Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-03130/USCOURTS-casd-3_13-cv-03130-1/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1446pr Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MONICA R. WERT, Individually and

on Behalf of Other Members of the

Public Similarly Situated,

Plaintiff,

Case No. 13-cv-3130-BAS(BLM)

ORDER GRANTING IN PART

AND DENYING IN PART

PLAINTIFF’S MOTION FOR

LEAVE TO FILE SECOND

AMENDED COMPLAINT

[ECF No. 22] v.

U.S. BANCORP, et al.,

Defendants.

On November 13, 2013, Plaintiff Monica R. Wert commenced this employment

class action against Defendants U.S. Bancorp and U.S. Bank National Association

(“U.S. Bank” or “USB”) in the San Diego Superior Court. Thereafter, Defendants

removed this action to federal court. Plaintiff now moves for leave to file a Second

Amended Complaint (“SAC”) under Federal Rule of Civil Procedure 15(a). 

Defendants oppose.

The Court finds this motion suitable for determination on the papers submitted

and without oral argument. See Civ. L.R. 7.1(d.1). For the following reasons, the

Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion.

//

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I. BACKGROUND1

“[W]ithin the last year,” Plaintiff alleges that she worked for Defendants as a

bank teller. (PSAC ¶ 25.) According to Plaintiff, she complied with the exhaustion

requirements of the Private Attorney General Act of 2004 (“PAGA”) by “providing

notice by certified letter on October 7, 2013, to Defendants and the LWDA concerning

the PAGA claims Plaintiff intends to pursue.” (Id. ¶ 13(e).) 2

Plaintiff alleges that “[t]he wage statements Defendants furnished, and continue

to furnish, to Plaintiff and other California employees did not meet the requirements

of California Labor Code § 226(a), including by failing to: (1) show the total hours

worked by the employee; (2) adequately show the deductions from wages; (3) itemize

the dates in prior pay periods to which adjustments were made; [and] (4) itemize the

inclusive dates of the pay period, including the pay period begin date[.]” (PSAC ¶¶

28.) Plaintiff alleges that these omissions caused her and Defendants’ other California

employees injuries. (Id.) 

Plaintiff also alleges that:

During the four years preceding the filing of Plaintiff’s

original Complaint through the present, Defendants

employed Plaintiff and Premium Pay Class Members who

were regularly scheduled to work, and did work, more than

five hours in a work day/work period. There were days

where Plaintiff and Premium Pay Class Members worked

more than five hours and were not provided with meal

periods and were, in fact, prevented from taking meal

periods due to work. Specifically, Plaintiff and Premium

Class Members were unable to take their meal periods

because they were required to attend to client needs, were

required to cover the bank, and were required to complete

urgent tasks assigned to them. In these instances, their work

prevented them from taking any meal period whatsoever, or,

a timely meal period within the first five hours of work. 

These missed and/or late meal periods were caused by work

restrictions—not employees’ desire or choice to skip or

delay meal periods. These employees did not waive their

meal periods.

These facts are taken from Plaintiff’s Proposed SAC (“PSAC”), attached as Exhibits 1 and 1

2 to Plaintiff’s motion.

 The acronym “LWDA” stands for California Labor and Workforce Development Agency. 

2

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(PSAC ¶ 30.) She adds that the specific dates when Defendants allegedly failed to

provide meal periods “may be ascertained through a review of their time and pay

records,” and were also “documented on employees’ itemized wage statementsthrough

the payment of ‘Penalty Py’ [sic] and/or ‘other paid’ and/or ‘other pai’ [sic].” (Id. ¶¶

31–32.) The missed meal-period pay also allegedly “did not account for nondiscretionary, production bonus compensation paid to them and other compensation

required to be included in their regular rate of pay.” (Id. ¶ 34.)

On November 13, 2013, Plaintiff commenced this employment class action

against Defendants in the San Diego Superior Court. On December 20, 2013,

Defendants removed this action to this Court. On July 14, 2014, Plaintiff filed her First

Amended Complaint (“FAC”) after being given leave by the Court. Defendants’

motion to dismiss the FAC, which is fully briefed, is currently pending before the

Court. Plaintiff now moves for leave to file a SAC under Rule 15(a). The Proposed

SAC drops two claims from the FAC filed pursuant to California Labor Code § 2802,

but adds one claim on behalf of the class for failure to provide meal periods and pay

proper premium wages in violation of California Labor Code §§ 512 and 226.7. 

Defendants oppose the motion.

