Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02004/USCOURTS-cand-3_15-cv-02004-1/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

CURTIS JOHNSON,

Plaintiff,

v.

SERENITY TRANSPORTATION, INC., et 

al.,

Defendants.

Case No. 15-cv-02004-JSC 

ORDER GRANTING IN PART MOTION 

TO DISMISS THIRD AMENDED 

COMPLAINT

Re: Dkt. No. 51

In this putative class action, Plaintiffs Curtis Johnson (“Johnson”) and Anthony Aranda 

(“Aranda, and together “Plaintiffs”) filed suit against their employer, Defendants Serenity 

Transportation, Inc. (“Serenity Transportation”), its owner David Friedel (“Friedel”), as well as 

Service Corporation International (“SCI”), SCI California Funeral Services, Inc. (“SCI 

California”), the Neptune Society of Central California, Inc. (“Neptune Society”), Lifemark 

Group, Inc. (“Lifemark”), and the County of Santa Clara (the “County” and collectively, 

“Defendants”). (Dkt. No. 50.) The gravamen of Plaintiffs’ Third Amended Complaint (“TAC”) is 

that Plaintiffs, mortuary drivers, have been misclassified as independent contractors and denied the 

benefits of California and federal wage-and-hour laws. Now pending before the Court is 

Defendants’ motion to dismiss. Defendants seek dismissal of all claims against Friedel for failure 

to plead alter ego liability, all claims against SCI, SCI California, Neptune, Lifemark, and the 

County (together, the “Customer Defendants”) for failure to plead that they are joint employers, as 

well as dismissal of various causes of action for failure to state a claim. (Dkt. No. 51.) Having 

considered the parties’ submissions, and having had the benefit of oral argument on October 15, 

2015, the Court GRANTS IN PART and DENIES IN PART the motion to dismiss.

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BACKGROUND

I. Complaint Allegations

Plaintiffs are “mortuary transportation drivers who carry dead bodies and other human 

remains from various locations (including nursing homes, hospitals, and homes) to Defendants’ 

facilities.” (Dkt. No. 50 ¶ 1.) Johnson worked as a driver for Defendants from January 1, 2012 to 

August 23, 2013, and Aranda from approximately August 2012 to March 2015. (Id. ¶¶ 6-7.) They 

bring this putative class action on behalf of themselves and the other 40-plus drivers that 

Defendants have employed during the relevant period. (Id. ¶ 17.)

Serenity Transportation & Friedel

Defendant Serenity Transportation is a mortuary transportation company that employed

Plaintiffs within the meaning of the Fair Labor Standards Act (“FLSA”), California Labor Code, 

and applicable Industrial Welfare Commission wage order (“IWC Wage Order”) to transport 

decedents. (Id. ¶¶ 8, 17.) 

Friedel is the owner, shareholder, CEO, and Board Member of Serenity Transportation, 

and an employer of Plaintiffs within the meaning of the FLSA, California Labor Code, and IWC 

Wage Order. (Id. ¶ 9.) Friedel “is the alter ego” of Serenity Transportation, which he operates for 

the purpose of concealing violations of the Labor Code. (Id.) Friedel dominates and controls the 

actions of Serenity Transportation and knowingly advised the company to treat the drivers as 

independent contractors to avoid employee status. (Id.) Friedel fails to respect Serenity 

Transportation’s corporate form by failing to adequately capitalize it, failing to properly maintain 

its minutes and corporate records, maintaining sole ownership of all Serenity Transportation stock, 

using his personal home as the location for board meetings, and otherwise failing to conduct board 

meetings in compliance with the law. (Id.)

Together, Serenity Transportation and Friedel assign drivers to 24-hour shifts, five days a 

week, resulting in 120-hour work weeks. (Id. ¶ 18.) The drivers are made available 24 hours a 

day to SCI, SCI California, Lifemark, Neptune, and the County’s Office of the Medical ExaminerCoroner. (Id.) Serenity Transportation and Friedel recruit and supervise drivers and advertise 

available driver positions online. (Id. ¶ 19.) The advertisements specify that drivers must be 

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available for on-call shifts 24 hours a day and that the employer enforces a professional attire dress 

code. (Id. ¶ 19.) Once hired, Serenity Transportation and Friedel schedule drivers for shifts and 

retain the right to change the shifts at their discretion. (Id.) Friedel is personally involved in 

drafting hiring criteria, interviewing drivers, and scheduling their shifts. (Id. ¶ 19.) Together, 

Serenity Transportation and Friedel promulgated “Client Policy Standards” that required drivers to 

obey a dress code, report to dispatch their status throughout the day, notify dispatch if the driver 

checks out of service before shift’s end, complete Serenity Transportation invoice information, 

keep the driver’s vehicle clean, and notify Serenity Transportation of any need for personal time 

off. (Id. ¶ 22.) Serenity Transportation and Friedel’s policy also provides that continuous 

violations of customer standards could result in termination of the driver’s contract or the driver 

being removed from a route. (Id.) Friedel is personally involved in monitoring and enforcing 

these policies. (Id.)

On both their website and in advertisements, Serenity Transportation and Friedel refer to 

the drivers as “staff.” (Id. ¶ 29.) Serenity Transportation and Friedel lease equipment to drivers, 

including vehicles, radios, and stretchers. (Id.) Initially, when Serenity Transportation was 

founded in 2010 it classified the drivers as employees, but Friedel, in his capacity as a member of 

the corporation’s Board of Directors, recommended that Serenity Transportation reclassify the 

drivers as independent contractors, and Serenity Transportation followed suit in February 2011. 

(Id. ¶¶ 29, 35.)

Drivers work for Serenity Transportation and Friedel continuously for many months or 

years. (Id. ¶ 33.) The drivers are, however, subject to termination by Serenity Transportation and 

Friedel at any time for any reason. (Id. ¶ 35.) Drivers are not required to possess a special license 

or undergo special training to perform Serenity Transportation’s transportation services. (Id.

¶ 34.)

Joint Employer Allegations

Serenity Transportation and Friedel served as labor contractors for SCI, SCI California, 

Neptune, Lifemark, and the County by providing drivers on an ongoing basis to meet those 

entities’ needs. (Id. ¶¶ 20, 33.) SCI and SCI California provide funeral and end-of-life services in 

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Alameda County and across the United States. (Id. ¶¶ 11-12.) Neptune and Lifemark provide 

cremation, removal, and end-of-life services in Alameda County and across the United States. (Id.

¶¶ 13-14.) The County provides investigation, removal, and autopsies in Santa Clara County. (Id.

¶ 15.) SCI, SCI California, Neptune, Lifemark, and the County all employed Plaintiffs by 

permitting them to work, exercising control over their wages, hours, and working conditions, and 

engaging them. (Id. ¶¶ 11-15.) The work that Plaintiffs and drivers generally performed for these 

Defendants was labor within the entities’ usual course of business. (Id.)

The Customer Defendants control the means and methods by which drivers carry out their 

jobs by directing drivers as to how to handle and remove decedents. (Id. ¶ 23.) While Drivers 

were at each Joint Employer’s location, drivers were under that Joint Employer’s supervision and 

control. (Id. ¶¶ 24-26.) Specifically, SCI and SCI California promulgated detailed policies 

governing drivers’ work, including requiring a particular type of identification band, specific 

labeling procedures, and a protocol for witnessing removal of human remains. (Id. ¶ 24.) SCI and 

SCI California retain the right to change these policies at any time. (Id.) They also retain the right 

to require that drivers receive ongoing training to provide services in compliance with the entities’ 

service guarantee; detail the time period in which drivers must respond to calls; and require drivers 

to follow a professional dress code. (Id.)

Neptune worked with Serenity Transportation and Friedel to create policies governing the 

drivers’ work, subject to change by Neptune, which include “instructions on how and where to 

record information about the deceased (including paperwork), how to handle the deceased, and the 

order in which Drivers were to complete tasks.” (Id. ¶ 25.) 

Lifemark also worked with Serenity Transportation to create policies governing drivers’ 

work subject to Lifemark’s change. (Id. ¶ 26.) Lifemark’s policies include instructions on “how 

and where to record information about the deceased, how to handle the deceased, and how Drivers 

should conduct themselves when arriving at and leaving Lifemark properties.” (Id.)

The County also promulgated detailed policies governing the drivers’ work subject to 

Change by the County at any time. (Id. ¶ 27.) These policies include identification and removal 

protocol at the County Coroner, including “the timeframe in which STI Drivers [are] expected to 

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respond to different types of calls . . . ; the amount of time that Drivers [are] required to wait at the 

scene if the deceased [is] not ready to be transported; and ‘stand-by’ and ‘dry-run’ time.” (Id.) 

The County requires drivers to keep records of service completion, and retained the right to keep 

its own records of runs. (Id.) The County also requires drivers to follow a dress code, refrain 

from displaying insignia besides the County Coroner’s, specified rules for driver’s vehicles’ 

appearance and equipment and retains the right to inspect these vehicles at any time. (Id.) The 

County supplies some of the driver’s equipment and otherwise requires that drivers act in 

accordance with instructions given by County staff at the scene. (Id.) 

Payment Allegations

Defendants paid Plaintiffs under a common compensation plan and policy where drivers 

are paid a flat rate that Defendants set for each completed dispatch. (Id. ¶ 37.) All Defendants 

participate in this scheme “including by requiring Drivers to fill out proprietary paperwork on 

which Driver time is recorded.” (Id.) As a result, drivers are not compensated for time spent 

awaiting calls. (Id.) This payment system fails to provide either minimum wage or overtime 

payment to drivers. (Id.)

II. Procedural History

Plaintiff Johnson initiated this action in Alameda County Superior Court on June 12, 2014 

alleging that Serenity Transportation and Friedel violated certain provisions of the California 

Labor Code. (Dkt. No. 1.) While the case was pending in state court, Johnson amended the 

complaint to add SCI and Neptune as defendants and to add a claim under the FLSA. (Dkt. No. 1 

¶ 1; Dkt. No. 32-1.) SCI properly and timely removed the case to federal court. (Dkt. No. 1.) 

Johnson then filed a Second Amended Complaint (“SAC”) adding Plaintiff Aranda and naming 

Lifemark, SCI California, and the County as defendants. (Dkt. No. 16.) The Court then granted 

Plaintiffs leave to file a Third Amended Complaint (“TAC”), which removed certain previouslyalleged causes of action and added others. (Dkt. No. 49.)

The now operative TAC includes ten causes of action against various groupings of 

defendants under federal and California labor law. The gravamen of almost all of Plaintiffs’ 

claims against all Defendants is that drivers have been misclassified as independent contractors 

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when they are really employees, and therefore Defendants have denied them the benefits of federal 

and California wage-and-hour laws. Defendants have moved to dismiss all claims against Friedel 

and the Customer Defendants as well as three of the ten causes of action for failure to state a claim 

upon which relief may be granted. 

