Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-00033/USCOURTS-cand-3_10-cv-00033-3/pdf.json

Parties Involved:
Costco Wholesale Corporation
Defendant
Jade Jue
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JADE JUE, individually, and on behalf of all

other similarly situated persons, on behalf of

the People of the State of California, and on

behalf of the California Labor and Workforce

Development Agency, and ROES 1–35,

Plaintiffs,

 v.

COSTCO WHOLESALE CORPORATION,

and DOES 1–20,

Defendant. /

No. C 10-00033 WHA

ORDER ON DEFENDANT’S

MOTION TO DISMISS, OR

ALTERNATIVELY, MOTION

FOR SUMMARY JUDGMENT 

AND MOTION TO STRIKE

INTRODUCTION

In this California labor action involving the alleged failure by Costco Wholesale

Corporation to provide “suitable seating” for its employees, Costco moves to dismiss all claims in

the complaint, or alternatively, for summary judgment. Costco also moves to strike portions of

the complaint pertaining to plaintiff’s class allegations. For the reasons set forth below,

defendant’s motion to dismiss plaintiff’s claims is GRANTED.

STATEMENT

Putative class representative and named plaintiff Jade Jue is a former Costco employee. 

She worked in a number of “front-end” positions at Costco as a cashier, customer service

assistant, and cashier’s assistant from September 2006 through August 2007 before taking a leave 

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of absence (Compl. ¶¶ 11, 12; Jerman Decl. ¶ 5). After failing to return to work for over a year,

Costco terminated Jue’s employment in September 2008 for “abandonment” (Jerman Decl. ¶ 6).

In October 2009, Jue filed this action in California Superior Court, alleging that Costco

failed to provide, or permit use of, suitable seating to her and similarly situated Costco employees

in violation of California Industrial Welfare Commission Wage Order 7-2001, Section 14. Two

claims were alleged based upon Costco’s alleged violation of this wage order. The first claim

alleged a violation of Section 1198 of the California Labor Code, which makes unlawful any

working condition proscribed by an IWC wage order (Compl. ¶¶ 41–55). For this claim, the

complaint alleged that Section 1198 was enforceable by private right of action through the Private

Attorney General Act of 2004 (“PAGA”), codified in Section 2699 of the California Labor Code

(id. ¶ 52). The second claim alleged unfair competition in violation of California Business and

Professions Code Section 17200 et seq. (id. ¶¶ 56–72). 

Costco removed the action to federal court, and promptly filed the instant motion (Dkt.

Nos. 1, 8). The motion unleashed a multi-pronged attack on plaintiff’s claims and class

allegations. First, Costco moved to dismiss the complaint in its entirety for failing to satisfy

federal pleading requirements. Second, Costco moved for summary judgment that plaintiff’s first

claim was time-barred under PAGA. Third, Costco moved to dismiss the second claim for lack of

standing and on the grounds that it derived from the time-barred first claim. Fourth, Costco

moved to strike various aspects of the class allegations as unascertainable and overly broad.

Questionable tactics tainted the briefing process. Approximately forty minutes after

Costco filed its reply brief, plaintiff filed a request to voluntarily dismiss the action without

prejudice (Dkt. Nos. 13, 14). One week later, Costco filed an opposition to the dismissal request

(Dkt. No. 15). After additional back-and-forth filings by the parties, a hearing on the voluntary

dismissal (but not the instant motion) was held. At the hearing, counsel for plaintiff Jue —

Attorney Cary Kletter — conceded that the relief sought by Jue under PAGA was time-barred. 

Attorney Kletter, however, added that he believed Costco’s removal under CAFA was improper

and informed the Court that an additional plaintiff — Jorge Mejia — would be added to the suit to

seek relief under PAGA. As for his requested dismissal, counsel explained that he intended to

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simply “start over” in state court with both Jue and Mejia as named plaintiffs, rather than oppose

Costco’s motion or file a motion to remand. That said, counsel admitted that the timing of the

dismissal request was unfortunate.

