Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-02221/USCOURTS-caed-2_13-cv-02221-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

ANDREW and KAREN FERNANDES,

Plaintiffs,

v.

TW TELECOM HOLDINGS INC., and 

DOES 1-50, inclusive,

Defendant.

2:13-CV-02221-GEB-CKD 

ORDER GRANTING IN PART AND 

DENYING IN PART MOTION TO 

DISMISS

Defendant TW Telecom Holdings, Inc. moves under Federal 

Rule of Civil Procedure (“Rule”) 12(b)(6) for dismissal of 

Plaintiff Andrew Fernandes’s claims alleged under section 6310 of 

the California Labor Code and section 1102.5(c) of the California 

Labor Code. Defendant also moves for dismissal of Plaintiff Karen 

Fernandes’s loss of consortium claim.

1 Plaintiffs oppose the 

motion.2 

 

1 Defendant also seeks dismissal of what Defendant characterizes as 

Plaintiffs' claims alleged under sections 6403 and 6404 of the California 

Labor Code. (Def.’s Mot. to Dismiss (“Def.’s Mot.”) 4:14-5:16, ECF No. 5-1.)

However, Plaintiffs state in their opposition that sections 6403 and 6404 are 

not “stand-alone causes of action” and are only alleged “as duties” supporting 

their 6310 claim. (Pls.’ Opp’n to Def.’s Mot. (“Pls.’ Opp’n”) 4:20-24, ECF No. 

6.) Defendant has not shown this is an appropriate dismissal motion; 

therefore, this portion of the motion is denied. 

2 Plaintiffs’ opposition includes a request that judicial notice be taken of 

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I. LEGAL STANDARD 

Decision on a Rule 12(b)(6) dismissal motion requires 

determination of “whether the complaint's factual allegations, 

together with all reasonable inferences, state a plausible claim 

for relief.” United States ex rel. Cafasso v. Gen. Dynamics C4 

Sys., Inc., 637 F.3d 1047, 1054 (9th Cir. 2011) (citing Ashcroft 

v. Iqbal, 556 U.S. 662, 678–79 (2009)). “A claim has facial 

plausibility when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. 

at 678 (citing Bell Atlantic v. Twombly, 550 U.S. 544, 556 

(2007)).

When determining the sufficiency of a claim under Rule 

12(b)(6), “[w]e accept factual allegations in the complaint as 

true and construe the pleadings in the light most favorable to 

the non-moving party.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th 

Cir. 2011) (internal quotation marks omitted). However, this 

tenet does not apply to “legal conclusions . . . cast in the form 

of factual allegations.” Id. (internal quotation marks omitted). 

“Therefore, conclusory allegations of law and unwarranted 

inferences are insufficient to defeat a motion to dismiss.” Id.

(internal quotation marks omitted); see also Iqbal, 556 U.S. at 

678 (quoting Twombly, 550 U.S. at 555) (“A pleading that offers 

‘labels and conclusions’ or ‘a formulaic recitation of the 

elements of a cause of action will not do.’”)

 

certain documents. This request is denied since Plaintiffs have not shown the 

documents are pertinent to issues involved in the motion. 

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II. FACTUAL ALLEGATIONS

The following allegations in the Complaint are germane 

to the claims involved in the motion.

Plaintiff Andrew Fernandes began working for Defendant 

on or about October 19, 2009. (Compl. ¶ 10, ECF No. 1.) At 

various times during his employment, this Plaintiff reported 

“safety and compliance” issues to his manager and to Defendant’s 

risk management department. (Id. at ¶¶ 14-16, 18-20, 22, 26, 29, 

32.) “[I]n early 2012, Plaintiff began to experience retaliation

. . . for reporting complaints.” (Id. at ¶ 30.) Among other acts

of retaliation, Plaintiff was investigated for motor vehicle 

violations (id.), removed from Defendant’s bonus program (id. at 

¶ 34), and terminated on August 1, 2012. (Id. at ¶ 35.)

III. ANALYSIS

a. Exhaustion of Administrative Remedies 

Defendant seeks dismissal of Plaintiff Andrew 

Fernandes’s claims, alleged under sections 1102.5(c) and 6310, 

contending that dismissal is required because this Plaintiff 

failed to allege in the Complaint that he exhausted the 

applicable administrative remedy for these claims prescribed in 

Labor Code section 98.7. 

Section 98.7(a) prescribes in pertinent part: “Any 

person who believes that he or she has been discharged or 

otherwise discriminated against in violation of any law under the 

jurisdiction of the Labor Commissioner may file a complaint with 

the [D]ivision [of Labor Standards Enforcement] . . . .” Cal. 

Lab. Code § 98.7(a) (emphasis added). Further, section 98.7(f) 

prescribes: “The rights and remedies provided by this section do 

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not preclude an employee from pursuing any other rights and 

remedies under any other law.” Cal. Lab. Code § 98.7(f).

