Judge: Yolanda Orozco, Case: 21STCV02061, Date: 2022-07-29 Tentative Ruling
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Case Number: 21STCV02061 Hearing Date: July 29, 2022 Dept: 31
MOTION FOR LEAVE TO AMEND COMPLAINT IS GRANTED
Background
On January 19, 2021, Plaintiffs Maria Arias and Ana Castro Licona (“Plaintiffs”) filed the instant action against Defendant Magic Laundry Services, Inc.; and Does 1 to 100. Plaintiffs initiated the present action, individually, and in a representative capacity pursuant to the Private Attorneys General Act (“PAGA”), for the purposes of recovering damages and civil penalties for Defendant’s alleged violations of the Labor and Government Code.
On May 14, 2021, Plaintiffs and Defendant filed a Stipulation agreeing Plaintiffs’ individual (non-PAGA) causes of action will be submitted to arbitration pursuant to an existing arbitration agreement between Plaintiffs and Defendant. Plaintiffs and Defendant further agreed that Plaintiff’s PAGA causes of action, including Plaintiffs’ individual PAGA claims, will not be submitted to arbitration, but would proceed pursuant in this present action. (See Stipulation and Order ¶¶ 2-3 filed on May 14, 2022; see also Min. Or. 01/11/22; Min. Or. 03/11/22.)
On October 20, 2021, Plaintiffs filed a Third Amended
Complaint alleging:
1. Sexual
Harassment
2. Failure to
Prevent Sexual Harassment and Retaliation
3. Retaliation for
Complaining About Sexual Harassment
4. Whistle-blower
Retaliation (Cal. Labor Code §1102.5)
5. Retaliation for
Exercising a Right Afforded to the Employee [Cal. Labor Code §98.6(a)]
6. Penalties
Pursuant to Cal. Labor Code § 2699 et seq. (by Arias)
7. Penalties Pursuant to Cal. Labor Code § 2699 et seq. (by Castro-Licona)
On May 01,2022 Plaintiffs filed a Motion for Leave to Amend to file a Fourth Amended Complaint.
On June 29, 2022, Defendant filed Opposition Papers.
On July 06, 2022, Plaintiffs filed reply papers.
“The court may, in furtherance of justice,
and on any terms as may be proper, allow a party to amend any pleading or
proceeding by adding or striking out the name of any party, or by correcting a
mistake in the name of a party, or a mistake in any other respect.”¿ (Code Civ.
Proc. (CCP), § 473.)¿ CCP section 576 also grants the court power to allow a
party to amend its pleading in the furtherance of justice.
California courts are required to permit
liberal amendment of pleadings in the interest of justice between the parties
to an action. (Dieckmann v. Superior Court (1985) 175 Cal.App.3d 345,
352.)¿ Generally, amendment must be permitted unless there is unwarranted delay
in requesting leave to amend or undue prejudice to the opposing party. (Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1377.) Even
if a good amendment is proposed in proper form, unwarranted delay in presenting
it may – of itself—be a valid reason for denial. (Emerald Bay Community
Association v. Golden Eagle Ins. Corp. (2005) 130 Cal.App.4th 1078,
1097.)¿¿
Under California Rules of Court, rule 3.1324, a motion to
amend a pleading before trial must (1) include a copy of the proposed amendment
or amended pleading, which must be serially numbered to differentiate it from
previous pleadings or amendments; (2) state what allegations in the previous
pleading are proposed to be deleted, if any, and where, by page, paragraph and
line number, the deleted allegations are located; and (3) state what
allegations are proposed to be added to the previous pleading, if any, and
where, by page, paragraph, and line number, the additional allegations are
located. (Cal. Rules of Court, rule 3.1324(a).) A separate supporting
declaration specifying (1) the effect of the amendment; (2) why the amendment
is necessary and proper; (3) when the facts giving rise to the amended
allegations were discovered; and (4) the reason why the request for amendment
was not made earlier must accompany the motion. (Id., rule 3.1324(b).)