Following the hearing, the Court presented Attorney Kletter with three options: (1)

remain in federal court and allow the instant motion to be resolved on the papers, after which

Mejia could be added to the action if leave to amend the complaint was granted; (2) immediately

file a motion to remand, which would be resolved prior to the instant motion; or (3) pay $1000 to

defense counsel for time spent and expenses incurred due to the delayed dismissal, after which the

voluntary dismissal would be allowed (Dkt. No. 21). Counsel selected the first option, leading to

this order (Dkt. No. 23).

ANALYSIS

While defendant presented a multitude of independent grounds upon which its motion

could be granted, this order will proceed in a claim-by-claim basis, and address only those issues

necessary to the outcome.

1. CLAIM ONE — “FAILURE TO PROVIDE, OR PERMIT USE OF, SEATS”

Plaintiff Jue conceded in her opposition brief and at oral argument that the civil penalties

she sought under the Private Attorney General Act for the alleged violation of Section 1198 were

time-barred by a one-year statute of limitations (Opp. 8; Compl. ¶ 55). Nevertheless, Jue still

asserts that the first claim can stand without PAGA, despite the fact that the complaint sets forth

no alternative statutory grounds authorizing a private right of action for an alleged violation of

Section 1198. In other words, plaintiff argues that a private right of action for her first claim is

authorized by Section 1198 alone. 

This is incorrect. Costco asserts, and the undersigned agrees, that a private right of action

to recover civil penalties for a violation of Section 1198 must be brought through PAGA, which

provides:

Notwithstanding any other provision of law, any provision of this

code that provides for a civil penalty to be assessed and collected

by the Labor and Workforce Development Agency or any of its

departments, divisions, commissions, boards, agencies, or

employees, for a violation of this code, may, as an alternative, be

recovered through a civil action brought by an aggrieved employee

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on behalf of himself or herself and other current or former

employees pursuant to the procedures specified in Section 2699.3.

Cal. Lab. Code § 2699(a). In other words, PAGA provides an “aggrieved employee” — so long

as the administrative procedures set forth in Section 2699.3 are followed — with a private right of

action to recover a “civil penalty” for any violation of the California Labor Code that would

otherwise be limited to government enforcement, assessment, and collection.

Section 1198 does not expressly grant a private right of action. Rather, the statutory text

simply establishes that certain employment practices are unlawful:

The maximum hours of work and the standard conditions of labor

fixed by the commission shall be the maximum hours of work and

the standard conditions of labor for employees. The employment

of any employee for longer hours than those fixed by the order or

under conditions of labor prohibited by the order is unlawful. 

Cal. Lab. Code § 1198. 

Nevertheless, plaintiff asserts that a private right of action for “civil penalties” under

Section 1198 can be brought in the absence of an express statutory grant and without bringing the

claim under PAGA. A recent California Court of Appeal decision, however, concluded

otherwise. See Caliber Bodyworks v. Superior Court, 134 Cal. App. 4th 365, 377 (2005). In

Caliber Bodyworks, the court distinguished between “statutory penalties . . . which were

recoverable directly by employees well before [PAGA] became part of the Labor Code, and a

demand for ‘civil penalties,’ previously enforceable only by the State’s labor law enforcement

agencies.” Ibid. Given this distinction, the court found that a demand for civil penalties was —

in the absence of PAGA — “enforceable only by the State’s labor law enforcement agencies”

when a code section contained no independent grant of statutory penalties recoverable through

private action. Ibid. Section 1198 is such a code section.

Moreover, PAGA specifically includes Section 1198 as one of the enumerated labor code

sections subject to its administrative requirements. See Cal. Lab. Code § 2699.3(a) (“A civil

action by an aggrieved employee pursuant to subdivision (a) or (f) of Section 2699 alleging a

violation of any provision listed in Section 2699.5 shall commence only after the following

requirements have been met . . . ”.); Cal. Lab. Code § 2699.5 (listing Section 1198 among labor

code sections enforceable under PAGA). This provides independent and compelling support to

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the conclusion that a private right of action under Section 1198 does not exist, except through the

procedures set forth in PAGA.

In sum, plaintiff Jue cannot circumvent her concession that she is time-barred from

recovering civil penalties under PAGA for a violation of Section 1198. Indeed, plaintiff’s

opposition cites to no decisions where a private right of action to recover civil penalties for a

violation of Section 1198 was ever authorized outside of PAGA. As such, as to plaintiff Jue,

claim one must be DISMISSED WITHOUT LEAVE TO AMEND.

