Opinion
2:13-CV-02221-GEB-CKD
12-13-2013
ANDREW and KAREN FERNANDES, Plaintiffs, v. TW TELECOM HOLDINGS INC., and DOES 1-50, inclusive, Defendant.
ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS
Defendant TW Telecom Holdings, Inc. moves under Federal Rule of Civil Procedure ("Rule") 12(b)(6) for dismissal of Plaintiff Andrew Fernandes's claims alleged under section 6310 of the California Labor Code and section 1102.5(c) of the California Labor Code. Defendant also moves for dismissal of Plaintiff Karen Fernandes' s loss of consort ium claim. Plaintiffs oppose the motion.
Defendant also seeks dismissal of what Defendant characterizes as Plaintiffs' claims alleged under sections 6403 and 6404 of the California Labor Code. (Def.'s Mot. to Dismiss ("Def.'s Mot.") 4:14-5:16, ECF No. 5-1.) However, Plaintiffs state in their opposition that sections 6403 and 6404 are not "stand-alone causes of action" and are only alleged "as duties" supporting their 6310 claim. (Pls.' Opp'n to Def.'s Mot. ("Pls.' Opp'n") 4:20-24, ECF No. 6.) Defendant has not shown this is an appropriate dismissal motion; therefore, this portion of the motion is denied.
Plaintiffs' opposition includes a request that judicial notice be taken of certain documents. This request is denied since Plaintiffs have not shown the documents are pertinent to issues involved in the motion.
I. LEGAL STANDARD
Decision on a Rule 12(b)(6) dismissal motion requires determination of "whether the complaint's factual allegations, together with all reasonable inferences, state a plausible claim for relief." United States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 (9th Cir. 2011) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007)).
When determining the sufficiency of a claim under Rule 12(b) (6), "[w]e accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the non-moving party." Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (internal quotation marks omitted). However, this tenet does not apply to "legal conclusions . . . cast in the form of factual allegations." Id. (internal quotation marks omitted). "Therefore, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Id. (internal quotation marks omitted); see also Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555) ("A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'")
II. FACTUAAL AALLEGATIONS
The following allegations in the Complaint are germane to the claims involved in the motion.
Plaintiff Andrew Fernandes began working for Defendant on or about October 19, 2009. (Compl. ¶ 10, ECF No. 1.) At various times during his employment, this Plaintiff reported "safety and compliance" issues to his manager and to Defendant's risk management department. (Id. at ¶¶ 14-16, 18-20, 22, 26, 29, 32.) "[I]n early 2012, Plaintiff began to experience retaliation . . . for reporting complaints." (Id. at ¶ 30.) Among other acts of retaliation, Plaintiff was investigated for motor vehicle violations (id.), removed from Defendant's bonus program (id. at ¶ 34), and terminated on August 1, 2012. (Id. at ¶ 35.)
III. ANALYSIS
a. Exhaustion of Administrative Remedies
Defendant seeks dismissal of Plaintiff Andrew Fernandes's claims, alleged under sections 1102.5(c) and 6310, contending that dismissal is required because this Plaintiff failed to allege in the Complaint that he exhausted the applicable administrative remedy for these claims prescribed in Labor Code section 98.7.
Section 98.7(a) prescribes in pertinent part: "Any person who believes that he or she has been discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner may file a complaint with the [D]ivision [of Labor Standards Enforcement] . . . ." Cal. Lab. Code § 98.7(a) (emphasis added). Further, section 98.7(f) prescribes: "The rights and remedies provided by this section do not preclude an employee from pursuing any other rights and remedies under any other law." Cal. Lab. Code § 98.7(f).
This statutory language does not explicitly require Plaintiff to exhaust an administrative remedy. "When interpreting state law, federal courts are bound by decisions of the state's highest court. In the absence of such a decision . . . a federal court is obligated to follow the decisions of the state's intermediate appellate courts" as long as "there is no convincing evidence that the state supreme court would decide differently." Vestar Dev. II, LLC v. Gen. Dynamics Corp., 249 F.3d 958, 960 (9th Cir. 2001) (quoting Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996)).
