Gomez v. Elite Labor Services Weeklys, Ltd.

Background

Fernando Gomez alleged that Elite Labor Services Weeklys, Ltd. violated section 226 of the California Labor Code by failing to provide wage statements to employees or, alternatively, by providing them late. Gomez asserted the first claim for himself and on behalf of a proposed class. He also brought a representative claim under California’s Private Attorneys General Act, based on the same wage-statement allegations.

Gomez alleged that Elite employed him from December 6, 2018, through February 28, 2019. The operative pleading was his Sixth Amended Complaint. Elite moved to dismiss under Rule 12(b)(6), which tests whether a complaint adequately states a legal claim, or alternatively moved under Rule 12(f) to strike the class and representative allegations.

Settlement-agreement argument

Elite argued that the entire Sixth Amended Complaint should be dismissed because Gomez had released his claims in a settlement agreement from a state-court action. The court took judicial notice of the settlement agreement, meaning it accepted the document as a properly noticeable court-filed record.

The court held that the agreement was ambiguous about whether Gomez released all claims that existed when the agreement became effective or whether the claims in this federal action were excluded. The court stated that resolving that ambiguity would require evidence about the surrounding circumstances and therefore could not be decided on a motion to dismiss. The court denied Elite’s motion to dismiss on that ground.

Class allegations concerning missing wage statements

The court agreed with Elite that Gomez had not pleaded enough facts to support a class claim that Elite failed to provide wage statements to other employees. Gomez relied on allegations concerning a declaration by Elite’s payroll manager, including that Elite used the same wage-statement procedures for Gomez and other employees. Gomez argued that his allegation that he received no wage statements suggested a companywide failure.

The court found that the allegations did not reasonably support that inference. Gomez’s failure to receive statements could also have resulted from an incorrect mailing address or a postal-delivery error. The court explained that Gomez needed to allege facts tending to rule out those alternative explanations, rather than allegations consistent with both liability and non-liability.

The court also rejected Gomez’s argument that the payroll manager’s description of practices beginning February 3, 2019, implied that no practices existed before that date. The court found that the absence of a statement about earlier practices was not an admission that no earlier practice existed.

Class allegations concerning late wage statements

The court also agreed that Gomez had not adequately pleaded a class claim that Elite provided wage statements late. California Labor Code section 226 requires wage statements to be provided semimonthly or at the time wages are paid. Gomez alleged that Elite mailed statements after payment of wages, but he did not allege that the mailing occurred after the semimonthly deadline.

The court further noted that Gomez alleged he was paid using pay cards. Under the statutory provisions discussed by the court, pay cards are equivalent to cash for this purpose, and wage statements may be provided separately from cash wages if they are furnished at least semimonthly.

The court therefore granted Elite’s motion to strike the class allegations supporting the first cause of action. Elite had not challenged Gomez’s individual first cause of action.

Private Attorneys General Act claim

The court described Gomez’s Private Attorneys General Act claim as derivative of his first cause of action. Because the first cause of action was limited to Gomez’s individual claim, the court held that the representative claim could not proceed purely on an individual basis. The court granted Elite’s motion to dismiss the second cause of action.

Further amendment

Gomez requested permission to file a Seventh Amended Complaint and sought discovery to determine whether other employees received wage statements, whether any statements were late, and whether wage statements had inaccurate year-to-date totals.

The court denied further leave to amend. It noted that Gomez had previously been given an opportunity to correct the deficiency concerning other employees and had not identified additional facts he could allege. The court also stated that a plaintiff must satisfy pleading requirements before discovery, rather than use discovery to determine whether a factual basis for a claim exists.

Disposition

The court ordered that Elite’s motion to dismiss or strike was granted in part and denied in part:

- The motion was denied to the extent it sought dismissal based on the settlement agreement. - The motion was granted to the extent it sought to strike the class allegations supporting the first cause of action. - The motion was granted to the extent it sought dismissal of the second cause of action under the Private Attorneys General Act.

The court directed Elite to file an answer to Gomez’s individual first cause of action within 14 days. It also directed the parties to meet and confer and submit a proposed pretrial schedule within 14 days. The opinion does not state that either dismissal was with or without prejudice.