Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02328/USCOURTS-cand-3_07-cv-02328-4/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 15:1938 Fair Labor Standards Act

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DAVID WAISBEIN,

Plaintiff,

 v.

UBS FINANCIAL SERVICES INC.,

Defendant

 /

No. C-07-2328 MMC

ORDER GRANTING DEFENDANT’S

MOTION FOR RECONSIDERATION;

VACATING ORDER OF AUGUST 15,

2007; GRANTING DEFENDANT’S

MOTION TO DISMISS OR,

ALTERNATIVELY, TO STRIKE CLASS

OR REPRESENTATIVE ALLEGATIONS;

VACATING HEARING

Before the Court is defendant UBS Financial Services Inc.’s (“UBS”) motion for

reconsideration of the Court’s order of August 15, 2007, by which order the Court granted

in part and denied in part defendant’s motion to dismiss or, alternatively, strike class or

representative allegations in plaintiff David Waisbein’s (“Waisbein”) First Amended

Complaint (“FAC”). On September 7, 2007, the matter came before the Court for hearing. 

Joseph Cho of Initiative Legal Group LLP appeared on behalf of Waisbein. M. Kirby C.

Wilcox and Molly Harcos of Paul, Hastings, Janofsky & Walker LLP appeared on behalf of

UBS. After the hearing, the parties, at the Court’s direction, filed subsequent briefing with

respect to the motion to dismiss or strike.

Having considered the parties’ submissions and the arguments of counsel, the Court

hereby GRANTS the motion for reconsideration, VACATES the order filed August 15, 2007,

Case 3:07-cv-02328-MMC Document 37 Filed 12/05/07 Page 1 of 6
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The Court finds further oral argument is unnecessary and, accordingly, VACATES

the hearing scheduled for December 7, 2007.

2

 The release in the Bowman settlement provides, in relevant part: “The Class

Members . . . hereby fully release and discharge UBS . . . from any and all wage-and-hour

claims . . . arising during the period from June 30, 2000 to the date on which the District

Court gives final approval of the Settlement . . . , including without limitation statutory,

constitutional, contractual or common law claims for wages, damages, unpaid costs,

penalties, liquidated damages, punitive damages, interest, attorney fees, litigation costs,

restitution, or equitable relief, based on the following categories of allegations: (a) any and

all claims for the failure to pay any type of overtime wages; any and all claims for the failure

to provide meal and/or rest periods; and/or any and all claims stemming from or based on

the alleged misclassification of employees as exempt employees . . . ; (b) any and all

claims alleging the improper assessment of costs, fines, penalties, chargebacks or

settlements on employees, including without limitation claims for improper trading error

deductions; and (c) any and all claims for failure to reimburse, indemnify, or cover or pay

for business costs . . . . The Class Members’ Released Claims include . . . California

Labor Code §§ 200 through 243[,] § 300 et seq.[,] § 400 et seq.[,] § 500 et seq.[,] § 1194[,] 

§§ 2802 and 2804[,] California Bus. & Prof. Code § 17200 et seq., [and] the California

Labor Code Private Attorneys General Act of 2004 . . . . ” (See RJN Ex. A ¶ 45.)

2

and, as to UBS’s motion to dismiss or strike, rules as follows.1

BACKGROUND

On November 22, 2006, the Court granted final approval to a class action settlement

in Bowman v. UBS Fin. Servs., Inc., No. C-04-03525. (See Def.’s Request for Judicial

Notice (“RJN”) Ex. A.) The Bowman plaintiffs had alleged UBS misclassified its Financial

Advisors and Trainees (“Financial Advisors”) as exempt from federal and state overtime

laws, and, as a result, did not compensate Financial Advisors for overtime hours worked or

provide them with required meal periods. (See id. Ex. B ¶¶ 13-31, 46.) Additionally, the

Bowman plaintiffs alleged UBS violated the California Labor Code by taking unlawful

deductions from wages, failing to reimburse incurred business expenses, and failing to

promptly pay wages due upon termination. (See id. Ex. B ¶¶ 33-34, 49-55.) Pursuant to

the settlement, UBS agreed to pay up to $44 million to the Bowman class members and

their counsel; in exchange, the Bowman class released certain claims against UBS,

including claims under §§ 200-243, 300-356, 400-410, 500-558, 1194, 2802, 2804 of the

California Labor Code, the Private Attorneys General Act of 2004 (“PAGA”), codified at

§§ 2698-2699.5 of the California Labor Code, and § 17200 of the California Business and

Professions Code. (See id. Ex. A at 7-9, 12-15.)2

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As Waisbein points outs, the Bowman class members only released claims that had

arisen during the period from June 30, 2000 to November 22, 2006. Consequently, the

Court interprets UBS’s motion as seeking dismissal of the FAC to the extent it is brought on

behalf of any Bowman class member and is based on the period from June 30, 2000 to

November 22, 2006.

3

On January 10, 2007, Waisbein, a former UBS Financial Advisor who opted out of

the Bowman class action, filed the instant action against UBS. In the FAC, Waisbein

alleges a cause of action on his own behalf for violation of the Fair Labor Standards Act,

based on a failure to pay overtime compensation. (See FAC ¶¶ 26-32.) Additionally,

Waisbein alleges causes of action under state law, based on UBS’s asserted failure to pay

overtime compensation, failure to provide accurate pay stubs, failure to provide required

meal and rest periods, taking unlawful deductions from wages, failure to reimburse incurred

business expenses, and failure to promptly pay wages due after termination of

employment. (See id. ¶¶ 33-86.) The state law claims, based on violations of §§ 201, 202,

221, 226(a), 226.7(a), 400-410, 510, 1194, and 2802 of the California Labor Code, are

alleged under PAGA and under § 17200 of the California Business and Professions Code;

each state law claim is asserted on behalf of Waisbein and on behalf of “other aggrieved

employees.” (See, e.g., id. ¶ 41.)