II. LEGAL STANDARD

Rule 15(a) of the Federal Rules of Civil Procedure provides that after a

responsive pleading has been served, a party may amend its complaint only with the

opposing party’s written consent or the court’s leave. Fed. R. Civ. P. 15(a). “The court

should freely give leave when justice so requires,” and apply this policy with “extreme

liberality.” Id.; DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). 

However, leave to amend is not to be granted automatically. Zivkovic v. S. Cal. Edison

Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (citing Jackson v. Bank of Hawaii, 902 F.2d

1385, 1387 (9th Cir. 1990)). Granting leave to amend rests in the sound discretion of

the district court. Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir.

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1996). 

The Court considers five factors in assessing a motion for leave to amend: (1)

bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of the

amendment, and (5) whether the plaintiff has previously amended the complaint. 

Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004); see also Foman v. Davis, 371

U.S. 178, 182 (1962). The party opposing amendment bearsthe burden ofshowing any

of the factors above. See DCD Programs, 833 F.2d at 186. Of these factors, prejudice

to the opposing party carries the greatest weight. Eminence Capital, LLC v. Aspeon,

Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). However, absent prejudice, a strong

showing of the other factors may support denying leave to amend. See id.

“Futility of amendment can, by itself, justify the denial of a motion for leave to

amend.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Futility is a measure of

the amendment’s legal sufficiency. “[A] proposed amendment is futile only if no set

of facts can be proved under the amendment . . . that would constitute a valid and

sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.

1988). Thus, the test of futility is identical to the one applied when considering

challenges under Rule 12(b)(6) for failure to state a claim upon which relief may be

granted. Baker v. Pac. Far E. Lines, Inc., 451 F. Supp. 84, 89 (N.D. Cal. 1978); see

Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991) (“A district court does not err

in denying leave to amend . . . where the amended complaint would be subject to

dismissal.” (citation omitted)).

III. DISCUSSION

Defendants argue that Plaintiff’s proposed amendment isfutile, unduly delayed,

and prejudicial. The futility challenge is specifically directed at Plaintiff’s new claim

for violations of the California Labor Code §§ 226.7(a) and 512. Alternatively, if

Plaintiff is granted leave, Defendants contend the “newly-added claims should not

relate back to the filing of the original complaint because they arise from new facts not

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originally pled and proper notice was not imparted to USB.” (Defs.’ Opp’n

23:14–24:12.) The Court will address each factor below.

A. Futility

Defendants contend that it would be futile to allow Plaintiff to amend because

her new claim has “no basis in law.” They spend considerable time focusing on

Plaintiff’s interpretation of the “regular rate of compensation” language in § 226.7.

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(See Defs.’ Opp’n 3:8–21:9.) According to Defendants, the § 226.7 requirement that

the employer “pay the employee one additional hour of pay at the employee’s regular

rate of compensation for each workday that the meal or rest or recovery period is not

provided” should be limited to an employee’s “normal hourly rate,” and equating

“regular rate of compensation” to “regular rate of pay”—the latter of which the parties

agree is a term of art—is improper. “Regular rate of pay” takes into account

compensation beyond the normal hourly rate, including commissions and nondiscretionary bonuses. See Cal. Labor Code §510(a). Plaintiff’s position is that the

“regular rate” language requires meal-period pay at the same regular rate upon which

overtime is compensated. (Pl.’s Reply 2:10–3:8.)

The relevant language in § 226.7 states the following:

If an employer fails to provide an employee a meal or rest or

recovery period in accordance with a state law, including,

but not limited to, an applicable statute or applicable

regulation, standard, or order of the Industrial Welfare

Commission, the Occupational Safety and Health Standards

Board, or the Division of Occupational Safety and Health,

the employer shall pay the employee one additional hour of

pay at the employee’s regular rate of compensation for each

workday that the meal or rest or recovery period is not

provided.

Cal. Labor Code § 226.7(c) (emphasis added). In comparison, the relevant language

from § 510 discussing the “regular rate of pay” states:

//

//

There is, however, no discussion addressing the futility of Plaintiff’s non-PAGA § 512 claim. 3

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Eight hours of labor constitutes a day’s work. Any work in

excess of eight hours in one workday and any work in excess

of 40 hours in any one workweek and the first eight hours

worked on the seventh day of work in any one workweek

shall be compensated at the rate of no less than one and

one-half times the regular rate of pay for an employee. Any

work in excess of 12 hours in one day shall be compensated

at the rate of no less than twice the regular rate of pay for an

employee. In addition, any work in excess of eight hours on

any seventh day of a workweek shall be compensated at the

rate of no less than twice the regular rate of pay of an

employee. Nothing in this section requires an employer to

combine more than one rate of overtime compensation in

order to calculate the amount to be paid to an employee for

any hour of overtime work.