Ordinarily, the judge will not consider the
validity of the proposed amended pleading in deciding whether to grant leave to
amend. Grounds for demurrer or motion to strike are premature. After leave to
amend is granted, the opposing party will have the opportunity to attack the
validity of the amended pleading; ¶ 6:688. [See Kittredge Sports Co. v.
Sup.Ct. (Marker, U.S.A.) (1989) 213 CA3d 1045, 1048, 261 CR 857, 859]
Discussion
As discussed in more detail below, Plaintiffs continue to
have standing to bring a PAGA claim because their individual PAGA claims have
not been compelled to arbitration. (See Stipulation and Order ¶¶ 2-3 filed on May
14, 2022.)
Proposed Amendment
Plaintiffs seek to amend the Third Amended Complaint to comport with Defendant’s discovery responses and a third-party deposition in order to clarify Plaintiffs’ theory of liability for retaliation, including the allegation that the reduction in force was pretextual since many of Plaintiffs’ coworkers were later rehired. Facts will be clarified but no new causes of action will be added. The Proposed Fourth Amended Complaint is attached as Exhibit A to the Motion.
Plaintiffs assert that since the trial is set for September 19, 2022, and only one third-party deposition has been taken, which is still open, Defendant will suffer no prejudice if the motion is granted.
Lastly, Plaintiffs’ counsel attests that the amendment was not brought earlier because Plaintiffs first sought a stipulation form Defense counsel on the amendment, which was declined. (Nomanim Decl. ¶¶ 5-6.) Plaintiffs’ counsel then subsequently reserved the earliest available motion date to hear the motion. (Id. ¶ 6.)
The proposed Third Amended Complaint will make the following amendments:
1.
Page 2, lines 18-19, ¶8: Change: “In early 2020,” to
“On or about February 28, 2020,”
2.
Page 2, lines 20-26, ¶9: change “Shortly thereafter,
Plaintiff Maria Arias was terminated on March 25, 2020 for pretextual reasons
when the real reason was retaliation for requesting her W2 for Defendant and
for complaining about sexual harassment.” “Shortly thereafter, Plaintiff Maria
Arias was terminated on March 19, 2020 and not rehired for pretextual reasons
when the real reason was retaliation for requesting her W2 for Defendant and
for complaining about sexual harassment. On information and belief, other
employees who did not complain were either put on unpaid leave, told they would
be rehired, and/or were in fact rehired at a later date. Thus, Plaintiff Maria
Arias’ termination and Defendant’s decision to not put her on unpaid leave
and/or to fail to offer her to be rehired at a later date were retaliatory.”;
3.
Page 3, lines 8-12, ¶11: add “On information and belief,
other employees who did not complain were either put on unpaid leave, told they
would be rehired, and/or were in fact rehired at a later date. Thus, Plaintiff
Castro Licona's termination and Defendant's decision to not put her on unpaid
leave and/or to fail to offer her to be rehired at a later date were
retaliatory.";
4.
Page 8, line 25 through page 9, line 2, ¶45: change
“Despite the fact that Plaintiffs made a good faith safety complaint that she
reasonably believed was a violations of local, state, or federal law to
Defendants, Defendants unlawfully retaliated against Plaintiffs by terminating
them in violation of Labor Code §1102.5" to “Despite the fact that
Plaintiffs made the above complaints they reasonably believed were a violations
of local, state, or federal law to Defendants, Defendants unlawfully retaliated
against Plaintiffs by terminating them and failing to rehire them in violation
of Labor Code §1102.5”;
5.
Page 11, lines 1-2, ¶55: add the following at the end
of the sentence before the period “and Defendant failing to select Plaintiff
for rehire”;
6.
Page 12, lines13-15, ¶66: change “Shortly thereafter,
Plaintiff was terminated on March 25, 2020 for pretextual reasons when the real
reason was retaliation for requesting her W2 for Defendant and due to
Plaintiff's protesting sexual harassment by her supervisor Aaron.” to “Shortly
thereafter, Plaintiff was terminated on March 19, 2020 and not selected for
rehire for pretextual reasons when the real reason was retaliation for
requesting her W2 for Defendant and due to Plaintiff's protesting sexual
harassment by her supervisor Aaron.”