This statutory language does not explicitly require 

Plaintiff to exhaust an administrative remedy. “When interpreting 

state law, federal courts are bound by decisions of the state's 

highest court. In the absence of such a decision . . . a federal 

court is obligated to follow the decisions of the state's 

intermediate appellate courts” as long as “there is no convincing 

evidence that the state supreme court would decide differently.” 

Vestar Dev. II, LLC v. Gen. Dynamics Corp., 249 F.3d 958, 960 

(9th Cir. 2001) (quoting Lewis v. Tel. Employees Credit Union, 87 

F.3d 1537, 1545 (9th Cir. 1996)). 

Section 98.7 has not yet been interpreted by the 

California Supreme Court, and California appellate courts are

split on the issue of whether plaintiffs must exhaust the 

administrative remedy provided in the statute. MacDonald v. 

State, 161 Cal. Rptr. 3d 520, 523 (Ct. App. 2013) (depublished),3

found that section 98.7 requires exhaustion notwithstanding that 

“the administrative remedy is couched in permissive, as opposed 

to mandatory, language.” The court reasoned that this 

construction is required in light of the California Supreme 

Court’s statements in Campbell v. Regents of Univ. of California, 

35 Cal. 4th 311 (2005). MacDonald interpreted Campbell as 

requiring administrative exhaustion whenever “an administrative 

remedy is provided by statute . . . [,] even where the 

administrative remedy is couched in permissive . . . language.”

 

3 Federal courts “may consider unpublished state decisions, even though such 

opinions have no precedential value.” Employers Ins. of Wausau v. Granite 

State Ins. Co., 330 F.3d 1214, 1220 n. 8 (9th Cir. 2003).

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161 Cal. Rptr. 3d at 523.

In contrast, Lloyd v. Cnty. of Los Angeles, 172 Cal. App. 

4th 320, 331 (2009), examined section 98.7 and concluded “it 

would appear Labor Code section 98.7 merely provides the employee 

with an additional remedy, which the employee may choose to 

pursue.” Lloyd also states: 

Further, case law has recognized there is no 

requirement that a plaintiff proceed through 

the Labor Code administrative procedure in 

order to pursue a statutory cause of action. 

We see no reason to differ with these 

decisions and to impose an administrative 

exhaustion requirement on plaintiffs seeking 

to sue for Labor Code violations.

We make the additional observation that 

construing Labor Code section 98.7 to 

obligate a plaintiff to seek relief from the 

Labor Commissioner prior to filing suit for 

Labor Code violations flies in the face of 

the concerns underlying the Labor Code 

Private Attorneys General Act of 2004 (PAG 

Act) (Lab.Code, § 2698 et seq.). As we stated 

in Dunlap v. Superior Court (2006) 142 

Cal.App.4th 330, 337, 47 Cal.Rptr.3d 614, the 

PAG Act was adopted to augment the 

enforcement abilities of the Labor 

Commissioner with a private attorney general 

system for labor law enforcement. . . . The 

PAG Act's approach, enlisting aggrieved 

employees to augment the Labor Commissioner's 

enforcement of state labor law, undermines 

the notion that Labor Code section 98.7 

compels exhaustion of administrative remedies 

with the Labor Commissioner. 

Id. at 331-32 (citations omitted) (internal quotations marks

omitted). 

MacDonald declined to follow Lloyd, stating in part, 

“[W]e do not believe this interpretation is correct. Moreover, 

Lloyd inexplicably fails to mention Campbell in its analysis . . 

. .” MacDonald, 161 Cal. Rptr. 3d at 525. However, Lloyd’s 

analysis of section 98.7 is consistent with the California 

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Supreme Court’s “well-established rules” of statutory 

interpretation. Los Angeles Cnty. Metro. Transp. Auth. v. Alameda 

Produce Mkt., LLC, 52 Cal. 4th 1100, 1106 (2011). Specifically,

Lloyd began its statutory interpretation “by examining the 

statutory language, giving it a plain and commonsense meaning.” 

Id. at 1106-07. Lloyd also “construe[d] the words in question in 

context . . . .” Id. at 1107.

“By its terms, Campbell only held that exhaustion of 

internal administrative remedies is required; there is no 

discussion in Campbell of exhaustion of administrative remedies 

before the Labor Commission.” Creighton v. City of Livingston, 

CV-F-08-1507 OWW/SMS, 2009 WL 3246825, at *12 (E.D. Cal. Oct. 7, 

2009). Therefore, an analysis of Campbell was not pertinent to 

Lloyd’s interpretation of the statute. Lloyd’s persuasive 

reasoning and interpretation of section 98.7 is adopted. See

Pinder v. Employment Dev. Dep't, CIV. S-13-817 LKK/AC, 2013 WL 

4482955, at *11 (E.D. Cal. Aug. 20, 2013) (finding no exhaustion 

requirement under section 98.7 and distinguishing Campbell);

Turner v. City & Cnty. of San Francisco, 892 F. Supp. 2d 1188, 

1202 (N.D. Cal. 2012) (same); but see e.g., Vasile v. Flagship 

Fin. Grp., LLC, 2:12-CV-02912-KJM, 2013 WL 4482914, at *6 (E.D. 

