Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-00715/USCOURTS-cand-3_06-cv-00715-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 29:201 Fair Labor Standards Act

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

GABE BEAUPERTHUY, et al. on behalf

of themselves and all others

similarly situated,

Plaintiffs,

 v.

24 HOUR FITNESS USA, INC., a

California corporation d/b/a 24

Hour Fitness; SPORT AND FITNESS

CLUBS OF AMERICA, INC., a

California corporation d/b/a 24

Hour Fitness,

Defendants.

 

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No. 06-715 SC

ORDER DENYING

DEFENDANTS' MOTION TO

DISMISS AND GRANTING

DEFENDANTS' MOTION

FOR A MORE DEFINITE

STATEMENT

I. INTRODUCTION

Plaintiff Gabe Beauperthuy brought this action on behalf of

himself and others similarly situated ("Plaintiffs") against

Defendants 24 Hour Fitness USA, Inc. and Sport and Fitness Clubs

of America, Inc. ("Defendants" or "24 Hour Fitness"), alleging

violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et

seq. ("FLSA"). Defendants now move for dismissal pursuant to

Federal Rule of Civil Procedure ("FRCP") 12(b)(6) for failure to

state a claim upon which relief can be granted. Defendants also

move, in the alternative, for a more definite statement pursuant

to FRCP 12(e). Plaintiffs have also filed a motion to compel

Case 3:06-cv-00715-SC Document 28 Filed 04/11/06 Page 1 of 7
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For the Northern District of California

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arbitration that they assert the Court should consider only in the

event that the Court grants Defendants' motion to dismiss. For

the reasons set forth herein, Defendants' motion to dismiss is

DENIED, Defendants' motion for a more definite statement is

GRANTED, and Plaintiffs' motion to compel arbitration is VACATED.

II. BACKGROUND

Plaintiffs formerly worked as Managers, Sales Counselors, and

Trainers for 24 Hour Fitness, and in that capacity were treated as

exempt from state and federal law mandating overtime compensation

for hours worked in excess of a certain number per week. 

Complaint ¶¶ 6-7 ("Compl."). Plaintiffs claim that Defendants'

decision to classify them as exempt employees was unlawful, and

seek damages for unpaid overtime hours worked, as well as

liquidated damages and attorneys' fees and costs. Compl. ¶ 8. 

Plaintiffs brought this action as a collective class under 

§ 216(b) of the FLSA, although the Court has not yet received

briefing or argument on the question of whether the putative class

should be certified. Id. ¶ 6. 

Defendants now move for an order dismissing this matter

because, Defendants assert, each Plaintiff agreed to a provision

in the employee handbook that provided that disputes of this

nature would be settled via arbitration rather than in litigation

before a court ("Arbitration Agreement"). See Defendants' Motion

to Dismiss for Failure to State a Claim Upon Which Relief Can Be

Granted at 6 ("Defs.' Mot."). Defendants contend that because the

Arbitration Agreement is mandatory and no grounds exist under

applicable state law to invalidate it, Plaintiffs' claims must be

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dismissed. Id. at 6-7. In the alternative, Defendants move for a

more definite statement pursuant to FRCP 12(e). Plaintiffs have

opposed Defendants' motion to dismiss, but do not appear to oppose

the alternative motion for a more definite statement. 

III. LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) tests the

sufficiency of the complaint. Dismissal of an action pursuant to

Rule 12(b)(6) is appropriate only where it "appears beyond doubt

that the plaintiff can prove no set of facts in support of his

claim which would entitle him to relief." Levine v. Diamanthuset,

Inc., 950 F.2d 1478, 1482 (9th Cir. 1991), quoting Conley v.

Gibson, 355 U.S. 41, 45–46 (1957). In reviewing the motion, a

court must assume all factual allegations to be true and construe

them in the light most favorable to the nonmoving party. North

Star Intern. v. Arizona Corp. Comm'n, 720 F.2d 578, 590 (9th Cir.

1993). Nevertheless, a complaint must be based on more than

"[c]onclusory allegations of law and unwarranted inferences" in

order to defeat a motion for dismissal. Parino v. FHP, Inc., 146

F.3d 699, 706 (9th Cir. 1999), quoting In re VeriFone Sec. Litig.,

11 F.3d 865, 868 (9th Cir. 1993).

IV. DISCUSSION

Although a party seeking to enforce an agreement to arbitrate

typically does so by filing a motion to compel arbitration, courts

have recognized that a party may choose instead to bring a motion

to dismiss under FRCP 12(b)(6). See Sparling v. Hoffman

Construction Co. Inc., 864 F. 2d 635, 637-38 (9th Cir. 1988). In

this case, 24 Hour Fitness has moved for dismissal, because,

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Defendants assert, arbitration on a collective class basis is

expressly disallowed by the Arbitration Agreement. See Defs.'

