).
While the Court acknowledges the lack of binding precedent on point, persuasive authority weighs in favor of denying PPG's motion on this basis. The decision of the United States Court of Appeals for the Second Circuit in Langan v. Johnson & Johnson Consumer Companies, Inc., 897 F.3d 88 (2d Cir. 2018) is instructive. In Langan, the Second Circuit recognized that class actions are an exception to the general rule that one person cannot litigate injuries on behalf of another. Id. at 93 (citing Wal-Mart Stores, Inc, v. Dukes, 564 U.S. 338, 348 (2011)). Through Federal Rule of Civil Procedure 23, Congress authorized “plaintiffs to bring, under limited circumstances, a suit in federal court on behalf of, not just themselves, but others who were similarly injured.” Id. Thus, “[a]lthough a named class action plaintiff has not actually suffered the injuries suffered by her putative class members (and therefore would not normally have standing to bring those suits), Congress has said that the fact that the parties ‘possess the same interest' and ‘suffer[ed] the same injury' gives the named plaintiff a sufficient stake in the outcome of her putative class members' cases.” Id. at 94 (quoting Wal-Mart, 564 U.S. at 348-49).
As the Second Circuit recognized, “it rarely happens that the circumstances surrounding one plaintiff's claim end up being identical to another putative class member, let alone all of the others.” Id. The requirements of Rule 23 (commonality and typicality under Rule 23(a) and predominance under Rule 23(b)) ensure that courts only certify classes with sufficiently similar characteristics. Id.
At some point, the Second Circuit noted, a named plaintiffs claims can be too different from the claims of a putative class member so as to implicate constitutional standing, rather than a question of whether it is prudent to certify a class under Rule 23. Id. That said, “non-identical injuries of the same general character can support standing.” Id.
Against this backdrop, the Second Circuit found there is no standing problem when a plaintiff attempts to sue on behalf of those who may have claims under different states' laws that generally prohibit the same conduct. Id. at 95. Instead, this issue should be considered under Rule 23. As the Second Circuit further explained:
This approach of considering variations in state laws as questions of predominance under Rule 23(b)(3), rather than standing under Article III, makes sense. For one, it acknowledges the obvious truth that class actions necessarily involve plaintiffs litigating injuries that they themselves would not have standing to litigate. See In re Bayer Corp., 701 F.Supp.2d at 377 (“Whether the named plaintiffs have standing to bring suit under each of the state laws alleged is ‘immaterial' because they are not bringing those claims on their own behalf, but are only seeking to represent other, similarly situated consumers in those states.”). Since class action plaintiffs are not required to have individual standing to press any of the claims belonging to their unnamed class members, it makes little sense to dismiss the state law claims of unnamed class members for want of standing when there was no requirement that the named plaintiffs have individual standing to bring those claims in the first place. See id-Id.
Other courts of appeals have reached similar conclusions. In a recent decision, the United States Court of Appeals for the Eleventh Circuit recognized that “all [four] circuits which have addressed whether a plaintiff can represent unnamed class members whose claims fall under different states' laws have concluded that that it is a question that concerns Rule 12(b)(6) or Rule 23-not Article III. A leading class action treatise is of the same view.” In re Zantac (Ranitidine) Prods. Liab. Litig., No. 21-10335, 2022 WL 16729170, at *6 (11th Cir. Nov. 7, 2022) (citing Morrison v. YTP Int'l Inc., 649 F.3d 533, 536 (7th Cir. 2011) (“this application of choice-of-law principles has nothing to do with standing, though it may affect whether a class should be certified-for a class action arising under the consumer-fraud laws of all 50 states may not be manageable, even though an action under one state's law could be”)); Langan, 897 F.3d at 93; In re Asacol Antitrust Litig., 907 F.3d 42,49 (1st Cir. 2018); Mayor of Baltimore v. Actelion Pharms. Ltd., 995 F.3d 123, 134 (4th Cir. 2021); William B. Rubenstein, 1 Newberg on Class Actions § 2:6 (5th ed. & Dec. 2021 update) (“[W]hen a class plaintiff shows individual standing, the court should proceed to Rule 23 criteria to determine whether, and to what extent, the plaintiff may serve in a representative capacity on behalf of the class.”). Upon consideration, the Eleventh Circuit agreed in In re Zantac that this does not pose a “standing question.” Id. at *5.
Considering this persuasive authority, the Court should not dismiss claims under the laws of states other than California and Nevada for lack of standing. All state-law claims arise out of an injury of the same general character (failure to accurately record and compensate for time worked). The class certification motion will provide PPG the opportunity to contest, as appropriate, the adequacy of the named Plaintiffs to represent the class, the typicality of their claims, and the predominance of common questions of law, with Plaintiffs bearing the burden of persuasion. For these reasons, the Court should deny the Motion to Dismiss based on lack of standing.
2. Failure to State a Claim/Motion To Strike
PPG also argues that Plaintiffs fail to state a claim and do not satisfy the pleading requirement of Rule 8 with respect to the laws of states where they did not live or work. At this preliminary stage, however, the “universe of facts remains fluid because a Federal Rule of Civil Procedure 23 class has not been certified yet.” Quint v. Vail Resorts, Inc., No. 1:20-cv-03569, 2022 WL 4550087, at *2 (D. Colo. July 8, 2022) (denying motion to dismiss under Rule 12(b)(6) relative to employment claims under state law brought for states where named plaintiffs did not live or work). Whether Plaintiffs can pursue claims in a representative capacity under the laws of other states is an issue to be more fully developed at the class certification stage, including through class certification discovery as appropriate. Therefore, it is premature to determine whether Plaintiffs have plausibly stated claims under non-Califomia or Nevada laws. See also Actelion Pharms., 995 F.3d at 134 (claims arising under other states' laws need not be “stricken or disregarded” because they may be considered in determining whether the plaintiffs' claims satisfy Rule 23). The Motion to Dismiss or Strike should therefore be denied without prejudice on this basis.
D. CONCLUSION
Based on the foregoing, it is respectfully recommended that PPG's Motion to Dismiss Plaintiffs' Amended Complaint in Part under Rule 12(b) and to Strike Portions of the Amended Complaint under Rule 12(f), ECF No. 23, be denied.
In accordance with the Magistrate Judges Act, 28 U.S.C. § 636(b)(1), and Local Rule 72.D.2, the parties are permitted to file written objections in accordance with the schedule established in the docket entry reflecting the filing of this Report and Recommendation. Objections are to be submitted to the Clerk of Court, United States District Court, 700 Grant Street, Room 3110, Pittsburgh, PA 15219. Failure to timely file objections will waive the right to appeal. Brightwell v. Lehman, 637 F.3d 187, 193 n. 7 (3d Cir. 2011). Any party opposing objections may file their response to the objections within fourteen (14) days thereafter in accordance with Local Civil Rule 72.D.2.