Carrillo v. Monterey Mechanical Co.

Background

Vincent Carrillo asserted nine California-law claims against Monterey Mechanical Co. on behalf of himself and a proposed class of similarly situated employees. The claims concerned minimum and straight-time wages, overtime, meal periods, rest periods, timely payment of wages after discharge, wage statements, expense reimbursement, employment records, and unfair competition.

Monterey removed the case from California state court. The court had previously denied Carrillo’s request to remand, finding that his claims for late payment under California Labor Code section 204 were preempted by section 301 of the Labor Management Relations Act because the collective bargaining agreement provided different pay arrangements. Monterey then moved under Rule 12(b)(6) to dismiss the complaint or, alternatively, to require individual arbitration under the Federal Arbitration Act and the collective bargaining agreement.

Late-Payment Claims

The court granted Monterey’s motion to dismiss Carrillo’s late-payment claims and dismissed those claims with prejudice. The court treated the section 204 claims as claims arising under the collective bargaining agreement because the agreement fell within California Labor Code section 204(c)’s exemption for different pay arrangements. The agreement also required employees to use a grievance process for disputes concerning its interpretation or application.

Carrillo had not alleged that he exhausted that grievance process. His opposition did not dispute that the section 204 claims should be dismissed, and his counsel stated at the hearing that he was unaware of facts supporting an amendment alleging compliance with the grievance process or a reason to excuse compliance. The court therefore found that amendment would be futile and dismissed the late-payment claims with prejudice.

Other Claims and Federal Labor-Law Preemption

The court denied Monterey’s motion to the extent it sought dismissal of the other claims based on preemption. Federal labor-law preemption can apply when a claim seeks a right created only by a collective bargaining agreement or when resolving the claim requires interpreting disputed agreement terms. Mere reference to or consultation of an agreement is not enough.

For the overtime claim, Monterey relied on California Labor Code section 514, which exempts certain employees covered by qualifying collective bargaining agreements. The exemption requires the agreement to provide, among other things, a regular hourly rate at least 30 percent above the state minimum wage for all employees. The court found that the agreement did not clearly provide the required rates for relevant years. Its travel-rate table used asterisks for several years and did not explain them, while a later 2024 memorandum of understanding could not establish rates for Carrillo’s employment from 2020 to 2022. Monterey therefore did not satisfy its burden to show that the section 514 exemption applied.

The court also rejected Monterey’s argument that the overtime claim required interpretation of the collective bargaining agreement. Carrillo asserted a statutory right to overtime under California law, and Monterey did not identify an active dispute about the meaning of any agreement term. The court reached similar conclusions for the meal-period claim, finding that the statutory exemption did not apply and that Monterey had not shown any disputed agreement interpretation.

For the rest-period claim, the court found that the collective bargaining agreement did not provide protection equivalent to California Wage Order 16. The agreement generally referred to rest breaks during each four-hour work segment, while Wage Order 16 required a break for every four hours worked or major fraction. The court concluded that an employee working just over six hours could receive two breaks under the wage order but only one under the agreement’s language. A clause requiring the agreement to be interpreted consistently with Wage Order 16 did not resolve that difference. The rest-period claim therefore was not preempted on that basis, and Monterey offered no other claim-specific preemption argument.

The court rejected Monterey’s preemption arguments concerning minimum-wage and straight-time pay. Those rights arose under California law, and Monterey did not show that resolving the claims required interpreting disputed collective bargaining agreement terms. The court likewise found no preemption of Carrillo’s expense-reimbursement claim under California Labor Code section 2802, because that claim sought a non-waivable statutory right and did not seek to enforce or challenge a reimbursement provision in the agreement.

The court also rejected Monterey’s argument that the claims for wages due at termination, wage statements, and unfair competition were preempted merely because they were derivative of other claims. Because the underlying claims were mostly not preempted, these derivative claims were not shown to arise solely from the collective bargaining agreement or to involve an active dispute about the meaning of agreement terms. Monterey made no preemption argument concerning the employment-records claim.

Grievance Provision and Arbitration

The court held that Monterey could not establish preemption merely by pointing to the collective bargaining agreement’s grievance and arbitration provision. A grievance provision invoked as a defense does not itself convert state-law claims into federal claims for removal or preempt them. Monterey’s request to compel individual arbitration was not decided.

Jurisdiction and Remand

After dismissing the only claims the court found preempted, the case contained only state-law claims. The court declined to exercise supplemental jurisdiction over those claims under 28 U.S.C. § 1367(c), applying the usual approach for a case in its early stages in which the federal claims have dropped out. The court remanded the case to the California Superior Court for the County of Alameda, where it had been assigned case number 24CV093407, and directed the clerk to close the federal case.

Disposition

The court granted Monterey’s motion to dismiss Carrillo’s untimely-payment claims with prejudice. It denied the motion to the extent it sought dismissal of any other claim based on preemption, remanded the remaining claims to state court, and did not reach Monterey’s other dismissal arguments or motion to compel arbitration.