SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

WADE SHUMWAY, an individual, on behalf of himself, and on behalf of others similarly situated,

Plaintiff,

vs.

INTUIT, INC., a Delaware corporation, and DOES 1-100, inclusive,

Defendants.

Case No. 2018-1-CV-330368

TENTATIVE RULING RE: DEMURRER TO SECOND AMENDED COMPLAINT; MOTION TO STRIKE

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on June 14, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative class action arising out of various alleged Labor Code violations brought by plaintiffs Wade Shumway (“Shumway”) and Johanna Tovar (“Tovar”) (collectively, “Plaintiffs”). According to the allegations of the Second Amended Class Action Complaint (“SAC”), filed on April 2, 2019, defendant Intuit, Inc. (“Defendant”) has a program of unlawfully rounding employee time to the nearest five minutes, resulting in underpayment of all wages owed. (SAC, ¶ 16.) Intuit also has a program in which it sets aside a percentage of base payroll totaling millions of dollars to fund its “Spotlight Program.” (Id. at ¶ 18.) The Spotlight Program is an employee recognition program pursuant to which certain employees receive bonuses. (Id. at ¶ 19.) Defendant does not include these bonuses in the regular rate of pay. (Id. at ¶ 22.)

The SAC sets forth the following causes of action: (1) Failure to Pay all Minimum and Overtime Wages (by Shumway and Tovar); (2) Failure to Pay all Overtime Wages Due to Miscalculation of the Regular Rate of Pay (by Shumway and Tovar); (3) Failure to Provide Accurate Itemized Wage Statements (by Shumway); (4) Failure to Pay all Wages When Due (by Shumway and Tovar); (5) Violation of California’s UCL (by Shumway and Tovar); and (6) PAGA (by “Plaintiff”). Defendant now demurs to the third cause of action and moves to strike portions of the SAC.

III. DEMURRER TO SECOND AMENDED COMPLAINT
IV.
A. Request for Judicial Notice
B.
Defendant requests judicial notice of the following:

(1) Class Action Complaint filed by Darci Myers on June 16, 2017, in the United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM, against Intuit Inc.;
(2)
(3) Amended Collective and Class Action Complaint filed by Darci Myers on October 17, 2017, in the United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM, against Intuit Inc.;
(4)
(5) Declaration of Joshua D. Levine in Support of Defendant Intuit, Inc.’s Opposition to Plaintiff’s Motion to Vacate Class Certification Hearing Date and Briefing Schedule, and Exs. B-D thereto, filed on January 22, 2018, in Myers v. Intuit, Inc., United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM;
(6)
(7) Motion for Leave to Amend Complaint, filed on February 14, 2018, in Myers v. Intuit, Inc., United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM;
(8)
(9) Declaration of Noam Glick in Support of Motion for Leave to File Amended Complaint, filed on February 14, 2018, in Myers v. Intuit, Inc., United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM;
(10)
(11) Intuit’s Opposition to Motion for Leave to Amend Complaint, filed on March 1, 2018, in the United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM;
(12)
(13) Order dated May 18, 2018, by the Honorable William Q. Hayes in the United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM; and
(14)
(15) Judgment in a Civil Case, issued on May 18, 2018, in the United States District Court, Southern District of California, Case No. 17cv1228-WQH-BLM.
(16)
The Court can take judicial notice of these documents as court records. (Evid. Code, § 452, subd. (d).) The request for judicial notice is GRANTED.

C. Discussion
D.
1. Third Cause of Action
2.
The third cause of action is for failure to provide accurate itemized wage statements pursuant to Labor Code section 226 and is asserted by Shumway on behalf of himself and the putative classes. Defendant argues this cause of action is time-barred because it is a claim for penalties and therefore is subject to a one year statute of limitations. Defendant states Shumway last worked for Defendant in April 2017 (see SAC, ¶ 11), but did not file this action until June 20, 2018, more than a year later.

The Court previously sustained Defendant’s demurrer to the third cause of action in the First Amended Complaint on the same basis asserted now by Defendant. Defendant contends nothing has changed in the SAC to justify a different result.

Defendant is correct that a claim for wage statement penalties under Section 226 is subject to a one-year statute of limitations. (See Singer v. Becton, Dickinson and Co. (S.D. Cal., 2008) 2008 WL 2899825, at *5.) Plaintiff argues, however, that the claim is timely because of equitable estoppel.

The Court first notes that, although Plaintiff refers to “equitable estoppel” several times in the opposition papers, Plaintiff’s argument actually relies on “equitable tolling,” which is what most of the opposition discusses.

Under the equitable estoppel doctrine, “[w]henever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.” (Evid. Code, § 623; see also Leasequip, Inc. v. Dapeer (2002) 103 Cal.App.4th 394, 404.)

