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`Case 1:20-cv-00172-NONE-HBK Document 38 Filed 10/14/21 Page 1 of 10
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`UNITED STATES DISTRICT COURT
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`FOR THE EASTERN DISTRICT OF CALIFORNIA
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`LUOS M. SALAS RAZO, on his own
`behalf and on behalf of all others similarly
`situated,
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`No. 1:20-cv-00172-NONE-HBK
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`
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`Plaintiff,
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`ORDER DENYING MOTION TO DISMISS
`OR IN THE ALTERNATIVE TO STAY
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`v.
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`AT&T MOBILITY SERVICES, LLC,
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`Defendant.
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`
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`(Doc. No. 10)
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`INTRODUCTION
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`This case proceeds on plaintiff Luis Razo’s second amended class action complaint
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`(“SAC”),1 which alleges generally that defendant AT&T Mobility Services, LLC underpaid him,
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`issued him unlawful wage statements, and withheld wages it owed him after his employment
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`ended, all in violation of various provisions of the California Labor Code. (Doc. No. 9.) Plaintiff
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`seeks to represent a class and sub-class made up of similarly situated employees of defendant.
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`(Id., ¶¶ 44–48.) Before the court for decision is defendant’s August 13, 2020 motion to dismiss
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`or to stay this action. (Doc. No. 10.) Plaintiff filed an opposition to the motion (Doc. No. 11),
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`and defendant replied (Doc. No. 15). The matter was taken under submission on the papers
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`1 Plaintiff’s initial complaint was removed to this court on January 21, 2020, on the basis of
`jurisdiction under the Class Action Fairness Act, 28 U.S.C. §§ 1332(d)(2). (Doc. No. 1.)
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`Case 1:20-cv-00172-NONE-HBK Document 38 Filed 10/14/21 Page 2 of 10
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`pursuant to Local Rule 230(c). On August 2, 2021, plaintiff filed a notice of supplemental
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`authority informing the court of a relevant California Supreme Court decision. (Doc. No. 21.)
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`For the reasons set forth below, defendant’s motion to dismiss or stay will be DENIED in its
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`entirety.2
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`DISCUSSION
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`A. Motion to Dismiss for Failure to State a Claim
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`1.
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`Legal Standard
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`The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal
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`sufficiency of the complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir.
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`1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of
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`sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901
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`F.2d 696, 699 (9th Cir. 1990). A claim for relief must contain “a short and plain statement of the
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`claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Though Rule 8(a)
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`does not require detailed factual allegations, a plaintiff is required to allege “enough facts to state
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`a claim for relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
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`(2007); Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). “A claim has facial plausibility when the
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`plaintiff pleads factual content that allows the court to draw the reasonable inference that the
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`defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility
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`standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility
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`that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).
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`In determining whether a complaint states a claim on which relief may be granted, the
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`court accepts as true the allegations in the complaint and construes the allegations in the light
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`most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v.
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`2 The undersigned apologizes to the parties for the excessive delay in the issuance of this order.
`This court’s overwhelming caseload has been well publicized and the long-standing lack of
`judicial resources in this district long-ago reached crisis proportion. That situation, which has
`continued unabated for over twenty months now, has left the undersigned presiding over 1,300
`civil cases and criminal matters involving 747 defendants at last count. Unfortunately, that
`situation sometimes results in the court not being able to issue orders in submitted civil matters
`within an acceptable period of time. This situation is frustrating to the court, which fully realizes
`how incredibly frustrating it is to the parties and their counsel.
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`Case 1:20-cv-00172-NONE-HBK Document 38 Filed 10/14/21 Page 3 of 10
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`United States, 915 F.2d 1242, 1245 (9th Cir. 1989). However, “[b]are assertions . . . amount[ing]
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`to nothing more than a formulaic recitation of the elements . . . are not entitled to be assumed
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`true.” Iqbal, 556 U.S. at 681. Likewise, the presumption of truth does not attach to “allegations
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`that contradict matters properly subject to judicial notice” or to material attached to or
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`incorporated by reference into the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979,
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`988–89 (9th Cir. 2001); accord Am. Bankers Mgmt. Co., Inc. v. Heryford, 190 F. Supp. 3d 947,
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`951 (E.D. Cal. 2016), aff’d, 885 F.3d 629 (9th Cir. 2018)
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`In practice, “a complaint . . . must contain either direct or inferential allegations respecting
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`all the material elements necessary to sustain recovery under some viable legal theory.”
