Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_17-cv-06253/USCOURTS-cand-3_17-cv-06253-2/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ANGELICA GARCIA,

Plaintiff,

v.

PASCUAL ZAVALA, et al.,

Defendants.

Case No. 17-cv-06253-TSH 

REQUEST FOR REASSIGNMENT

WITH REPORT & 

RECOMMENDATION RE MOTION 

TO AMEND COMPLAINT AND CLASS 

CERTIFICATION DEADLINES

Re: Dkt. No. 65

I. INTRODUCTION

Angelica Garcia filed this wage and hour putative class action seeking damages against 

P&Z Foods, Inc., Pascual Zavala and Miriam Arevalo (“Defendants”) for violations of the Fair 

Labor Standards Act and related state law claims. She now seeks leave to amend her complaint to 

add the entity P&Z Group, Inc. and to amend class certification deadlines. ECF No. 65. No 

opposition has been filed. The undersigned finds this matter suitable for disposition without oral 

argument and VACATES the January 30, 2020 hearing. See Civ. L.R. 7-1(b). As not all parties 

have consented to the jurisdiction of a United States Magistrate Judge pursuant to 28 U.S.C. § 

636(c), the Court requests this case be reassigned to a District Judge for disposition. Having 

considered the parties’ positions, relevant legal authority, and the record in this case, the 

undersigned RECOMMENDS the District Court GRANT the motion for the following reasons.

II. BACKGROUND

A. Factual Allegations

Garcia was employed as a non-exempt employee by P&Z Foods at its Carnitas Tijuana 

Restaurants, located in Concord and Pittsburgh, California until approximately October 27, 2016. 

Compl. ¶ 11, ECF No. 1. She alleges Zavala is an owner, director and/or managing agent of P&Z 

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Foods and Arevalo is a supervisor. Id. ¶¶ 14-15. Garcia filed this case on October 27, 2017, 

alleging nine causes of action: (1) violations of the Fair Labor Standards Act, 29 U.S.C. §§ 207, 

216, 255; (2) failure to provide rest and meal periods, Cal. Lab. Code §§ 226,7, 512; (3) failure to 

pay minimum wages, id. §§ 1194, 1194.2, 1197; (4) failure to pay premium overtime wages, id. §§ 

510, 1194, 1194.2; (5) failure to reimburse employees for expenses incurred, id. § 2802; (6) failure 

to pay wages due upon separation from employment, id. §§ 201-03; (7) failure to provide accurate 

wage statements, id. §§ 226, 226.6; (8) violation of California’s Unfair Competition Law, Cal. 

Bus. & Prof. Code §§ 17200; and (9) penalties under California’s Private Attorney General Act, 

Cal. Lab. Code §§ 2698. Compl. ¶¶ 35-117. She brings her claims on behalf of: “All persons who 

are employed or have been employed by DEFENDANTS in the State of California who, within 

four (4) years of the filing of this Complaint, have worked as non-exempt employees.” Id. ¶ 25. 

B. Procedural Background

Garcia served all defendants named in her complaint on January 10, 2018. ECF Nos. 11-

13. However, Magistrate Judge Maria-Elena James, to whom this case was originally assigned,

twice continued the initial case management conference because Defendants had not appeared and 

Garcia did not indicate how she intended to proceed against them. ECF Nos. 15, 17, 30. On 

March 5, 2018, Garcia indicated that Zavala would waive service and file a responsive pleading, 

and that P&Z Foods “appears to have filed papers of dissolution” and “the individual defendants 

are no longer employed by the entity.” ECF No. 18. She requested additional time to determine 

how to proceed and seek entry of default, if necessary. Id. Judge James granted Garcia’s request 

and ordered the parties to file a case management statement by May 17, 2018. ECF No. 19. 

Zavala subsequently made an appearance, filing an answer and crossclaims against P&Z 

Foods and Arevalo. ECF No. 21. Both Garcia and Zavala filed consents to magistrate judge 

jurisdiction. ECF Nos. 8, 23. They filed a joint case management statement on May 17, 2018,

and Garcia filed a request for entry of default as to P&Z Foods on May 23, 2018. ECF Nos. 25-

26. 