Section 98.7 has not yet been interpreted by the California Supreme Court, and California appellate courts are split on the issue of whether plaintiffs must exhaust the administrative remedy provided in the statute. MacDonald v. State, 161 Cal. Rptr. 3d 520, 523 (Ct. App. 2013) (depublished), found that section 98.7 requires exhaustion notwithstanding that "the administrative remedy is couched in permissive, as opposed to mandatory, language." The court reasoned that this construction is required in light of the California Supreme Court's statements in Campbell v. Regents of Univ. of California, 35 Cal. 4th 311 (2005). MacDonald interpreted Campbell as requiring administrative exhaustion whenever "an administrative remedy is provided by statute . . . [,] even where the administrative remedy is couched in permissive . . . language." 161 Cal. Rptr. 3d at 523.
Federal courts "may consider unpublished state decisions, even though such opinions have no precedential value." Employers Ins. of Wausau v. Granite State Ins. Co., 330 F.3d 1214, 1220 n. 8 (9th Cir. 2003).
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In contrast, Lloyd v. Cnty. of Los Angeles, 172 Cal. App. 4th 320, 331 (2009), examined section 98.7 and concluded "it would appear Labor Code section 98.7 merely provides the employee with an additional remedy, which the employee may choose to pursue." Lloyd also states:
Further, case law has recognized there is no requirement that a plaintiff proceed through the Labor Code administrative procedure in order to pursue a statutory cause of action. We see no reason to differ with these decisions and to impose an administrative exhaustion requirement on plaintiffs seeking to sue for Labor Code violations.Id. at 331-32 (citations omitted) (internal quotations marks omitted).
We make the additional observation that construing Labor Code section 98.7 to obligate a plaintiff to seek relief from the Labor Commissioner prior to filing suit for Labor Code violations flies in the face of the concerns underlying the Labor Code Private Attorneys General Act of 2004 (PAG Act) (Lab.Code, § 2698 et seq.). As we stated in Dunlap v. Superior Court (2006) 142 Cal.App.4th 330, 337, 47 Cal.Rptr.3d 614, the PAG Act was adopted to augment the enforcement abilities of the Labor Commissioner with a private attorney general system for labor law enforcement. . . . The PAG Act's approach, enlisting aggrieved employees to augment the Labor Commissioner's enforcement of state labor law, undermines the notion that Labor Code section 98.7 compels exhaustion of administrative remedies with the Labor Commissioner.
MacDonald declined to follow Lloyd, stating in part, "[W] e do not believe this interpretation is correct. Moreover, Lloyd inexplicably fails to mention Campbell in its analysis . . . ." MacDonald, 161 Cal. Rptr. 3d at 525. However, Lloyd's analysis of section 98.7 is consistent with the California Supreme Court's "well-established rules" of statutory interpretation. Los Angeles Cnty. Metro. Transp. Auth. v. Alameda Produce Mkt., LLC, 52 Cal. 4th 1100, 1106 (2011). Specifically, Lloyd began its statutory interpretation "by examining the statutory language, giving it a plain and commonsense meaning." Id. at 1106-07. Lloyd also "construe[d] the words in question in context . . . ." Id. at 1107.
"By its terms, Campbell only held that exhaustion of internal administrative remedies is required; there is no discussion in Campbell of exhaustion of administrative remedies before the Labor Commission." Creighton v. City of Livingston, CV-F-08-1507 OWW/SMS, 2009 WL 3246825, at *12 (E.D. Cal. Oct. 7, 2009). Therefore, an analysis of Campbell was not pertinent to Lloyd's interpretation of the statute. Lloyd's persuasive reasoning and interpretation of section 98.7 is adopted. See Pinder v. Employment Dev. Dep't, CIV. S-13-817 LKK/AC, 2013 WL 4482955, at *11 (E.D. Cal. Aug. 20, 2013) (finding no exhaustion requirement under section 98.7 and distinguishing Campbell); Turner v. City & Cnty. of San Francisco, 892 F. Supp. 2d 1188, 1202 (N.D. Cal. 2012) (same); but see e.g., Vasile v. Flagship Fin. Grp., LLC, 2 : 12-CV-02912-KJM, 2013 WL 4482914, at *6 (E.D. Cal. Aug. 19, 2013)(finding section 98.7 requires exhaustion); Ferretti v. Pfizer Inc., 855 F. Supp. 2d 1017, 1023-24 (N.D. Cal. 2012)(same).
