Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-04324/USCOURTS-cand-3_14-cv-04324-12/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 15:1938 Fair Labor Standards Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MIHAIL SLAVKOV, et al.,

Plaintiffs,

v.

FAST WATER HEATER PARTNERS I, 

LP, et al.,

Defendants.

Case No. 14-cv-04324-JST 

ORDER DENYING MOTION TO 

DISMISS

Re: ECF No. 47

Before the Court is Defendants’ Motion to Dismiss Plaintiffs’ Third Cause of Action in 

their Second Amended Complaint. ECF No. 47. For the reasons stated below, the motion is 

denied.

I. BACKGROUND

Plaintiffs Mihail Slavkov, Nikola Vlaovic, and Martin Arnaudov filed this putative class 

action against Defendants Fast Water Heater Partners I, LP dba Fast Water Heater Company; 

FWH Acquisition Company, LLC dba Fast Water Heater Company, Jeffrey David Jordan; and 

Jason Sparks Hanleybrown. Complaint. ECF No. 1. In the operative Second Amended 

Complaint, dated August 27, 2015, they allege that they are former employees of Defendants who 

performed services in the San Francisco Bay Area including the installation of water heaters and 

other core plumbing products at customers’ homes. Second Amended Complaint (“SAC”), ECF 

No. 44 at ¶ 6-8. They assert the following claims: (1) failure to pay overtime wages in violation of 

the Fair Labor Standards Act (“FLSA”); (2) failure to pay overtime wages in violation of 

California law; (3) failure to pay minimum wages under California law; (4) failure to make 

payments within the required time in violation of California law; (5) failure to provide proper 

itemized wage statements in violation of California law; (6) failure to provide reimbursements; 

(7) failure to comply with San Francisco Sick Leave Ordinance; (8) unlawful taking of wages 

Case 3:14-cv-04324-JST Document 80 Filed 12/10/15 Page 1 of 6
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

under Labor Code sections 219 and 221; (9) violation of the Fair Credit Reporting Act (“FCRA”); 

(10) violation of the Investigative Consumer Reporting Agencies Act (“ICRAA”); (11) unfair 

competition in violation of California law; and (12) violation of the Private Attorney General Act 

(“PAGA”). Id. ¶¶ 34-114.

Defendants filed this motion to dismiss the Third Cause of Action in Plaintiffs’ SAC on 

September 14, 2015. ECF No. 47. Plaintiffs filed a response on September 28, 2015, ECF No. 

51, and Defendants replied on October 5, 2015, ECF No. 52.

II. LEGAL STANDARD

A complaint must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief,” in order to “give the defendant fair notice of what the . . . claim is and 

the grounds upon which it rests.” Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 555 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (internal quotation marks omitted). “A claim has facial plausibility when 

the plaintiff pleads factual content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Id. “Dismissal under Rule 12(b)(6) is appropriate 

only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable 

legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). 

The Court must “accept all factual allegations in the complaint as true and construe the pleadings 

in the light most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th 

Cir. 2005).

III. ANALYSIS

Defendants challenge the Third Cause of Action pleaded by Plaintiffs, which alleges that 

Defendants “willfully paid Plaintiffs and the California class less than minimum wages set forth in 

the California Labor Code.” SAC ¶ 47. The gravamen of the claim underlying Plaintiffs’ Third 

Cause of Action is that Defendants should have compensated their employees for their commute 

time at the beginning and end of each day, spent driving in company vans between their homes 

and their first and last appointments. Both sides appear to agree that the governing framework for 

Case 3:14-cv-04324-JST Document 80 Filed 12/10/15 Page 2 of 6
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

this motion is found in Rutti v. Lojack Corp., 596 F.3d 1046 (9th Cir. 2009), and Morillion v. 

Royal Packing Co., 22 Cal. 4th 575 (2000). In Morillion, the California Supreme Court held that 

employees are entitled to compensation for all time when they are “subject to an employer’s 

control.” 22 Cal. 4th at 581. The defendant in Morillion was an agricultural company that 

required employees to meet at specified areas and ride to the work site on buses provided by 

defendants. Id. at 579. Employees were not allowed to use their own transportation. Id. Because 

they were required to use the company’s buses, and could not conduct other activities during their 

commute, such as “drop[ping] off their children at school, stop[ping] for breakfast before work, or 

run[ning] other errands requiring the use of a car,” the Morillion court held that the employees 

were subject to defendants’ control during their commute and were therefore entitled to 

compensation during that time. Id. at 586. In deciding whether time was compensable, the 

Morillion court held, “[t]he level of the employer’s control over its employees, rather than the 

mere fact that the employer requires the employees’ activity, is determinative.” Id. at 587.

In Rutti, the Ninth Circuit held, relying on Morillion, that employees were subject to their 

employers’ control when they were required to drive company vehicles to their appointments, 

could not stop for personal errands or take passengers, could not use personal cell phones, and 

were required to answer calls from the company dispatcher and to follow the schedule dictated to 

them by the company. 596 F.3d at 1061-62. It reversed a grant of summary judgment, repeating 

Morillion’s holding that the key test is whether the employees were “subject to the control of an 

employer” during their commute time. Id. at 1062.

Plaintiffs here allege as follows in their SAC: 

PLAINTIFFS and current and former non-exempt employees of DEFENDANTS in 

California were provided company vehicles emblazoned with the DEFENDANTS’ 

contact information and logos in large print on their sides that DEFENDANTS also 

use as “mobile billboards” to advertise their water heater installation business. 

PLAINTIFFS were required as a matter of policy and/or practice to use these 

vehicles to travel from their homes to their first customer locations of the day, 

between jobs during the day and to travel from their last jobs back to their homes.

