Judge David S. Cunningham, Case 19STCV26096 2022-08-04 Tentative Ruling

Judge: David S. Cunningham, Case: 19STCV26096, Date: 2022-08-04 Tentative Ruling

Opposing Party: RadicalMedia LLC, et al. (jointly “Radical” or “Defendants”)

Radical is a media company that makes commercials. [Perez] is a police officer. On 9/8/18, [Perez] and 10 other police officers performed freelance “traffic and pedestrian control services” while Radical filmed a Cadillac commercial in Downtown Los Angeles. [Citation.]

[Perez] worked on the shoot for one day and never worked for Radical again. He claims Radical failed to (1) pay him on time, and (2) provide compliant meal and rest breaks.

Plaintiff moved to represent two classes of Radical freelance workers – a Code Class asserting “‘late pay’ violations under the Labor Code[,]” and a 17200 Class asserting “meal and rest break violations under the Unfair Competition Law.” (Ibid.)

On 4/29/22, the Court denied the certification motion. (See id. at pp. 1-11; see also 4/29/22 Minute Order, p. 1.)

Notably, Plaintiff raised “two new liability theories” in support of certification:

The first relates to the Code Class. [Perez] claims Radical is a “temporary services employer” under Labor Code section 201.3, meaning Radical must pay employees weekly. [Citations.] The second relates to the 17200 [C]lass. [Perez] claims workers “often [had] meals delayed” because Radical called “grace.” [Citation.] He defines “grace” as “the practice by which a crew agrees to let production continue for exactly twelve additional minutes into the first meal period, generally in order to complete a single take of a given set-up.” [Citation.]

(4/29/22 Tentative Ruling Re: Motion for Class Certification, pp. 1-2.) Neither theory is alleged in the operative complaint, “so the Court decline[d] to consider them” (id. at p. 2), but the Court granted Perez leave to move for leave to amend.

* add William Mann as both an individual claimant and a new class representative;

* add a new cause of action pursuant to Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5^th 93 and Labor Code section 226(a); and

Here, the Court decides whether and to what extent Plaintiff’s motion for leave to amend should be granted.

“The court may grant leave to amend the pleadings at any stage of the action. A party may discover the need to amend after all pleadings are completed and new information requires a change in the nature of the claims or defenses previously pleaded.” (Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial (The Rutter Group 2021) ¶ 6:636, emphasis in original.) “Such changes usually cannot be made on ex parte procedure [citation]. Rather, a formal motion to amend must be served and filed.” (Ibid.)

“Motions for leave to amend are directed to the sound discretion of the judge.” (Id. at ¶ 6:637.) “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading.” (Cal. Code Civ. Proc. § 473, subd. (a)(1).) “However, the court’s discretion will usually be exercised liberally to permit amendment of pleadings.” (Howard v. County of San Diego (2010) 184 Cal.App.4^th 1422, 1428.)

“The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” (Ibid.) “Leave to amend should be denied only where the facts are not in dispute, and the nature of the plaintiff’s claim is clear, but under substantive law, no liability exists and no amendment would change the result.” (Edwards v. Superior Court (2001) 93 Cal.App.4^th 172, 180.) In fact, “[i]f the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.” (Morgan v. Superior Court (1959) 172 Cal.App.2d 527, 530.)

Plaintiff filed a reply after 5:00 p.m. on 8/1/22. Plaintiff contends the Court should allow the late reply because one of his attorneys “was suffering from Covid during the week the Opposition was filed[,]” and his “other responsible attorney . . . was out of state on vacation during the same time.” (Reply, p. 2.)

“[A] trial court has broad discretion to accept or reject late-filed papers[.]” (Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5^th 252, 262.)

The delay explanation is questionable. How many attorneys work in Plaintiff’s counsel’s office? Was there a third or fourth attorney available who could have worked on the reply? The reply papers fail to answer these questions. (See, e.g., Reply Harris Decl., ¶¶ 1-4.)

Regardless, the Court read the reply and finds that it fails to change the analysis.

Shingo is a Fair Labor Standards Act federal case that Plaintiff’s counsel recently filed in the United States District Court for the Central District of California. Plaintiff’s reply brief cites several paragraphs from Shingo’s complaint. Plaintiff claims the Shingo allegations show that “there is evidence of systematic, late payment of wages, without reference to Radical’s alleged difficulties in reading timecards (the defense in the Cadillac commercial), for motion pictures for Acura (2022), Apple (2021), Cheetos (2020), Target (2021), BMW (2021), LA Tourism (2021), and Noom (2021).” (Reply, p. 4.)