In contrast, “[e]quitable tolling under California law is a judicially created doctrine that operates to suspend or extend a statute of limitations in order to ensure that a limitations period is not used to bar a claim unfairly.” (Hatfield v. Halifax PLC (9th Cir. 2009) 564 F.3d 1177, 1185.) It is clear Shumway’s argument is based on equitable tolling.

“Three factors are taken into consideration when deciding whether to apply equitable tolling under California law: (1) timely notice to the defendant in the filing of the first claim; (2) lack of prejudice to the defendant in gathering evidence to defend against the second claim; and (3) good faith and reasonable conduct by the plaintiff in filing the second claim.” (Ibid.)

Shumway argues equitable tolling applies because he notified Defendant of his intent to bring a Labor Code section 226 claim in November 2016 (SAC, ¶ 73), a few months later he sought leave to add himself to the Myers action in federal court (Id. at ¶ 74), and in February 2018 Shumway sent a PAGA notice letter to Defendant outlining the claims he intended to pursue under PAGA, including penalties for Defendant’s failure to provide accurate wage statements (Id. at ¶ 75).

As it did in connection with the prior demurrer, Defendant argues equitable tolling applies only when the plaintiff in the earlier action is the same plaintiff in the later action. In other words, Defendant contends Shumway cannot rely on the existence of the Myers case for equitable tolling. Again, the Court finds this argument has merit. (See Reid v. City of San Diego (2018) 24 Cal.App.5th 343, 361 [“Plaintiffs cite no authority, and we are aware of none, that would allow a plaintiff in one case to equitably toll the limitation period based on the filing of a stranger’s lawsuit.”].)

Shumway attempts to distinguish Reid, arguing that there are no facts in Reid showing the Reid plaintiffs attempted to join the earlier lawsuit, timely filed administrative charges, or otherwise provided the defendants with any notice of the claims. Shumway asserts he notified Defendant in multiple ways of his intent to bring the Labor Code section 226 claim.

Shumway’s attempts to distinguish Reid lack merit. Equitable tolling requires the filing of an earlier claim, and Shumway does not allege he filed any earlier claim. The only earlier claim filed was Myers and Shumway cannot rely on that action for tolling. Equitable tolling can also be based on action taken to exhaust administrative remedies, but Shumway’s PAGA letter was not necessary for him to pursue the section 226 claim.

In sum, Shumway has not shown equitable tolling applies to save the third cause of action from being time-barred. Moreover, Shumway has not demonstrated any way this defect can be cured. Accordingly, Defendant’s demurrer to the third cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.

V. MOTION TO STRIKE
VI.
A. Defendant’s Request for Judicial Notice
B.
Defendant requests judicial notice of the following:

(1) The February 6, 2018, letter signed by Shaun Markley of Nicholas & Tomasevic, LLC, submitted to the LWDA.
(2)
The Court can take judicial notice of the records and files of a state administrative board. (Evid. Code, § 452, subd. (c); see also Fowler v. Howell (1996) 42 Cal.App.4th 1746, 1750.) Accordingly, the request for judicial notice is GRANTED.

C. Discussion
D.
Defendant moves to strike the following allegations from the SAC: (1) language asserting the fourth cause of action is being brought by Tovar; (2) language asserting a PAGA claim based on Plaintiffs’ quarterly performance bonus theory; and (3) language stating the PAGA claim is brought “BY PLAINTIFF ON BEHALF OF THEMSELVES.” In the opposition papers, Plaintiffs state they have no objection to changing the wording in the PAGA claim from “themselves” to “himself” to clarify the claim is asserted only on behalf of Shumway.

1. Language Asserting the Fourth Cause of Action is Being Brought by Tovar
2.
Defendant asserts Tovar was working in Nevada at the time her employment ended. Defendant argues an individual working for an employer outside California when his or her employment terminates has no standing to bring a claim for waiting time penalties based on wages allegedly due at termination. The problem with this argument, which is acknowledged by Defendant, is that the SAC contains no allegations stating Tovar worked in Nevada. A motion to strike can only be based on the face of the challenged pleading or from any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437.)

Defendant contends a court may take judicial notice of basic information concerning a plaintiff’s employment where the viability of the plaintiff’s claims depend on the information and the defendant supplies the court with the necessary documents for judicial notice. While there are certainly times when a document may be subject to judicial notice and can be considered on a pleadings motion like a demurrer or motion to strike, Defendant provides no authority demonstrating this is such a circumstance. In fact, Defendant does not request judicial notice of any particular document purporting to show Tovar’s place of employment, instead relying on statements made in a declaration by Laura Wuertz-Barac, the Director of HR Care and Operations for Defendant. This type of evidence is not properly before the Court on a motion to strike. Consequently, at this stage in the case there is no basis for the Court to consider the merits of Defendant’s argument that relies on facts regarding Tovar’s place of employment at the time her employment ended.