Cal. Labor Code § 510(a) (emphasis added).

In Bradescu v. Hillstone Restaurant Group, Inc., No. SACV 13-1289, 2014 WL

5312546, at *7-8 (C.D. Cal. Sept. 18, 2014), the court concluded that “there is no

authority supporting the view that ‘regular rate of compensation,’ for purposes of meal

period compensation, is to be interpreted the same way as ‘regular rate of pay’ is for

purposes of overtime compensation.” After reviewing the plain language of § 510(a),

§ 226.7(c), and the IWC Wage Order 5-2001 § 11(B), it explained that “the

legislature’s choice of different language is meaningful, in the absence of authority to

the contrary.” Bradescu, 2014 WL 5312546, at *7-8. Incidentally, the court also

rejected the notion that Seckler v. Kindred Healthcare Operating Group, Inc., No.

SACV 10-01188, 2013 WL 812656 (C.D. Cal. Mar. 5, 2013), a case that Plaintiff cites,

supports the idea that “regular rate of pay” and “regular rate of compensation” are

equivalent, finding that the class-certification order was not a determination on the

merits. Bradescu, 2014 WL 5312546, at *8. 

In a different context, a district court addressed whether awards under §§ 226.7

and 510 were wages or penalties. See Corder v. Houston’s Rests., Inc., 424 F. Supp.

2d 1205, 1210 (C.D. Cal. 2006). In Corder, the court concluded that awards under §

226.7 were penalties under California law because “[w]hereas employers have no

discretion in providing meal and rest breaks, employers have total discretion in

requiring employees to work overtime hours.” Corder, 424 F. Supp. 2d at 1210. The

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court went on to further explain:

An understaffed employer, if it feels it is in its best interest,

can make the conscious decision to require an employee to

work overtime. And if it does, the employer must

compensate the employee by paying him or her wages at a

rate of at least one and one-half timesthe employee’s regular

rate of pay. In contrast, an employer cannot likewise require

an employee to forego meal and rest periods. If it does, the

employer is guilty of a misdemeanor, subject to a fine and

imprisonment, and must pay the employee one additional

hour of pay at the employee's regular rate of compensation,

no matter if the length of the break not provided was ten

minutes or thirty minutes.

Id. (citations and footnote omitted). What is of particular importance is the court’s

different treatment of §§ 226.7 and 510: awards under § 226.7 are penalties, but awards

under § 510 are wages. Id. at 1210-11.

This Court finds the reasoning in Bradescu and Corder persuasive. The plain

language of §§ 226.7 and 510 does not suggest that the phrases “regular rate of

compensation” is synonymous to and may be used interchangeably with “regular rate

of pay.” The very fact that the awards under §§ 226.7 and 510 are of a different nature

for potential plaintiffs—awards being a penalty under § 226.7 and a wage under §

510—strongly suggests that the definition of the awards—i.e., “regular rate of

compensation” versus “regular rate of pay”—are also different. See Corder, 424 F.

Supp. 2d at 1210-11. 

The Bradescu Court’s observation of the legislature’s choice of different

language being meaningful is also compelling. See Bradescu, 2014 WL 5312546, at

*7-8. The legislature had the opportunity to define awards under §§ 226.7 and 510 in

the same manner, but it chose not to. This distinction between the use “regular rate of

compensation” and “regular rate of pay” is not limited to meal / rest periods under

§ 226.7 and overtime under § 510. IWC Wage Order No. 4-2001 also limits “regular

rate of compensation” to meal and rest periods and “regular rate of pay” to overtime. 

These distinctions in the use of particular language also lead this Court to the

conclusion that the phrases “regular rate of compensation” and “regular rate of pay” are

not synonymous and should not be used interchangeably. 

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In sum, the Court agrees with Defendants that it would be futile to grant leave

to Plaintiff to pursue her proposed § 226.7 claim seeking an award based on the

synonymous use of “regular rate of compensation” and “regular rate of pay.” However,

that conclusion does not necessarily mean that Plaintiff’s §§ 226.7 and 512 claim as

articulated in the proposed SAC would be futile in its entirety. The parties do not

address the possibility that there is a cognizable claim under §§ 226.7 and 512 beyond

the synonymous use of “regular rate of compensation” and “regular rate of pay.” Thus,

the Court cannot conclude that Plaintiff’s proposed §§ 226.7 and 512 claim is futile in

its entirety.