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`Twombly, 550 U.S. at 562. It is inappropriate to assume that the plaintiff “can prove facts which
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`it has not alleged or that the defendants have violated the . . . laws in ways that have not been
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`alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S.
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`519, 526 (1983).
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`2.
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`Analysis
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`a.
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`Unpaid Wages Claims
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`i.
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`Failure to properly calculate overtime rates
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`Plaintiff alleges that defendant routinely failed to properly calculate overtime and double
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`time pay rates because it failed to include his total compensation (including bonuses and
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`commissions) when calculating the regular rate for purposes of determining overtime wages
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`owed. (SAC, ¶ 25.) Defendant moves to dismiss this claim, arguing that plaintiff’s own wage
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`statements contradict his allegations of wrongdoing. (Doc. No. 10-1 at 5–9.) Defendant asserts
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`that the relevant wage statements may be considered in the context of this motion to dismiss
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`because they have been incorporated by reference into the complaint. (Id. at 6 n.3.)
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`It is true that the SAC specifically references and discusses in some detail wage
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`statements issued to plaintiff for June 1 and June 13, 2018. (SAC, ¶¶ 26, 28.) Although the
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`documents are not attached to the SAC, the court may nonetheless consider them because they
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`form a central pillar of plaintiff’s allegations and their authenticity has not been questioned.
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`United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“Even if a document is not attached to
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`a complaint, it may be incorporated by reference into a complaint if the plaintiff refers
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`extensively to the document or the document forms the basis of the plaintiff’s claim.”); see also
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`Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (indicating that a court can consider
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`documents “whose contents are alleged in a complaint and whose authenticity no party questions,
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`but which are not physically attached to the [plaintiff’s] pleading”) (internal quotation marks
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`omitted); Achal v. Gate Gourmet, Inc., 114 F. Supp. 3d 781, 812 (N.D. Cal. 2015) (considering
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`wage statements attached by plaintiff to original complaint, even though plaintiff did not attach
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`them to amended pleading because the authenticity of those documents was not in question).
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`Defendant’s motion to dismiss however, does not merely rely on the content of the
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`incorporated wage statements. Defendant’s briefs are filled with counsel’s own factual assertions
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`and interpretations of the wage statements that are unsupported by any evidence, let alone
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`evidence that can be considered by the court at this stage of the case. For example, defendant
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`asserts that plaintiff’s June 1, 2018 wage statement reflects that defendant made required
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`adjustments to plaintiff’s overtime pay in a line entitled “OT TRUE-UP ADD’L COMP.” (Doc.
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`No. 10-1 at 7.) Although defendant’s is not an absurd reading of these words, nothing in the
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`document itself makes this clear, and the record contains no competent evidence interpreting the
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`wage statements. Moreover, just like the complaint itself, documents incorporated by reference
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`must be viewed in a light most favorable to plaintiff in the context of a motion to dismiss.
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`Viewed in such a light, the wage statements do not explain how overtime rates are adjusted nor
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`do they demonstrate that those adjustments are being properly calculated. The motion to dismiss
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`this aspect of plaintiff’s failure to pay wages claim will therefore be DENIED.
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`ii.
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`Failure to list all hours worked
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`Plaintiff also alleges that the wage statements fail to properly list all hours worked,
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`providing one example of a wage statement that shows line items adding up to 106.08 hours while
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`indicating only 81.98 total hours were worked. (Id., ¶ 27.) Plaintiff asserts that this resulted in a
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`failure to pay wages for all hours worked at appropriate rates. In support of dismissing this claim,
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`defendant cites to the decision in Hernandez v. BCI Coca-Cola Bottling Co., No. CV 11-9484
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`SVW SSX, 2012 WL 12272348 (C.D. Cal. Apr. 12, 2012), aff’d, 554 F. App’x 661, 662 (9th Cir.
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`2014). There, the district court considered allegedly defective wage statements in the context of a
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`motion for summary judgment. Id. The wage statements in question in that case contained two
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`line-items for overtime that split the 150% pay owed into two component parts: a line accounting
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`for the 100% “base” pay and a line for the 50% “premium” pay added to the base pay. Id. at *1.