LEGAL STANDARD

A Rule 12(b)(6) motion challenges the sufficiency of a complaint as failing to allege 

“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 570 (2007). A facial plausibility standard is not a “probability 

requirement” but mandates “more than a sheer possibility that a defendant has acted 

unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations 

omitted). For purposes of ruling on a Rule 12(b)(6) motion, the court “accept[s] factual 

allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the 

non-moving party.” Manzarek v. St. Paul Fire & Mar. Ins. Co., 519 F.3d 1025, 1031 (9th Cir.

2008). “[D]ismissal may be based on either a lack of a cognizable legal theory or the absence of 

sufficient facts alleged under a cognizable legal theory.” Johnson v. Riverside Healthcare 

Sys., 534 F.3d 1116, 1121 (9th Cir. 2008) (internal quotations and citations omitted); see 

also Neitzke v. Williams, 490 U.S. 319, 326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a 

claim on the basis of a dispositive issue of law”).

Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), under 

which a party is only required to make “a short and plain statement of the claim showing that the 

pleader is entitled to relief,” a “pleading that offers ‘labels and conclusions’ or ‘a formulaic 

recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678

(quoting Twombly, 550 U.S. at 555). “[C]onclusory allegations of law and unwarranted inferences 

are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir.

2004); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (“[A]llegations in a complaint 

or counterclaim may not simply recite the elements of a cause of action, but must contain 

sufficient allegations of underlying facts to give fair notice and to enable the opposing party to 

defend itself effectively.”). The court must be able to “draw the reasonable inference that the 

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defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663. “Determining whether a 

complaint states a plausible claim for relief . . . [is] a context-specific task that requires the 

reviewing court to draw on its judicial experience and common sense.” Id. at 663-64.

If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no 

request to amend the pleading was made, unless it determines that the pleading could not possibly 

be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en 

banc) (internal quotation marks and citations omitted).

DISCUSSION

Defendants move to dismiss the TAC on three main grounds: (1) failure to allege a basis 

for Friedel’s liability; (2) failure to demonstrate that the Customer Defendants qualify as 

Plaintiffs’ joint employers for the purposes of liability; and (3) failure to allege sufficient facts to 

state a claim upon which relief may be granted for the second, third, and seventh causes of action. 

The Court will address each in turn.

A. The TAC Adequately Alleges Grounds for Defendant Friedel’s Liability

1. Alter Ego Liability

Plaintiffs allege that Friedel is the alter ego of Serenity Transportation such that he is liable 

for the corporation’s violations. (Dkt. No. 51 ¶ 9.) “The alter ego doctrine arises when a plaintiff 

comes into court claiming that an opposing party is using the corporate form unjustly and in 

derogation of the plaintiff’s interests.”1 Mesler v. Bragg Mgmt. Co., 39 Cal.3d 290, 300 (1985). 

Under the doctrine, “[a] corporate identity may be disregarded—the ‘corporate veil’ pierced—

 

1 Both parties cite both federal and state law when describing the requirements of alter ego 

liability. The Court here is sitting not in diversity, but in original federal jurisdiction based on the 

FLSA claim, and supplemental jurisdiction over the remaining claims. (See Dkt. No. 51 ¶¶ 2-3.) 

Still, in determining whether alter ego liability applies, the federal court looks to the law of the 

forum state. In re Schwarzkopf, 626 F.3d 1032, 1037 (9th Cir. 2010); see also Gerritsen v. 

Warner Bros. Entm’t Inc., --- F. Supp. 3d ----, No. CV 14-03305 MMM (CWx), 2015 WL 

4069617, at *19 n. 126 (“Whether to pierce the corporate veil is a question of state law.”) (citing 

Dusharm v. Elegant Custom Homes, Inc., 302 F. App’x 571, 572 (9th Cir. 2008)). There is 

separate federal law on alter ego liability, which generally is applied when determining whether 

the court can exercise personal jurisdiction over a party based on alter ego theory. Ultimately, this 

may be a distinction without a difference because California alter ego law is substantially similar 

to federal law. See Ministry of Def. of the Islamic Republic of Iran v. Gould, Inc., 969 F.2d 764, 

769 (9th Cir. 1992).

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where an abuse of the corporate privilege justifies holding the [owner] of a corporation liable for 

the acts of the corporation.” Sonora Diamond Corp. v. Super. Ct., 83 Cal. App. 4th 523, 538 

(2000). “There is a strong presumption against disregarding corporate identities and finding a 

person to be the alter ego of a corporation.” Tarel Seven Design, Inc. v. Magni Grp., Inc., No. SA 

CV 89-210 AHS (RWRX), 1990 WL 118290, at *4 (C.D. Cal. May 30, 1990) (citing In re 

Christian & Potter Aluminum Co., 584 F.2d 326, 338 (9th Cir. 1978)). To overcome this 

presumption and state a claim for alter ego liability, a plaintiff must adequately allege that (1) 

there is such unity of interest that the separate personalities [of the entity and the shareholder] no 

longer exist and (2) that failure to disregard [their separate entities] would result in fraud or 

injustice. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001); see also Mid-Century Ins. Co. 

v. Gardner, 9 Cal. App. 4th 1205, 1213 (1992) (same). The party asserting alter ego liability bears 

the burden of establishing it. See U.A. Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 

(9th Cir. 1994). Conclusory allegations of alter ego status are inadequate; instead, the “plaintiff 

must allege specifically both of the elements of alter ego liability, as well as facts supporting 

each.” Sandoval v. Ali, 34 F. Supp. 3d 1031, 1040-41 (N.D. Cal. 2014) (citation omitted); see also 

Neilson v. Union Bank of Cal., 290 F. Supp. 2d 1101, 1116 (C.D. Cal. 2003).

When assessing whether there is unity of interest between a corporation and an individual 

for the purposes of piercing the corporate veil under alter ego liability, courts consider, among 

other factors:

the commingling of funds and other assets; the failure to segregate 

funds of the individual and the corporation; the unauthorized 

diversion of corporate funds to other than corporate purposes; the 

treatment by an individual of corporate assets as his own; the failure 

to seek authority to issue stock or issue stock under existing 

authorization; the representation by an individual that he is 

personally liable for corporate debts; the failure to maintain 

adequate corporate minutes or records; the intermingling of the 

individual and corporate records; the ownership of all the stock by a 

single individual or family; the domination or control of the 

corporation by the stockholders; the use of a single address for the 

individual and the corporation; the inadequacy of the corporation’s 

capitalization; the use of the corporation as a mere conduit for an

individual’s business; the concealment of the ownership of the 

corporation; the disregard of formalities and the failure to maintain 

arm’s-length transactions with the corporation; and the attempts to 

segregate liabilities to the corporation.

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Digby Adler Grp. LLC v. Image Rent a Car, Inc., 79 F. Supp. 3d 1095, 1106-07 (N.D. Cal. Feb. 6, 

2015) (citations omitted). Some courts have held that a plaintiff need only plead two or three of 

these factors to adequately plead unity of interest. See Daewoo Elecs. Am. Inc. v. Opta Corp., No. 

C 13-1247 JSW, 2013 WL 3877596, at *5 (N.D. Cal. July 25, 2013) (citation omitted); Pac. Mar. 

Freight, Inc. v. Foster, No. 10-CV-0578-BTM-BLM, 2010 WL 3339432, at *6 (S.D. Cal. Aug. 

24, 2010) (citing authority holding that the identification of unity of interest plus two or three 

factors was adequate).

The TAC alleges more than mere conclusory allegations that courts generally find 

insufficient. See Gerritsen v. Warner Bros. Entm’t Inc., --- F. 3d ----, No. CV 14-03305 MMM 

(CWx), 2015 WL 4069617, at *20 (C.D. Cal. Jan. 30, 2015) (collecting cases where plaintiffs 

merely alleged that the individual was the alter ego of the corporation). Plaintiffs specifically 

allege why there was such a unity of interest and ownership: Friedel “dominated and controlled 

the actions” of Serenity Transportation, failed to adequately capitalize Serenity Transportation, 

failed to properly maintain minutes and corporate records, maintained sole ownership of all stock, 

used his personal home as the location for board of director meetings, and failed to conduct board 

meetings as required by corporate by-laws and state law. (Dkt. No. 51 ¶ 9.) Based on these 

allegations, some factors weigh in favor of finding unity of interest, including domination or 

control by a sole individual, the failure to maintain adequate corporate minutes or records, an 

inference of use of a single address for the individual and the corporation, and inadequacy of the 

corporation’s capitalization. See Digby Adler Grp., LLC, 79 F. Supp. 3d at 1106-07. The TAC is 

silent as to the other factors, so they weigh against finding alter ego liability. Still, Plaintiffs have

adequately alleged at least four elements in support of finding alter ego liability, which his enough 

to show unity of interest at the pleading stage. See Daewoo Elecs. Am. Inc., 2013 WL 3877596, at 

*5. 

Defendants’ reliance on Stewart v. Screen Gems-EMI Music, Inc., 81 F. Supp. 3d 938 

(N.D. Cal. 2015), is misplaced. There, the Court found that the three elements—equitable 

ownership, use of same offices and employees, and identical officers and directors—were not 

enough to establish unity of interest for the purposes of personal jurisdiction after evidence of alter 

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ego liability was actually submitted and reviewed. Id. at 956. Not so here, where the Court 

reviews only the four corners of the complaint.

Next, “California courts generally require evidence of some bad-faith conduct to fulfill the 

second prong of alter ego liability, [and] that bad faith must make it inequitable to recognize the 

corporate form.” Smith v. Simmons, 638 F. Supp. 2d 1180, 1192 (E.D. Cal. June 23, 2009). A 

plaintiff’s difficulty collecting judgment from a corporation is not an inequitable result that 

warrants application of the alter ego doctrine. Neilson, 290 F. Supp. 2d at 1117. Defendants harp 

on this rule, urging that there is no inequitable result solely based on the idea that Plaintiffs may 

not be able to obtain relief from Serenity Transportation alone. But this is not what Plaintiffs 

allege. 