On May 24, 2018, Judge James held a case management conference, at which time Garcia 

represented that she did not name Arevalo as a defendant and that Arevalo is only named in 

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Zavala’s crossclaim. ECF Nos. 28, 30. Judge James noted that Garcia’s statement misrepresented 

the record, given that she repeatedly names Arevalo as a defendant in her complaint and served 

her with a copy of the summons and complaint. ECF No. 30. Accordingly, Judge James ordered 

Garcia to show cause why the Court should not dismiss Arevalo. Id. She also scheduled a further 

status hearing for July 26, 2018. ECF No. 28. On May 30, 2018, Garcia filed a notice of 

dismissal as to Arevalo, after which Judge James discharged the show cause order. ECF Nos. 31, 

33. In the meantime, the Clerk entered default against P&Z Foods on May 25, 2018. ECF No. 29.

On July 10, 2018, Zavala filed a certificate of service as to P&Z Foods. ECF No. 25. 

Judge James vacated the July 26 status conference and scheduled a further case management 

conference for August 9, 2018. ECF No. 36. 

On August 1, 2018, Zavala requested the Clerk enter default against P&Z Foods as to his 

crossclaims. ECF No. 37. On August 3, 2018, Garcia and Zavala filed a joint case management 

statement, indicating that Zavala’s attempts to locate Arevalo had failed and that he would likely 

dismiss his claims against her if unable to complete service. ECF No. 39. The parties requested 

the Court permit them to begin class discovery and to set a mid-discovery conference. Judge 

James vacated the August 9 case management conference and set a February 7, 2019 deadline for 

the parties to complete class-related discovery, with any motion for class certification to be filed 

by March 14, 2019. ECF No. 40. The Clerk subsequently entered default against P&Z Foods as 

to Zavala’s crossclaims on August 17, 2018. ECF Nos. 37, 41. 

On September 4, 2018, the case was reassigned to the undersigned, after Judge James 

retired. The undersigned scheduled a case management conference for January 17, 2019. ECF 

No. 43. In their January 10, 2019 joint statement, Garcia and Zavala requested the Court refer 

them to court-sponsored mediation. ECF No. 44. Zavala also indicated he had been unable to 

serve Arevalo and intended to dismiss her from his crossclaims. Based on the parties’ 

representations, the undersigned referred them to mediation and scheduled a further case 

management conference on April 11, 2019. ECF No. 45.

On April 4, 2019, Garcia and Zavala filed an updated joint statement in which Garcia 

stated she intended to file a motion to amend the court’s scheduling order “due to Plaintiff’s 

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uncovering of new information which will be presented at the April 11, 2019 Case Management 

Conference.” ECF No. 49. Garcia filed a supplemental case management statement on April 11, 

informing the Court that she believed Zavala possessed records relevant to the claim period and 

requested an extension of the of the class certification deadlines to allow her sufficient time to 

investigate Zavala’s potential liability. ECF No. 53. At the April 11 case management 

conference, Garcia requested an eight-month extension of time to conduct class discovery. ECF 

No. 55. The Court granted the request and extended the discovery deadline to January 9, 2020, 

with the deadline to move for class certification extended to February 20, 2020. Id.

One week later, on April 18, 2019, Martin & Vanegas, APC filed a motion to withdraw as 

counsel for Zavala, indicating he had stopped communicating with them and had not paid them. 

ECF No. 57. The Court granted the motion, on the condition that all papers from the Court and 

from other parties shall continue to be served on attorney Marta Vanegas for forwarding purposes 

until a substitution of counsel is filed. ECF No. 59.

C. Motion to Amend

On December 20, 2019, Garcia filed the present motion to amend her complaint and the 

case management deadlines. ECF No. 65. She states that, since the April 11 conference, she has 

investigated Zavala’s prior and continued ownership of P&Z Foods and P&Z Group, Inc., “a new 

company which appears to have been formed by Defendant Pascual Zavala to take over the 

operations of the almost identically named P&Z Foods, Inc.” Mot. at 2. Her investigation efforts 

included the depositions of accountant Fahim Choudhary and Tax Care Inc., and accountant Jose 

Rosillo and Tax Ace Inc. Id. Garcia also received documents from the accountants, including 

emails between Zavala and his accountants and payroll, tax, and corporate documents. Id. at 3.

