Case Name: Gonzales v. Sprouts Farmers Markets, LLC, et al.

Case No.: 1-13-CV-248781

Plaintiff Jeffrey Gonzales has filed a motion for leave to file a second amended complaint to add additional defendants, to add a cause of action more meal break violations, and to add a cause of action for rest break violations. Defendants oppose the motion only as to amending the claim for PAGA civil penalties.

Plaintiff, on behalf of himself and all other similar situated, sued Defendants Sprouts Famers Markets, LLC, an Arizona limited liability company, and Sunflower Farmers Markets, Inc. for alleged violations of the California Labor Code and Business and Professions Code on July 1, 2013. Plaintiff notified Defendants and the Labor and Workforce Development Agency of the alleged violation on July 19, 2013, and the Agency failed to take action in response to Plaintiff’s letter. Plaintiff then amended his complaint to include claims under the Private Attorneys General Act of 2004 (“PAGA”) on November 21, 2013. Now, Plaintiff also contends that there were meal violations and rest violations and seeks to amend his complaint to add those claims and that PAGA applies to those meal and rest violations. Plaintiff also seeks to bring in Sunflower Farmers Markets, LLC, SFM, LLC, and SF Markets, LLC as additional Defendants. Plaintiff argues that both the original and the new PAGA claims apply to the new defendants. Plaintiff submitted a second letter to the Labor and Workforce Development Agency on May 19, 2014 about the additional alleged statutory violations against Defendants and proposed new Defendants.

The court may, in the furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading. Cal. Code Civ. Proc., § 473(a)(1). The court’s discretion “should be exercised liberally in favor of amendments, for judicial policy favors resolution of all disputed matters in the same lawsuit.” Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1047. Unless an adverse party is able to demonstrate that an amendment will result in unfair prejudice, leave to amend should be freely given by the court. Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564.

Other than the PAGA claims, because Defendants do not oppose the proposed inclusion of Doe Defendants, Sunflower Farmers Market, LLC, SFM, LLC, and SF Markets, LLC as named defendants in the second amended complaint, nor oppose the proposed inclusion of meal and rest break claims in the second amended complaint, the motion to leave to amend as to those inclusions is GRANTED.

However, Defendants oppose leave to amend as to Plaintiff’s PAGA Amendments. Defendants contend that the amendments are futile and fail as a matter of law for five reasons: (1) the Plaintiff cannot be permitted leave to amend the PAGA claim because the requisite time for the Labor and Workforce Development Agency to respond has not lapsed; (2) the original PAGA letter does not satisfy the notice requirements for alleged meal and rest break violations; (3) the PAGA amendments are time barred; (4) the Plaintiff’s untimely second letter to the Labor and Workforce Development Agency alleging meal and rest break violations does not relate back to the original letter to the Agency; and (5) the PAGA claim is barred in its entirety against the newly alleged Defendants.

Denial of leave to amend is proper where a proposed amendment fails to state a valid cause of action. California Casualty General Ins. Co. v. Superior Court. (1985) 173 Cal.App.3d 274, 280-81. Denial is also appropriate when the pleading is deficient as a matter of law and the defect could not be cured by appropriate amendment. Id. Also, denial of leave to amend is appropriate where the applicable statute of limitations has run on the claims a plaintiff seeks to add. Aroa Marketing, Inc. v. Hartford Ins. Co. of Midwest (2011) 198 Cal.App.4th 781, 789.

I. Time required for Labor and Workforce Development Agency

Plaintiff mailed the Second Labor and Workforce Development Agency Letter on May 19, 2014. The hearing on the matter is set for June 27.

After receiving an employee’s notice, the Labor and Workforce Development Agency has 33 calendar days to notify the employee and employer of whether it intends to investigate the allegations. If the Agency does not send notice within that time period, only then may the employee file suit. Cal. Lab. Code § 2699.3(a)(2)(A).

Because no notice from the Labor and Workforce Development Agency regarding its intention to investigate the matter has been submitted to the court, the time limit does not bar the Plaintiff from bringing suit.

II. Notice of original PAGA letter

Defendants argue that the original PAGA letter makes no reference to Labor Code sections 204 or 512, and only makes a single reference to section 226.7 without further description. However, the letter does state “Sprouts failed to provide the aggrieved employees meal and/or rest breaks, minimum and overtime wages, and other wage violations.” Defendant argues that this statement is too vague, and thus should not be a matter of notice.