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`At first glance, this caused the total hours worked for all line items to double count any time spent
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`working overtime. Id. But the wage statement in Hernandez also included an obvious line that
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`showed the total hours worked, which did not double count the time spent working overtime. Id.
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`The district court concluded the wage statement in that case was sufficient as a matter of law
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`because the statement showed the total hours worked during the pay period. Id. at *3.
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`The wage statements at issue here have some similarities to those in Hernandez but are
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`noticeably more complicated. For example, the June 1, 2018 statement has more than a dozen
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`line items. If only the “regular” and “overtime base” line items are added together, the hours in
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`those line items equal the total hours worked listed at the top of the statement. But, as plaintiff
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`correctly points out, if all of the hours listed in the line items are added together, they total far
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`more than the listed “total hours worked.” Although the court could make educated guesses as to
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`why certain line items are or are not included in the total hours worked, nothing before the court
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`clearly explains the nature of each category. Again, the court is not permitted to consider
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`counsel’s explanations and arguments as to why the total provided is correctly reflected by the
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`line items. The court is not moved by the fact that Hernandez approved on summary judgment
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`wage statements with somewhat similar, but much less complicated, double-counting issues. The
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`motion to dismiss this claim will therefore also be DENIED.
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`b.
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`Unlawful Wage Statements Claim
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`Plaintiff next alleges that on a routine basis defendant failed to provide wage statements
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`compliant with California Labor Code § 226 because hours and rates were not properly shown.
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`(SAC, ¶ 29.) Defendant argues that these claims are untimely in light of California Code of Civil
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`Procedure § 340, which sets forth a one-year statute of limitations applicable to any action
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`seeking statutory damages. (Doc. Nos. 1-4 at 2 (original filing in state court); 10-1 at 9
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`(argument).) According to defendant, because the SAC alleges that plaintiff ended his
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`employment in June 2018, plaintiff had until June 2019 to file an action for penalties owed due to
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`any allegedly unlawful wage statements. (Doc. No. 10-1 at 9.)
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`Plaintiff responds in two ways. First, he points out that the SAC indicates that plaintiff
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`continued to receive wage payments and statements as late as August 2018. (Doc. No. 11 at 9;
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`see also SAC, ¶ 35 (alleging “the latest payment date [was] made as late as August 2018”).)
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`Defendant acknowledges this in its reply but maintains that the only wage statement issued to
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`plaintiff within the one-year limitations period—a statement for the October 5, 2018 pay period—
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`cannot form the basis of plaintiff’s claim because that wage statement was “lawful.” (Doc. No.
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`15 at 10.) Specifically, defendant contends that because plaintiff did not actually work from
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`September 16 through September 29, 2018 (the period covered by the October 5, 2018 wage
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`statement) the wage statement was not required to provide “applicable hourly rates in effect” and
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`instead properly reflected a miscellaneous payment of $20.00 as a “misc payment-no tax.” (Id.)
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`This too is merely an unsupported argument. Nothing properly before the court explains what the
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`“MISC PAYMENT” was for or why it should or should not reflect an underlying hourly wage.
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`Therefore, to the extent defendant is moving to dismiss any claims premised upon the wage
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`statement for the October 5, 2018 pay period, that motion will be DENIED as well.
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`Second, plaintiff suggests that the one-year statute of limitations period does not apply
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`here at all because he is seeking damages, not just statutory penalties. (Doc. No. 11 at 9.)
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`Plaintiff is correct that where damages, rather than statutory penalties, are requested, a three-year
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`statute of limitations applies. Novoa v. Charter Commc’ns, LLC, 100 F. Supp. 3d 1013, 1025
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`(E.D. Cal. 2015) (“depending on the relief sought, a claim pursuant to Section 226(e)(1) could be
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`subject to a one-year or a three-year limitations period”). The SAC is not a model of clarity in
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`this regard. It generally requests damages in several places. (See SAC, ¶¶ 53, 55.) However, the
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`relevant wage statement cause of action specifically requests only “penalties according to proof.”