As a result of her investigations, Garcia states she has learned the following:

• In September 2017, shortly before P&Z Foods, Inc. dissolved, 

P&Z Group, Inc., a corporation with an almost identical name, 

was incorporated. 

• The articles of incorporation filed with the State of California 

list Defendant Pascual Zavala as the agent for service of 

process of P&Z Group, Inc. 

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• Subsequent disclosures filed with the Secretary of State list 

Defendant Pascual Zavala as the Chief Executive Officer, 

Secretary, Chief Financial Officer and person completing the 

disclosure on behalf of P&Z Foods, Inc. 

• A business license application submitted to the City of 

Pittsburg in January of 2019, lists Defendant Pascual Zavala 

as the owner of “Carnitas Tijuana.” 

• Food inspection reports of “Carnitas Tijuana” conducted by 

the Contra Costa Health Services Department from 2016 

through 2019 were signed by Defendant Pascual Zavala and 

one report from November 20, 2018, explicitly lists Defendant 

Pascual Zavala as the owner of “Carnitas Tijuana.” 

• Accountants constantly and almost exclusively interfaced 

with Defendant Pascual Zavala regarding the payroll and 

accounting of “Carnitas Tijuana” at email address 

“pnzfoods[@]gmail.com.” 

• Email messages from accountants to Defendant Pascual 

Zavala reference “your company.” 

• Defendant Pascual Zavala signed an authorization for monthly 

withdrawal for the provision of accounting services of Tax 

Care Inc. to P&Z Foods, Inc.

• Practically all of “Carnitas Tijuana” business checks provided 

by accountants appear to be signed by Defendant Pascual 

Zavala (who sometimes initials his name as “P&Z”). 

• A 2009 Mechanics Bank business account statement lists 

“Pascual Zavala DBA Carnitas Tijuana.” 

• A business account was used to pay for personal expenses 

such as fitness club membership fees, flights to Mexico, car 

insurance payments and car servicing. 

Id. at 3-4. As such, Garcia seeks leave to amend to add P&Z Group as a defendant and to allege 

alter ego liability. Id. at 5. She also requests a further continuance of the class certification 

deadlines to allow her to conduct meaningful class certification discovery prior to filing a class 

certification motion. at 1. 

As no opposition was filed and there was no indication that Martin & Vanegas served the 

motion on Zavala, the Court ordered his former counsel to e-file proof of service by January 13, 

2020. ECF No. 68. Martin & Vanegas filed proof of service on January 17, 2020, declaring that it 

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served the documents on December 23, 2019.1 ECF No. 69.

III. MAGISTRATE JUDGE JURISDICTION

All parties, including unserved defendants, must consent for jurisdiction to vest with a 

magistrate judge. Williams v. King, 875 F.3d 500, 503-04 (9th Cir. 2017). As noted above, Garcia 

and Zavala both filed consents to magistrate judge jurisdiction. However, default has been entered 

against P&Z Foods and, although Garcia dismissed her claims against Arevalo, Zavala’s 

crossclaims against her remain pending and he has not made an appearance since the Court 

granted his counsel’s motion to withdraw. Based on the procedural posture of this case, the 

undersigned finds it appropriate to have this case reassigned to a district judge for disposition. 

Accordingly, the Clerk of Court is directed to reassign this case.

IV. LEGAL STANDARD

Under Federal Rule of Civil Procedure 15(a)(1), a party may amend its pleading once as a 

matter of course within 21 days of serving it. Further amendment of the pleadings is allowed with 

the opposing party’s consent or leave of the court. Fed. R. Civ. P. 15(a)(2). The Court considers 

five factors in deciding a motion for leave to amend: (1) bad faith on the part of the movant; (2) 

undue delay; (3) prejudice to the opposing party; (4) futility of amendment; and (5) whether the 

plaintiff has previously amended his complaint. In re W. States Wholesale Natural Gas Antitrust 

Litig., 715 F.3d 716, 738 (9th Cir. 2013). The rule is “to be applied with extreme liberality.” 

