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Perez v. Jie

United States District Court, Ninth Circuit

December 12, 2013

THOMAS E. PEREZ, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff,
v.
HUANG

ORDER DENYING MOTION TO DISMISS, GRANTING IN PART AND DENYING IN PART MOTION TO REINSTATE PRELIMINARY INJUNCTION PROCEEDINGS, AND DENYING MOTION TO UNSEAL

ROBERT S. LASNIK, District Judge.

This matter comes before the Court on Defendants' "Brief Regarding Sufficiency of Plaintiff's Second Amended Complaint, " dkt. # 54, Defendants' "Motion to Unseal Second Declaration of WHI Sproule, " dkt. # 20, and Plaintiff's "Request for Reinstatement of a Preliminary Injunction Hearing and for Records from Defendants, " dkt. # 46. Having reviewed the memoranda and supporting documents submitted by the parties, the Court finds as follows:

I. BACKGROUND

This employment case arises out of Defendants' alleged failure to comply with the minimum wage, overtime, and recordkeeping requirements of the Fair Labor Standards Act ("FLSA"). Dkt. # 44 at 7-9. Plaintiff, the U.S. Secretary of Labor, also alleges that Defendants Pacific Coast Foods, Inc., dba J & J Mongolian Grill ("J & J Mongolian Grill"), J & J Comfort Zone, Inc., dba Spa Therapy ("Spa Therapy"), and their owners, Huang Jie and his wife, Zhao Zeng Hong, violated the anti-retaliation provision of the FLSA. Id . at 9-10. Plaintiff contends that Defendants' violations were willful, id. at 10, and he seeks to recover unpaid wages owed to Defendants' employees, liquidated damages, and an injunction prohibiting Defendants from committing future violations of the FLSA. Id . at 10-11.

In May 2013, Plaintiff sought a temporary restraining order and preliminary injunction enjoining Defendants from violating the FLSA. Dkt. # 2. The Court denied Plaintiff's motion for a temporary restraining order, dkt. # 9, and held a preliminary injunction hearing. Dkt. # 23. After hearing testimony and receiving evidence, the Court continued the hearing to September 12, 2013. Id . On August 30, 2013, the Court granted Defendants' motion to dismiss for failure to state a claim and struck the continued hearing date. Dkt. # 42. In the Court's Order dismissing Plaintiff's First Amended Complaint, [1] the Court granted Plaintiff leave to amend and permitted Plaintiff to request reinstatement of the preliminary injunction hearing following submission of an amended complaint. Id . at 5. Plaintiff timely filed a Second Amended Complaint and moved to reinstate the preliminary injunction proceedings.

II. DISCUSSION

A. Defendants' Second Motion to Dismiss

In the context of a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the allegations of the complaint are accepted as true and construed in the light most favorable to plaintiff. In re Syntex Corp. Sec. Litig. , 95 F.3d 922, 925-26 (9th Cir. 1996); LSO, Ltd. v. Stroh , 205 F.3d 1146, 1150 n.2 (9th Cir. 2000). The question for the Court is whether the well-pled facts in the complaint sufficiently state a "plausible" ground for relief. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007).

In order to determine whether a claim rises above the speculative and attains plausibility, courts must consider not only the pleadings and documents that are an integral part of the complaint, [2] but also any "obvious alternative explanation" for defendant's conduct, Twombly , 550 U.S. at 567, based on the court's "judicial experience and common sense, " Iqbal, 129 S.Ct. at 679. How many supporting facts are necessary to make a claim plausible in light of the other competing explanations must be decided on a case-by-case basis. Iqbal, 556 U.S. at 680. If the Court dismisses the complaint or portions thereof, it must consider whether the pleading could be cured by the allegation of additional facts, even in the absence of a request for leave to amend. Watison v. Carter , 668 F.3d 1108, 1117 (9th Cir. 2012).