As stated, the Court will entertain a motion to intervene by Mr. Mejia, who is allegedly

not time-barred from seeking civil penalties for claim one under PAGA. Given that the factual

allegations underlying Mr. Mejia’s employment at Costco may differ in many respects from those

of plaintiff Jue, this order will refrain from addressing the sufficiency of plaintiff’s first claim

under Rule 8 and Twombly. Indeed, it would be premature to examine the facts as they are

currently pled, since Mr. Mejia may have performed different tasks at Costco, or perhaps worked

at a different Costco altogether. The more prudent approach would be to gauge the sufficiency of

the amended complaint if and when plaintiff seeks leave to amend.

2. CLAIM TWO — “UNFAIR COMPETITION”

Plaintiff’s second claim is based upon California unfair competition law (Compl. ¶¶

56–72). See Cal. Bus. & Prof. Code §§ 17200 et seq. Underlying this claim is the allegation that

defendant’s “acts and practices have forced Plaintiffs and other similarly situated workers to labor

for many hours in a row without being able to sit which they were entitled by law and which are

important to employee safety” (id. ¶ 66).

Costco does not allege that plaintiff Jue is time-barred from bringing her second claim. 

See Cal. Bus. & Prof. Code § 17208 (setting a four-year statute of limitations). Rather, Costco

argues that Jue cannot use Section 17200 as a means to circumvent the one-year statute of

limitations to recover civil penalties under PAGA (Br. 4). Costco also asserts — as a separate

argument — that plaintiff Jue lacks standing to assert an unfair competition claim, because she

has not plausibly alleged that she has suffered an injury-in-fact or lost money or property as a

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result of the alleged unfair competition, and the injunction she seeks will not redress any injury

allegedly suffered (Br. 5–7).

With respect to the first argument, Jue’s unfair competition claim does not require that her

Section 1198 claim be actionable. A claim may be brought under Section 17200 for any business

practices that are unfair, even if they are not unlawful. Cel-Tech Communications v. Los Angeles

Cellular Tel. Co., 20 Cal.4th 163, 180 (1999). As such, plaintiff’s unfair competition claim is not

contingent upon proof of an actual violation of law. It does not fail simply because her Section

1198 claim is time-barred.

The defendant’s standing argument, by contrast, has legs. As discussed below, plaintiff

Jue does not have standing to assert a claim under Section 17200, at least as currently pled. 

Additionally, even if Mr. Mejia intervenes in this action, there will be significant obstacles to

establish his standing for the second claim, if the allegations remain the same.

While standing may be a statutory requirement to bring an unfair competition claim, it is

also a constitutional prerequisite to bringing suit in federal court. To establish Article III

standing, a plaintiff must allege a personal and concrete injury fairly traceable to the defendant’s

allegedly unlawful conduct. See, e.g., Thinket Ink Info. Res., Inc. v. Sun Microsytems, Inc., 368

F.3d 1053, 1057 (9th Cir. 2004). Moreover, it must be likely that the injury will be redressed by

the relief requested. Ibid. In addition to Article III standing, California Business and Professions

Code Section 17204 contains its own statutory standing requirement for unfair competition,

which states: “Actions for relief pursuant to this chapter shall be prosecuted exclusively in a court

of competent jurisdiction by [the Attorney General or] . . . a person who has suffered injury in

fact and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code

§ 17204. 

Plaintiff Jue has met neither of these requirements for her unfair competition claim.

A. Injury-in-Fact

With respect to injury-in-fact, the complaint alleged (Compl. ¶¶ 66, 68):

Costco’s acts and practices have forced Plaintiffs and other

similarly situated workers to labor for many hours in a row without

being able to sit which they were entitled by law and which are

[sic] important to employee safety. . . . As a direct and proximate

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result of the acts and practices described herein, Plaintiffs and the

Class Members have been denied compensation, in an amount to

be proven at trial. Plaintiffs and those similarly situated have

accordingly each suffered injury in fact and has [sic] lost money or

property as a result of Costco’s unfair, unlawful and fraudulent

business practices, and unfair competition.