Additionally, Plaintiff cites a Shingo paragraph that purports to discuss Labor Code section 201.3’s legislative history and a California Supreme Court case called Smith v. Superior Court (2006) 39 Cal.4^th 77. (See id. at p. 5.)

The Shingo allegations have no bearing on the outcome of Plaintiff’s motion. Plaintiff cites zero authority requiring the Court take allegations in a federal complaint as true in deciding whether to grant leave to amend in a California case. The Court declines to rely on Shingo.

During the certification hearing, the Court made clear that it was only allowing Plaintiff to file a motion for leave to amend regarding the two new liability theories:

I’ve ruled on the issue of narrowing the scope. The question I’m asking is I will give you a file-by date if you wish to file a motion for leave to amend that would certainly address what the Court identified as the two new liability theories in its preliminary issues.

I’m not however suggesting that I would consider an appropriate amendment to narrowing the scope of the 17200 Class to Radical freelancers who worked in excess of six hours and were issued walkie-talkies.

I do want to be clear that I think my ruling today on this motion for class certification would reject that amendment as certainly futile because I think it’s addressed in the ruling that I’m making today.

I’m turning solely on the question of the Labor Code section 201.3 argument and the grace period argument. So what I would want to do is rather than us actually get into the argument of whether those two theories are indeed futile or not, I would give you an opportunity to file a motion for leave to amend so that we have a record on those two liability theories. And then I can make a decision in a more developed record on those two theories.

So what is your response with respect to that? Because what I would be doing is setting a file-by date to file a motion to amend the pleadings for leave to amend on those two theories.

MR. HARRIS: Well, we would like to have permission to do that. And I would like to have a chance to briefly review the transcript that’s being prepared today in connection with that. The normal turnaround time is ten business days for the court reporter. And if that’s a problem, perhaps she could let us know. . .

THE COURT: File-by date of about 30 days for a motion for leave to amend is probably appropriate. That’s the most I would do. I’ll hear briefly from Mr. Andrews in a moment. But that is my intent to give you a file-by date on leave to amend to address those two new liability theories. I at least want to have a clear record on them since you raised them unless you are withdrawing them.

I do think that they were outside the scope of the pleadings. I don’t think that Mr. Andrews had appropriate opportunity to certainly review or adequately respond to those. I want a clear and complete record. If that is indeed an argument that you wish to make, I would at least allow you to have an opportunity to consider amending the pleadings.

And then depending upon whether or not the Court agrees with you, then we may have to do another round of discovery on that very, very narrow topic. But I do want to be clear. I’m not expanding. I’m not accepting a narrower definition of the 17200 Class to only those freelance employees who were issued walkie-talkies because I do believe this ruling subsumes that.

MR. HARRIS: No. Thank you very much. We would like to have the opportunity to do that.

Plaintiff’s motion is moot as to the “grace” theory. He “abandons the ‘grace’ theory entirely (there is no reference to grace anywhere in the TAC)[.]”[1] (Opposition, p. 2; see also id. at p. 12.)

Defendants contend the “section 201.3” theory is futile. (See id. at pp. 2, 12-14.)

* Under section 201.3, “[e]mployees hired by a temporary services agency to work for their clients may be paid by the agency at the end of the week even if an assignment ends during the week.” (Chin, et al., Cal. Prac. Guide: Employment Litigation (The Rutter Group 2022) ¶ 11:497.5, emphasis added; see also Cal. Labor Code § 201.3, subd. (a)(1) [stating that a temporary services agency is “an employing unit that contracts with clients or customers to supply workers to perform services for the clients or customers and that performs” seven listed “functions”].)

* Defendants assert that Radical is not a temporary services agency. (See Motion, p. 14 [stating that Radical “does not contract with clients or customers to supply workers; rather it hires workers and produces its commercials entirely in-house”].) (Motion, p. 14.)

* Defendants further assert that Perez “received his final wages within a week” in compliance with section 201.3. (Id. at p. 13.)

* Both assertions are based on extrinsic evidence, not the face of the TAC (see ibid. [citing declarations]), and Defendants make no effort to show that the evidence is judicially noticeable.

