Lazares v. Shopify, Inc.

Background

Matthew Lazares filed a putative class action against Shopify (USA), Inc. The amended complaint alleged that Shopify misclassified Lazares and other commissioned sales employees as exempt under California law. Lazares alleged that the classification resulted in unpaid overtime and sick time, inadequate meal and rest breaks, and untimely payment.

Lazares also challenged provisions in Shopify’s Commission Plans, Intellectual Property Rights Agreement, and Performance Improvement Plan. He alleged that the Commission Plans waived rights to bring unpaid-wage claims and limited the time for calculating entitlements. He alleged that the Intellectual Property Rights Agreement restricted discussion of the Commission Plans, functioned as a non-compete agreement, included an unlawful non-solicitation clause, and lacked notice required by California Labor Code section 2870. He further alleged that the Performance Improvement Plan improperly required strict confidentiality.

Among several California Labor Code and Wage Order claims, Lazares brought a claim under California’s Unfair Competition Law. He sought injunctive relief to stop the alleged practices and restitution of money he claimed Shopify unlawfully withheld. Shopify moved for judgment on the pleadings as to the Unfair Competition Law claim.

Legal standard

A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) may be granted when, accepting the pleadings’ factual allegations as true, the moving party is entitled to judgment as a matter of law. The court explained that this motion uses the same standard as a motion to dismiss for failure to state a claim under Rule 12(b)(6). A complaint must provide enough facts to state a legally plausible claim, rather than relying on conclusory statements or unsupported inferences.

Equitable relief

The court held that Lazares had not adequately alleged that he lacked an adequate remedy at law, which is required for equitable relief. The court rejected the argument that merely requesting injunctive relief and restitution sufficiently pleaded that requirement.

The court also found that the amended complaint did not show a personal and reasonably certain need for prospective injunctive relief. Lazares was a former employee, and the complaint did not allege that he had inventions over which he could not assert property rights, that his job search had been affected by a non-compete provision, or that Shopify had continued enforcing the agreements against him. The complaint’s conclusory statement that Shopify had enforced and continued to enforce unlawful non-compete provisions was insufficient. The court also found that Lazares had not explained how the requested restitution differed from monetary recovery for the alleged unpaid wages.

Standing

The court additionally considered Shopify’s standing arguments. Article III standing requires a concrete and particularized injury, and a plaintiff seeking prospective injunctive relief must show a real and immediate threat of repeated future injury. The court found that Lazares had not alleged that Shopify had enforced, attempted to enforce, or would attempt to enforce the challenged agreements against him.

The court also noted that the Unfair Competition Law requires a plaintiff to allege economic injury caused by the challenged conduct. The court found that Lazares’s suggestions that he had been forced to forgo competing jobs or could not profit from inventions were not pleaded in the amended complaint.

Disposition

The court GRANTED Shopify’s motion for judgment on the pleadings. The court allowed Lazares to file an amended complaint within 21 days because it could not yet determine that amendment would be futile. The order did not state that the entire action was dismissed. The court also set a case-management conference for April 1, 2025, and directed the parties to file a joint case-management statement by March 25, 2025.