3. Language Asserting a PAGA Claim Based on Plaintiffs’ Quarterly Performance Theory
4.
Defendant argues Plaintiffs’ PAGA claim should be struck to the extent it is premised on Plaintiffs’ quarterly incentive bonus theory because Plaintiffs never provided a pre-suit notice to the LWDA asserting that theory. Defendant asserts the notice sent to the LWDA only referred to Defendant’s Spotlight Bonus Program and did not provide any notice of Plaintiff’s new theory of liability based on quarterly incentive bonuses being calculated with the incorrect formula. Specifically, Defendant seeks to have the following language struck: (1) “incorporates each and every allegation contained above” in paragraph 92; and (2) “on behalf of the Classes” in paragraph 93.

As an initial matter, the Court notes it cannot strike the PAGA claim “to the extent it is premised on Plaintiffs’ quarterly incentive bonus theory.” A motion to strike is used to strike “the whole or any part” of a pleading. The only “parts” of the SAC Defendant includes in the notice of the motion to strike are the sections of paragraphs 92 and 93 quoted above. There is nothing wrong with Plaintiffs’ incorporation of earlier allegations. However, the allegation that the PAGA claim is brought “on behalf of the Classes” is properly the subject of a motion to strike because it necessarily includes the new “Incentive Bonus Class” (SAC, ¶ 43) and Defendant contends Plaintiffs cannot base the PAGA claim on the incentive bonuses.

Prior to bringing a civil action for statutory penalties pursuant to PAGA, an employee must comply with California Labor Code section 2699.3 , which requires the employee to give written notice of the alleged violation to both the employer and the Labor and Workforce Development Agency (“LWDA”), including the facts and theories supporting the violation. (Lab. Code, § 2699.3, subd. (a) .) “[C]ompliance with the pre-filing notice and exhaustion requirements of [PAGA] is mandatory.” (Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 384.)

“PAGA notice must be specific enough such that the LWDA and the defendant can glean the underlying factual basis for the alleged violations.” (Holak v. K Mart Corp. (E.D. Cal. 2015) 2015 WL 2384895, at *3.) Indeed, the notice to the LWDA should have an “exceedingly detailed level of specificity.” (See Soto v. Castlerock Farming and Transport Inc. (E.D. Cal. 2012) 2012 WL 1292519, at *8.) This requirement is intended to protect businesses by putting them on notice of violations so they can remedy those violations without litigation. (See Hamilton v. Genesis Logistics, Inc. (C.D. Cal. 2013) 2013 WL 3168373, at *5.)

It is undisputed that Plaintiffs’ LWDA letter only referenced the Spotlight Program and did not discuss Defendant’s alleged failure to properly calculate quarterly incentive bonuses. (See Request for Judicial Notice is Support of Defendant Intuit Inc.’s Motion to Strike Portions of Plaintiffs’ Second Amended Complaint, Ex. A.) Plaintiffs do not argue otherwise.

Plaintiffs contend, however, that Shumway can amend the PAGA notice and will not be time-barred in doing so because of the relation back doctrine and equitable tolling. Plaintiffs argue the newly asserted PAGA penalties relate back because they arise out of the same failure to pay overtime stated in the original PAGA notice and Complaint. With regard to equitable tolling, Plaintiffs argue courts have held that another employee’s filing of a complaint tolls the PAGA statute of limitations for a subsequent plaintiff who later files claims after the expiration of the one-year statute of limitations.

Similar arguments were considered in Brown v. Ralphs Grocery Co. (2018) 28 Cal.App.5th 824. The Brown court found equitable tolling could not be used to preserve PAGA claims where a plaintiff failed to file an adequate notice with the LWDA. (Id. at p. 840.) In discussing the relation back doctrine, the Brown court stated, “The doctrine cannot be used to frustrate the intent of the Legislature to require compliance with administrative procedures as a condition to filing an action.” (Id. at p. 841.) The court also found, however, that later added claims may relate back to a prior adequately noticed claim. (Id. at p. 842.)

Regardless, because it is undisputed Plaintiffs did not provide notice to the LWDA of claims other than those arising out of the Spotlight Program, the PAGA cause of action in the SAC cannot be based on any other claims. Accordingly, the language in paragraph 93 stating “on behalf of the Classes” must be stricken.

E. Conclusion
F.
Defendant’s motion to strike is GRANTED WITH 10 DAYS’ LEAVE TO AMEND as to the language in paragraph 93 stating “on behalf of the Classes” and the language stating the PAGA claim is brought “BY PLAINTIFF ON BEHALF OF THEMSELVES.” The motion to strike is DENIED as to the language asserting the fourth cause of action is being brought by Tovar.

The Court will prepare the final order if this tentative ruling is not contested.