Chatman v. WeDriveU, Inc

Background

Precious Chatman brought two related cases against WeDriveU, Inc.: a proposed class action and an action under California’s Private Attorneys General Act (PAGA). She alleged that WeDriveU violated California workplace laws by failing to pay proper overtime, meal-period premiums, sick-leave pay, minimum wages, and other compensation; failing to provide required rest and meal periods; issuing inaccurate wage statements; failing to reimburse business expenses; and engaging in unfair business practices.

WeDriveU removed both cases from state court to federal court, arguing that section 301 of the Labor Management Relations Act (LMRA) completely preempted certain claims because Chatman was covered by a collective bargaining agreement (CBA). The CBA addressed wages, hours, working conditions, overtime, sick days, and arbitration. WeDriveU also relied on a previously approved class settlement that released certain claims arising on or before December 22, 2018. Chatman was not listed as having opted out of that settlement.

Judicial notice

The court granted requests to take judicial notice of the CBA, the prior settlement documents, and a district court opinion submitted by Chatman. The court declined to take judicial notice of WeDriveU’s declaration, Chatman’s job application, and driving record because Chatman disputed the CBA’s effective date and the date she began working, creating factual disputes that could not be resolved through judicial notice.

Subject-matter jurisdiction

The court rejected Chatman’s argument that the PAGA case belonged entirely in state court because it presented only state-law questions. Applying Ninth Circuit precedent, the court held that claims preempted under LMRA section 301 raise a federal question that supports removal. The court found that Chatman’s overtime, meal-period, and sick-leave rights were at least partly grounded in or dependent on the CBA. Because the PAGA claim was partly derivative of those claims, the court also found federal jurisdiction over the PAGA case.

Prior settlement

The court held that the prior settlement released Chatman’s claims arising on or before December 22, 2018, including claims involving meal periods, rest periods, unpaid wages, overtime, business expenses, waiting-time penalties, sick leave, wage statements, PAGA penalties, and unfair business practices. Chatman’s class-action claims were dismissed to the extent they arose before that date.

LMRA preemption and judgment on the pleadings

A judgment on the pleadings under Federal Rule of Civil Procedure 12(c) may be entered when, accepting the complaint’s factual allegations as true, no material factual dispute exists and the moving party is entitled to judgment as a matter of law.

Overtime. California’s overtime statute does not apply to an employee covered by a qualifying CBA that provides specified wages, hours, working conditions, overtime premiums, and a regular hourly rate at least 30 percent above the state minimum wage. The court found that Chatman’s CBA satisfied those requirements. Because Chatman was covered by the CBA, her overtime rights arose from the CBA rather than the state statute and were preempted by LMRA section 301. The court treated related claims concerning the timing and amount of overtime payments, as well as related PAGA allegations, as derivative of the preempted overtime claims. WeDriveU’s motion for judgment on the pleadings was granted as to Chatman’s overtime claims.

Meal periods. The parties disputed whether the CBA expressly provided for meal periods. The court concluded that resolving that dispute required interpreting the CBA. It therefore held that Chatman’s meal-period claims were preempted under LMRA section 301, even if they were not preempted under the first part of the applicable test. The court granted judgment on the pleadings as to the meal-period claims.

Sick leave. The court found that the CBA satisfied the statutory requirements for excluding CBA-covered employees from California’s statutory paid-sick-leave provisions. Chatman’s rights to paid sick leave therefore arose from the CBA. The court also found that her related claims about the amount and timing of sick-leave payments depended on those CBA-based rights. The court granted judgment on the pleadings as to all sick-leave claims.

PAGA. The court held that Chatman’s PAGA allegations based on overtime, meal periods, and sick leave were preempted because they were derivative of her own preempted claims. But the court found that WeDriveU had not shown that the other underlying allegations—such as minimum wage, rest periods, reporting time, and time-sheet violations—were preempted. WeDriveU’s motion for judgment on the pleadings in the PAGA case was therefore granted as to the overtime, meal-period, and sick-leave claims and denied to the extent it sought judgment based on the other underlying claims.

Leave to amend

The court denied leave to amend the preempted claims because amendment would be futile: Chatman could not add facts that would change the conclusion that those rights arose from the CBA. The court stated that those claims were dismissed with prejudice.

Remand and disposition

After dismissing the claims over which it had original federal jurisdiction, the court declined to exercise supplemental jurisdiction—the authority to hear related state-law claims—over the remaining claims. It granted Chatman’s motion to remand the PAGA case in part and remanded the PAGA cause of action and its remaining underlying claims to state court. The court also remanded the remaining non-preempted state-law claims in the proposed class action to the San Mateo Superior Court. The order states that the remaining claims in both cases were remanded and that judgment would be entered accordingly.