NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

U.S. TELEPACIFIC CORP., AKA TPx 

Communications, a California corporation, 

Plaintiff-Appellant, 

 v. 

U.S. SPECIALTY INSURANCE 

COMPANY, a Texas corporation; DOES, 1-

10, inclusive, 

Defendants-Appellees.

No. 19-55828 

D.C. No. 

2:18-cv-05083-DMG-AGR 

MEMORANDUM*

Appeal from the United States District Court

for the Central District of California

Dolly M. Gee, District Judge, Presiding

Submitted June 1, 2020**

Seattle, Washington

Before: GOULD, BEA, and MURGUIA, Circuit Judges.

U.S. TelePacific Corp., doing business as TPx Communications (“TPx”),

purchased a Directors, Officers and Organization Liability Policy (“the Policy”) 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The panel unanimously concludes this case is suitable for decision 

without oral argument. See Fed. R. App. P. 34(a)(2).

FILED

JUN 17 2020

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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from U.S. Specialty Insurance Company (“Specialty”). When two former TPx 

employees filed wage-and-hour putative class action lawsuits against TPx, the 

insured tendered the complaints to Specialty for coverage under the Policy. 

Specialty denied coverage and refused to advance TPx defense costs to litigate the 

class action lawsuits, which were consolidated into one action (“the underlying 

lawsuit”). TPx thereafter brought this suit in state court against Specialty, alleging 

causes of action for: (1) breach of the Policy contract; (2) tortious breach of the 

implied covenant of good faith and fair dealing; and (3) declaratory relief. 

Specialty timely removed the case to federal court based on diversity jurisdiction. 

28 U.S.C. § 1332(a)(1).

TPx appeals the district court’s order granting Specialty’s motion for 

judgment on the pleadings. We review a district court’s order granting a motion 

for judgment on the pleadings de novo. Herrera v. Zumiez, Inc., 953 F.3d 1063, 

1068 (9th Cir. 2020). Accordingly, we must determine whether, “taking all the 

allegations in the pleadings as true,” Specialty was “entitled to judgment as a

matter of law.” Id. (quoting Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 

971, 978–79 (9th Cir. 1999)). We have jurisdiction under 28 U.S.C. § 1291, and 

we affirm.

The district court did not err in concluding that Specialty’s duty to advance 

defense costs under the Policy extended only to actually covered claims. As the 
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district court correctly explained, Condition (D)(2) of the Policy provides that

Specialty must advance defense costs for claims “for which [the] Policy provides 

coverage,” not for potentially covered claims. Condition (D)(3) adds that Specialty 

will pay only those amounts properly allocated as “covered matters.” Relevant as 

well is that Condition (D)(3) unambiguously provides that when there is a dispute 

over whether a claim is actually covered by the Policy, Specialty will advance 

defense costs only for the portion “which the parties agree is not in dispute.” 

Conditions (D)(2) and (D)(3) are thus impossible to square with TPx’s proposed 

interpretation of the Policy to obligate Specialty to advance defense costs for any 

potentially covered claim.

The district court also did not err when it concluded certain causes of action

in the underlying lawsuit were barred from coverage by Exclusion (L) of the 

Policy. Exclusion (L) provides that Specialty is not liable to make any payment of 

loss in connection with a claim for any actual or alleged violation of the Fair Labor 

Standards Act (“FLSA”) “or any other similar provisions of any federal, state or 

local statutory or common law or any rules and regulations promulgated under any 

of the foregoing.” As the district court explained, because of Exclusion (L), 

Specialty was not obligated to provide coverage for four causes of action in the 

underlying lawsuit, which involved alleged violations of California Labor Code 

provisions that are similar to FLSA provisions and regulations: the failure to pay 
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overtime, minimum wage, and meal and rest break claims. With respect to the 

failure-to-pay-overtime-wages cause of action in the underlying lawsuit, contrary 

to TPx’s contention, just because there are differences between the California 

Labor Code and FLSA provisions does not render them dissimilar. See Rousey v. 

Jacoway, 544 U.S. 320, 329 (2005) (explaining that the plain meaning of the word 

“similar” is “like, though not identical to,” or “shar[ing] characteristics”). As to 

the causes of action for TPx’s alleged failure to provide meal and rest breaks, 

contrary to TPx’s arguments on appeal, the district court rightly applied Exclusion 

(L) to bar coverage for state-law claims similar to FLSA provisions and 

regulations.1

The district court further did not err when it held the Policy’s “Loss” 

definition precluded coverage for TPx’s alleged failure to pay in a timely manner 

wages upon termination. The Policy’s Loss definition plainly excepts “penalties” 

from coverage. As the district court held, the underlying lawsuit’s cause of action 

alleging TPx failed to pay in a timely manner wages upon termination seeks relief 

under a California Labor Code statute that characterizes available relief as “a 

penalty.” Cal. Lab. Code § 203 (providing that any willfully unpaid wages “shall 

continue as a penalty from the due date thereof at the same rate until paid or until 

1 TPx does not dispute that the district court properly held Exclusion (L) bars 

coverage for the underlying lawsuit’s minimum-wage cause of action.
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an action therefor is commenced”). And a plain reading of the Policy’s Loss 

definition reflects that it excepts from coverage both statutory and civil penalties.

TPx contends on appeal that following a recent California Court of Appeal 

decision, even if the Policy does not obligate Specialty to indemnify TPx for 

penalties, Specialty is still obliged to pay defense costs for claims seeking 

penalties. As quoted by TPx, that case—Southern California Pizza Co. v. Certain 

Underwriters at Lloyd’s, London Subscribing to Policy Number 11EPL-2028

(“SoCal Pizza”), 252 Cal. Rptr. 3d 635, 645 (Ct. App. 2019)—held that “whether 

the [relief sought] are covered losses is neither here nor there.” But the very next 

two sentences of the SoCal Pizza opinion explain that it was irrelevant whether the 

relief sought was covered because: (1) the court there was concerned only with the 

duty to defend, rather than the duty to indemnify; and (2) the insurer did not 

dispute defense costs were independently covered losses under the policy whether 

or not the underlying claim or relief sought was covered. SoCal Pizza, 252 Cal. 

Rptr. 3d at 645. SoCal Pizza is thus inapposite.

Finally, the district court did not err when it found that Exclusion (F) bars 

coverage for all wage-and-hour causes of action in the underlying lawsuit. 

Exclusion (F) presumptively bars coverage for claims made by employees against 

TPx, except where a claim is for an actual or alleged “Employment Practices 

Wrongful Act,” which is defined in the Policy as specified causes of action. As the 
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district court explained, Exclusion (F)’s plain language bars coverage for claims 

made by employees except when the underlying civil action actually asserts an

enumerated cause of action that constitutes an Employment Practices Wrongful 

Act under the Policy. TPx cannot dispute that the underlying lawsuit alleges no 

such cause of action.

AFFIRMED.