Banaga v. Gov't Emps. Ins. Co.

JESSE BANAGA, Individually And On Behalf Of All Others Similarly Situated, Plaintiff, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant.

Case No.: 18-cv-02756-GPC-KSC

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

June 12, 2019

ORDER GRANTING MOTION TO DISMISS FIRST AMENDED CLASS ACTION COMPLAINT WITH LEAVE TO AMEND

[ECF No. 15.]

Plaintiff Jesse Banaga was employed at the Government Employees Insurance Company ("GEICO") first as a Customer Service Representative and then as a Sales Representative. Shortly after his promotion to Sales Representative, Banaga began to suffer from acute stress and anxiety which ultimately forced him to take a medical leave of absence. During his absence, Banaga contends that GEICO unlawfully considered FMLA and ADA leaves in determining - through a rating system called a power-selling ratio ("PSR") - both his ability to receive a bonus and the requisite amount, if any, of the bonus payout. Upon his return to GEICO, Banaga further alleges that the Defendant company demoted him from his Sales Representative position. Plaintiff maintains that this decision was largely motivated by his taking of FMLA and CFRA leave, which in turn impacted his ability to meet the sales quota to remain a Sales Representative. As a result of these claims, Plaintiff now brings his First Amended Complaint, which alleges violations of the Family and Medical Leave Act ("FMLA"), 29 U.S.C. §§ 2601, et seq., the California Family Rights Act ("CFRA"), Cal. Gov't Code § 12945.2, the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12101, et seq., and the California Fair Employment & Housing Act ("FEHA"), Cal. Gov't Code § 12940(a).

Presently before the Court is a motion to dismiss Plaintiff Jesse Banaga's First Amended Complaint ("FAC") filed by GEICO on March 15, 2019. ECF No. 15. Plaintiff filed an opposition on April 2, 2019 and Defendant filed its reply on April 16, 2019. ECF Nos. 15 and 18. Pursuant to Civil Local Rule 7.1(d)(1), the Court finds the matter suitable for adjudication without oral argument. For reasons set forth below, the Court GRANTS Defendant's motion to dismiss.

I. BACKGROUND

A. Factual Background

Plaintiff, a resident of San Diego County, brings this action on behalf of himself and others similarly situated against GEICO, a Maryland corporation conducting business in the State of California. FAC ¶¶ 15-16. Defendant GEICO is an auto insurance company that sells insurance policies to consumers through local agents.

On or about April 30, 2001, Plaintiff, a resident of San Diego County, began his employment with Defendant GEICO as a Customer Service Representative. Id. ¶ 22. Plaintiff held this position until January 10, 2015, when he was transferred to the Sales Department to begin working as a Sales Representative. Id. In early 2017, Plaintiff began experiencing "acute stress and anxiety" and sought FMLA and CFRA leave. Id. ¶ 23. Upon GEICO's approval, Plaintiff began taking medical leave under the FMLA and the CFRA in February 2017. Id. ¶ 23. The FAC does not indicate the duration of Plaintiff's medical leave.

On August 9, 2017, Plaintiff alleges that he was demoted from his position as a Sales Representative to a Customer Service Representative. Id. ¶ 34. Although it is unclear from the FAC when the Plaintiff returned from his medical leave, Plaintiff asserts that his demotion resulted from his "inability to meet the sales quota because Plaintiff was on FMLA and CFRA leave." Id.

In the FAC, Plaintiff also alleges that GEICO utilizes a rating system called a PSR to evaluate employees' sales performances and pay entitlements in the Sales Department and "likely other departments in the company." Id. ¶ 25. Before calculating bonus payouts for each employee, Defendant sets a quota near the beginning of each selling period. Id. ¶ 27. This quota is the same for all employees, regardless of leave status. Id. If an employee does not meet the quota for the selling period, they are not eligible for a requisite bonus that corresponds with the selling period. Id. According to Plaintiff, meeting this quota qualifies employees as eligible to receive a bonus but does not guarantee that employees will actually receive a monthly bonus. Id. Moreover, Plaintiff believes that an employee's performance compared to the quota is also utilized for other employment actions, like promotions and monetary raises.