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`(Id., ¶ 94.)3 To the extent the SAC is unclear about plaintiff’s intent to seek damages in
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`connection with his wage statement claim, leave to amend would be appropriately granted at this
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`3 The same claim does quote language from Cal. Labor Code § 226 that permits a plaintiff to
`either recover damages or statutory penalties for a wage statement violation. (Id., ¶ 89.)
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`early stage of the proceedings—where class discovery has not yet even begun.4 The court will
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`permit plaintiff an opportunity to clarify his prayer for relief in an amended pleading.
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`c.
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`Meal Period Premium Claim
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`Plaintiff asserts that meal period premiums were not paid at the proper rate. (SAC, ¶ 28.)
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`Defendant moved to dismiss this claim (Doc. No. 10-1 at 11), arguing that the claim is premised
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`upon a “nonactionable theory” rejected by the California Court of Appeals in Ferra v. Loews
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`Hollywood Hotel, LLC, 40 Cal. App. 5th 1239, 1252 (2019), which held that employers are only
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`obligated to compensate employees with a full extra hour for missed meal/rest breaks at their base
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`hourly rate. However, that appellate decision was overruled by the California Supreme Court on
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`July 15, 2021, Ferra v. Lowes Hollywood Hotel, LLC, 11 Cal. 5th 858 (2021), which concluded
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`unanimously that meal and rest break premiums must be calculated at the same “regular rate of
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`pay” used to calculate overtime pay, a calculation that encompasses all nondiscretionary
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`payments, not just hourly wages. The California Supreme Court’s decision in Ferra requires
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`denial of this aspect of defendant’s motion to dismiss.
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`d.
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`Waiting Time Claim
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`Finally, plaintiff claims that defendant failed to timely pay him wages due at termination
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`of employment as required by California Labor Code § 201 (or alternatively within 72 hours of
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`resignation as required by § 202) and therefore that defendant owes waiting time penalties under
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`§ 203. (SAC, ¶ 33.) The SAC specifically alleges that plaintiff’s last day of work was in June
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`2018 but that he continued to receive payments as late as August 2018, more than 30 days after
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`his employment ended. (Id., ¶ 83.) Defendant argues that this claim should be dismissed because
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`the payments on which plaintiff bases his own waiting time claim were only calculable after his
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`termination. (Doc. No. 10-1 at 11.) Defendant correctly points out that the requirement for
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`paying wages at termination may be excused for certain types of pay that are not calculable at the
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`time of termination. (Doc. No. 15 at 8 (citing Nordstrom Comm. Cases, 186 Cal. App. 4th 576,
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`588 (2010)). But as the decision in Nordstrom itself suggests, this is a fact-intensive inquiry.
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`There, the court was considering whether to approve a settlement that included, among other
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`4 The court notes that defendant continues to object to class discovery in part because these
`motions have remained pending before the court. (Doc. Nos. 31, 36.)
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`things, a claim regarding the timeliness of post-termination commission payments. Nordstrom,
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`186 Cal. App. At 587–88. The court in Nordstrom found there was a bona fide dispute over when
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`such commissions became calculable considering the specific facts of that case, including
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`Nordstrom’s pre-existing system of computing and paying net commissions at the next pay
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`period. Id.
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`Here, the SAC highlights five types of payments that plaintiff allegedly received late:
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`“[1] Cash Awards, [2] Commission, [3] Taxable non-cash Awards, [4] Misc. Payment, and
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`[5] recalculation of overtime differential pay.” (SAC, ¶ 84.) Defendant asserts that “each, on
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`their face, represents payments that cannot be made at termination.” (Doc. No. 10-1 at 11.)
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`While this may be self-evident to counsel, it is not to the court. There is simply no record upon
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`which the court could decide at this stage of the proceedings that the five categories of payments
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`listed were not calculable at termination. Defendant has not cited, and the court has not located,
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`any authority suggesting that it is plaintiff’s burden to affirmatively allege at the pleading stage
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`that payments he received well after termination were in fact calculable at the time of termination.
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`Defendant’s motion to dismiss the waiting time claim will therefore also be DENIED.
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`B. Motion to Stay Pending Resolution of Ayala.
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`Defendant next moves to stay this case pending the conclusion of an earlier-filed, similar
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`lawsuit pending in the U.S. District Court for the Central District of California: Ayala v. AT&T
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`Mobility Services, LLC, et al., No. 2:18-cv-08809-SVW-MRW. (Doc. No. 10-1 at 12.)