A civil action under PAGA claiming a violation under Cal. Labor Code § 2699.5 can commence only after the aggrieved employee has provided written notice to the Labor and Workforce Development Agency, including the statutes that have been violated and the facts and theories that to support the violation. Cal. Lab. Code § 2699.3(a)(1). A plaintiff did not satisfy the requirements under § 2699.3 because the plaintiff merely recited that the employer failed to provide off-duty meal periods and to pay compensation for work without off-duty meals. Alcantar v. Hobart Service, No. ED CV 11-1600 PSG (SPx), 2013 WL 228501, at *2-4 (C.D. Cal. Jan. 22, 2013). The court held that plaintiff’s letter was essentially stating that a specific code violation occurred without specific facts supporting that. Id. Also, the sentence “[r]est periods were either less than ten minutes, not provided, interrupted or late as prescribed by California law” did not provide adequate notice because it was essentially repeating the statute and that it was violated, instead of providing specific facts supporting it. Ovieda v. Sodexo Operations, LLC, 2013 WL 3887873, at *3-4 (C.D. Cal. July 3, 2013).

In the instant action, no mention was made to Labor Code sections 204 or 512, which is required by the statute. See Cal. Lab. Code § 2699.3(a)(1). Also, the statement made about meal and rest break was similar to statement made in Ovieda, in that the letter said the employer violated the statute without any specific facts as to how the employer violated the statute. See 2013 WL 3887874, at *3-4. Therefore, the court finds that the original PAGA letter did not provide the notice required for a PAGA claim to go forward as to the meal and rest break violations. Thus, Plaintiff’s second PAGA letter must be within the statute of limitations to meet the requirements set out in § 2699.3 or relate back to the original PAGA letter so that the PAGA amendments are not time barred.

III. Statute of Limitations

Plaintiff was terminated on January 25, 2013. Plaintiff did not provide the second Labor and Workforce Development Agency letter until May 19, 2014, nearly 16 months later. Defendant asserts that because the statute of limitations is a year, that Plaintiff’s suit is barred.

Plaintiff relies on equitable tolling for its request for leave to amend and to add PAGA claims. Plaintiff claims that he was induced by Defendants’ agreement to mediate and thus did not seek additional claims under PAGA for meal and rest break violations within the relevant statute of limitations period. On January 2, 2014, the parties filed a Stipulation to Continue Responsive Pleading and Status Conference Pending Private Mediation and Order, confirming that the parties scheduled private mediation on April 10, 2014. However, Defendant withdrew one week prior to the mediation, even though mediation fees had been paid.

The statute of limitations on a PAGA claim is one year. Cal. Code Civ. Proc., § 340(a). Notice of new claims must be provided to the Labor and Workforce Development Agency within the one year period. Baas v. Dollar Tree Stores, No. C 07-03108 JSW, 2009 WL 1765759, at *5.

Even if equitable tolling applied, it would not have saved Plaintiff from the statute of limitations. The statute of limitations started running on January 25, 2013, when Plaintiff was fired. Then, on January 2nd, with 23 days left to file the amendment PAGA claims, Plaintiff and Defendants decided to enter mediation. Then, one week prior to mediation schedule on April 10, 2014, Defendants withdrew, and thus the time on the statute of limitations resumed. 23 days from April 10th would be May 3rd, and Plaintiff filed the second PAGA letter on May 19th. Therefore, equitable tolling, even if it applied, would not prevent the statute of limitations from barring the new PAGA claims.

IV. Relating back Second PAGA letter

Plaintiff also contends that the second PAGA letter relates back to the first and therefore, the new PAGA claims should not be barred. Defendants disagree.

If relation back is allowed, then the plaintiff must demonstrate that the meal and rest period theory of liability asserted in the second letter and the wage statement and timely final wage claim asserted in the original letter are (1) based on the same general set of facts, (2) seeks recovery against the same defendants for the same injuries, and (3) refers to the same incident caused by the same offending instrumentality. Barrington v. A.H. Robins Co. (1985) 39 Cal.3d 146, 151. The Ninth Circuit ruled that if the plaintiff attempts to relate an issue back when notice was required for an administrative claim, the factual allegations must be able to bear the weight of the new theory added by the amendment. Rodriguez v. Airborne Express (2001) 265 F.3d 890, 899. In Temple v. Guardsmark LLC, the court applied the Rodriguez test and found that a Labor and Workforce Diversity Agency letter did not relate back to a timely submitted Agency letter where the first letter alleged uniform and rest break claims, and the latter alleged a wage statement claim. No. C 09-02124 SI, 2011 WL 723611, at *9 (N.D. Cal. 2011). The original PAGA letter in that case contended “that his employer Guardsmark failed to properly compensate him, and similarly aggrieved Guardsmark employees, for uniform maintenance as required by California Labor Code section 2802, and that Guardsmark failed to provide him and other security guards with off-duty rest periods in violation of California Labor Code § 226.7. Said conduct, in addition, violates each Labor Code section as set forth in California Labor Code § 2699.5.” Id. The court ruled that an investigation into the uniform maintenance and rest period violations would not likely lead to an investigation into the wage statement violation, and the facts alleged did not bear the burden of the wage statement violation. Id.