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotations 

and citation omitted). Generally, a court should determine whether to grant leave indulging “all 

inferences in favor of granting the motion.” Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th 

Cir. 1999). “Courts may decline to grant leave to amend only if there is strong evidence of ‘undue 

delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies 

by amendments previously allowed, undue prejudice to the opposing party . . . , [or] futility of 

amendment, etc.’” Sonoma Cty. Ass’n of Retired Emps. v. Sonoma Cty., 708 F.3d 1109, 1117 (9th 

1 As part of its certificate of service, Martin & Venegas states that it also served Garcia’s Notice of 

Non-Opposition (ECF No. 67). However, as Garcia filed the notice on January 8, 2020, Martin & 

Venegas could not have served it on December 23, and the Court disregards that portion of the 

certificate of service as inadvertent error.

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Cir. 2013) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).

V. DISCUSSION

A. Bad Faith

Bad faith may be shown when a party seeks to amend late in the litigation process with 

claims which were, or should have been, apparent early. Bonin v. Calderon, 59 F.3d 815, 846 (9th 

Cir. 1995). Although this case was filed in 2017, there appears to be no bad faith on Garcia’s part 

as not all defendants have appeared and she seeks to amend based on the result of her recent 

independent investigations. Further, she does not seek to add new claims, but rather allegations to 

include Zavala’s new corporation, P&Z Group, as a defendant and to allow her to hold Defendants 

liable under an alter ego theory of liability. The amendments are based on the same conduct of 

which Defendants were given notice in the original complaint. Accordingly, the undersigned finds 

this factor weighs in favor of leave to amend. See Logtale, Ltd. v. IKOR, Inc., 2014 WL 1478901, 

at *5 (N.D. Cal. Apr. 14, 2014) (“There is no evidence, however, of bad faith and sanctions are not 

warranted. Plaintiff’s proposed SAC does not add new claims, but rather new allegations intended 

to bolster its existing claims and alter ego allegations.”); Rachford v. Air Line Pilots Ass’n., 2006 

WL 1699578, at *5 (N.D. Cal. June 16, 2006) (“Nevertheless, the alter ego doctrine does not 

create an independent cause of action that can be pled in the alternative with another independent 

cause of action; it merely serves to identify which parties may be held liable for the misconduct at 

issue.”). 

B. Undue Delay 

“[D]elay alone no matter how lengthy is an insufficient ground for denial of leave to 

amend.” United States v. Webb, 665 F.2d 977, 980 (9th Cir. 1981); see also Morongo Band of 

Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). However, undue delay combined 

with other factors may warrant denial of leave to amend. See, e.g., Jackson v. Bank of Hawaii, 

902 F.2d 1385, 1387-89 (9th Cir. 1990) (holding that prejudice and undue delay are sufficient to 

deny leave to amend); Morongo Band of Mission Indians, 893 F.2d at 1079 (“delay of nearly two 

years, while not alone enough to support denial, is nevertheless relevant”). A moving party’s 

inability to sufficiently explain its delay may indicate that the delay was undue. Jackson, 902 F.2d 

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at 1388. Whether the moving party knew or should have known the facts and theories raised in 

the proposed amendment at the time it filed its original pleadings is a relevant consideration in 

assessing untimeliness. Id. “[L]ate amendments to assert new theories are not reviewed favorably 

when the facts and the theory have been known to the party seeking amendment since the 

inception of the cause of action.” Acri v. Int’l Ass’n of Machinists & Aerospace Workers, 781 

F.2d 1393, 1398 (9th Cir. 1986). 

Here, the undersigned finds Garcia did not unduly delay in seeking leave to amend. As 

noted above, it was not until recently that she learned of Zavala’s ownership of P&Z Group, a new 

company that she believes Zavala formed to take over the operations of P&Z Foods. Garcia 

learned this information through her independent investigations, as P&Z Foods has not appeared

in the case and Zavala has not participated in discovery. In fact, throughout this litigation, Zavala 

has denied liability and represented to Garcia and this Court that he was not Garcia’s and putative 

class members’ employer and therefore did not have access to any employment records relevant to 

the claim period. See ECF No. 25 at 2; ECF No. 39 at 2; ECF No. 44 at 3. Thus, this factor 

weighs in favor of amendment.