Instead, Plaintiffs urge that the inequitable result is that Friedel will be unjustly enriched 

by having directly profited from having unlawfully instructed Serenity Transportation to violate 

the California Labor Code by classifying the drivers as independent contractors instead of 

employees—i.e., by receiving a windfall as the corporation’s sole shareholder from funds that 

otherwise would have been paid to the drivers as further wages or benefits but for his law-breaking 

advice. Courts have rejected a plaintiff’s attempts to argue that an allegation of unjust enrichment 

is enough to meet the inequitable result prong where the plaintiff alleges no facts explaining how

the alleged alter ego benefited from the purported misconduct. See, e.g., Gerritsen, 2015 WL 

3958723, at *28 (citation omitted). But here, Plaintiffs have alleged facts about Friedel’s role in 

the wrongful classification of drivers as independent contractors, and their allegations give rise to 

an inference of unjust enrichment because he is alleged to be the sole shareholder of the 

company—in other words, he alone benefitted from the misclassification. On the one hand, 

Plaintiffs concede that they can offer no case law that holds that allegations of unjust enrichment 

of a sole shareholder are enough to satisfy the inequitable result prong. Defendants, for their part, 

urge that a sole shareholder’s unjust enrichment cannot be enough for inequitable result, or all 

shareholders would always be liable as alter egos in similar circumstances. But this argument 

ignores the allegation that Friedel is alleged to be the sole shareholder of the company. And

Defendants likewise offer no authority that holds that such allegations are not enough to plead 

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alter ego liability, instead relying solely on the presumption against alter ego. While such 

presumption exists, Defendants have not met their burden of showing that Plaintiffs’ allegations 

are insufficient to overcome the presumption of corporate separateness on a motion to dismiss. 

This is enough to meet the inequitable result prong at this stage of the litigation. Defendants’ only 

other argument against alter ego is their assertion at oral argument that Friedel was not the sole 

shareholder of Serenity Transportation as Plaintiffs allege, such that finding alter ego adequately 

pleaded here would result in holding all shareholders to answer in every independent contractor 

classification case. But this argument relies on facts outside the four corners of the TAC, which 

the Court does not consider on a 12(b)(6) motion to dismiss. Thus, while Plaintiffs may not be 

able to prove on the merits that Friedel was Serenity Transportation’s alter ego, they have 

sufficiently pleaded alter ego allegations to survive Defendants’ motion.

2. Liability under California Labor Code § 2753.4

The first eight causes of action in the TAC allege liability against Friedel, in part, for 

having advised Serenity Transportation to treat drivers—who were initially classified as 

employees—as independent contractors knowing that they were, in fact, employees. Plaintiffs’ 

allegations arise under California Labor Code § 2753, which provides in relevant party that a 

person “who, for money or other valuable consideration, knowingly advises an employer to treat 

an individual as an independent contractor to avoid employee status for that individual shall be 

jointly and severally liable with the employer if the individual is found not to be an independent 

contractor.” Cal. Labor Code § 2753(a). The statute also includes a carve-out, noting that it does 

not apply to a “person who provides advice to his or her employer” or a licensed attorney 

providing legal advice. Id. § 2753(b). 

The TAC alleges that Friedel was the CEO of Serenity Transportation. (Dkt. No. 46 ¶ 9.) 

Thus, because he is alleged to be an employee of the company, Defendants contend that the 

subsection (b) carve-out applies and Friedel is not vicariously liable under Section 2753. 

Defendants made this same argument in their opposition to Plaintiffs’ motion for leave to file the 

TAC, and the Court noted that because neither party had offered “any case law addressing whether 

a defendant alleged to be an employee can still be subject to liability for advice provided in some 

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other capacity[, t]he Court cannot conclude absent further briefing that Plaintiffs’ Section 2753 

claim against Friedel” fails. (Dkt. No. 49 at 5.) Defendants still do not cite any case law in 

support of their position. They note that “no other case has squarely addressed the issue of 

liability based upon [Section] 2753 for individuals wearing ‘numerous corporate hats[.]’” (Dkt. 

No. 51 at 26 n.4.) Indeed, neither Plaintiffs nor the Court has found authority addressing this 

issue, which is not altogether surprising given that the law only went into effect in 2012. 

Defendants argue generally that, as a matter of logic, when a person performs as both 

employee and in other roles for his employer—like a member of board of directors—his 

employment relationship always precludes Section 2753 liability. On the one hand, this approach 

finds support in the legislative history of Section 2753, which explains that the addition of the 

section “was necessary because employers frequently relied on the services of employment 

consulting firms to find ways to streamline the business and cut costs.” Noe v. Super. Ct., 237 

Cal. App. 4th 316, 330 (2015) (citation omitted). Thus, the purpose of Section 2753 was to 

combat outside consultants. See id. & n.7. On the other hand, the statute is to be construed 

broadly in favor of protecting employees—i.e., those individuals misclassified by the employer. 

Id. (citations omitted). This weighs in favor of extending liability to employees acting in distinct 

capacities. Moreover, in other contexts, California courts have recognized the distinction between 

employee and a board member and found liability only where the defendant was acting in the 

capacity of the particular position that could give rise to liability. For example, in Gaillard v. 

Natomas Co., 208 Cal. App. 3d 1250 (1989), the court declined to apply the business judgment 

rule to officer-director defendants because the actionable conduct arose out of their role as officer 

employees, not as directors. Id. at 1265. With no direct authority to rely on, and since the Court it 

required to interpret the Labor Code broadly to protect employees, see Noe, 237 Cal. App. 4th at 

330, the Court concludes that, as pleaded, Section 2753 liability may attach where an officerdirector provides misclassification advice in his role as director.

Defendants further contend that Plaintiffs have not alleged that Friedel received money or 

valuable consideration for providing the misclassification advice, so the claim fails anyway. But 

Plaintiffs have alleged that Friedel was the sole shareholder of Serenity Transportation. (Dkt. No. 

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51 ¶ 9.) Drawing all inferences in Plaintiffs’ favor as required, one could reasonably infer that 

Friedel received the cost-savings benefit—i.e., withheld wages and benefits—that resulted from 

Serenity Transportation classifying drivers as independent contractors instead of employees. 

Thus, Plaintiffs have stated a claim for Friedel’s vicarious liability under Section 2753, as well. 

The Court therefore declines to dismiss Friedel from this action.2

B. Whether the TAC Adequately Pleads that Defendants SCI, SCI California, Neptune, 

Lifemark and the County are Joint Employers with Serenity Transportation

Defendants next contend that Plaintiffs have failed to allege that SCI, SCI California, 

Neptune, Lifemark, and the County are liable to Plaintiffs as “joint employers” under the FLSA 

and California law. The joint employer doctrine recognizes that “even where business entities are 

separate, if they share control of the terms of conditions of an individual’s employment, both 

companies can qualify as employers.” Guitierrez v. Carter Bros. Sec. Servs., LLC, No. 2:14-cv00351-MCE-CKD, 2014 WL 5487793, at *3 (E.D. Cal. Oct. 29, 2014) (citing Real v. Driscoll 

Strawberry Assocs., Inc., 603 F.2d 748, 769-60 (9th Cir. 1979)). “While [the] plaintiff is not 

required to conclusively establish that defendants were her joint employers at the pleading stage, 

[the] plaintiff must at least allege some facts in support of this legal conclusion.” Hibbs-Rines v. 

Seagate Techs., LLC, No. C 08-05430 SI, 2009 WL 513496, at *5 (N.D. Cal. Mar. 2, 2009) 

(citation omitted).

1. Joint Employer under the FLSA

 

2

Plaintiffs also allege that Friedel himself was an “employer” of drivers. An individual manager 

can be liable as an employer where he has a significant role in company operations and 

supervision of employees, particularly where he has a say on financial matters. See Boucher v. 

Shaw, 572 F.3d 1087, 1094 (9th Cir. 2009); Guifu Li v. A Perfect Day Franchise, Inc., 281 F.R.D. 

373, 398 (N.D. Cal. 2012) (noting that employer status under the FLSA “has been found where a 

manager had the authority to hire and fire employees, instructed employees regarding time cards, 

maintained employment records, filled out wage sheets, and paid the bills”) (citation omitted); cf. 

Baird v. Kessler, 172 F. Supp. 2d 1305, 1311 (E.D. Cal. 2001) (concluding that a managers who 

did not “control the purse strings” were not individually liable as employers even though they set 

work schedules, drafted employee handbooks, recommended or reviewed terminations, and 

maintained employment records). Drawing all inferences in Plaintiffs’ favor, the TAC adequately 

alleges that Friedel, as sole shareholder of Serenity Transportation, was a joint employer. 

Defendants do not appear to challenge Plaintiff’s claims against Friedel directly as an employer, 

so even if the alter ego and vicarious liability claims were inadequately pleaded, Friedel would 

remain in the case.

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a. Legal Standard

A defendant must be an “employer” of the plaintiff to be liable under the FLSA. Bonnette 

v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983), abrogated on other 

grounds by Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985). The FLSA defines 

an employer as “any person acting directly or indirectly in the interest of an employer in relation 

to an employee.” 29 U.S.C. § 203(d). The statute defines “to employ” as “to suffer or permit to 

work.” Id. § 203(g). “[T]he Ninth Circuit has held that the definition of employer under the 

FLSA should be construed to mean that an individual is subject to liability under the FLSA where 

an individual exercises control over the nature and structure of the employment relationship, or 

economic control over the relationship.” Arias v. Raimondo, No. 2:13-cv-00904-TLN-EFB, 2015 

WL 1469272, at *4 (E.D. Cal. Mar. 30, 2015) (citations omitted).

“Two or more employers may be “joint employers” for the purposes of the FLSA.” 

Maddock v. KB Homes, Inc., 631 F. Supp. 2d 1226, 1232 (C.D. Cal. 2007). “All joint employers 

are individually responsible for compliance with the FLSA.” Id.; see also 29 C.F.R. § 791.2(a). 

Whether an entity is a “joint employer” under the FLSA is a question of law. Torres-Lopez v. 

May, 111 F.3d 633, 638 (9th Cir. 1997).

The Supreme Court has explained that the “economic reality” of an employment situation 

determines whether an employer-employee relationship exists under the FLSA. Goldberg v. 

Whitaker House Coop., 366 U.S. 28, 33 (1961). “The FLSA itself does not specifically address 

the concept of joint employers.” Adedapoidle-Tyehimba v. Crunch, LLC, No. 13-cv-00225-WHO, 

2013 WL 4082137, at *3 (N.D. Cal. Aug. 9, 2013). However, the Department of Labor 

promulgated regulations that provide guidance for when joint employment may exist. See 

Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1112 n.4 (9th Cir. 2001) (“We give deference to the 

DOL’s regulations interpreting the FLSA.”). These regulations provide that

Where the employee performs work which simultaneously benefits 

two or more employers, or works for two or more employers at 

different times during the workweek, a joint employment 

relationship generally will be considered to exist in situations such 

as:

(1) Where there is an arrangement between the employers to share 

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the employee’s services, as, for example, to interchange employees; 

or

(2) Where one employer is acting directly or indirectly in the interest 

of the other employer (or employers) in relation to the employee; or

(3) Where the employers are not completely disassociated with 

respect to the employment of a particular employee and may be 

deemed to share control of the employee, directly or indirectly, by 

reason of the fact that one employer controls, is controlled by, or is 

under common control with the other employer.

