Maslic v. ISM Vuzem d.o.o.

Background

The plaintiffs were employees of Vuzem who worked on a construction project at Tesla’s facility in Fremont, California, from November 2014 through June 2016. Eisenmann was the general contractor, Vuzem was the subcontractor, and Tesla owned the facility. The plaintiffs alleged that they were not paid minimum wages or overtime, were not provided adequate rest periods, and did not receive all unpaid compensation when their employment ended. They also alleged that Vuzem used threats involving serious harm, loss of visa status, prosecution, and withheld pay to coerce them into working under dangerous conditions.

The plaintiffs asserted claims under the Fair Labor Standards Act, California labor law, the federal Trafficking Victims Protection Reauthorization Act (TVPRA), and California’s anti-trafficking law. Eisenmann and Tesla moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not allege enough facts to plausibly support a legal claim. Their motion challenged five claims brought against them: four California wage-and-hour claims and the TVPRA and California Trafficking Victims Protection Act (CTVPA) claims.

Wage-and-hour claims

The court held that the four wage-and-hour claims were untimely. It applied a three-year limitations period to the minimum-wage, overtime, and rest-period claims and a one-year limitations period to the waiting-time-penalty claim. Because the plaintiffs’ work ended by June 2016, the court concluded that the latest possible deadlines were June 2019 for the wage and rest-period claims and June 2017 for the waiting-time-penalty claim. The plaintiffs’ complaint was filed in August 2020.

The plaintiffs referred to possible tolling based on an earlier related proceeding but did not explain why that proceeding would extend their deadlines. The court also concluded that amendment would be futile, cause undue delay, and prejudice Eisenmann and Tesla. The court therefore granted with prejudice Eisenmann and Tesla’s motion to dismiss the four wage-and-hour claims as those claims related to those defendants. Because the claims were untimely, the court did not address whether Eisenmann or Tesla were the plaintiffs’ employers under California law.

TVPRA and CTVPA claims

The TVPRA permits a victim of coerced labor to sue a third party that knowingly benefits financially or receives something of value from a venture that relied on coerced labor, when the third party knew or should have known about that labor. The court found that the plaintiffs adequately alleged both required points.

First, the plaintiffs alleged that Eisenmann and Tesla received value from a construction venture that relied on the plaintiffs’ labor: Eisenmann earned money from the contracts, and Tesla obtained labor that improved its facility. The court rejected the argument that Vuzem had to provide a benefit directly to Eisenmann or Tesla.

Second, the court found sufficient allegations that Eisenmann and Tesla knew or should have known about the coerced labor. The plaintiffs alleged that the companies’ managers supervised their work, Tesla security guards tracked their arrival and departure, Eisenmann directed the use of vans transporting them from company-provided housing, and the companies knew about their foreign recruitment, long hours, housing, and lack of construction licenses. At the pleading stage, the court had to accept the factual allegations as true and draw reasonable inferences for the plaintiffs.

Because the TVPRA claim survived, the related CTVPA claim also survived. The court denied Eisenmann and Tesla’s motion to dismiss the TVPRA and CTVPA claim as it related to those defendants. Judge Lucy Y. Koh entered the order on November 19, 2021.