Mot. at 10. 

The parties agree that the Arbitration Agreement provides

that: 

Unless controlling legal authority requires otherwise, there

shall be no right or authority for any dispute to be heard or

arbitrated on a class action basis, as a private attorney

general, or on a basis involving disputes brought in a

purported representative capacity on behalf of the general

public, provided, however, that any individual claim is

subject to this agreement to arbitrate. 

Id. at 7; Compl. ¶ 99. However, the parties vigorously dispute

whether "class action basis" as used in the Arbitration Agreement

is only meant to cover class actions brought under FRCP 23, or

whether it extends to collective actions brought under FLSA 

§ 216(b). That question, however, is one of contract

interpretation and is therefore not for this Court to decide. See

Green Tree Financial v. Bazzle, 539 U.S. 444, 447 (2003). Rather,

if the Arbitration Agreement is valid and enforceable, the

question of whether Plaintiffs can proceed with arbitration as a

collective action will be determined by the arbitrator. Id. 

On a motion to dismiss, the Court is charged only with

examining the legal sufficiency of the allegations. In this

respect, the Court is satisfied that Plaintiffs have properly

alleged a claim upon which relief can be granted, and have also

set forth potentially valid defenses to enforcement of the

Arbitration Agreement. For example, Plaintiffs have alleged that

the Arbitration Agreements are unenforceable because they are

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procedurally and substantively unconscionable, and have also

averred that, even if enforceable, Defendants waived their right

to compel arbitration. See Compl. ¶¶ 100-103; Plaintiffs'

Opposition to Defendants' Motion to Dismiss at 23 ("Pls.' Opp."). 

Resolution of Plaintiffs' arguments concerning the enforceability

of the Arbitration Agreement will require an examination of the

facts surrounding formation of the contract against the governing

state law, see Alexander v. Anthony Intern. L.P., 341 F.3d 256,

264 (3d Cir. 2003), and resolution of Plaintiffs' argument with

respect to Defendants' purported waiver of the right to arbitrate

necessarily implicates an inquiry into the conduct of the parties

and any prejudice that may flow therefrom. See Chiron Corp. v.

Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir.

2000). 

Whether Plaintiffs' defenses to enforcement of the

Arbitration Agreement hold up under scrutiny is a matter for

another day; at this point, the Court finds that Plaintiffs have

carried their burden of demonstrating that they may be able to

prove some set of facts that will entitle them to relief in this

forum. Defendants had the option of bringing a motion to compel

arbitration - indeed, the record demonstrates that Plaintiffs

consistently sought to arbitrate these claims - and given the

allegations in the pleadings along with the Supreme Court's

decision in Green Tree Financial, it is puzzling that they elected

instead to proceed with the instant motion. Regardless, the legal

standard governing motions brought under FRCP 12(b)(6) makes clear

that where, as here, Plaintiffs have alleged a viable claim and

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1 Plaintiffs claim to have worked at Defendants' facilities in

Nevada, Washington, Colorado, Idaho, Kansas, California, Missouri,

Oregon, Nebraska, Tennessee, Montana, and Utah. Id. ¶¶ 11-68.

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have asserted defenses to enforcement of the very agreement that

Defendants claim prevents Plaintiffs from obtaining relief in this

forum, the Court is bound to deny a motion to dismiss. Cf.

Germaine Music v. Universal Songs of Polygram, 275 F. Supp. 2d

1288, 1299 (D. Nev. 2003) (finding dismissal appropriate where it

was clear that plaintiff could prove no set of facts in support of

his claim that the court was the proper forum for resolution of

his claim).

With respect to Defendants' motion for a more definite

statement, the Court finds that Defendants have set forth

compelling reasons for obtaining clarification under FRCP 12(e). 

Specifically, with respect to Plaintiffs who claim to have been

employed in more than one state, the Court finds that Defendants

are entitled to a statement delineating which state each Plaintiff

was working in when he or she agreed to the terms of the employee

handbook, including the Arbitration Agreement.1

Finally, because Plaintiffs have asked the Court to consider

their petition to compel arbitration only in the event that the

Court grants Defendants' motion to dismiss, the Court will not

consider Plaintiffs' petition.

//

//

//

// 

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V. CONCLUSION

In light of the foregoing, Defendants' motion to dismiss for

failure to state a claim upon which relief can be granted is

DENIED. Defendants' motion for a more definite statement is

GRANTED. Plaintiffs' motion to compel arbitration is VACATED. 

IT IS SO ORDERED.

April 11, 2006 ____________________________

UNITED STATES DISTRICT JUDGE

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