29 C.F.R. § 791.2(b). Thus, the regulations indicate that “joint employment will generally be 

considered to exist when 1) the employers are not ‘completely disassociated’ with respect to the 

employment of the individuals and 2) where one employer is controlled by another or the 

employers are under common control.” Chao v. A-One Med. Servs., Inc., 346 F.3d 908, 918 (9th 

Cir. 2003).

The Ninth Circuit, in turn, has adopted a four-part “economic reality” test to determine 

when the employer-employee relationship exists. See Bonnette, 704 F.2d at 1470. These factors 

include whether the employer: “(1) had the power to hire and fire the employees, (2) supervised 

and controlled employee work schedules or conditions of employment, (3) determined the rate and 

method of payment, and (4) maintained employment records.” Id.; see also Moreau v. Air France, 

356 F.3d 942, 946-47 (9th Cir. 2004) (confirming applicability of the Bonnette factors for the 

economic reality test). In Torres-Lopez v. Mary, the Ninth Circuit added to this analysis eight 

secondary “non-regulatory” factors that support joint employer status, including whether:

(1) the work done by the employee was analogous to a specialty job 

on the production line; (2) the responsibility under the contract was 

standard for the industry and could be passed from one contractor to 

another without material change and little negotiation; (3) the 

purported joint employer owns or has an interest in the premises and 

equipment used for the work; (4) the employees did not have a 

business organization that could shift as a unit from one worksite to 

another; (5) the services rendered were piecework and did not 

require special skill, initiative or foresight; (6) the employee did not 

have an opportunity for profit or loss depending upon the 

employee's managerial skill; (7) there was permanence in the 

working relationship and (8) the service rendered was an integral 

part of the alleged joint employer’s business.3

 

3

The Torres-Lopez factors derive from the Migrant and Seasonal Agricultural Worker Protection 

Act, 29 U.S.C. §§ 1801-1872. See Maddock v. KB Homes, Inc., 631 F. Supp. 2d 1226, 

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Id. at 640; Moreau, 356 F.3d at 947-48. The first and eighth Torres-Lopez factors, however, do 

not have much bearing outside of the production-line employment context. Moreau, 356 F.3d at 

952. The Ninth Circuit has since clarified that the Bonnette factors weigh most heavily in the 

analysis. See Moreau, 356 F.3d at 946-47 (noting that the court “focused primarily on [the] four 

Bonnette factors”); see also, e.g., Rios v. Airborne Express, Inc., No. C-05-2092 VRW, 2006 WL 

2067847, at *2 (N.D. Cal. July 24, 2006) (noting that the Bonnette factors are most important) 

(citations omitted).

In addition to pleading facts in support of the Bonnette and Torres-Lopez factors, a plaintiff 

seeking to hold multiple entities liable as joint employers must plead specific facts that explain 

how the defendants are related and how the conduct underlying the claims is attributable to each 

defendant. See Freeney v. Bank of Am. Corp., No. CV 15-02376 MMM (PJWx), 2015 WL 

4366439, at *18 (C.D. Cal. July 16, 2015); Adedapoidle-Tyehimba, 2013 WL 4082137, at *5. 

Ultimately, all of these factors are meant to guide a court’s analysis, but the ultimate determination 

must be based “upon the circumstances of the whole activity.” Rutherford Food Corp. v. 

McComb, 331 U.S. 722, 730 (1947); Bonnette, 704 F.2d at 1470 (“The [ ] factors . . . provide a 

useful framework for analysis . . . but they are not etched in stone and will not be blindly 

applies.”). At the motion to dismiss stage, a plaintiff need only allege facts demonstrating some of 

the Bonnette or Torres-Lopez factors to survive. See, e.g., Guitierrez, 2014 WL 5487793, at *5-6. 

b. Application to the Customer Defendants

i. Bonnette Factors

Power to Hire and Fire. The first Bonnette factor is whether the alleged joint employer 

has the power to hire and fire the purported employees. Here, the TAC alleges that Serenity 

Transportation and Friedel placed job advertisements, interviewed, and hired drivers, then 

provided them to the Customer Defendants as a labor contractor. (Dkt. No. 50 ¶¶ 19-20.) Thus, 

the Customer Defendants plainly have no hiring authority. With respect to firing, the TAC alleges

generally that the Customer Defendants retain and exercise the right to remove drivers from their 

work rotation. (Dkt. No. 50 ¶ 35.) In contrast, however, the TAC also explicitly alleges that 

Serenity Transportation and Friedel retain and exercise the right to terminate a driver’s 

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employment. (Id.; see also id. ¶ 22 (noting that failure to comply with policies could result in the 

driver’s contract termination).) Plaintiffs argue in their opposition that removal of a driver from 

his work rotation for a particular Customer Defendant “effectively terminates the Driver from that 

Defendant and is indicative of employment status.” (Dkt. No. 52 at 12.) But the TAC does not 

allege that removal of a driver from a work rotation terminates the driver’s role—as a driver for 

Serenity Transportation. Thus, the first Bonnette factor weighs against a finding of joint employer 

status for all of the Customer Defendants.

Control over the Employees’ Work Schedules or Conditions. The second Bonnette factor 

is whether the entity had control over the employees’ work schedules or conditions. This factor 

provides a scintilla of support for a finding of joint employer status. The Court discounts the 

conclusory allegation that all “[e]ach of the Defendants has retained extensive control over the 

wages, hours, and working conditions of Plaintiffs and other Drivers.” (Dkt. No. 50 ¶ 17.) The 

TAC alleges that the Customer Defendants promulgated detailed policies that governed the work 

that the drivers performed. (Id. ¶¶ 23-27.) Similarly, with respect to each Customer Defendant, 

Plaintiffs allege that when drivers were on their locations or performing work for them, they were 

under that Customer Defendant’s supervision and control. (Id.) But the TAC lacks factual 

allegations to support this legal conclusion. These allegations are too vague and conclusory to 

support a plausible inference of joint employment under the relevant pleading standards. 

Turning to the more specific allegations against each Customer Defendant, SCI and SCI 

California enacted policies requiring drivers to use particular labeling and removal protocol; 

requiring that drivers receive training; detailing the time period in which drivers were to respond 

to calls; and specifying that drivers dress “in a professional manner.” (Id. ¶ 24.) Merely requiring 

drivers to dress professionally while on the job plainly does not give rise to joint employer 

liability; this “policy” does not even identify the particular clothing that the drivers must wear. 

And while one identified policy is that SCI and SCI California require that drivers receive 

training, Plaintiffs do not allege that the training comes from those entities or has anything to do 

with those entities’ policies. Thus, the claim against SCI and SCI California turns on those 

entities’ labeling and removal protocol and policies detailing the time period in which drivers must 

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respond to calls. There is no allegation that SCI and SCI California control the drivers’ driving 

routes or schedules. These allegations provide some indication that SCI and SCI California had 

limited control over the employees’ work conditions, but the inference is weak at best. 

Turning to Neptune, Plaintiffs allege that the entity created policies with instructions on 

how and where drivers must record information about the deceased, how to handle the deceased, 

and the order in which drivers were to complete tasks. (Id. ¶ 25.) The TAC does not detail what 

those policies were—i.e., what tasks were included and, how they were enforced, if at all. Further 

undercutting any inference of Neptune’s control is the allegation that Neptune “worked with STI 

and Friedel” to create the policies. (Id.) Even drawing all reasonable inferences in Plaintiffs’ 

favor, that Neptune did not have its own policies governing the drivers but rather created policies 

with the drivers’ actual employer undercuts the conclusion that Neptune itself exercised control 

over the drivers’ working conditions through these policies. 

The same is true of Lifemark, which is alleged to have worked with Serenity 

Transportation and Friedel to create policies and procedures including instructions on how and 

where to record information about the deceased, how to handle the deceased, and how drivers 

should conduct themselves while located on Lifemark property. (Id. ¶ 26.) As above, the TAC 

does not detail what those policies are; without them, the Court has no ability to suss out the extent 

to which the policies actually indicate Lifemark’s control over the drivers’ working conditions. 

Nor does the TAC allege that Lifemark itself monitored or enforced the policies. Thus, as written, 

the allegations against Neptune and Lifemark give rise only to an anemic inference that the entity 

exercised control over the drivers’ work conditions and schedules.

The County presents a slightly different picture. The TAC alleges that the County 

promulgated policies about the timeframe in which drivers must respond to different types of calls, 

the amount of time drivers were required to wait at the scene if the deceased was not ready to be 

transported, and “stand-by” and “dry-run” time. (Id. ¶ 27.) This is enough, at this stage of 

litigation, to plausibly establish that the Customer Defendants exercise control over the driver’s 

work conditions. Defendants urge that the work conditions or requirements relating to timing and 

manner of decent pick-up that they are alleged to have imposed were merely “for the sake of 

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tracking dead bodies” and contend that they are therefore insufficient like the policies in Moreau 

v. Air France, 356 F.3d 942, 951 (9th Cir. 2004), which were imposed “to ensure compliance with 

various safety and security regulations[.]” But there are no allegations in the TAC that the 

Customer Defendants’ policies are meant to ensure compliance with laws, ordinances, or 

regulations. To be sure, the control that the Customer Defendants are alleged to exercise could be 

stronger—for example, there are no allegations here that the Customer Defendants were involved 

in day-to-day oversight of driver’s work. But the allegations against the County are enough to 

satisfy this Bonnette factor. 

Thus, the second Bonnette factor provides some support for a finding of joint employer 

status for the County, and minimal support for such finding as to SCI, SCI California, Neptune, 

and Lifemark.

