Opinion
Case No. 22-cv-02813-JST
2023-02-09
Deborah RUSSELL, Plaintiff, v. WALMART INC., Defendant.
David Jude Gallo, Law Offices of David J. Gallo, Del Mar, CA, for Plaintiff. Arwen Rainbird Johnson, Christine B. Choi, King & Spalding LLP, Los Angeles, CA, Ramon Andres Miyar, Quyen Le Ta, King & Spalding LLP, San Francisco, CA, for Defendant.
David Jude Gallo, Law Offices of David J. Gallo, Del Mar, CA, for Plaintiff. Arwen Rainbird Johnson, Christine B. Choi, King & Spalding LLP, Los Angeles, CA, Ramon Andres Miyar, Quyen Le Ta, King & Spalding LLP, San Francisco, CA, for Defendant.
ORDER GRANTING MOTION TO DISMISS
Re: ECF Nos. 13, 17 JON S. TIGAR, United States District Judge
Before the Court is Defendant Walmart Inc.'s motion to dismiss. ECF No. 17. The Court will grant the motion.
I. BACKGROUND
In this putative class action, Plaintiff Deborah Russell alleges that Walmart violates California's wage laws by not compensating customers who use Walmart's self-checkout system for the time they spend ringing up their items. See, e.g., ECF No. 1-1 ¶ 15 ("Walmart suffers and permits its customers to perform cashier work without compensation."). She seeks to recover allegedly unlawfully withheld wages and obtain restitution.
Walmart moves to dismiss Russell's complaint, arguing that Russell seeks "to fundamentally rewrite California law on what it means to be an employee." ECF No. 13 at 6. It argues there is no legal basis for treating retail customers as employees under the California Labor Code. ECF Nos. 13, 17. Plaintiff opposes the motion. ECF No. 18. Walmart has filed a reply. ECF No. 20.
II. JURISDICTION
This Court has subject matter jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2)(A), because: (i) there is an aggregate amount in controversy exceeding $5,000,000, exclusive of interest and costs, (ii) there are 100 or more putative class members, (iii) the parties are minimally diverse. This Court has supplemental jurisdiction over any state-law claims under 28 U.S.C. § 1367. III. LEGAL STANDARD
A district court properly dismisses a complaint "for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) . . . if there is a 'lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.' " Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)).
On a motion to dismiss, courts accept the material facts alleged in the complaint, together with reasonable inferences to be drawn from those facts, as true. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). But "the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To be entitled to the presumption of truth, a complaint's allegations "must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
In addition, to survive a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Plausibility does not mean probability, but it requires "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "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." Id. IV. DISCUSSION
Russell requests judicial notice of several government documents: California's 2021 Minimum Wage Order; California's July 2014 Wage Order No. 7; a California Division of Labor Standards Enforcement ("DLSE") Opinion Letter from October 27, 1988; and an excerpt from the DLSE's Policies and Interpretations Manual from December 2018. See ECF No. 19, Ex. A-D. The Court will take judicial notice of these documents because their authenticity is not subject to reasonable dispute. See Vasserman v. Henry Mayo Newhall Mem'l Hosp., 65 F. Supp. 3d 932, 943 (C.D. Cal. 2014) (collecting cases in which courts found that public records like wage orders are judicially noticeable). Nonetheless, the Court notes that "California courts have held repeatedly that DLSE's interpretations in the DLSE [Manual] . . . are not entitled to deference." Becerra v. RadioShack Corp., No. 4:11-cv-03586 YGR, 2012 WL 6115627 at *4 (N.D. Cal. Dec. 10, 2012).
Russell alleges that Walmart owes her unpaid wages for the time she has spent using Walmart's self-checkout system because, under California law, a business has an "obligation to pay minimum wage" when it "knows that work is being performed, but fails to prevent it." ECF No. 18 at 11. She brings two claims: (1) recovery of unpaid wages as damages under Labor Code § 1194, and (2) recovery of minimum wages as restitution pursuant to California Business & Professions Code § 17200.
Russell bases her claims on the Industrial Welfare Commission's wage orders, which guarantee a minimum wage for workers in California. ECF No. 1-1 ¶ 19. Specifically, she contends that Wage Order 7, which applies to "all persons employed in the mercantile industry," guarantees her minimum wage for the time she has spent at Walmart performing self-checkout because it defines "hours worked" as "the time during which an employee is subject to the control of an employer, and includes all time the employee is suffered or permitted to work, whether or not required to do so." Id.; Cal. Code Regs., tit. 8, § 11070(2)(G). Walmart argues that Russell's complaint must be dismissed with prejudice because her claims rest on a legal theory that is without support in the law.
Walmart only owes wages to Russell if she was Walmart's employee and it, by extension, was her employer. See Vazquez v. Jan-Pro Franchising Int'l, Inc., 10 Cal. 5th 944, 950, 273 Cal.Rptr.3d 741, 478 P.3d 1207 (2021) ("[A]ll currently applicable California wage orders, in defining the terms as used in the wage orders, define the term 'employ' in part to mean 'suffer, or permit to work' and define the term 'employee' to mean 'any person employed by an employer.' " (internal quotation and citation omitted)). Thus, to evaluate Walmart's motion, the Court must determine whether Russell has adequately alleged that she was Walmart's employee. The Court finds that she has not done so.