4

B. Undue Delay and Prejudice

“Undue delay by itself . . . is insufficient to justify denying a motion to amend

. . . [w]e have previously reversed the denial of a motion for leave to amend where the

district court did not provide a contemporaneous specific finding of prejudice to the

opposing party, bad faith by the moving party, or futility of the amendment.” Bowles

v. Reade, 198 F.3d 752, 758 (9th Cir. 1999) (citations omitted). “As the Ninth Circuit

reasoned in Westlands Water District v. United States, ‘legal prejudice is . . . prejudice

to some legal interest, some legal claim, some legal argument . . . [u]ncertainty because

a dispute remains unresolved is not legal prejudice.’” Pershing Pac. W., LLC v.

Ferretti Grp., USA, Inc., No. 10-CV-1345-L DHB, 2013 WL 3227942 (S.D. Cal. June

25, 2013) (quoting Westlands Water Dist. v. United States, 100 F.3d 94, 97 (9th Cir.

1996)). 

The gist of Defendants’ argument is that Plaintiff’s year-long delay to include

the §§ 226.7 and 512 claim is unjustified because it is a claim that “Plaintiff’s lawyers

simply failed to think of.” (Defs.’ Opp’n 22:10–21.) However, Plaintiff providesfacts

Defendants also argue that Plaintiff’s § 203 waiting-time-penalty claim is also futile because 4

it is predicated on a futile § 226.7 claim. Because Defendants fail to demonstrate that the proposed

§ 226.7 claim is futile in its entirety, they also fail to demonstrate that any proposed § 203 claim as

predicated on the § 226.7 claim is also futile.

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suggesting otherwise. In her motion, Plaintiff contendsthat “further investigation” and

“additional legal research” prompted seeking leave to also pursue a §§ 226.7 and 512

claim. (Pl.’s Mot. 2:11–16.) But there is not enough in that assertion to demonstrate

that Plaintiff knew or should have known to pursue the §§ 226.7 and 512 claim. 

Further investigation perhaps produced additional facts that alerted Plaintiff and her

counsel to possible additional claims. Ultimately though, the burden is Defendants’,

and without more, Defendants fail to demonstrate that the delay is the result of merely

“bringing [claims] . . . that [she] had not previously thought of[.]” See Johnsen v.

Rogers, 551 F. Supp. 281, 284 (C.D. Cal. 1982). 

Moving on to prejudice, though Plaintiff seeks leave to amend her complaint

almost ten months after the initiation of this action, this action remains in the early

stages of litigation. In fact, this action has not yet even moved beyond the pleading

stage. And, as Plaintiff emphasizes, no discovery has been propounded. (Pl.’s Reply

9:10–10:14.) Moreover, Defendants fail to demonstrate that any additional cost that

may have been incurred was prejudicial; they merely assert the conclusory proposition

that they “will be forced to incur unnecessary litigation costs due to the late addition

of new claims.” (Defs.’ Opp’n 22:22–23:4.)

Defendants fail to meet their burden demonstrating that they will be prejudiced

by amendment. They also fail to make a “strong showing of the other factors [to]

support denying leave to amend.” See Eminence Capital, 316 F.3d at 1052.

C. Relation Back

Under Federal Rule of Civil Procedure 15, an “amendment to a pleading relates

back to the date of the original pleading when: . . . the amendment asserts a claim or

defense that arose out of the conduct, transaction, or occurrence set out—or attempted

to be set out—in the original pleading.” Fed. R. Civ. P. 15(c)(1)(B); ASARCO, LLC

v. Union Pac. R.R. Co., 765 F.3d 999, 1004 (9th Cir. 2014). “The relation back

doctrine of Rule 15(c) is ‘liberally applied.’” Clipper Exxpress v. Rocky Mountain

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Motor Tariff Bureau, Inc., 690 F.2d 1240, 1259 n.29 (9th Cir. 1982); see also

ASARCO, 765 F.3d at 1005. In determining whether the relation-back doctrine applies,

the court compares the original complaint with the amended complaint and decides

whether the claim to be added will likely be proved by the “same kind of evidence”

offered in support of the original pleading. ASARCO, 765 F.3d at 1004; Percy v. San

Francisco Gen. Hosp., 841 F.2d 975, 979 (9th Cir. 1988). The court considers whether

the “allegations of a new theory in an amended complaint . . . involve[] the same

transaction, occurrence, or core of operative facts involved in the original claim.” 