Control over the Rate and Method of Employees’ Payment. The third Bonnette factor is 

whether the alleged employer determined the rate and method of the employees’ payment. The 

TAC alleges in a conclusory fashion that “[a]ll Defendants participate in the compensation 

scheme, including by requiring Drivers to fill out proprietary paperwork on which Driver time is 

recorded.” (Dkt. No. 50 ¶ 37.) In the TAC, Plaintiffs impliedly allege that they signed an 

employment contract with Serenity Transportation.4 (See Dkt. No. 50 ¶ 22 (Serenity 

 

4 Defendants attached a copy of Plaintiff Johnson’s employment contract to their motion to 

dismiss. (Dkt. No. 51-1.) On a 12(b)(6) motion, a court may consider documents incorporated by 

reference into the complaint. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003) (citing 

Fed. R. Civ. P. 12(b)). “Even if a document is not attached to a complaint, it may be incorporated 

by reference into a complaint if the plaintiff refers extensively to the document or the document 

forms the basis of the plaintiff’s claims.” Id. “The defendant may offer such a document, and the 

district court may treat such a document as part of the complaint, and thus may assume that its 

contents are true for the purposes of a motion to dismiss.” Id. This “incorporation by reference 

doctrine” has been extended “to situations in which the plaintiff’s claim depends on the contents 

of a document, the defendant attaches the document to its motion to dismiss, and the parties do not 

dispute the authenticity of the document, even though the plaintiff does not explicitly allege the 

contents of that document in the complaint.” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 

2005). The incorporation by reference doctrine permits the Court to consider Plaintiff Johnson’s 

employment agreement with Serenity Transportation. Plaintiffs refer to an employment contract 

in the TAC and states that Serenity Transportation retained the right to terminate for any or no 

reason. Plaintiffs contend that it was improper for Defendants to submit the contract, but do not 

challenge its authenticity, and in fact quote from the document in their opposition. (See Dkt. No. 

52 at 12-13 n.8.) Although Plaintiffs stated at oral argument that they dispute the authenticity of 

the contract, their dispute was limited to the duration provision only: they contend that Plaintiff 

Johnson signed a 1-year contract, not a 2-year as the contract Defendants submitted. However, the 

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Transportation and Friedel’s policies notified drivers that violations could result in contract 

termination).) The employment contract indicates that drivers receive a percentage of the fees for 

services that the Customer Defendants pay. (Dkt. No. 51-1 at 7.) While this makes clear that the 

Customer Defendants’ initial fee contributes to the ultimate determination of how much drivers 

received, it is Serenity Transportation alone that was actually responsible for determining the rate 

at which drivers were ultimately paid. This is not enough to plausibly infer that the Customer 

Defendants have control over the payment that the drivers receive.

Maintenance of Employment Records for the Employees. The final Bonnette factor 

considers whether the Customer Defendants maintain employment records for the employees. The 

TAC does not allege that SCI, SCI California, Neptune, or Lifemark maintain employment records 

for the drivers. As for the County, the TAC alleges that the County requires drivers to keep 

records and retains the right to keep records of the runs. (Dkt. No. 50 ¶ 27.) But it does not allege 

that the County actually maintains such records. Thus, this factor weighs against a finding of joint 

employment status against all Customer Defendants.

Plaintiff’s argument that it has no knowledge regarding whether other Defendants [besides 

the County] retained employment records” because those Defendants “have not substantially 

responded to any discovery requests” misses the mark. (Dkt. No. 52 at 13.) This approach—

allowing Plaintiffs to cure pleading defects at the back end through facts gleaned through 

discovery rather than pleading facts in the complaint—flips the relevant pleading standard on its 

head. Twombly and Iqbal require a plaintiff to plead enough facts from which a plausible 

inference of joint employment status can be drawn to survive dismissal, and thereafter proceed to 

discovery, not the other way around.

ii. Torres-Lopez Factors

The Court now turns to the second through seventh Torres-Lopez factors. See Moreau, 

356 F.3d at 952. As for the second factor, there are no allegations that “responsibility under the 

 

Court does not rely on the duration of the contract in its analysis and Plaintiffs did not challenge 

the authenticity of any other provision of the agreement, so the Court will consider it.

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contract was standard for the industry and could be passed from one contractor to another without 

material change and little negotiation[,]” so this factor weighs against a finding of joint employer 

status. Torres-Lopez, 111 F.3d at 640. Similarly, there are no allegations that SCI, SCI 

California, Neptune or Lifemark has an interest in any of the equipment the drivers used—i.e., the 

cars or other equipment used to transport the bodies, so the third factor weighs against a finding 

that they are joint employers. The TAC alleges that the County “retained the right to supply some 

of the equipment, including body bags, plastic sheeting, and body shrouds.” (Dkt. No. 50 ¶ 27.) 

On the other hand, the TAC does not allege that the County actually supplied any of this 

equipment or had any ownership or other interest in the drivers’ cars. Thus, this factor provides a 

modicum of support for a finding of joint employer status only for the County. There are no 

allegations pertaining to the fourth Torres-Lopez factor, but the fifth and sixth weigh in favor of 

joint employer status inasmuch as the TAC alleges that the services rendered were piecework as 

drivers received a flat rate per run and required no special skill or license requirement and that the 

drivers had no opportunities for profit or less depending on their managerial skill. Seventh, 

Plaintiffs allege that there was permanence in the working relationship, but at the same time allege 

that the Customer Defendants could remove a driver from their work route at any time and were 

provided to the Customer Defendants as labor contractors on a per-call basis. This factor is 

therefore a wash. In short, the third (ever so slightly), fifth, and sixth factors support a finding of 

joint employment as for the County, and only the fifth and sixth support such a finding as to SCI, 

SCI California, Neptune and Lifemark. 

But besides a mechanical application of these factors, the facts of Torres-Lopez itself are 

also instructive. There, the nominal employer effectively had no employees at all, but instead 

functioned more as an employment agent or broker to funnel workers to the grower, which then 

exercised control over most aspects of the field work. 111 F.3d at 637. In other words, the 

purported joint employer—not the nominal employer—exercised control over the workers. Not so 

here, where Serenity Transportation and Friedel hire, train, supervise, and fire drivers, and

function not as an employment agent or broker, but as a labor contractor providing its own driveremployees to perform services for its customers. In short, the secondary Torres-Lopez factors, 

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especially in light of the weak showing of a single Bonnette factor, do not compel the Court to 

conclude that the Customer Defendants are joint employers.

* * *

The Bonnette factors weigh the heaviest in the joint employment analysis under federal 

law, see Moreau, 356 F.3d at 946-47, and as set forth above, only one of the factors provides any 

support for a finding of joint employer status. Plaintiffs are unable to cite a case suggesting that a 

single Bonnette factor is enough for joint employment even at the pleading stage. Analysis of the 

secondary Torres-Lopez factors likewise provides only minimal support for such a conclusion. 

Ultimately, as the Ninth Circuit instructs, the factors are just a guide and what matters is the 

totality of the circumstances alleged. See Rutherford, 331 U.S. at 730; Bonnette, 704 F.2d at 1470. 

In light of the Bonnette and Torres-Lopez factors, and viewing the economic realities test as a 

whole, the TAC does not adequately allege that any of the Customer Defendants are actually 

functioning as joint employers of the drivers. Plaintiff shall have leave to amend to cure the 

defects discussed above.

2. Joint Employer Under California Law

The Court reaches the same conclusion applying California law, which has its own test for 

determining joint employment. 

a. Legal Standard

In actions to recover unpaid minimum wages pursuant to Cal. Labor Code § 1194, as here, 

“the standards to determine whether Defendants are directly liable are set out in Martinez v. 

Combs, 49 Cal.4th 35 (2010), where the California Supreme Court held that the definition of 

‘employer’ for minimum wage purposes is provided in the orders of California’s Industrial 

Welfare Commission (“IWC”)[.]” Ochoa v. McDonald’s Corp., --- F. Supp. 3d ----, No. 14-cv02098-JD, 2015 WL 5654853, at *2 (N.D. Cal. Sept. 25, 2015); see Martinez, 49 Cal. 4th at 52; 

see, e.g., Futrell v. Payday Cal., Inc., 190 Cal. App. 4th 1419, 1429 (2010); Betancourt v. 

Advantage Human Resourcing, Inc., No. 14-cv-01788-JST, 2014 WL 4365074, at *2-3 (N.D. Cal. 

Sept. 3, 2014); Torres v. Air to Ground Servs., Inc., 300 F.R.D. 386, 394-95 (C.D. Cal. 2014); 

Taylor v. Waddell & Reed Inc., No. 09-cv-02909 AJB (WVG), 2013 WL 435907, at *3 (S.D. Cal. 

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Feb. 1, 2013) (citation omitted); Arredondo v. Delano Farms Co., No. CV F 09-01247-LJO-DLB, 

2012 WL 2358594, at *9 (E.D. Cal. June 20, 2012) (citation omitted). The IWC Wage Order 

provides three alternative definitions for the term “to employ.” Martinez, 49 Cal.4th at 64. It 

means: “(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or 

permit to work, or (c) to engage, thereby creating a common law employment relationship.” Id. at 

64. 

Notably, Plaintiffs argued that another test should primarily drive the determination—

namely, the California common law employment relationship tests as governed by the multi-factor 

test in S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341, 350 (1989). In 

Martinez, the California Supreme Court expressly rejected the contention that California’s 

common law test for defining employment is the sole test that applies to define employment in 

wage and hour actions pursuant to Section 1194. See 49 Cal.4th at 50 n.12 (concluding that 

Reynolds v. Bement, 36 Cal.4th 1075 (2005) “spoke too broadly in concluding that the common 

law defines the employment relationship in actions under section 1194”); see also id. at 62-65 

(holding that Reynolds does not apply). Instead, Martinez stands for the proposition that the three 

definitions set forth in the IWC Wage Order control—in part due to legislative intent to expand 

the employer definition beyond the common law employment relationship and provide more 

protection than the federal law “economic realities” test. See id. at 58-60. However, “the IWC’s 

definition of employment incorporates the common law definition as one alternative”—namely, 

under the third definition “to engage.” Id. at 64; see also Taylor, 2013 WL 435907, at *5 

(“Martinez clarified that the common law test still plays an important role in the IWC’s definition 

of the employment relationship as it incorporates the common law definition as one alternative.”) 

(internal quotation marks and citation omitted). 

Plaintiffs argue that since Martinez, a number of courts have continued to apply only the 

common law Borello right-to-control test without reference to Martinez or the IWC Wage Order 

definitions. See, e.g., Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d 981, 988 (9th Cir. 

2014); Ruiz v. Affinity Logistics Corp., 754 F.3d 1093, 1100-01 (9th Cir. 2014); Ayala v. Antelope 

Valley Newspapers, Inc., 59 Cal. 4th 522, 530-31 (20124). But the cases on which Plaintiffs rely 

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are distinguishable. First, in those cases the parties agreed that the Borello test applied. More 

importantly, the courts in those cases were determining whether a single entity had accurately 

classified workers as employees versus independent contractors, rather than whether secondary 

entities were joint employers, as is the case here. See Alexander, 765 F.3d at 988; Ruiz, 754 F.3d 

at 1100-01; Ayala, 59 Cal. 4th at 530-31. The only case Plaintiffs cite that involved a court 

determining whether a secondary entity counted as a joint employer is Guitierrez v. Carter Bros. 

