Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-01086/USCOURTS-cand-5_07-cv-01086-0/pdf.json

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

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

**E-Filed 5/8/07**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

RUBEN MENDEZ, et al.,

 Plaintiffs,

 v.

BOTTOMLEY DISTRIBUTING CO., INC.,

 Defendant.

Case Number C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S

MOTION TO DISMISS AND STRIKE

[Doc. No. 6]

On April 27, 2007, the Court heard oral argument with respect the motion to dismiss and

strike filed by Defendant Bottomley Distributing Co., Inc. (“Bottomley”). For the reasons

discussed below, the motion will be denied.

I. BACKGROUND

Twelve individual employees and former employees of Bottomley filed this action in the

Santa Clara Superior Court seeking redress for Bottomley’s alleged violations of federal and state

wage and hour laws. The complaint asserts the following claims: (1) failure to pay overtime pay

in violation of the Fair Labor Standards Act, 29 U.S.C. § 207; (2) failure to provide meal and rest

breaks in violation of California Labor Code §§ 226.7 and 512; (3) failure to provide each

employee with an itemized statement of gross and net wages earned and other information

required by California Labor Code § 226; (4) failure to pay earned wages twice a month in

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

 As of the date of this order, pin citations are available only with respect to the BNA 1

publication. All future citations will be to the BNA publication.

2

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

violation of California Labor Code § 204; (5) failure to pay earned wages at the time of discharge

or layoff in violation of California Labor Code § 201; (6) failure to pay earned wages at the time

of resignation; and (7) unfair business practices arising out of the above violations in violation of

California Business and Professions Code §§ 17200 et seq. 

Bottomley removed the action to this Court on the basis of federal question jurisdiction. 

Bottomley thereafter filed a motion to dismiss Plaintiffs’ claim for failure to provide meal and

rest breaks on the ground that there is no private right of action for such claim, and to dismiss

Plaintiffs’ § 17200 claim to the extent based upon failure to provide meal and rest breaks on the

ground that § 17200 does not provide for recovery of penalties. Bottomley also moved to strike

references to deprivation of meal and rest periods more than one year prior to the filing of the

complaint on the ground that any claim for such deprivation seeks a penalty and thus is subject to

a one-year statute of limitations.

Following completion of briefing on Bottomley’s motion, the California Supreme Court

clarified that the additional hour of pay under § 226.7 constitutes a wage or premium pay and

thus is governed by a three-year statute of limitations. See Murphy v. Kenneth Cole Productions,

Inc., 40 Cal.4th 1094, ---, 155 P.3d 284, ---, 12 Wage & Hour Cas.2d (BNA) 833, 895 (2007).1

Bottomley subsequently withdrew its motion to dismiss to the extent that motion argued that the

remedy under § 226.7 constitutes a penalty, and withdrew its motion to strike entirely. 

Bottomley maintains its motion to dismiss to the extent the motion argues that there is no private

right of action under § 226.7. The Court requested and received supplemental letter briefs from

the parties addressing this issue.

II. LEGAL STANDARD

For purposes of a motion to dismiss, the plaintiff’s allegations are taken as true, and the

Court must construe the complaint in the light most favorable to the plaintiff. Jenkins v.

McKeithen, 395 U.S. 411, 421 (1969). Leave to amend must be granted unless it is clear that the

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

complaint’s deficiencies cannot be cured by amendment. Lucas v. Department of Corrections,

66 F.3d 245, 248 (9th Cir. 1995). When amendment would be futile, however, dismissal may be

ordered with prejudice. Dumas v. Kipp, 90 F.3d 386, 393 (9th Cir. 1996). 

III. DISCUSSION

The question of whether § 226.7 creates a private right of action has not been addressed

by the California Supreme Court. In the absence of authority from that court, this Court must use

its best judgment to predict how that court would decide the issue. See General Motors Corp. v.

Doupnik, 1 F.3d 862, 865 (9th Cir. 1993). This Court may look to the decisions of California

appellate courts for guidance, but it is not bound to follow such decisions. Id. at 865 n.4. 

This Court concludes that, although the question was not addressed directly, presumably

because it was not raised by the parties, the California Supreme Court implicitly held in Murphy

that a private right of action exists under § 226.7. Discussion of this implicit holding requires

some understanding of the administrative and civil remedies generally available to wage

claimants. The Murphy decision describes these remedies as follows: 

An employee pursuing a wage-related claim has two principal options. the

employee may seek judicial relief by fling an ordinary civil action against the

employer for breach of contract and/or for the wages prescribed by statute. Or the

employee may seek administrative relief by filing a wage claim with the

[commissioner] pursuant to a special statutory scheme codified in sections 98 to

98.8.

Murphy, 12 Wage & Hour Cas.2d (BNA) at 896 (internal quotation marks and citations omitted). 

“The Labor Commissioner has broad authority to investigate employee complaints and to

conduct hearings in actions to recover wages, penalties, and other demands for compensation.” 

Id. (internal quotation marks and citations omitted). This administrative process commonly is

known as “the Berman hearing procedure.” Id. “The Berman hearing procedure is designed to

provide a speedy, informal, and affordable method of resolving wage claims.” Id. The purpose

of the procedure is “to avoid recourse to costly and time-consuming judicial proceedings in all bu

the most complex of wage claims.” Id. (internal quotation marks and citations omitted). Any

party may seek review of the Labor Commissioner’s decision in a Berman proceeding by filing

an appeal in the appropriate municipal or superior court. Id. The filing of such an appeal

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

terminates the jurisdiction of the Labor Commissioner and vests jurisdiction in the appellate

court to conduct a de novo hearing of the issues. Id. at 896-97.

