Opinion
Case No. 05cv1629 DMS (JMA).
April 11, 2006
Plaintiffs, over 1000 individual police officers of the San Diego Police Department, bring their Second Amended Complaint ("SAC") against the City of San Diego ("Defendant") alleging Defendant engaged in unlawful employment and business practices. Presently before the Court is Defendant's motion to dismiss Plaintiffs' breach of contract and unfair competition claims pursuant to Fed.R.Civ.P. 12(b)(6). On April 8, 2006, the Court heard oral argument on the motion, Justian Jusuf, Esq. and Gregory G. Petersen, Esq. appeared on behalf of all Plaintiffs, and Mark Stiffler, Esq. appeared on behalf of Defendant. For the reasons discussed below, the Court denies Defendant's motion to dismiss Plaintiffs' breach of contract claim and grants Defendant's motion to dismiss Plaintiffs' unfair competition claim.
I. BACKGROUND
Plaintiffs, through their SAC, seek wages for performing pre-shift and post-shift activities, including dressing time, walking time, and time spent working during meal and other break periods. Plaintiffs allege Defendant agreed to compensate them for time spent engaging in pre-shift and post-shift activities pursuant to a Memorandum of Understanding ("MOU") entered into by Plaintiffs' employee-organization, the San Diego Police Officer's Association ("SDPOA"), and the City of San Diego. Plaintiffs' also allege that Defendant failed to reimburse work expenses, unlawfully taxed work expense reimbursement as wages, and engaged in unlawful overtime rate computations and record keeping violations. Based on these allegations, Plaintiffs allege claims for violations of the Fair Labor Standards Act and the California Labor Code, breach of contract, and unfair competition under California Business and Professions Code § 17200 (the "UCL").On February 2, 2006, Defendant filed a motion to dismiss Plaintiffs' breach of contract and UCL claims. Plaintiffs filed an Opposition, and thereafter Defendant filed a Reply.
II. DISCUSSION
A. Legal Standard
Dismissal pursuant to Rule 12(b)(6) is proper only when there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In deciding a 12(b)(6) motion, all material factual allegations of the complaint are accepted as true, as well as all reasonable inferences to be drawn from them. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 338 (9th Cir. 1996). A claim may be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
B. Breach of Contract
Defendant moves to dismiss Plaintiffs' breach of contract claim on two grounds. First, Defendant argues that under well settled California law, "because Plaintiffs are civil service employees, they cannot state a cause of action for breach of contract." ( See Defendant's Motion to Dismiss at 3.) However, pursuant to the Meyers-Milias-Brown Act ("MMBA"), an MOU negotiated by the parties and approved by the appropriate governing authority is valid and binding on the parties. See Glendale City Employees' Assn., Inc. v. City of Glendale, 15 Cal.3d 328, 336 (1975). Under Glendale, " [a]ll labor-management agreements, in public employment or private employment, are enforceable contracts which should be interpreted to execute mutual intent and purposes of parties." Id. at 338. Similarly, California Labor Code § 1126, provides: "[a] collective bargaining agreement between an employer and a labor organization shall be enforceable at law or in equity, and . . . subject to the same remedies . . . as are available on other contracts in the courts of this State." Plaintiff may therefore pursue contractual remedies under the MOU.
Second, Defendant contends that Plaintiffs may not pursue a claim for breach of contract because they failed to exhaust their administrative remedies under the MOU. Section G, Article 24 of the MOU, provides: "The [SDPOA] agrees to pursue all claims of violation of this MOU through the grievances procedure. Resort to other remedies shall not be pursued until all steps of the grievance procedure have been exhausted." The provisions of the grievance procedure appear in Defendant's Personnel Regulations Manual ("Personnel Manual"). ( See Personnel Manual, at Index K-1, 3-5.)
Plaintiffs concede they did not attempt resolution of their claims through the grievance procedure. Rather, they contend they were not required to do so because the grievance procedure is inadequate, as it requires nothing more than "contact" be made to attempt resolution of the dispute. Generally, "where an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act." Abelleira v. District Court of Appeal, Third Dist., 17 Cal.2d 280, 291 (1941). The exhaustion of administrative remedies, however, is not required if such remedies are inadequate. See Glendale, 15 Cal.3d at 342.
The grievance procedure here is inadequate. The procedure does not provide for "the taking of testimony, the submission of legal briefs, or resolution of the claims by an impartial trier of fact." Glendale, 15 Cal.3d at 342. As such, the procedure is tailored for settlement of minor, individual grievances, rather than complex issues involving interpretation of an MOU and hundreds of participants.
Defendant contends "the more formal procedure Plaintiffs seek through the taking of testimony and submission of legal briefs is provided for in . . . step 5, of the Grievance Procedure, where provision is made for unresolved grievances to be heard before the Civil Service Commission." ( See Defendant's Reply at 2.) However, Step Five of the grievance procedure provides that "[t]he employee . . . may only request a hearing before the Civil Service Commission in matters solely involving Civil Service Rules or the Personnel Manual." ( See Grievance Procedure at 5) (emphasis added). Plaintiffs' breach of contract claim does not involve Civil Service Rules or the Personnel Manual. Rather, the dispute focuses on the MOU. Plaintiffs' failure to abide by the grievance procedure does not therefore bar them from pursuing relief in this action.
C. Unfair Competition
Defendant moves to dismiss Plaintiffs' UCL claim on grounds that it — the City of San Diego — is not a "person" within the meaning of the Act. The UCL, Defendant argues, applies only to "persons" who engage in acts of unfair competition.
Business and Professions Code § 17201 provides: "[T]he term person shall mean and include natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons." In Janis v. California State Lottery Com., 68 Cal.App.4th 824, 831 (1998), the court held that government entities "are not in this definition of person." Additionally, the California courts have held that the UCL does not apply to governmental entities, even when those entities are acting in a non-governmental capacity. See People for the Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Bd., 125 Cal.App.4th 871, 881 (2005) (application of sovereign powers test is unnecessary where court finds defendant is not a "person" under the UCL). Because Defendant is not a "person" under the UCL, Plaintiffs' unfair competition claim fails as a matter of law.
III. CONCLUSION
For these reasons, Defendant's motion to dismiss Plaintiffs' breach of contract claim is DENIED and Defendant's motion to dismiss Plaintiffs' unfair competition claim is GRANTED. Defendant shall file its Answer within twenty (20) days of this Order being stamped "filed." The parties shall also contact the Magistrate Judge within ten (10) days after this Order is filed to schedule an Early Neutral Evaluation Conference and to set all dates in this matter.IT IS SO ORDERED.