Lazares v. Shopify, Inc.

Background

Matthew Lazares filed a putative class action alleging that Shopify misclassified him and other commissioned sales employees as exempt under California law. He alleged that the employees were not properly paid overtime or sick time, did not receive proper meal and rest breaks, were required to work seven consecutive days without a day off, and were not timely paid. He also alleged that Shopify changed commission plans and required employees to sign unlawful confidentiality and non-compete agreements.

Lazares asserted several California Labor Code and Wage Order claims, as well as a claim under California’s Unfair Competition Law (UCL). For the UCL claim, he sought equitable restitution, disgorgement of profits, and injunctive relief. The court had previously dismissed the UCL claim and allowed him to file a second amended complaint. Shopify then filed a second motion for judgment on the pleadings directed at the UCL claim and the requests for equitable relief.

Analysis

The court treated the motion under Federal Rule of Civil Procedure 12(c). That rule permits judgment on the pleadings after the pleadings are closed when, accepting the allegations as true, the moving party is entitled to judgment as a matter of law. The court applied the same standard used for a motion to dismiss for failure to state a claim.

The court held that Lazares had not adequately alleged that he lacked an adequate legal remedy. He argued that the California Labor Code’s three-year limitations period left him without a remedy for an additional fourth year available under the UCL. Relying on Ninth Circuit precedent, the court concluded that the expiration or shorter period of a legal claim does not, by itself, make the available legal remedies inadequate for purposes of federal equitable jurisdiction.

Lazares also argued that he lacked an adequate legal remedy for Shopify’s alleged failure to provide notice that its non-compete agreements were void. The court rejected that argument because the applicable statute allowed a private action for actual damages and Lazares did not explain why those damages would be inadequate.

The court separately held that Lazares lacked standing to seek prospective injunctive relief. As a former employee, he had not alleged that Shopify had enforced, attempted to enforce, or would attempt to enforce the challenged agreements against him. He also had not alleged that he had changed his behavior because of the agreements, that future enforcement was sufficiently imminent, or that the agreements or an exit letter caused him economic injury.

Ruling

Judge Haywood Gilliam GRANTED Shopify’s motion for judgment on the pleadings. The court DISMISSED Lazares’s UCL claim without leave to amend and without prejudice to refiling in state court. The court found further amendment futile because Lazares had already been given an opportunity to amend, had been told to plead his best case, and did not explain what new allegations he would add. The scheduling order remained in effect.

The court also ordered Lazares’s counsel to show cause by May 23, 2025, why sanctions should not be imposed for providing inaccurate citations in the opposition brief.