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`Defendant requests that the court exercise its discretion under the “first to file” rule to stay this
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`case. (Id.) Under that doctrine, a court “analyzes three factors: chronology of the lawsuits,
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`similarity of the parties, and similarity of the issues.” Kohn L. Grp., Inc. v. Auto Parts Mfg.
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`Mississippi, Inc., 787 F.3d 1237, 1240 (9th Cir. 2015). The Ayala action was initiated on August
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`22, 2018 (Ayala, Doc. No. 1-45), approximately one year before this matter was initiated in the
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`Madera County Superior Court on August 27, 2019 (Doc. No. 1-4). The issues raised also appear
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`to be similar. (Compare Ayala, Doc. No. 52 (Ayala’s third amended complaint) with SAC.)
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`Likewise, the first-to-file rule does not require strict identity of parties, but rather only
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`5 The court takes judicial notice of the Ayala docket and its contents. Fed. R. Evid. 201(b).
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`“substantial similarity,” which may be satisfied in the class context where the two cases propose
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`to represent at least some of the same individuals. See Adoma v. Univ. of Phoenix, Inc., 711 F.
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`Supp. 2d 1142, 1147 (E.D. Cal. 2010). This appears to be the case here, where the proposed class
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`in Ayala is made up of call center employees, a subset of the class proposed in this action.
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`(Compare Ayala, Doc. No. 52, ¶ 2, with SAC, ¶ 45.)
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`Yet even assuming the three requirements of the first-to-file rule are satisfied “it does not
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`follow that application of the rule is appropriate. The doctrine is discretionary and, accordingly,
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`the court may disregard it in the interests of equity.” Id. at 1149. “The circumstances under
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`which an exception to the first-to-file rule typically will be made include bad faith, . . .
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`anticipatory suit, and forum shopping.” Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622,
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`628 (9th Cir. 1991). In exercising its “broad” discretion under this doctrine, a court may consider
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`demonstrations of prejudice. Adoma, 711 F. Supp. 2d at 1149. It is for just this reason that the
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`court declines to stay this case at this time.
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`The record now reveals that defendant has settled yet another class action case raising
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`claims similar to those presented here and in Ayala. That case was apparently settled on March
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`29, 2021 but was not filed until June 22, 2021 in San Bernardino County Superior Court (Wallack
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`et al. v. AT&T Mobility, No. CIVSB2117915). (See Doc. No. 24 at 7, 13.) Meanwhile, in May
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`2021, defendant refused to produce class wide discovery in this case, while never mentioning that
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`it had already settled a parallel class action. (Id. at 13.) Generally, plaintiff Razo contends that
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`there are indications of collusion between defendant and class counsel in Wallack. (Id. at 23–24.)
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`Although the fairness of the settlement in Wallack is not before this court, plaintiff’s counsel in
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`this case has moved to be appointed class counsel on an interim basis to facilitate counsel’s
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`intervention in the Wallack case.6 Staying this action at this time would have the effect of
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`significantly impeding plaintiff’s efforts to be heard in Wallack. Although the court expresses no
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`opinion on the merit of plaintiff’s contentions about the Wallack settlement, the court does
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`6 The Wallack settlement apparently has carved out plaintiff Razo and named plaintiffs in other
`earlier-filed actions, limiting the ability of each of those individuals to intervene in Wallack or to
`object to the settlement. (See Doc. No. 24 at 21.)
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`9
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`Case 1:20-cv-00172-NONE-HBK Document 38 Filed 10/14/21 Page 10 of 10
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`believe that the San Bernardino County Superior Court likely will want to be made aware of
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`plaintiff’s concerns.
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`Accordingly, for the reasons explained above:
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`CONCLUSION
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`1. Defendant’s motion to dismiss or to stay (Doc. No. 10) is DENIED; and
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`2. Plaintiff is granted leave to file an amended complaint within 30 days of the date of
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`entry of this order to address the issue of a prayer for damages in connection with his
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`wage statement claim.
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`IT IS SO ORDERED.
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` Dated: October 13, 2021
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`UNITED STATES DISTRICT JUDGE
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`10
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