Plaintiff claims that the operative complaint alleged valid causes of action against the Defendants for failure to provide accurate written wage statements; failure to pay all final wages timely; unfair competition; and civil penalties. Plaintiff argues that the meal and rest break violations are predicated upon the same policies and practices underlying the previously alleged claims in the Original complaint, and therefore, the meal and rest period theory of liability meet the standard in Barrington. Plaintiff also distinguishes Temple by saying that investigating the accuracy of Defendants’ written wage statements and alleged failure to provide complete and timely final wages would very likely lead to an investigation into meal and rest break violations.

In this case, the court finds that the original PAGA letter does not offer the same general set of facts nor the same incident causing the rest or meal violations as the second PAGA letter. The facts in the original notice to the Labor Workforce and Diversity Agency state that the Defendants failed to provide accurate written wage statements, and that the Defendants failed to pay timely wages earned following the separation of employment. That Defendants provided an inaccurate wage statement does not indicate that a meal or rest violation occurred. Also, that Defendants did not give timely pay once an employee left does not indicate that a meal or rest violation occurred while the employee worked. In addition, as mentioned in Section I, the statement that there was a failure to provide meal and/or rest breaks is not an alleged fact, but a statement repeating the statute and that it was violated. Therefore, the facts alleged do not bear the burden of the new meal and rest violation claims. See Temple, 2011 WL 723611, at *9. Thus, the second notice to the Agency does not relate back to the first notice, and as a result, the new PAGA claims against the Defendants would be barred by the statute of limitations, and therefore futile.

Therefore, the motion for leave to amend in regards to the new PAGA claims about the meal and rest violations against all Defendants is DENIED.

V. Original PAGA claims against new Defendants

Plaintiff claims that relating back should apply for the original PAGA claims against the new Defendants because he was “genuinely ignorant” of the defendant’s identity and the amended complaint and original complaint are based on the same facts and incidents. Defendant argues that none of new defendants were provided PAGA notice in regards to the original PAGA claims within the one year period required.

Plaintiff’s operative complaint and amended complaint rest on the same facts and allege valid causes of action against the Defendants for failure to provide accurate written wage statements; failure to pay all final wages timely; unfair competition; and civil penalties. Plaintiff also claims that he was ignorant of the other defendants until May 7, 2014, when counsel for Defendants depicted all possible Defendants in an Electronic Correspondence to counsel for Plaintiff. Other than that, all other documents in relation to Plaintiff’s work have only indicated Sunflower Farmers Market, Inc. and Sprouts Farmers Market, LLC.

When the plaintiff is ignorant of the name of a defendant, he must state that fact in the complaint, or the affidavit if the action is commenced by affidavit, and such defendant may be designated in any pleading or proceeding by any name, and when his true name is discovered, the pleading or proceeding must be amended accordingly. Cal. Code Civ. Proc., § 474.

Because Defendants do not contest that Plaintiff was ignorant of Doe Defendants, and the original complaint states that the Plaintiff is ignorant of the identity of the DOE Defendants, the doctrine of relating back will apply. Therefore, the original PAGA claims will apply to the new Defendants if adequate notice was given to them.

Before Plaintiff can file a PAGA claim, the employee must file notice with the Labor and Workforce Diversity Agency and the employer(s). Cal. Lab. Code, § 2699.3(a)(1). In Pena v. Taylor Farms Pacific, Plaintiff timely submitted a Labor and Workforce Diversity Agency letter with regard to defendant Taylor Farms, and approximately two years later, substituted staffing agency Manpower as a Doe defendant. No. 2:13-CV-01282-KJM-AC, 2014 WL 1665231, at *1-2 (E.D. Cal. April 23, 2014). Manpower moved to dismiss on the grounds that plaintiff failed to timely provide it with notice and so failed to exhaust its administrative remedies. The court granted Manpower’s motion to dismiss, and stated, “[h]aving failed to provide the required notice, plaintiff’s PAGA claim is improper against Manpower.” Id. at *5.

Plaintiff seeks to bring in three new defendants: SFM, LLC, Sunflower Markets, LLC, and SF Markets, LLC. In the second PAGA letter, Plaintiff cc’ed Sunflower Marekts, LLC, and SF Markets, LLC, but did not cc SFM, LLC. Therefore, the court finds that adequate notice was provided to new Defendants Sunflower Markets, LLC, and SF Markets, LLC, but not to SFM, LLC. Therefore, Plaintiff’s motion for leave to amend to add the new Defendants to the original PAGA claims is GRANTED IN PART and DENIED IN PART.