Sec. Servs., LLC, No. 2:14-cv-00351-MCE-CKD, 2014 WL 5487793 (E.D. Cal. Oct. 29, 2014). 

The Guitierrez court applied only the Borello test to determine whether the plaintiffs had 

adequately alleged that a certain entity was a joint employer under California law, but relied on 

Ayala, which, as described above, does not involve joint employer allegations. In short, Plaintiffs’ 

authority does not persuade the Court that the IWC Wage Order definitions discussed in Martinez

should not govern the analysis of whether the Customer Defendants are joint employers under 

California law.

Still, the question of the scope of Martinez’s application has not yet been resolved. As one 

court in this District recently explained, “[a]lthough Martinez involved alleged minimum wage 

violations under California Labor Code § 1194, California courts have applied the Martinez

definition to causes of action arising under other section of the Labor Code as well.” Ochoa, 2015 

WL 5654853, at *2 n.3 (collecting cases). The California Supreme Court has not yet decided 

whether Martinez applies to other wage-and-hour claims, see Ayala v. Antelope Valley 

Newspapers, Inc., 59 Cal.4th 522, 531 (2014) (“[W]e leave for another day the question what 

application, if any, the wage order tests for employee status might have to wage and hour claims 

such as these.”), and recently granted review on the question of how broadly Martinez should 

apply, see Dynamex Operations West, Inc. v. Super. Ct., No. S222732, 182 Cal. Rptr. 3d 644 

(2015). Despite some uncertainty, the Court agrees with the well-reasoned approach of the Ochoa

court and others and will therefore apply Martinez—and the three IWC Wage Order definitions—

to the wage and hour claims here. See Ochoa, 2015 WL 5454853, at *2; Futrell, 190 Cal. App. 

4th at 1429; Betancourt, 2014 WL 4365074, at *2-3; Torres, 300 F.R.D. at 394-95; Taylor, 2013 

WL 435907, at *3; Arredondo, 2012 WL 2358594, at *9.

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Notably in Martinez, the California Supreme Court also implied that Borello may not 

apply to wage claims at all because the facts are distinguishable. 49 Cal. 4th at 73 (“Assuming the 

decision in [Borello] has any relevance to wage claims, a point we do not decide, the case does not 

advance plaintiffs’ argument.”). But, to date, the California Supreme Court has not held that 

Borello is inapplicable. Thus, to the extent that Borello is relevant to any of the definitions of 

employer under the IWC Wage Order, the Court will still reference standards set forth in that case.

i. Exercise Control over Wages, Hours, or Working Conditions

Under Martinez, an entity employs workers if it “directly or indirectly, or through an agent 

or any other person, employs or exercises control” over their wages, hours, or working conditions. 

IWC Wage Order No. 9-1002 § 2(G). The language is disjunctive, and control over only one such 

factor will give rise to joint employer liability. See Martinez, 49 Cal.4th at 59. “While this 

language is potentially quite broad in scope, California courts have circumscribed it by denying 

employer liability for entities that may be able to influence the treatment of employees but lack the 

authority to directly control their wages, hours or conditions.” Ochoa, 2015 WL 5654853, at *3.

For example, in Martinez, the plaintiff workers sued a farmer and two produce merchants 

that sold the farmer’s produce. 49 Cal.4th at 42. The Martinez court held that the merchants were 

not joint employers. While the merchant could decide how much to pay the farmer, which would 

then influence how much the farmer paid the workers, this was not enough to constitute control 

over wages. Id. at 72. Moreover, while the merchants instituted some policies pertaining to the 

manner and method of packing the produce, only the farmer decided which field the workers 

would harvest, hired and fired the workers, trained and supervised them, determined their rate and 

manner of pay, and set their hours. Id. Thus, only the farmer, not the merchant, had ultimate 

control over wages, hours, and working conditions and constituted an employer. Id. Other courts 

applying California law have reached similar conclusions. See, e.g., Futrell, 190 Cal. App. 4th at

1432-33 (on defendant’s motion for summary judgment, noting that an entity that “does not 

control the hiring, hiring, and day-to-day supervision of workers” is not an employer); Ochoa, 

2015 WL 5654853, at *5 (on defendant’s motion for summary judgment, holding that McDonald’s 

is not a joint employer of the employees its franchisees because “the authority to make hiring, 

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firing, wage, and staffing decisions at the [franchised] restaurants lies in [the franchisee] and its 

managers—and in them alone”).

ii. Suffer or Permit to Work

An entity can be held liable as an employer for “suffering or permitting to work” only if it 

“fail[s] to perform the duty of seeing to it that the prohibited condition does not exist.” Martinez, 

49 Cal.4th at 69 (internal quotation marks omitted). Put another way, the “basis of liability is the 

defendant’s knowledge of and failure to prevent the work from occurring.” Id. at 70 (emphasis in 

original). Merely receiving the benefit of the employees’ work is not enough to establish liability 

under the “suffer or permit to work” standard. Id. 

In Martinez, the California Supreme Court concluded that the produce merchants were not 

employers because “neither had the power to prevent plaintiffs from working.” Id. Instead, only 

the farmer “had the exclusive power to hire and fire his workers, to set their wages and hours, and 

to tell them when and where to report to work.” Id. The court reasoned that while the merchants 

“might as a practical matter have forced [the farmer] to lay off workers or to divert their labor to 

other projects” by no longer doing business with the farmer, but “[s]uch a business relationship, 

standing alone, does not transform the purchaser into the employer of the supplier’s workforce.” 

Id. Other courts have similarly underscored that an entity does not “suffer or permit” workers to 

work where they do not have hiring and firing power. See, e.g., Futrell, 190 Cal. App. 4th at 

1434; Ochoa, 2015 WL 5654853, at *7. This is true even where the entity monitors the workers’ 

performance and can exercise influence over the workers’ actual employer. See, e.g., Ochoa, 2015 

WL 5654853, at *7 (citations omitted).

iii. Engage

Under Martinez, “to engage” means to create a common law employment relationship. 

Martinez, 49 Cal.4th at 64. Under the common law, “[t]he principal test of an employment 

relationship is whether the person to whom service is rendered has the right to control the manner 

and means of accomplishing the result desired.”5 Borello, 48 Cal.3d at 350; see also Futrell, 190 

 

5 California’s common law the test is so similar to federal law that at least one court in this District 

has declined to apply the California rules separately and instead applied the FLSA test even to 

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Cal. App. 4th at 1434 (noting that the key factor is “control of details”). What matters is whether 

the hirer “retains all necessary control” over the operations, and the strongest factor is whether the 

hirer can discharge the worker without cause. Ayala v. Antelope Valley Newspapers, Inc., 59 

Cal.4th 522, 532 (2014).

California courts also consider “several ‘secondary’ indicia of the nature of a service 

relationship.” Borello, 48 Cal. 3d at 350; Futrell, 190 Cal. App. 4th at 1434. These factors 

include the right to terminate at will, along with:

(a) whether the one performing services is engaged in a distinct 

occupation or business; (b) the kind of occupation, with reference to 

whether, in the locality, the work is usually done under the direction 

of the principal or by a specialist without supervision; (c) the skill 

required in the particular occupation; (d) whether the principal or the 

worker supplies the instrumentalities, tools, and the place of work 

for the person doing the work; (e) the length of time for which the 

services are to be performed; (f) the method of payment, whether by 

the time or by the job; (g) whether or not the work is a part of the 

regular business of the principal; and (h) whether or not the parties 

believe they are creating the relationship of employer-employee.

Id.; see also Futrell, 190 Cal. App. 4th at 1434. The factors “[g]enerally . . . cannot be applied 

mechanically as separate tests; they are intertwined and their weight depends often on particular 

combinations.” Borello, 48 Cal.3d at 350 (citation omitted).

2. Application to the Customer Defendants

Plaintiffs argue that the allegations in the TAC meet all three definitions of an employer 

under Martinez. 

a. Exercise Control Over Wages, Hours, or Working Conditions

Plaintiffs contend that the Customer Defendants exercise control over both their wages and 

working conditions sufficient for a finding of joint employment. With respect to wages, Plaintiffs 

insist that the Customer Defendants in part set the drivers’ compensation, based on the allegation 

that “Drivers are paid a flat rate set by Defendants for each dispatch they complete.” (Dkt. No. 50 

 

state law labor claims. See Rios v. Airborne Express, Inc., No. C-05-2092 VRW, 2006 WL 

2067847, at *2 (N.D. Cal. July 24, 2006) (where plaintiff brought both FLSA and state law claims, 

noting that “[b]ecause of the similarities underlying the FLSA and California laws at issue here, 

the court applies the FLSA’s joint employer test to [plaintiff’s] claims”); see also Guitierrez, 2014 

WL 5487793, at *5 (noting that the California common law “right-to-control” test is similar to 

federal law’s economic reality test).

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¶ 37.) But the employment contract indicates that drivers receive a percentage of the fees for 

services that the Customer Defendants pay. (Dkt. No. 51-1 at 7.) While this makes clear that the 

Customer Defendants’ initial fee contributes to the ultimate determination of how much drivers 

receive, Serenity Transportation alone is alleged to have responsibility for determining the rate at 

which drivers were ultimately paid. The California Supreme Court squarely rejected the exact

argument that Plaintiffs now advance. See Martinez, 49 Cal. 4th at 52 (concluding that the

merchant’s provision of funds to the farmer does not constitute control over the workers’ wages

even though the provision of funds affects the farmer’s payments to the workers). Thus, the TAC 

does not adequately allege that the Customer Defendants exercise control over the drivers’ wages.

Nor does the TAC allege facts that give rise to a plausible inference that the Customer 

Defendants exercise control over the drivers’ working conditions based on the policies they are 

alleged to have promulgated. While the TAC includes some allegations regarding policies that the 

Customer Defendants promulgated with respect to the drivers’ work and that certain Customer 

Defendants (namely, SCI and SCI California) required drivers to undergo training, mere

imposition of requirements or oversight of workers’ performance is not enough to make the 

overseeing entity a joint employer absent hiring and firing power. See Martinez, 49 Cal.4th at 70;

Futrell, 190 Cal. App. 4th at 1432-33; Ochoa, 2015 WL 5654853, at *5.