DISCUSSION

UBS argues the state law claims are subject to dismissal, to the extent Waisbein

seeks relief on behalf of the Bowman class members, in light of the release set forth in the

settlement agreement approved by the Court in Bowman.

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A. PAGA Claims

The Second through Sixth Causes of Action, in which Waisbein seeks relief based

on violations of §§ 201, 202, 221, 226(a), 226.7(a), 400-410, 510, 1194, and 2802 of the

California Labor Code, are brought pursuant to PAGA.

Under California law, the State may “assess and collect” civil penalties from

employers for violations of certain provisions of the Labor Code. See Cal. Labor Code

§ 2699(a). Under PAGA, however, if an “aggrieved” employee “give[s] written notice by

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certified mail to the [State] and the employer of the specific provisions of [the Labor Code]

alleged to have been violated,” see Cal. Labor Code § 2699.3(a)(1), and the State

thereafter decides not to investigate or does investigate and determines that a citation

against the employer should not issue, the employee may “as an alternative” to

enforcement by the State, bring a civil action under PAGA to recover the civil penalties “on

behalf of himself or herself and other current or former employees,” see id. “[C]ivil

penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to

the [State] and 25 percent to the aggrieved employees.” Cal. Labor Code § 2699(i).

As noted, the Bowman class members released any claim they might have had

under §§ 201, 202, 221, 226(a), 226.7(a), 400-410, 510, 1194, and 2802 of the California

Labor Code and under PAGA, with respect to the period from June 30, 2000 to November

22, 2006. Waisbein argues the release does not bar him from bringing a PAGA cause of

action based on a claim that UBS violated those statutes with respect to the Bowman class

members. Specifically, Waisbein argues, because the plaintiffs in Bowman failed to follow

the correct procedures to allege a claim and prosecute a claim under PAGA, they were

never authorized by the State to bring a PAGA claim and, consequently, lacked authority to

waive the State’s ability to collect penalties against UBS.

Waisbein’s argument is premised on the theory that a claim brought under PAGA by

an aggrieved employee is not only a claim brought on behalf of the employee, but also a

claim brought on behalf of the State. Waisbein cites no authority to support his

interpretation of PAGA. As the California Court of Appeal has stated, “[PAGA] empowers

or deputizes an aggrieved employee to sue for civil penalties ‘on behalf of himself or herself

and other current or former employees’ as an alternative to enforcement by the [State].” 

See Dunlap v. Superior Court, 142 Cal. App. 4th 330, 337 (2006) (internal citation omitted)

(emphasis added). Indeed, as noted, a PAGA claim can only be filed where the State has

made an affirmative decision not to pursue the matter, either by deciding not to investigate

at all or by investigating and then deciding the employer should not be cited and subjected

to penalties.

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Contrary to Waisbein’s argument, the question is not whether the State would be

barred by the release from imposing penalties against UBS under Labor Code sections

other than PAGA. See, e.g., Cal. Labor Code § 558 (providing Labor Commissioner may,

upon “inspection and investigation,” impose civil penalties on employer who violates

§ 510). Rather, the question is whether the Bowman class members voluntarily entered

into an agreement in which they accepted a monetary benefit from UBS in exchange for not

pursuing their claims under PAGA. The indisputable answer to that question is “yes.” (See

RJN Ex. A ¶ 45.) As a result, Waisbein may not bring herein PAGA claims on behalf of the

Bowman class members with respect to the time period identified in the release. See

Howard v. America Online Inc., 208 F. 3d 741, 746-47 (9th Cir. 2000) (holding class action

settlement, in which class settled claims arising under state law and released any claim

“related to the matters” alleged in complaint, barred second action in which class members

alleged federal claim based on facts related to those on which state law claims had been

based).

Accordingly, the Second through Sixth Causes of Action are subject to dismissal, to

the extent they are brought on behalf of any Bowman class member and is based on the

time period from June 30, 2000 to November 22, 2006.

B. Section 17200

In the Seventh Cause of Action, Waisbein seeks, pursuant to § 17200, “restitution of

the wages withheld, deducted and/or retained by [UBS], and losses and/or expenses

unreimbursed or charged by [UBS].” (See FAC ¶¶ 84, 85.)

For the reasons discussed above, the Court finds the release in the Bowman

settlement agreement bars the Seventh Cause of Action to the extent it is alleged on behalf

of Bowman class members and is based on the time period from June 30, 2000 to

November 22, 2006. See Howard, 208 F. 3d at 746-48.

Accordingly, the Seventh Cause of Action is subject to dismissal, to the extent it is

brought on behalf of any Bowman class member and is based on the time period from June

30, 2000 to November 22, 2006.

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CONCLUSION

For the reasons stated, UBS’s motion to dismiss, or, alternatively, to strike is hereby

GRANTED, and, accordingly, the Second through Seventh Causes of Action are hereby

DISMISSED without leave to amend to the extent they are alleged on behalf of any

Bowman class member and are based on the time period from June 30, 2000 to November

22, 2006.

IT IS SO ORDERED.

Dated: December 5, 2007 

MAXINE M. CHESNEY

United States District Judge

Case 3:07-cv-02328-MMC Document 37 Filed 12/05/07 Page 6 of 6