Whether an employee receives a bonus - and the amount of that bonus - appears to be determined by an individual PSR score. Id. ¶ 25. Plaintiff contends that the PSR score considers the number of policies an employee sells in comparison to the number of policies sold by other GEICO employees. Id. ¶ 29. Accordingly, Plaintiff asserts that the employee who sells the greatest number of policies during the relevant period will have the highest PSR score for that selling period - and the individual who sells the fewest number of policies will sport the lowest PSR score for the period. Id. Once an employee meets the monthly quota to be eligible for a bonus, Plaintiff submits that GEICO will look to the PSR score to make two determinations: (1) if the score is high enough to warrant the payout of the monthly bonus; and (2) the actual bonus amount that an employee will receive. GEICO also does not prorate sales quotas or factor "protected leaves" into PSR scores.

As a result, Plaintiff contends that there is a "direct correlation between the number of days that an employee works and both factors that [GEICO] relies on to determine bonus entitlement." Id. ¶ 30. Plaintiff alleges that if an employee is "on protected leave pursuant to the FMLA and/or CFRA for a large portion of a month," then it is "highly unlikely (if not impossible) for the employee to reach quota." Id. ¶ 31. In addition, Plaintiff asserts that "the number of days that an employee works is also directly related to the likelihood of a high PSR score." Id. ¶ 32. Since Defendant does not make adjustments to either the quota or the employees' PSR scores for protected medical and disability leaves, Plaintiff alleges that GEICO unlawfully considers FMLA, CFRA, and/or ADA leaves of absence as negative factors in making employment decisions and determining bonus amounts and entitlements. Id. ¶ 26.

Consequently, Plaintiff's First Amended Complaint alleges four causes of action: (1) Violation of the FMLA pursuant to 29 U.S.C. Section 2601, et seq.; (2) Violation of the CFRA pursuant to the California Government Code Section 12945.2(a); (3) Violation of the ADA pursuant to 42 U.S.C. Sections 12101 et seq., and (4) Violation of the FEHA, pursuant to California Government Code Section 12940(a).

Plaintiff's Complaint seeks: (1) an order certifying the Class and designating Jesse Banaga as the Class Representative and his counsel as Class Counsel; (2) damages for Plaintiff and proposed class members; (3) injunctive relief enjoining GEICO from continuing the alleged unlawful practices; (4) costs of suit including attorneys' fees as permitted by law. Id. at 16-17.

II. LEGAL STANDARD

A. Rule 12(b)(6) Standard

"To survive a motion to dismiss [under Rule 12(b)(6)], 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, 679 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In this respect, "[d]ismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts tosupport a cognizable legal theory." Mendiondo v. Centinela Hosp Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

While "detailed factual allegations" are unnecessary, the complaint must allege more than "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 556 U.S. at 678. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).

"Generally, a court may not consider material beyond the complaint in ruling on a Fed. R. Civ. P. 12(b)(6) motion." Intri-Plex Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir. 2007). However, "[a] court may take judicial notice of 'matters of public record' without converting a motion to dismiss into a motion for summary judgment," as long as the facts noticed are not "subject to reasonable dispute." Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (citation omitted); see also United States v. Ritchie, 342 F.3d 903, 908-09 (9th Cir. 2003).

III. DISCUSSION

Defendant moves to dismiss Banaga's claims for violations of FMLA, CFRA, ADA, and FEHA on the basis that they lack sufficient factual allegations to state plausible claims for relief. Banaga's claims stem from two forms of harm: (1) denial of a bonus because Plaintiff failed to meet sales goals under a production quota and performance-based rating system; and (2) demotion because Plaintiff failed to meet sales goals as a result of his medical leave of absence. The Court will address Plaintiff's claims in turn.

A. Banaga's Claims Under the FMLA

Pursuant to 29 U.S.C. § 2612, the FMLA provides for qualifying employees suffering from "serious health condition[s]" the right to take up to 12 weeks of unpaid leave each year provided that they have worked for the covered employer for at least twelve months. 29 U.S.C. § 2612(a). In addition, an employee who takes FMLA leavehas the right to be restored to his or her previously-held position of employment (or an equivalent position) from when the leave commenced. Id. Employers may not "interfere with, restrain, or deny the exercise of or [] attempt to exercise, any right provided" under the FMLA. Id. See also 29 C.F.R. § 825.220(c). Moreover, employers cannot use the taking of FMLA leave as a...