C. Prejudice to the Opposing Party

“[T]he consideration of prejudice to the opposing party [ ] carries the greatest weight” in 

the Court’s analysis. Eminence Capital, 316 F.3d at 1052. “A need to reopen discovery and 

therefore delay the proceedings supports a district court’s finding of prejudice from a delayed 

motion to amend the complaint.” Lockheed Martin Corp. v. Network Solutions, 194 F.3d 980, 986 

(9th Cir. 1999) (citing Solomon v. North Am. Life & Cas. Ins. Co., 151 F.3d 1132, 1139 (9th Cir.

1998)). However, “[n]either delay resulting from the proposed amendment nor the prospect of 

additional discovery needed by the non-moving party in itself constitutes a sufficient showing of 

prejudice.” Tyco Thermal Controls LLC v. Redwood Indus., 2009 WL 4907512, at *3 (N.D. Cal.

Dec. 14, 2009).

Here, although Garcia filed this case in 2017, it remains in the early stages of litigation, 

with the case management order limiting the parties to discovery related to class certification 

issues. Further, Garcia’s proposed amendments are not so substantial that granting her leave to 

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amend would alter the nature of the claims of the course of the litigation. Finally, “[t]he party 

opposing amendment bears the burden of showing prejudice.” DCD Programs, Ltd. v. Leighton, 

833 F.2d 183, 187 (9th Cir. 1987) (citation omitted). As no opposition has been filed, there has 

been no showing of prejudice. Accordingly, the undersigned finds this factor also weighs in favor 

of amendment.

D. Futility of Amendment

“A motion for leave to amend may be denied if it appears to be futile or legally 

insufficient. However, a proposed amendment is futile only if no set of facts can be proved under 

the amendment to the pleadings that would constitute a valid and sufficient claim[.]” Miller v. 

Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988) (citations omitted). As the Supreme Court 

has held, ‘[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper 

subject of relief, he ought to be afforded an opportunity to test his claim on the merits.’” Foman v. 

Davis, 371 U.S. 178, 182 (1962). The standard to be applied is identical to that on a motion to 

dismiss for failure to state a claim under Rule 12(b)(6). Miller, 845 F.2d at 214. 

Here, the undersigned finds Garcia’s proposed amended complaint gives Defendants fair 

notice of the claims and the grounds up which they rest. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 

555 (2007). Further, even if one or more defendants were to argue the legal insufficiency of 

Garcia’s proposed amendment, “‘[t]he merits or facts of a controversy are not properly decided in 

a motion for leave to amend and should instead be attacked by a motion to dismiss for failure to 

state a claim or for summary judgment.’” Allen v. Bayshore Mall, 2013 WL 6441504, at *5 (N.D.

Cal. Dec. 9, 2013) (quoting McClurg v. Maricopa Cty., 2010 WL 3885142, at *1 (D. Ariz. Sept. 

30, 2010)). Thus, “‘denial [of a motion for leave to amend] on this ground is rare and courts 

generally defer consideration of challenges to the merits of a proposed amended pleading until 

after leave to amend is granted and the amended pleading is filed.’” dpiX LLC v. Yieldboost Tech, 

Inc., 2015 WL 5158534, at *3 (N.D. Cal. Sept. 2, 2015) (quoting Clarke v. Upton, 703 F. Supp. 2d 

1037, 1043 (E.D. Cal. 2010)). Accordingly, the undersigned finds this factor weighs in favor of 

amendment.

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E. Previous Amendments

Garcia has not previously sought leave to amend, and this factor therefore weighs in favor 

of amendment.

VI. CONCLUSION

As all factors weigh in her favor, the undersigned RECOMMENDS the District Court 

GRANT Garcia’s motion to amend. Further, because the amended complaint adds P&Z Group as 

a party, the undersigned RECOMMENDS the Court either CONTINUE the class discovery and 

certification deadlines or VACATE the pending deadlines and set a further case management 

conference to take place after P&Z Group has been served.

Garcia shall serve a copy of this report and recommendation upon all parties that are not 

represented, including Zavala, and file proof of service thereafter. Pursuant to 28 U.S.C. § 

636(b)(1) and Federal Rule of Civil Procedure 72(b)(2), a party may serve and file any objections 

within 14 days after being served. Failure to file objections within the specified time may waive 

the right to appeal the district court’s order.

IT IS SO RECOMMENDED.

Dated: January 29, 2020

THOMAS S. HIXSON

United States Magistrate Judge

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