Plaintiffs rely on Villalpando v. Exel Direct, Inc., No. 12-cv-04137 JCS, 2014 WL 

1338297, at *5 (N.D. Cal. Mar. 28, 2014), for the proposition that general allegations that 

Defendants promulgated policies controlling the manner and means in which drivers were required 

to perform their work are sufficient to survive a motion to dismiss. The Villalpando court 

concluded that the general allegations about the policies were “sufficient to put all of the 

Defendants on notice of the conduct that is the basis of Plaintiffs’ claims.” Id. at *5. The court 

further noted that “whether [the defendant] is, in fact, a joint employer with each of the retail 

Defendants is a question that will be the subject of discovery and may be addressed on the merits 

at a later stage of the case[,] [but] [a]t this early stage of the case, however, Plaintiffs’ allegations . 

. . are sufficient” to meet pleading standards. Id. at *6. But in Villalpando the defendants did not 

assert that the allegations failed to adequately allege control. The case did not even mention the 

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relevant standards for pleading joint employment. Instead, the court’s focus appeared to have 

been the defendants’ lament that the complaint simply alleged that defendants collectively had 

policies without specifying the policies of each one. See id. at *5-6. Here, in contrast, Plaintiffs 

have identified the specific policies that each Customer Defendant purportedly promulgated, but 

the identified policies are not enough to give rise to a plausible inference of joint employer status.

And indeed, besides conclusory allegations that the Court does not accept as true, there are 

no factual allegations supporting the proposition that the Customer Defendants could hire or fire 

drivers from their positions. While they could request that a driver be removed from their 

rotation—i.e., that the driver no longer performs pickups for them—there are no allegations that 

this removal affects the driver’s employment with Serenity Transportation. Thus, the allegations 

do not plausibly establish that removal from one Customer Defendant’s routes does not result 

simply in the driver doing runs for other customers. See Martinez, 49 Cal.4th at 70; Futrell, 190 

Cal. App. 4th at 1432-33; Ochoa, 2015 WL 5654853, at *5. Further, the TAC alleges that it was 

Serenity Transportation and Friedel that were responsible for day-to-day supervision of the 

drivers. Thus, the TAC does not allege that the Customer Defendants exercised control over the 

drivers’ working conditions as defined in Martinez.

For each of these reasons, the TAC does not allege that the Customer Defendants exercised

control over the drivers’ wages working conditions sufficient for a finding of joint employer status 

under the first prong of Martinez.

b. Suffer or Permit to Work

Plaintiffs’ argument as to the second prong fares no better. Plaintiffs barely push back 

against Defendants’ assertion that the TAC fails to allege that the Customer Defendants “suffered 

or permitted” the drivers to work under the meaning of Martinez. Indeed, Plaintiffs’ opposition 

dedicates a single sentence in support of the proposition that the TAC meets the suffer-or-permitto-work standard. (Dkt. No. 52 at 10:17-19.) Specifically, Plaintiffs contend that the allegation 

that the Customer Defendants “helped set workers’ wages and determined in part the workers’ 

work location and hours established that it may have had knowledge of and failed to prevent the 

allegedly unlawful work from occurring[.]” (Id.) 

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However, just like the alleged joint employers in Martinez, as explained above, Serenity 

Transportation is alleged to have exclusive power to hire and fire the drivers and to set their wages 

and hours. Martinez, 69 Cal.4th at 69. While the Customer Defendants retain the right to request 

that a driver be removed from their route, that does not remove the driver from Serenity 

Transportation’s employ; thus, like Martinez, “[s]uch a business relationship, standing alone, does 

not transform the purchaser into the employer of the supplier’s workforce.” Id. Instead, Plaintiffs’ 

argument hits the same brick wall as with the analysis above: the TAC does not plausibly allege 

that the Customer Defendants had hiring and firing power, so they did not suffer and permit 

drivers to work, even if they exercised control or influence over the actual employer. See, e.g., 

Futrell, 190 Cal. App. 4th at 1434; Ochoa, 2015 WL 5654853, at *7; Futrell, 190 Cal. App. 4th at 

1434; Ochoa, 2015 WL 5654853, at *7. Thus, the TAC fails to adequately allege that the 

Customer Defendants are joint employers under this second prong of Martinez.

c. To “Engage” and thereby Create a Common Law Employment Relationship

As for the third prong, whether the Customer Defendants “engaged” drivers, the Court 

considers whether the Customer Defendants created a common law employment relationship with 

the drivers. Martinez, 49 Cal. 4th at 64. 

The primary inquiry is whether the Customer Defendants had the right to exercise control 

over the drivers. The inquiry is similar to the FLSA analysis. Plaintiffs allege that SCI/SCI 

California retained the right to control the drivers’ work by enacting detailed labeling and witness 

removal protocol requiring that drivers receive training, detailing the time period in which drivers 

must respond to calls, and retaining the right to control driver dress code. (Dkt. No. 50 ¶ 24.) 

Neptune allegedly created policies and procedures including instructions on how and where to 

record information, how to handle the deceased, and the order in which drivers were to complete 

tasks. (Id. ¶ 25.) Similarly, Lifemark allegedly created policies and procedures about how and 

where to record information about the deceased, how to handle the deceased, and how drivers 

should conduct themselves when arriving at and leaving Lifemark properties. (Id. ¶ 26.) The 

County, in turn, promulgated policies governing identification and removal protocol, including the 

timeframe in which drivers were expected to respond, the amount of time that drivers must wait at 

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the scene, records drivers must keep, professional dress requirements, and certain vehicle and 

equipment requirements. (Id. ¶ 27.) These allegations are enough to plausibly establish that the 

Customer Defendants had some control over some of the details of the drivers’ work.

As for the secondary factors, while Plaintiffs argue that the Customer Defendants had the 

right to terminate drivers as explained above, the actual allegations are that the Customer 

Defendants could remove drivers from their rotation. Next, Plaintiffs allege that transportation of 

human remains is not a distinct occupation or business from the Customer Defendants, but rather 

was integral to their work: SCI and SCI California allegedly hired drivers themselves, and 

Neptune and Lifemark advertise and offer removal transportation services as part of their end-oflife services. (Dkt. No. 50 ¶¶ 30-31.) They have alleged that no skill, special training or 

specialized license is required to do the work (id. ¶ 34), and that drivers were made available to 

the Customer Defendants on an ongoing basis, which implies an indefinite working relationship 

(id. ¶ 33). 

On the other hand, other secondary factors are not pleaded: while Plaintiffs allege in a 

conclusory manner that the Customer Defendants paid drivers by the job, the employment contract 

indicates that it was actually Serenity Transportation that paid drivers in such a manner. 

Moreover, while the TAC alleges that the drivers spent some time at properties belonging to the 

Customer Defendants, their primary place of work was the road—i.e., their cars—and there are no 

allegations that SCI, SCI California, Neptune, or Lifemark supply the instrumentalities or tools for 

drivers. The County is alleged to have retained the right to supply some equipment, like body 

bags, plastic sheeting, and body shrouds, which provides some support on this factor only with 

respect to the County. (See id. ¶ 27.) They have alleged that the work was generally done with 

supervision, but the only supervision alleged in the TAC is from Serenity Transportation and 

Friedel. (See id. ¶ 19.) Finally, there are no allegations in the TAC regarding whether the drivers 

and Customer Defendants believed that they were creating an employer-employee relationship.

To be sure, Plaintiffs do “not have to satisfy every factor in order to establish an 

employment relationship” at the pleading stage. See Betancourt, 2014 WL 4365074, at *6 

(citation omitted). Plaintiffs have not cited any cases holding that a weak showing of right to 

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control coupled with some secondary indicia of an employment relationship is enough. However, 

looking holistically at all of the factors, given that the control alleged is weak and that there are no 

allegations that the Customer Defendants could hire and fire drivers, Plaintiffs have not plausibly 

alleged an employment relationship. At oral argument, Plaintiffs contended that they could allege 

additional factors to support these factors. Plaintiffs shall have leave to amend to include 

additional support for these factors. 

* * *

As written, the TAC does not adequately allege any basis for joint employer liability under 

the standards set forth in Martinez. Because Plaintiffs have therefore failed to plausibly establish 

a basis for the Customer Defendants’ joint employer liability under either federal or California 

law, the Court will therefore dismiss all claims against the Customer Defendants with leave to 

amend. 

C. Adequacy of Particular Causes of Action

1. Second Cause of Action Based on “On Call” and “Standby” Time

In the second cause of action, Plaintiffs allege that Defendants are liable for failing to pay 

drivers minimum wage for all hours worked because drivers were not compensated for “on call” 

or “standby time” waiting for new pick-up assignments in violation of California Labor Code 

§ 1194 and IWC Wage Order 9-2001. (Dkt. N. 50 ¶¶ 70-89.) Defendants move to dismiss this 

claim on the ground that the TAC contains insufficient allegations that Plaintiffs are entitled to be 

paid for their on-call and standby time. 

California law requires employees to be paid for “all hours” worked “at the statutory or 

agreed rate and no part of this rate may be used as a credit against a minimum wage obligation.” 

Armenta v. Osmose, Inc., 135 Cal. App. 4th 314, 323 (2005). Thus, “a piece-rate formula that 

does not compensate directly for all time worked does not comply with California Labor Codes, 

even if, averaged out, it would pay at least minimum wage for all hours worked.” Cardenas v. 

McLane Foodservs., Inc., 796 F. Supp. 2d 1246, 1252 (C.D. Cal. 2011); see also Gonzalez v. 

Downtown LA Motors, LP, 215 Cal. App. 4th 36, 49 (2013) (noting that employees compensated 

on a piece-rate basis must be paid minimum wage for all hours worked). The gravamen of the 

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second cause of action is that Plaintiffs were assigned to 24-hour shifts 5 days a week and were 

not paid for hours spent waiting for their next driving assignment.

“It is well established that an employee’s on call or standby time may require 

compensation.” Mendiola v. CPS Sec. Solutions, Inc., 60 Cal. 4th 833, 840 (2015); see also 

Skidmore v. Swift & Co., 323 U.S. 134, 137 (1944) (“Facts may show that the employee was 

engaged to wait, or they may show that he waited to be engaged.”); see, e.g., Madera Police 

Officers Ass’n v. City of Madera, 36 Cal.3d 403, 406 (1984) (concluding that officers’ on-call 

mealtime was compensable hours worked).

“California courts considering whether on-call time constitutes hours worked have 

primarily focused on the extent of the employer’s control.” Mendiola, 60 Cal.4th at 840 (citations 

omitted). In fact, “[t]he level of the employer’s control over its employees . . . is determinative” in 

resolving whether the on-call or standby time constitutes compensable hours worked. “When an 

employer directs, commands, or restrains an employee from leaving the work place . . . and thus 

prevents the employee from using the time effectively for his or her own purposes, that employee 

remains subject to the employer’s control. According to [the definition of hours worked], that 

employee must be paid.” Morillion v. Royal Packing Co., 22 Cal.4th 575, 583 (2000). California 

courts consider a number of factors when determining whether an employer had control during oncall time, including:

(1) whether there was an on-premises living requirement; (2) 

whether there were excessive geographical restrictions on 

employee’s movements; (3) whether the frequency of calls was 

unduly restrictive; (4) whether a fixed time limit for response was 

unduly restrictive; (5) whether the on-call employee could easily 

trade on-call responsibilities; (6) whether use of a pager could ease 

restrictions; (7) whether the employee had actually engaged in 

personal activities during call-in time.