Since section 98.7 "merely provides the employee with an additional remedy, which the employee may choose to pursue," this portion of the motion is denied. Lloyd, 172 Cal. App. 4th at 331.
b. Section 1102.5(c)
Defendant seeks dismissal of Plaintiff Andrew Fernandes's section 1102.5(c) claim, arguing it fails to allege that Plaintiff "refused to participate" in an activity that would result in a violation of law. (Def.'s Mot. to Dismiss ("Def.'s Mot.") 7:7-10, ECF No. 5-1.) Plaintiff responds that his "consistent complaints" and "his refusal to ignore the [safety and compliance] violations" constituted protected conduct under section 1102.5(c). (Pls.' Opp'n to Def.'s Mot. ("Pls.' Opp'n") 6:11-15, ECF No. 6.)
Section 1102.5(c) prescribes: "An employer may not retaliate against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation." Cal. Lab. Code § 1102.5(c). This is "a whistleblower statute" that "prohibits an employer . . . from retaliating against an employee who refuses to engage in conduct that would result in a violation of a statute." Rope v. Auto-Chlor Sys. of Washington, Inc., 220 Cal. App. 4th 635, 648 (2013).
Plaintiff' s allegations do not evince that he "refused to participate in an activity that would result" in a violation of law. Cf. Ferretti v. Pfizer Inc., 855 F. Supp. 2d 1017, 1025-27 (N.D. Cal. 2012)(denying dismissal of 1102.5(c) claim where Plaintiff indicated that she would not conduct Phase III of her employer's product studies and requested a transfer). Therefore, this claim is dismissed.
c. Loss of Consortium
Defendant seeks dismissal of Plaintiff Karen Fernandes' s loss of consortium claim, arguing it is insufficiently alleged. (Def.'s Mot. 8:11-14.)
To state a loss of consortium claim, a plaintiff must allege his or her spouse suffered an injury that "is sufficiently serious and disabling to raise the inference that the conjugal relationship is more than superficially or temporarily impaired." Molien v. Kaiser Found. Hospitals, 27 Cal. 3d 916, 932-33 (1980). The injury may be physical or psychological, but psychological injury must "rise[] to the level of a 'neurosis, psychosis, chronic depression, or phobia'. . . ." Anderson v. Northrop Corp., 203 Cal. App. 3d 772, 780 (1988) (quoting Molien, 27 Cal. 3d at 933).
Plaintiff Karen Fernandes alleges in the Complaint: "As a result of [Andrew Fernandes's] termination . . . , [he] has suffered severe emotional distress and continues to obtain treatment for such . . . . [and Karen Fernandes] "has lost the companionship and services of her husband, including, but not limited to, loss of love, companionship, comfort, care, assistance, protection, affection, society, and moral support." (Compl. 11 37, 61.) These allegations do not "allow[] the court to draw the reasonable inference," Iqbal, 556 U.S. at 678, that Andrew Fernandes's emotional distress "is sufficiently serious and disabling" to "more than superficially or temporarily impair[]" the Fernandes's marital relationship. Molien, 27 Cal. 3d at 932-33; see Anderson, 203 Cal. App. 3d at 780-81 (affirming an order of dismissal entered after the trial court sustained demurrer where plaintiff alleged in the loss of consortium claim that her spouse became "mentally upset, distressed and aggravated" because the appellate court did "not find such emotional disquiet rises to the level of a 'neurosis, psychosis, chronic depression, or phobia' sufficient to substantially disturb the marital relationship on more than a temporary basis.") Therefore, this claim is dismissed.
IV. CONCLUSION
For the stated reasons, Defendant's motion seeking dismissal of Plaintiff Andrew Fernandes' s 6310 claim is denied, and its motion seeking dismissal of the section 1102.5(c) claim is granted. Defendant's motion seeking dismissal of Plaintiff Karen Fernandes's loss of consortium claim is granted. Further, Plaintiffs are granted fourteen (14) days from the date on which this order is filed to file an amended complaint addressing the referenced deficiencies in any dismissed claim. Plaintiffs are notified that a dismissal with prejudice could be entered under Rule 41(b) if an amended complaint is not filed within the prescribed time period.
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GARLAND E. BURRELL, JR.
Senior United States District Judge