Murphy commenced a Berman proceeding before the Labor Commissioner, asserting

claims for unpaid overtime and waiting-time penalties against his former employer. Following

the Commissioner’s ruling in Murphy’s favor, the employer sought de novo review in the

superior court. During that de novo review process, Murphy sought to raise new claims for meal

and rest period violations under § 226.7 and for itemized pay statement violations. Those claims

had not been raised in the Berman proceeding. The superior court allowed Murphy to raise the

new claims over the employer’s objection. During the course of the superior court’s de novo

review of Murphy’s claims, a question arose as to whether claims for meal and rest period

violations under § 226.7 are governed by a one-year or a three-year statute of limitations. The

superior court, concluding that a three-year statute of limitations governed, found for Murphy on

his § 226.7 claims and on his other claims. The California Court of Appeal reversed in part,

holding that Murphy could not raise new claims for the first time on de novo appeal from the

Berman proceeding, and that a one-year statute of limitations applied to § 226.7 claims. The

California Supreme Court granted Murphy’s petition for review to address both questions.

With respect to Murphy’s assertion of new claims under § 226.7 in the de novo appellate

proceedings, the court stated as follows: “As the Court of Appeal here acknowledged, Murphy

could have filed a separate civil complaint raising the additional wage claims, at which point the

trial court could have consolidated the civil action with the de novo proceeding and considered

all of the claims together.” Id. at 898. In concluding that Murphy could have filed a civil

complaint raising his § 226.7 claims even though those claims had not been raised in the

administrative Berman proceeding, the court necessarily concluded that Murphy had the right to

file a civil claim under § 226.7. Moreover, the court devoted the bulk of its lengthy decision to

the question of whether a civil claim brought under § 226.7 is subject to a one-year statute of

limitations or a three-year statute of limitations. There would have been no reason for the court

to engage in this detailed analysis if no private right of action exists under § 226.7 in the first

place.

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

Bottomley argues that Murphy cannot be read as holding even implicitly that there is a

private right of action under § 226.7 because the issue was not presented to the court. It long has

been established that “[q]uestions which merely lurk in the record, neither brought to the

attention of the court nor ruled upon, are not to be considered as having been so decided as to

constitute precedents.” Webster v. Fall, 266 U.S. 507, 511 (1925); see also Sakamoto v. Duty

Free Shoppers, Ltd., 764 F.2d 1285, 1288 (9th Cir. 1985) (holding that “unstated assumptions on

non-litigated issues are not precedential holdings binding future decisions”). However, while

Murphy may not constitute binding precedent as to this issue, it nonetheless is informative as to

how the California Supreme Court would resolve the question of whether a private right of action

exists under § 226.7. 

Moreover, separate and apart from the implicit holding of Murphy discussed above, this

Court concludes that Murphy’s explicit determination that the additional hour of pay under §

226.7 is a wage necessarily suggests strongly that claimants have a private right of action to

recover that wage pursuant to California case law interpreting California Labor Code § 218. 

Section 218 reads in relevant part as follows: “Nothing in this article shall limit the right of any

wage claimant to sue directly or through an assignee for any wages or penalty due him under this

article.” Cal. Lab. Code § 218. Bottomley argues that § 218 does not confer any affirmative

right to sue for unpaid wages, but simply states that it does not limit an employee’s otherwise

existing right to sue for unpaid wages. Bottomley’s argument has some appeal, as it does track

the literal language of the statute. However, a number of California appellate decisions have

cited § 218 for the proposition that wage claimants have a direct right of action to seek unpaid

wages. See, e.g., Reynolds v. Bement, 36 Cal.4th 1075, 1084 (2005); Smith v. Rae-Venter Law

Group, 29 Cal.4th 345, 350 (2002); Sampson v. Parking Serv. 2000 Com, Inc., 117 Cal.App.4th

212, 220 (2004). Based upon these authorities, this Court concludes that a private right of action

exists to recover wages owing under § 226.7. 

The Court has considered Bottomley’s arguments to the contrary, including Bottomley’s

analysis of the legislative history of § 226.7. After careful review of Murphy and the California

cases addressing wage claimants’ rights to sue for unpaid wages generally, however, this Court is

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

persuaded that if squarely presented with the issue the California Supreme Court would conclude

that there is a private right of action under § 226.7. 

IV. ORDER

Accordingly, the motion to dismiss and strike is DENIED.

DATED: 5/8/07

__________________________________

JEREMY FOGEL

United States District Judge

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

Case No. C 07-1086 JF (RS)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS AND STRIKE

(JFLC2)

This Order was served on the following persons:

Molly Agarwal magarwal@littler.com, psloan@littler.com

Ronald D. Arena rarena@littler.com, bkearney@littler.com

Michelle R. Barrett mbarrett@littler.com, RYee@littler.com

Michael D. Nelson michael.nelson@333law.com

Sheila K. Sexton ssexton@beesontayer.com, eaviva@beesontayer.com

George J. Tichy , II gtichy@littler.com 

Case 5:07-cv-01086-JF Document 16 Filed 05/08/07 Page 7 of 7