Mendiola, 60 Cal.4th at 841 (quotation marks omitted) (quoting Owens v. Local No. 169, 971 F.2d 

347, 351 (9th Cir. 1992)). Courts also consider whether the “[o]n-call waiting time . . . is spent 

primarily for the benefit of the employer and its business.” Gomez v. Lincare, Inc., 173 Cal. App. 

4th 508, 523-24 (2009). 

Here, Plaintiffs allege that drivers are assigned to 24-hour shifts, five days a week, 

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resulting in 120-hour workweeks and that they are only paid when responding to calls. (Dkt. No. 

50 ¶¶ 18, 83.) They allege that they can receive as many as seven or eight 2-hour calls per day. 

(Id. ¶ 84.) Plaintiffs allege that Serenity Transportation and Friedel require drivers to respond 

immediately to notices of calls on the Nextel radios that Serenity Transportation provides and 

that—at least on information and belief—the Customer Defendants expect drivers to be available 

24 hours a day 7 days a week and to respond to dispatches within a specified timeframe.6 (Id.) 

Plaintiffs further allege that these requirements “made it difficult for Drivers to engage in personal 

activities when they were not responding to calls.” (Id.)

Applying the factors identified in Mendiola to these allegations, there are no on-premises 

living requirement or excessive geographical restrictions alleged, so the first two factors weigh 

against compensable on-call time. With respect to the frequency of calls, Plaintiffs allege that at 

most they receive eight 2-hour calls per day, which would result in 8 hours of on-call time; 

drawing all inferences in Plaintiffs’ favor, this could result in just a single hour between each shift, 

which could be viewed as too restrictive to engage in personal activities. Plaintiffs do not allege 

what the average number of calls is per day. Plaintiffs have alleged that drivers must respond to 

calls immediately on their radios, but there is no indication that a radio response is unduly 

restrictive. Similarly, Plaintiffs have alleged that there is some fixed time limit for response set by 

the Customer Defendants, but have not alleged what that time period was, so the Court cannot 

conclude that it is unduly restrictive. The TAC is silent as to whether drivers could trade shifts or 

assignments. Finally, Plaintiffs allege that the requirements made it difficult for them to engage in 

personal activities during on-call time, but not that they could not and did not engage in personal 

activities. On the whole, these factors do not plausibly allege that the on-call time was 

compensable; only the time restrictions are plausibly alleged to be restrictive, but California courts 

usually require more than a single factor. See Gomez, 173 Cal. App. 4th at 524 (on-call waiting 

time not compensable where no on-site living requirement or geographic restrictions and 

employees had 30 minutes to respond by telephone and 2 hours to respond to a patient’s home, 

 

6

The TAC does not allege what that specified timeframe is for any Customer Defendant.

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could trade on-call responsibilities and had pagers provided by employer). 

Plaintiffs rely on Renfro v. City of Emploria, Kansas, 948 F.2d 1529, 1535 (10th Cir. 

1991), for the proposition that the TAC allegations are sufficient to state a plausible claim that 

Plaintiffs’ on-call time was compensable. Not so. First, Renfro involved whether time was 

compensable under the FLSA, not California Labor Law; the standards are different, as federal 

law considers the agreement between the parties and California law does not. Even if Renfro were 

binding on this Court, there the workers were required to report to duty within 20 minutes of being 

paged and received as many as 13 calls during an on-call period. Id. at 1535. Here, in contrast, 

Plaintiffs do not allege that they had to respond within 20 minutes; instead, they merely state 

“within a specified time period.” 

In short, as presently written, Plaintiffs have alleged facts that they “waited to be engaged,” 

not that they were “engaged to wait.” The second cause of action is therefore dismissed to the 

extent that it asserts failure to compensate on-call time.

2. Third Cause of Action for Unpaid Overtime Wages

Plaintiff’s third cause of action alleges that Defendants failed to pay them overtime wages

in violation of California Labor Code § 510 and IWC Wage Order 9-2001 § 3. (Dkt. No. 50 

¶¶ 90-97.) Labor Code Section 510 “requires employees to be paid not less than one and on-half 

times their ‘regular rate of pay’ for all hours in excess of eight [hours] in a day or 40 [hours] in a 

week.” Gonzalez, 215 Cal. App. 4th at 52 (citing DLSE Manual § 49.2.1.2). “The ‘regular rate of 

pay’ in a piece rate system is calculated by diving the employee’s ‘total earnings’ for the week, or 

in the alternative, to pay one and one-half times the employee’s piece-rate for all overtime hours.” 

Id.

Defendants argue that Plaintiffs’ overtime claim must be dismissed because Plaintiffs have 

not shown that they worked in excess of 8 hour works days or 40 workdays precisely because they 

have not shown that they are entitled to compensation for on-call time. The Court declines to 

dismiss this cause of action. As discussed above, the TAC as written fails to establish a plausible 

claim that Plaintiffs were entitled to compensation for their on-call time, so they were not entitled 

to wages for the entire 24-hour shift. However, the TAC still states a plausible claim for failure to 

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pay overtime based on the number of shifts and average shift length alleged. Specifically, 

Plaintiffs allege that they receive a maximum of eight 2-hour calls per day, which would result in 

16 hours of compensable time responding to calls, which renders drivers eligible for overtime 

payment that Plaintiffs allege Defendants fail to pay. See Gonzalez, 215 Cal. App. 4th at 52. This 

cause of action is therefore plausibly alleged.

3. Seventh Cause of Action Regarding Itemized Statements of Hours Worked

The seventh cause of action, a “pay stub” violation, arises under Labor Code Section 226

and IWC Wage Order No. 9 § 7. Plaintiffs allege that Defendants have failed to comply with their 

obligation to provide Plaintiffs, semi-monthly or at the time of each payment of wages, with 

accurate, itemized written statements describing the total number of hours worked. (Dkt. No. 50 

¶¶ 124-132.)

Labor Code Section 226 requires an employer’s semi-monthly wage statement to include 

an accurate itemized written statement including nine categories of information, including the total 

number of hours worked. Cal. Labor Code § 226. “To recover damages under [S]ection 226, 

subdivision (e), an employee must suffer injury as a result of a knowing and intentional failure by 

an employer to comply with the statute.” Price v. Starbucks Corp., 192 Cal. App. 4th 1136, 1142 

(2011). The mere fact that the information was missing from the wage statement is not a 

cognizable injury. See id. at 1142-43 ( noting that the “deprivation of [the] information, standing 

alone is not a cognizable injury”) (internal quotation marks, citation, and footnote omitted); see 

also Milligan v. Am. Airlines, Inc., 577 F. App’x 718, 719 (9th Cir. 2014) (citation omitted) 

(“[T]he injury requirement . . . cannot be satisfied simply because one of the nine itemized 

requirements in [Section 226] is missing from a wage statement.”). However, “the types of 

injuries on which a Section 226 claim may be premised include ‘the possibility of not being paid 

overtime, employee confusion over whether they received all wages owed them, difficulty and 

expense involved in reconstructing pay records, and forcing employees to make mathematical 

computations to analyze whether the wages paid in fact compensated them for all hours worked.” 

Ortega v. J.B. Hunt Transp., Inc., 258 F.R.D. 361, 374 (C.D. Cal. 2009) (citation omitted).

Here, Plaintiffs allege that their wage statements did not show the actual and total number 

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of hours worked and that, as a result, they have been precluded from accurately monitoring the 

number of hours worked, determining whether they have been lawfully compensated for all hours 

worked, and seeking any owed overtime. (Dkt. No. 50 ¶¶ 126, 129.) Courts have found that a 

plaintiff’s “inability to determine their hourly wage meets the minimal-injury requirement of 

Section 226.” Soto v. Diakon Logistics (Del.), Inc., No. 08-CV-33-L WMC, 2013 WL 4500693, 

at *10 (S.D. Cal. Aug. 21, 2013); Ortega, 248 F.R.D. at 374. Thus, Plaintiffs state a cognizable 

claim for violation of Labor Section 226.

D. Leave to Amend

Generally, when a complaint is dismissed, “leave to amend shall be freely given when 

justice so requires.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010); see 

Fed. R. Civ. P. 15(a). The Ninth Circuit has “repeatedly held that a district court should grant 

leave to amend even if no request to amend the pleading was made, unless it determines that the 

pleading could not possibly be cured by the allegations of other facts.” Lopez, 203 F.3d at 1130 

(9th Cir. 2000) (internal quotation marks and citations omitted). However, leave to amend may be 

denied “where the amendment would be futile.” Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 

2009). Further amendment may be denied as futile where a plaintiff has already amended the 

complaint once. See Semiconductor Energy Lab Co., Ltd. v. Yujurio Nagata, No. C 11-02793 

CRB, 2012 WL 177557, at *8 n.6 (N.D. Cal. Jan. 23, 2012) (citing Bonin v. Calderon, 59 F.3d 

815, 845 (9th Cir. 1995)).

Here, Plaintiffs have already amended her claims three times. However, Plaintiff’s first 

and second amended complaints were filed as of right, and the Court granted Plaintiffs leave to 

file the third upon Plaintiffs’ request. Thus, none of the amendments followed briefing on a 

motion to dismiss, so the Court has not had an opportunity to put Plaintiffs on notice of any 

deficiencies. At oral argument, Plaintiffs represented that they can allege further facts to render 

plausible at least some of the dismissed claims. Accordingly, the Court will grant leave to amend.

CONCLUSION

For the reasons described above, the Court GRANTS IN PART and DENIES IN PART 

Defendants’ motion to dismiss. Specifically, the Court declines to dismiss the claims against 

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Friedel or the third and seventh causes of action. However, the Court dismisses the claims against

the Customer Defendants, but Plaintiffs shall have lead to amend to add allegations that establish 

that the Customer Defendants were joint employers for the purposes of the FLSA and the 

California Labor Code. In addition, the Court dismisses with leave to amend the second cause of 

action to the extent that it asserts failure to compensate for on-call time. Plaintiffs’ amended 

complaint is due by November 16, 2015. 

This Order disposes of Docket No. 51.

IT IS SO ORDERED.

Dated: November 2, 2015

________________________

JACQUELINE SCOTT CORLEY

United States Magistrate Judge

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