Percy, 841 F.2d at 978 (quoting Clipper Exxpress, 690 F.3d at 1259 n.29) (internal

quotation marks omitted).

“The requirement that the allegations in the amended complaint arise from the

same conduct, transaction, or occurrence is meant to ensure that the original pleading

provided adequate notice of the claims raised in the amended pleading.” Williams v.

Boeing Co., 517 F.3d 1120, 1133 n.9 (9th Cir. 2008). However, “a plaintiff need only

plead the general conduct, transaction, or occurrence to preserve its claim against a

defendant.” ASARCO, 765 F.3d at 1006. When a defendant is notified of litigation

concerning a particular transaction or occurrence, “the defendant knowsthat the whole

transaction described in it will be fully sifted, by amendment if need be, and that the

form of the action or the relief prayed or the law relied on will not be confined to their

first statement.” Id. at 1006 (internal quotation marks omitted). The exact contours of

the plaintiff’s claims, i.e., “the facts that will ultimately be alleged and the final scope

of relief that will be sought, can and should be sorted out through later discovery and

amendments to the pleadings.” Id.

It is not entirely clear what relief Defendants seek in requesting a determination

that Plaintiff’s newly added claims do not relate back. Generally, “the relation back

doctrine is a bar to a statute of limitations defense.” Sarkizi v. Graham Packaging Co.,

No. 1:13-CV-1435, 2014 WL 6090417, at *5 (E.D. Cal. Nov. 12, 2014) (citing Percy

v. San Francisco Gen. Hosp., 841, F.2d 975, 979 (9th Cir. 1988)). There is no mention

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of any relevant statute of limitations that may bar the claims in Defendants’ argument,

which in its entirety states:

Here, Plaintiff’s new claim and predicate claims based on

Section 226.7 violations, Sections 201-202 violations

(failure to pay wages at termination) and corresponding

Section 203 waiting time penalties are based on facts that

were not previously alleged in the original Complaint. The

rate at which premiums were paid was not at issue or pled,

and so USB was not provided fair notice. Thus, the new

claims should not relate back to the filing of the original

Complaint.

(Defs.’ Opp’n 24:7–12.) 

Aside from the fact Defendants fail to request specific relief as a result of the

purported lack of any relation back, Defendants fail to show that the newly added

claims do not relate back to the original pleading. As stated above, “a plaintiff need

only plead the general conduct, transaction, or occurrence to preserve its claim against

a defendant.” ASARCO, 765 F.3d at 1006. Consequently, when Defendants were

notified of litigation concerning the particular transaction or occurrence in the original

complaint, Defendants were also responsible for knowing “that the whole transaction

described in it will be fully sifted, by amendment if need be, and that the form of the

action or the relief prayed or the law relied on will not be confined to their first

statement.” See id. at 1006 (internal quotation marks omitted). The allegations of a

new theory in Plaintiff’s amended complaint “involve[] the same transaction,

occurrence, or core of operative facts involved in the original claim.” See Percy, 841

F.2d at 978 (internal quotation marks omitted). Therefore, Defendants fail to

demonstrate that there is any impropriety under Rule 15’s relation-back doctrine. See

Fed. R. Civ. P. 15(c)(1)(B).

IV. CONCLUSION & ORDER

In light of the foregoing and taking into consideration the policy that “[t]he court

should freely give leave when justice so requires,” the Court GRANTS IN PART and

DENIES IN PART Plaintiff’s motion for leave to file an amended complaint. See Fed.

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R. Civ. P. 15(a)(2). Specifically, the Court denies Plaintiff’s motion insofar as her

pursuit of a §§ 226.7 and 512 claim in a manner using “regular rate of compensation”

and “regular rate of pay” synonymously; pursuing the claim in that manner is futile. 

However, the Court grantsthe motion in all other respects. Accordingly, Plaintiffshall

file her SAC, revised in a manner consistent with this order, no later than January 8,

2015.

Furthermore, in anticipation of Plaintiff’s amended complaint, the Court

TERMINATES AS MOOT Defendants’ currently pending motions to dismiss and

strike. (ECF No. 20.) If Plaintiff fails to amend her complaint by the aforementioned

deadline, Defendants shall file an ex parte application notifying the Court of such

failure and requesting it to reinstate their motions to dismiss and strike no later than

January 15, 2015.

IT IS SO ORDERED.

DATED: December 18, 2014

Hon. Cynthia Bashant

United States District Judge

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