Cal. Aug. 19, 2013)(finding section 98.7 requires exhaustion);

Ferretti v. Pfizer Inc., 855 F. Supp. 2d 1017, 1023-24 (N.D. Cal. 

2012)(same).

Since section 98.7 “merely provides the employee with 

an additional remedy, which the employee may choose to pursue,”

this portion of the motion is denied. Lloyd, 172 Cal. App. 4th at 

331.

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b. Section 1102.5(c) 

Defendant seeks dismissal of Plaintiff Andrew 

Fernandes’s section 1102.5(c) claim, arguing it fails to allege 

that Plaintiff “refused to participate” in an activity that would 

result in a violation of law. (Def.’s Mot. to Dismiss (“Def.’s 

Mot.”) 7:7-10, ECF No. 5-1.) Plaintiff responds that his 

“consistent complaints” and “his refusal to ignore the [safety 

and compliance] violations” constituted protected conduct under 

section 1102.5(c). (Pls.’ Opp’n to Def.’s Mot. (“Pls.’ Opp’n”)

6:11-15, ECF No. 6.)

Section 1102.5(c) prescribes: “An employer may not 

retaliate against an employee for refusing to participate in an 

activity that would result in a violation of state or federal 

statute, or a violation or noncompliance with a state or federal 

rule or regulation.” Cal. Lab. Code § 1102.5(c). This is “a 

whistleblower statute” that “prohibits an employer . . . from 

retaliating against an employee who refuses to engage in conduct 

that would result in a violation of a statute.” Rope v. AutoChlor Sys. of Washington, Inc., 220 Cal. App. 4th 635, 648

(2013). 

Plaintiff’s allegations do not evince that he “refused 

to participate in an activity that would result” in a violation 

of law. Cf. Ferretti v. Pfizer Inc., 855 F. Supp. 2d 1017, 1025-

27 (N.D. Cal. 2012)(denying dismissal of 1102.5(c) claim where 

Plaintiff indicated that she would not conduct Phase III of her 

employer’s product studies and requested a transfer). Therefore, 

this claim is dismissed. 

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c. Loss of Consortium 

Defendant seeks dismissal of Plaintiff Karen 

Fernandes’s loss of consortium claim, arguing it is 

insufficiently alleged. (Def.’s Mot. 8:11-14.) 

To state a loss of consortium claim, a plaintiff must 

allege his or her spouse suffered an injury that “is sufficiently 

serious and disabling to raise the inference that the conjugal 

relationship is more than superficially or temporarily impaired.” 

Molien v. Kaiser Found. Hospitals, 27 Cal. 3d 916, 932-33 (1980). 

The injury may be physical or psychological, but psychological 

injury must “rise[] to the level of a ‘neurosis, psychosis, 

chronic depression, or phobia’. . . .” Anderson v. Northrop 

Corp., 203 Cal. App. 3d 772, 780 (1988) (quoting Molien, 27 Cal.

3d at 933).

Plaintiff Karen Fernandes alleges in the Complaint: “As 

a result of [Andrew Fernandes’s] termination . . . , [he] has 

suffered severe emotional distress and continues to obtain 

treatment for such . . . . [and Karen Fernandes] “has lost the 

companionship and services of her husband, including, but not 

limited to, loss of love, companionship, comfort, care, 

assistance, protection, affection, society, and moral support.” 

(Compl. ¶¶ 37, 61.) These allegations do not “allow[] the court 

to draw the reasonable inference,” Iqbal, 556 U.S. at 678, that 

Andrew Fernandes’s emotional distress “is sufficiently serious 

and disabling” to “more than superficially or temporarily 

impair[]” the Fernandes’s marital relationship. Molien, 27 Cal. 

3d at 932-33; see Anderson, 203 Cal. App. 3d at 780-81 (affirming 

an order of dismissal entered after the trial court sustained 

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demurrer where plaintiff alleged in the loss of consortium claim 

that her spouse became “mentally upset, distressed and 

aggravated” because the appellate court did “not find such 

emotional disquiet rises to the level of a ‘neurosis, psychosis, 

chronic depression, or phobia’ sufficient to substantially 

disturb the marital relationship on more than a temporary 

basis.”) Therefore, this claim is dismissed. 

IV. CONCLUSION

For the stated reasons, Defendant’s motion seeking 

dismissal of Plaintiff Andrew Fernandes’s 6310 claim is denied, 

and its motion seeking dismissal of the section 1102.5(c) claim

is granted. Defendant’s motion seeking dismissal of Plaintiff 

Karen Fernandes’s loss of consortium claim is granted. Further, 

Plaintiffs are granted fourteen (14) days from the date on which 

this order is filed to file an amended complaint addressing the 

referenced deficiencies in any dismissed claim. Plaintiffs are

notified that a dismissal with prejudice could be entered under 

Rule 41(b) if an amended complaint is not filed within the 

prescribed time period.

Dated: December 13, 2013

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