In other words, carefully borrowing the language of Section 17204, the complaint alleged

that a “deni[al] of compensation” formed the basis of the “injury in fact “ and “lost money or

property” suffered by plaintiff Jue and those similarly situated. No other “injury in fact” or “lost

money or property” was alleged.

Given that the heart of this dispute and the unfair competition claim is Costco’s alleged

failure provide its employees with “suitable seating,” it stretches the imagination to see how the

inability to sit while on the job amounts to a denial of compensation. While this order does not

discount the possibility that a logical connection between the two could potentially be drawn, no

such connection is plausibly alleged. Rather, the complaint is devoid of any allegations tying the

alleged denial of seating to a loss of compensation, or any other money or property for that

matter.

In sum, the complaint has failed to show that the alleged injury — denied compensation

— is fairly traceable to the defendant’s allegedly unlawful conduct. Plaintiff Jue’s standing to

bring her unfair competition claim is therefore improper under both Article III and Section 17204. 

See Thinket, 368 F.3d at 1057; see also Cal. Bus. & Prof. Code § 17204 (conferring a private right

of action only if a person has “suffered injury in fact . . . as a result of the unfair competition”)

(emphasis added). Given this failure, plaintiff Jue’s second claim must be DISMISSED.

B. Injury Remediable by the Relief Requested

While plaintiff’s failure to plausibly establish injury-in-fact is alone sufficient to dismiss

her unfair competition claim for lack of standing, this order will briefly tee up a second defect

with standing that must be addressed if and when counsel seeks leave to amend. 

In the complaint, plaintiff Jue sought an injunction to force Costco to comply with the

IWC wage order mandating “suitable seating.” It is difficult to see, however, how such forwardlooking injunctive relief could remedy any injury suffered by Jue, or how she would stand to

benefit in any way, shape, or form from the injunction sought. She hasn’t worked at Costco for

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over a year. See Walsh v. Nevada Department of Human Resources, 471 F.3d 1033, 1036–37

(9th Cir. 2006) (holding that a plaintiff who was “no longer an employee of the [defendant]” and

had not alleged “any interest in returning to work” lacked standing to seek an injunction forcing

her former employer to adopt and enforce lawful discrimination policies). 

If a motion to amend the complaint and to allow Mr. Mejia to intervene is brought,

counsel must address how Mejia — especially if he also no longer works for Costco — would

have standing to seek both restitution and injunctive relief under Section 17200. See Cal. Bus. &

Prof. Code § 17203 (authorizing only restitution and injunctive relief for claims based upon

Section 17200).

3. SUFFICIENCY OF CLASS ALLEGATIONS

Since Mr. Mejia will likely intervene in this action, it is premature to evaluate the

sufficiency of the class allegations in the current complaint. Both of plaintiff Jue’s claims have

been dismissed. Given this fact, it is likely that Mr. Mejia will become the new putative class

representative, as least as to the first claim under PAGA. Adding this new plaintiff will no doubt

involve different factual allegations specific to his claims. As such, the more prudent approach

would be to allow counsel to seek leave to amend the complaint (which will include a motion to

intervene by Mr. Mejia) by filing a properly noticed motion on the normal 35-day calendar, and

allow Costco to oppose the motion and raise these issues again (if necessary) as to the proposed

amended complaint.

That said, plaintiff is reminded that class certification discovery is not a substitute to the

pleading requirements of Rule 8 and Twombly. Class allegations must supported by sufficient

factual allegations demonstrating that the class device is appropriate and discovery on class

certification is warranted.

CONCLUSION

For the reasons set forth above, defendant’s motion is GRANTED. Claim one as to

plaintiff Jue is DISMISSED WITH PREJUDICE. Claim two as to plaintiff Jue is DISMISSED WITH

LEAVE TO AMEND. Plaintiff may file a properly noticed motion on the normal 35-day calendar to

seek leave to file an amended complaint (bundled with a motion to intervene by Mr. Mejia) no

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later than NOON ON THURSDAY, MARCH 25, 2010. The motion should address the issues raised

herein, with the proposed amended complaint attached as an exhibit.

IT IS SO ORDERED.

Dated: March 11, 2010. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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