Ruelas v. County of Alameda

Background

Plaintiffs are or were pretrial detainees, people detained while facing deportation, and federal detainees confined at Santa Rita Jail. The complaint alleges that, beginning as early as July 2015, plaintiffs performed industrial food preparation and cleaning for Aramark Correctional Services, LLC, under Aramark’s contract with Alameda County. According to the complaint, Aramark employees managed kitchen operations, supervised the amount and quality of work, established work quotas, assigned tasks, and reported alleged misconduct to Sheriff’s deputies. The complaint also alleges that County Defendants and Aramark threatened workers with punishment, longer jail sentences, solitary confinement, or loss of work if they refused to work or left because of illness or injury.

The operative second amended complaint asserted claims under the Thirteenth Amendment, the Trafficking Victims Protection Act, the equal-protection and due-process clauses of the Fourteenth Amendment, California’s Unfair Competition Law, and California’s Bane Act. The County Defendants moved to dismiss the Fourteenth Amendment due-process claim. Aramark moved to dismiss the Unfair Competition Law claim. The court considered both motions under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Fourteenth Amendment Due-Process Claim

The County Defendants argued that the complaint no longer stated a due-process claim after the California Supreme Court’s decision concerning compensation for people working in county jails. The court agreed and granted the County Defendants’ motion.

The court had previously held that non-convicted incarcerated people had a property right to compensation under the California Labor Code and had sufficiently alleged that the County Defendants denied them due process by withholding pay without a hearing. The California Supreme Court later held that California Penal Code section 4019.3, which establishes a compensation cap, applies to all county inmates, including pretrial detainees, working in county jails. The court therefore concluded that the Penal Code controls and that the Labor Code’s minimum-wage and overtime provisions do not apply to non-convicted detainees.

Plaintiffs argued in their opposition brief that they had an inherent property interest in their labor, rather than only a statutory right to wages. The court declined to consider that theory as a basis for avoiding dismissal because the complaint pleaded the due-process claim only as a statutory right to wages. The court also stated that, even if it considered the argument, it would reject it on the merits. Relying on Ninth Circuit precedent, the court held that incarcerated people do not have a constitutionally protected property interest in compensation for their labor without a statutory or otherwise established right to the wages demanded. The court dismissed the due-process claim without leave to amend because amendment would be futile.

Unfair Competition Law Claim Against Aramark

Aramark argued that the Unfair Competition Law claim should be dismissed under the safe-harbor doctrine and because plaintiffs had not plausibly alleged unlawful or unfair conduct. The safe-harbor doctrine generally prevents an unfair-competition claim based on conduct that the Legislature has clearly permitted or for which it has clearly determined that no legal action should lie.

The court denied Aramark’s motion. It rejected Aramark’s narrow view that the claim was based only on failure to pay wages. The complaint also alleged that non-convicted detainees were coerced to work, that Aramark employees threatened to report workers for punishment if they left early because of illness or injury, and that those reports could lead to longer jail sentences or solitary confinement. The court held that the cited Penal Code provision did not clearly permit the alleged combination of nonpayment, threats, coercion, and exploitation.

The court also declined to dismiss the claim under the Unfair Competition Law’s “unlawful” prong. It relied on its earlier conclusion that the alleged Trafficking Victims Protection Act violation could serve as a predicate violation for the unfair-competition claim, and stated that later decisions concerning the Labor Code did not eliminate that basis.

The court likewise declined to dismiss the “unfair” prong. It concluded that the alleged forced labor and coercive and threatening conduct could offend public policy reflected in the Trafficking Victims Protection Act and the Bane Act. The court found no distinction between the alleged labor practices and the harm for which plaintiffs sought recovery because plaintiffs alleged that the labor practices themselves directly caused the harm.

Disposition

The court granted the County Defendants’ motion to dismiss and dismissed plaintiffs’ Fourteenth Amendment due-process claim without leave to amend. It denied Aramark’s motion to dismiss plaintiffs’ Unfair Competition Law claim.