Defendants contend that Plaintiff's Second Amended Complaint still fails to state a claim upon which relief may be granted. Defendants argue that the Second Amended Complaint is deficient in the following three ways: (1) it fails to provide specific allegations regarding the individual employees identified in Exhibit A attached to the Second Amended Complaint, (2) it does not allege any facts that Defendants meet the $500, 000 annual gross sales volume requirement for their employees to be covered employees under the FLSA, and (3) it alleges no facts from which the Court could infer that the corporate Defendants are engaged in related activities for a common business purpose under the terms of the FLSA.

Contrary to Defendants' contentions, the Court finds that Plaintiff's Second Amended Complaint provides sufficient factual allegations, to give Defendants notice of the claims and the grounds upon which they rest. First, Exhibit A to the Complaint identifies the specific J & J Mongolian Grill and Spa Therapy employees who were allegedly denied minimum wage and overtime payments. Dkt. # 44 at 2; Dkt. # 45. Although the Second Amended Complaint does not provide an overwhelming amount of detail, it does assert that the J & J Mongolian Grill employees identified in Exhibit A were paid a lump sum each month regardless of the number of hours they worked. Dkt. # 44 at 8. Similarly, the Second Amended Complaint alleges that the Spa Therapy employees received a daily amount of pay that varied depending on the total amount of tips they received rather than on the number of hours they worked. Id . According to Plaintiff, these payments amounted to less than the FLSA's minimum wage. Id . Similarly, Plaintiff alleges that the named employees worked more than 40 hours per week and did not receive overtime compensation for the time worked in excess of 40 hours. Id . Combined with Plaintiff's allegations that the employees are covered employees under the FLSA because they are employed in an enterprise engaged in commerce, these allegations are sufficient to inform Defendants of the alleged FLSA violations regarding the employees identified and the grounds upon which the claims rest. See Quinonez v. Reliable Auto Glass, LLC, No. CV-12-000452-PHX-GMS, 2012 WL 2848426, at *2 (D. Ariz. July 11, 2012) ("The elements of an FLSA claim are: 1) plaintiff was employed by defendant during the relevant period; 2) plaintiff was [a covered employee]; and 3) the defendant failed to pay plaintiff minimum wage and/or overtime.").

Second, Plaintiff's Second Amended Complaint alleges sufficient facts to support his contention that the employees are covered employees under the FLSA. To be covered by the FLSA's minimum wage, overtime and recordkeeping rules, "employees must be engaged in commerce or in the production of goods for commerce, or... employed in an enterprise engaged in commerce." Chao v. A-One Med. Servs., Inc. , 346 F.3d 908, 914 (9th Cir. 2003) (quoting 29 U.S.C. § 207(a)(1)). To be considered an "[e]nterprise engaged in commerce or in the production of goods for commerce, " among other things, the defendant must have an annual gross volume of sales or business of not less than $500, 000. 29 U.S.C. § 203(s)(1).[3] Here, Plaintiff asserts that Defendants' gross annual volume of sales for each of the past three years was not less than $500, 000. Dkt. # 44 at 7. While brief, this allegation is all that is required at the pleading stage for the Court to infer that the employees identified in Exhibit A are covered employees under the FLSA. Vega v. Peninsula Household Services, Inc., No. C-08-03815 JCS, 2009 WL. 656291, at *1, 4 (N.D. Cal. March 12, 2009) (finding plaintiff had alleged sufficient facts regarding FLSA's enterprise coverage where plaintiff alleged that defendant had annual gross volume of sales totaling more than $500, 000).

Finally, although Plaintiff's allegations regarding the "common business purpose" requirement of enterprise coverage may fail on the merits, the Court finds that they are sufficient to support a plausible claim for relief. In addition to describing the business activities of J &J Mongolian Grill and Spa Therapy, the Second Amended Complaint asserts that the individual defendants exercise common control over the two corporate defendants, and one entity uses goods and supplies purchased by the other. Dkt. # 44 at 7. Assuming the truth of these allegations as it ...


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