7. Page 15, lines 7-9, ¶85: change “Shortly thereafter, Plaintiff Castro Licona was terminated on March 15, 2020 for pretextual reasons when the real reason was Plaintiff Castro Licona's protected complaints about sexual harassment and Labor Code violations.” to “Shortly thereafter, Plaintiff Castro Licona was terminated on March 15, 2020 and not selected for rehire for pretextual reasons when the real reason was Plaintiff Castro Licona’s protected complaints about sexual harassment and Labor Code violations.”
Defendant’s Oppostion based on Plaintiffs’ Lack of Standing Has No Merit
In opposition, Defendant does not assert it will suffer prejudice or that Plaintiffs seek leave to amend in bad faith. Instead, Defendant asserts that Plaintiffs’ lack standing to maintain their PAGA action pursuant to Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906.
In Viking, the U.S. Supreme Court explained:
“But as we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA's standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action. See Cal. Lab. Code Ann. §§ 2699(a), (c). When an employee's own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.”
(Viking River Cruises, supra, 142 S.Ct. at 1925 [internal citation omitted].)
In other words, Viking held that a plaintiff’s individual PAGA claims can be compelled to arbitration and consequently, a Plaintiff may lose standing to bring a PAGA claim. However, Defendant has offered no evidence that Plaintiffs’ individual claims can be or have been compelled to arbitration. On the contrary, the stipulation signed by the Partis on May 14, 2022 expressly foreclosed this result stating:
· “Plaintiffs shall proceed with arbitration of all non-PAGA related causes of action pursuant to the parties’ arbitration agreement.” (Stipulation and Order ¶ 2 filed on May 14, 2022.)
· “The PAGA causes of action shall proceed before the Court and shall not be stayed, but all remaining causes of action shall be stayed pending arbitration.” (Id. at ¶ 3.)
In Defendant’s Memoranum and Points of Authorities, Defendant states it will elaborate on Plaintiffs’ lack of standing in detail in their forthcoming Demurrer/Motion to Dismiss Plaintiff’s TAC. (Opp. at 3:5-7.) Filled concurrently with Defendant’s Demurrer is the Declaration of Defense counsel David Shyu, and attached to Shyu’s declaration is a copy of the Arbitration Agreement between Plaintiffs and Defendant. (Demurrer to TAC, Shyu Decl. Ex. 3.)
In bold letters, Defendant’s Arbitration Agreement states:
“Private attorney general representative actions brought on behalf of the state under the California Labor Code are not arbitrable, are outside the scope of this Agreement, and may be maintained in a court of law. But, to the extent provided by applicable law, any claim by you on your own behalf under the California Private Attorney General Act to recover your unpaid wages must be arbitrated and is covered by this Agreement.” (Demurrer to TAC, Shyu Decl. Ex. 3 at p. 2.)
The Arbitration Agreement expressly states that the PAGA representative claims are not covered by the Agreement. As to the second sentence of the above provision, it is inapplicable to Plaintiffs because Plaintiffs did not bring a claim for unfair wages. Consequently, Plaintiffs’ PAGA claims are not subject to Arbitration. Moreover, even if Plainiffs claims were subject to arbitration, Defendant has waived that right when it stipulated that Plaintiffs’ PAGA claims will proceed in this case rather than in arbitration. (See e.g. Morgan v. Sundance, Inc. (2022) 142 S. Ct. 1708.) Accordingly, Viking is inapplicable to this action and Plaintiffs have standing to bring this action.
Therefore, since Defendants have offered no valid opposition nor shown it will be prejudiced, Plaintiffs’ Motion is GRANTED.
Conclusion
Plaintiffs’ Motion for Leave to File a Fourth Amended Complaint is GRANTED. The amended pleading must be separately filed within 5 days.
Moving party to give notice.
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