The California Supreme Court has set forth three tests for establishing an employer-employee relationship under the state's wage orders:
To employ, then, under the [Industrial Welfare Commission's] definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.").Martinez v. Combs, 49 Cal. 4th 35, 64, 109 Cal.Rptr.3d 514, 231 P.3d 259 (2010), as modified (June 9, 2010) (emphasis in original). Although Russell's complaint cites to multiple sections of Wage Order 7, see ECF No. 1-1 at 5-6, her complaint, proposed amended complaint, and opposition rely exclusively on the suffer or permit to work test. See generally ECF No. 1-1; ECF No. 18; ECF No. 18-1. The essence of that test "is the idea that an employment relationship exists if an entity knows or should know that an individual is doing work, yet fails to prevent the individual from working." Betancourt v. Advantage Hum. Resourcing, Inc., No. 14-cv-01788-JST, 2014 WL 4365074, at *5 (N.D. Cal. Sept. 3, 2014). "The IWC . . . borrowed its definition of 'employ'—'to engage, suffer, or permit to work'—in 1916 from the language of early 20th-century statutes prohibiting child labor." Martinez v. Combs, 49 Cal. 4th 35, 69, 109 Cal.Rptr.3d 514, 231 P.3d 259 (2010). "Statutes so phrased were generally understood to impose liability on the proprietor of a business who knew child labor was occurring in the enterprise but failed to prevent it, despite the absence of a common law employment relationship." Id. "The phrase 'suffered or permitted to work, whether or not required to do so' 'encompasses a meaning distinct from merely "working." ' " Hernandez v. Pac. Bell Tel. Co., 29 Cal. App. 5th 131, 142, 239 Cal.Rptr.3d 852 (2018) (quoting Morillion v. Royal Packing Co., 22 Cal. 4th 575, 584, 94 Cal.Rptr.2d 3, 995 P.2d 139 (2000)). The California Supreme Court has explained that an employee is "suffered or permitted to work" when the employee is working, but not subject to the employer's control, such as unauthorized overtime when an employee voluntarily continues to work at the end of a shift with the employer's knowledge. Morillion, 22 Cal. 4th at 585, 94 Cal.Rptr.2d 3, 995 P.2d 139.
"The California Supreme Court has never explicitly defined 'work' in the phrase 'suffer or permit to work' or issued an opinion that squarely addresses the question." Huerta v. CSI Elec. Contractors, Inc., 39 F.4th 1176, 1181 (9th Cir. 2022). For two reasons, however, the Court concludes that Plaintiff's efforts in using Walmart's self-checkout apparatus did not constitute "work" under the relevant wage order and that her claim must therefore be dismissed. First, Plaintiff cites no authority that would categorize the actions of a customer performing self-check-out as "work," and the Court has located none. On that ground, similar claims to those here brought against the grocery chain Albertson's were rejected last year in a persuasive order by Judge Curtis Karnow of the San Francisco Superior Court. See ECF No. 21 at 4-8 (Order Sustaining Without Leave Demurrer to First Amended Complaint, Sophia Sadlowski v. Albertsons, LLC, No. CGC-22-599110 (S.F. Super. Ct. July 25, 2022). Without at least either persuasive case authority or evidence that the IWC or the California Legislature intended to extend the protections of the minimum wage laws to customers who take advantage of self-checkout kiosks, the Court will not expand California law in that way.
Second, the Court "avoid[s] absurd results when interpreting statutes." E. Bay Sanctuary Covenant v. Biden, 993 F.3d 640, 670 (9th Cir. 2021); see also Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 333, 59 S.Ct. 191, 83 L.Ed. 195 (1938) ("[T]o construe statutes so as to avoid results glaringly absurd, has long been a judicial function."). Although the Wage Order is not a statute, the Court applies the same principle. As Judge Karnow noted, to expand the law as Plaintiff suggests would lead to absurd results. "Plaintiff's construction [of the Wage Order] would lead to customers becoming employees of all sorts of commercial enterprises, e.g., customers who pump their own gas, use an ATM, fill their soda cup at restaurant[s], use self-service airline check-in, operate credit card machines at restaurant[s] when purchasing take-out, etc." ECF No. 21 at 7. To Judge Karnow's list, the Court could add an endless number of additional examples: the child who selects and pays for a pumpkin at a pick-your-own Halloween pumpkin patch; the customer who buses their own table at a restaurant; the customer who retrieves online purchases from a package locker or other pick-up point; the farmer's market customer who places produce into their own reusable bag; and so forth. It strains credulity past its breaking point to categorize these persons as employees.
Accordingly, the Court GRANTS Walmart's motion to dismiss Russell's complaint.
Russell seeks leave to amend to cure the deficiencies in her complaint. "A dismissal without leave to amend is improper unless it is beyond doubt that the complaint 'could not be saved by any amendment.' " RS-ANB Fund, LP v. KMS SPE LLC, No. 4:11-cv-00175-BLW, 2011 WL 5352433, at *3 (D. Idaho Nov. 7, 2011) (quoting Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009)). Although the Court is skeptical that Russell can state a plausible claim based on the facts she currently alleges, the Court nonetheless grants leave to amend.
CONCLUSION
For the reasons stated above, the Court grants Walmart's motion to dismiss. Within 21 days from this order, Russell may file an amended complaint solely to cure the deficiencies identified in this order.
IT IS SO ORDERED.