In addition to their advertising functions, the vehicles provided by DEFENDANTS 

constitute a place of work and their use benefits the DEFENDANTS as these 

company provided vehicles were also used to store and transport tools, equipment 

and plumbing products sold by the DEFENDANTS. The DEFENDANTS at all 

Case 3:14-cv-04324-JST Document 80 Filed 12/10/15 Page 3 of 6
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

times maintained strict control over these company vehicles and continually 

monitored their speed and location via remote “GPS” technology as soon as their 

engines were turned on and the vehicles began moving. Under DEFENDANTS’ 

policies, use of these vehicles was limited to company business and personal use of 

the vehicles – or transporting anyone other than another of DEFENDANTS’ 

employees – was prohibited. SAC ¶ 27.

Defendants assert that the cause of action should be dismissed because Plaintiffs fail to 

allege the same facts that supported a sufficient level of control in Rutti and Morillion. ECF No. 

47 at 8. Plaintiffs respond that their theory of the claim is that “if a California employer does not 

maintain a fixed workplace to which it requires its employers to commute in a company-provided

and outfitted service vehicle — which must nonetheless be used to travel to and from customer 

locations each day — those service vehicles effectively function as that employer’s ‘workplace.’” 

ECF No. 51 at 4.

The Court will not dismiss this cause of action. Both Rutti and Morillion are clear that it is 

the overall “level of control” exhibited in each case that is determinative, not that the presence or 

absence of any particular fact creates a bright-line test. On these allegations, it is plausible that 

Plaintiffs could demonstrate sufficient employer control even in the absence of certain facts

deemed relevant in Rutti and Morillion. See, e.g., Campbell v. Best Buy Stores, L.P., No. LA 

CV12-07794 JAK (SHx), 2013 WL 53302217 at *9 (C.D. Cal. Sept. 20, 2013) (denying a 

summary judgment motion by employer defendants even though the Rutti factor of employer 

control over employees’ routes was absent, and noting that “Rutti did not state that this factor was 

to be dispositive or given more weight than others”). 

In any event, subsequent case law makes clear that a significant factor in Rutti and 

Morillion was whether employees were required to use the form of transport provided by their 

employer. In Overton v. Walt Disney Co., 136 Cal. App. 4th 263, 271 (2006), the California 

Court of Appeal held that time spent on a shuttle between Disney’s employee lots and the park

was not compensable because employees were not required to park at the lot — indeed, ten percent 

of employees commuted to work through other means. The court noted: “[a]s is clear from our 

discussion of Morillion, the key factor is whether Disney required its employees who were 

assigned parking in the Katella lot to park there and take the shuttle.” Id. (emphasis in original). 

Case 3:14-cv-04324-JST Document 80 Filed 12/10/15 Page 4 of 6
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Similarly, in Alcantar v. Hobart Serv., 800 F.3d 1047, 1054-55 (9th Cir. 2015), the Ninth Circuit 

reversed a district court’s grant of summary judgment, basing its decision on the question of

whether an employer’s policy of allowing its employees to either leave company vehicles

overnight at a company parking lot (in which case they could commute to work in other ways) or 

bring the company vehicle home (in which case they were required to drive it to work the next 

day) was, in fact, an illusory choice. As the Ninth Circuit noted, there were allegations that 

employees in reality had to bring the company vehicles home due to lack of space in the parking 

lot, and therefore were required to drive them back to work. Id. at 1055. Summary judgment was 

improperly granted because plaintiffs had “raise[d] a genuine dispute of material fact as to whether 

technicians are, as a practical matter, required to commute in Hobart’s vehicles.” Id.

Defendants cite Novoa v. Charter Commc'ns, LLC, 100 F. Supp. 3d 1013 (E.D. Cal. 2015)

for the proposition that “operating a branded company vehicle [does] not render a commute 

compensable,” ECF No. 52 at 7, and argue that since Plaintiffs’ minimum wage claim is

essentially based on Plaintiffs’ operating a branded vehicle, the claim should be dismissed. The 

central issue for the Court in Novoa, however, was not whether employees commuted in “branded 

company vehicles,” but whether employees “voluntarily elected to commute in the employer's 

vehicle,” 100 F. Supp. 3d at 1021. The Novoa court granted summary judgment to the employer 

because it did not require employees to begin driving company vehicles from home; employees 

had the option of beginning their work day at company premises. Id. 

Those are not the facts Plaintiffs allege in the present case. Plaintiffs here allege that they 

were “required as a matter of policy and/or practice to use these vehicles to travel from their 

homes to their first customer locations of the day . . . and to travel from their last jobs back to their 

homes.” SAC ¶ 27. They also allege that Defendants “at all times maintained strict control over 

these company vehicles and continually monitored their speed and location via remote ‘GPS’ 

technology,” and that “personal use of the vehicles — or transporting anyone other than another of 

DEFENDANTS’ employees — was prohibited.” Id. These allegations are sufficient to plead that 

employees were under Defendants’ control pursuant to Rutti and Morillion and, therefore, to 

Case 3:14-cv-04324-JST Document 80 Filed 12/10/15 Page 5 of 6
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

ground a claim for compensation for their commute time.

1

Accordingly, Defendants’ motion to dismiss is denied.

IT IS SO ORDERED.

Dated: December 10, 2015

______________________________________

JON S. TIGAR

United States District Judge

 

1 Because these allegations are sufficient, the Court does not address or reach any conclusion in 

regards to Plaintiffs’ alternative theories, such as that the “continuous workday” doctrine applies, 

or that Defendants are asking employees to drive “moving billboards.” See ECF No. 51 at 8.

Case 3:14-cv-04324-JST Document 80 Filed 12/10/15 Page 6 of 6