* For now, whether Radical constitutes a temporary services agency and whether Perez received timely pay are factual questions.

* Adding Mann as a new class representative is appropriate since the Court found Perez atypical relative to the Code Class and the 17200 Class, and Defendants contest Perez’s typicality relative to the “section 201.3” theory. (See Opposition, pp. 13-14.)

Accordingly, the Court grants Plaintiff’s motion as to the “section 201.3” theory and allows Mann to be added as a class representative for the “section 201.3” theory but not for the Code Class and the 17200 Class since the Court denied certification of the Code Class and the 17200 Class.

Plaintiff’s motion is denied as to his request to revise the Code Class and 17200 Class definitions. To reiterate, the Court denied certification of these classes, and the request exceeds the scope of the Court’s prior order.

There is a caveat. Because the motion is granted as to the “section 201.3” theory, Perez should receive an opportunity to amend to pursue a 17200 Class based on the section “201.3” theory to the extent it is meant to be incorporated into the section 17200 cause of action.

But the motion is denied as to the proposed 17200 Class definition in the TAC, which does not appear to involve the “section 201.3” theory, because the Court expressly rejected it at the certification hearing. (See Hoffer Decl., Ex. 16, p. 71.)

Perez’s request to add Washington as an individual claimant is denied because:

* Plaintiff’s counsel apparently has known about Washington since at least April 2020 (see Opposition, pp. 9-10);

* the moving brief and Plaintiff’s counsel’s declaration fail to explain the reason(s) for the delay in moving to add him; and

* given that he seeks to assert individual claims only and does not intend to serve as a class representative, he has effectively decided to opt out of the class action and should file his own case; there is no reason to adjudicate his individual claims here.

In reply, Perez characterizes Washington as a new class member and argues that leave to amend should be granted because the proposed amendment “is the functional equivalent of a motion to intervene[.]” (Reply, p. 6.)

The Court disagrees. The moving brief states that “the TAC seeks to add” Washington “as an individual Plaintiff only[.]” (Motion, p. 1, emphasis added.) Given that he seeks to assert individual claims and does not intend to serve as a class representative, he has effectively decided to opt out of the class action and should file his own case.[2]

“California law requires employers to provide daily meal and rest breaks to most unsalaried employees. If an employer unlawfully makes an employee work during all or part of a meal or rest period, the employer must pay the employee an additional hour of pay.” (Naranjo, supra, 13 Cal.5^th at 101.)

The California Supreme Court decided Naranjo on 5/23/22. The issue was whether “this extra pay for missed breaks constitutes ‘wages’ that must be reported on statutorily required wage statements during employment [citation] and paid within statutory deadlines when an employee leaves the job.” (Id. at 102.) The Supreme Court reversed the Court of Appeal and answered yes. The opinion states: “Although the extra pay is designed to compensate for the unlawful deprivation of a guaranteed break, it also compensates for the work the employee performed during the break period.” (Ibid.) “The extra pay thus constitutes wages subject to the same timing and reporting rules as other forms of compensation for work.” (Ibid.)

Based on this change in law, Perez requests leave to add a new cause of action pursuant to section 226(a). Section 226(a) is the provision that requires wages to be reported on wage statements. The TAC alleges that Mann’s and the Code Class’s wage statements violate Naranjo and section 226(a) because they fail to show premium payments for missed meal and rest breaks. (See TAC, ¶¶ 80-81.)

The Court denies the motion in part. The Court denied certification of the Code Class. Moreover, in denying certification of the 17200 Class, the Court found that Perez failed to show commonality as to the meal and rest break claims. (See 4/29/22 Tentative Ruling Re: Motion for Class Certification, pp. 8-9.) The new section 226(a) cause of action is derivative of the meal and rest break claims to the extent it is a class claim and should be denied, primarily because the Court already found that there is no commonality concerning the alleged, predicate meal and rest break violations.

However, the motion is granted to the extent it is an individual cause of action asserted by Mann. (See, e.g., TAC, ¶¶ 79-82.)

This portion of the motion is granted in part and denied in part. It is granted as to the new factual allegations supporting:

* Mann’s individual claims, including the new individual cause of action under section 226(a).

[1] “TAC” means third amended complaint.

[2] The Court notes that the reply brief fails to address the intervention requirements.