DLA Piper Motion to Dismiss

Case3:09-cv-03031-SC Document14 Filed08/11/09 Page1 of 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 KEKER & VAN NEST LLP WENDY J. THURM - #163558 (wthurm@kvn.com) AUDREY H. WALTON-HADLOCK - #250574 (awaltonhadlock@kvn.com) 710 Sansome Street San Francisco, CA 94111-1704 Telephone: (415) 391-5400 Facsimile: (415) 397-7188 Attorneys for Defendant DLA PIPER LLP (US) (Misnamed as DLA Piper LLP) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION KENDRICK PATTERSON, ADAM BERGMAN, MICHAEL ATTIANESE, ANDREA LEVY, DARYL YEAKLE, and RAYMOND R. PLANTE, each individually, and on behalf of all others similarly situated and the general public, Plaintiffs, v. STEPHEN V. O'NEAL, individually and on behalf of those similarly situated; THOMAS HILL, individually and on behalf of those similarly situated, ELLEN L. BASTIER, individually and on behalf of those similarly situated; MARK WEITZEL, individually and on behalf of those similarly situated; JULIAN MILLSTEIN, individually and on behalf of those similarly situated; and DAVID P. GRAYBEAL, individually and on behalf of those similarly situated; ORRICK, HERRINGTON & SUTCLIFFE LLP, a limited liability partnership, DLA PIPER LLP, a limited liability partnership, NIXON PEABODY LLP, a limited liability partnership, HOWREY LLP, a limited liability partnership, and MORGAN LEWIS & BOCKIUS LLP, a limited liability partnership, Defendants. Case No. 09-cv-03031-SC CLASS ACTION DEFENDANT DLA PIPER LLP (US)’S NOTICE OF MOTION AND MOTION TO DISMISS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT Date: Time: Dept: Judge: September 25, 2009 10:00 a.m. Courtroom 1, 17th Floor Samuel Conti 25 26 27 28 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page2 of 25 1 2 3 4 5 6 7 8 9 10 11 B. 12 13 14 a. 15 16 b. 17 18 19 3. 20 21 4. 22 23 5. 24 25 26 27 28 IV. 2. III. TABLE OF CONTENTS Page MOTION AND NOTICE OF MOTION .........................................................................................1 MEMORANDUM OF POINTS AND AUTHORITES ..................................................................1 I. II. INTRODUCTION ...............................................................................................................1 FACTUAL BACKGROUND..............................................................................................3 A. B. Plaintiffs’ insufficient allegations against DLA Piper. ............................................3 Procedural history ....................................................................................................5 ARGUMENT.......................................................................................................................5 A. Plaintiffs cannot state a WARN Act claim against DLA Piper that is “plausible on its face.” .............................................................................................6 Plaintiffs’ claim against DLA Piper is inconsistent with the WARN Act’s basic purpose and statutory requirements. .....................................................7 1. Plaintiffs have not alleged—and cannot allege—that DLA Piper was ever their “employer” under the WARN Act. .............................8 Plaintiffs have not adequately alleged that DLA Piper became their employer by “purchasing” a part of Thelen’s business. ............................................................................9 Plaintiffs cannot pursue their WARN Act claim against DLA Piper as a “successor” to Thelen...........................................12 Plaintiffs have not alleged—and cannot allege—that DLA Piper “ordered” that Plaintiffs be terminated from employment. ..............14 Plaintiffs have not alleged—and cannot allege—any “mass layoff” or “plant closing” by DLA Piper that triggered WARN Act notification requirements. ...................................................................17 Plaintiffs have not alleged—and cannot allege—that they suffered an “employment loss” covered by the WARN Act as a result of any alleged purchase by DLA Piper. ...........................................18 Plaintiffs’ conspiracy allegations do not plausibly state a claim for relief. ....................................................................................................20 CONCLUSION..................................................................................................................21 i 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page3 of 25 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 TABLE OF AUTHORITIES Page(s) Federal Cases Adams v. Erwin Weller Co. 87 F.3d 269 (8th Cir. 1996) .......................................................................................................15 Ashcroft v. Iqbal ___ U.S. ___, 129 S.Ct. 1937 (2009)................................................................................. passim Bell Atl. Corp. v. Twombly 550 U.S. 544 (2007)........................................................................................................... passim Bergman v. Thelen LLP No. 3:08-cv-05322-EDL.................................................................................................... passim Chauffeurs, Sales Drivers, Warehousemen & Helpers Union Local 572 v. Weslock Corp. 66 F.3d 241 (9th Cir. 1995) ...........................................................................................12, 14, 17 Christian v. Mattel, Inc. 286 F.3d 1118 (9th Cir. 2002) .............................................................................................20, 21 Conley v. Gibson 355 U.S. 41 (1957).......................................................................................................................6 Coppola v. Bear Stearns & Co., Inc. 499 F.3d 144 (2d Cir. 2007) ......................................................................................................15 Deveraturda v. Globe Aviation Sec. Servs. 454 F.3d 1043 (9th Cir. 2006) ...................................................................................................15 Doe v. Wal-Mart Stores, Inc. __ F.3d __, 2009 WL 1978730 (9th Cir. July 10, 2009) .............................................................9 First Advantage Background Servs. Corp. v. Private Eyes, Inc. 569 F. Supp. 2d 929 (N.D. Cal. 2008) .......................................................................................10 Int’l Alliance of Theatrical & Stage Employees & Moving Picture Machine Operators, AFL-CIO v. Compact Video Servs., Inc. 50 F.3d 1464 (9th Cir. 1995) ............................................................................................. passim Int’l Broth. of Teamsters, Chauffeurs, Sales Drivers, Warehousemen & Helpers Union Local 952 v. Am. Delivery Serv. Co. 50 F.3d 770 (9th Cir. 1995) .......................................................................................................14 Johnson v. Riverside Healthcare System, LP 534 F.3d 1116 (9th Cir. 2008) ...................................................................................................10 Kendall v. VISA U.S.A., Inc. 518 F.3d 1042 (9th Cir. 2008) .......................................................................................10, 11, 13 McCaffrey v. Brobeck, Phleger & Harrison, L.L.P. No. C 03-2082 CW, 2004 WL 345231 (N.D. Cal. Feb. 17, 2004) (“McCaffrey I”)....................................................................................................................12, 13 McCaffrey v. Brobeck, Phleger & Harrison, L.L.P. No. C 03-2082 WWS, 2005 WL 3358775 (N.D. Cal. April 27, 2005) (“McCaffrey II”) ..................................................................................................................11, 13 Moss v. U.S. Secret Service ___ F.3d ___, 2009 WL 2052985 (9th Cir. July 16, 2009) .......................................................10 ii NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page4 of 25 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 TABLE OF AUTHORITIES (cont'd) Page(s) Operating Engineers’ Pension Trust Fund v. Clark’s Welding and Machine No. 09-0044 SC, 2009 WL 1324049 (N.D. Cal. May 8, 2009).................................................16 Pearson v. Component Tech. Corp. 247 F.3d 471 (3d Cir. 2001) ......................................................................................................15 Vogt v. Greenmarine Holding, LLC 318 F. Supp. 2d 136 (S.D.N.Y. 2004) .......................................................................................15 W. Mining Council v. Watt 643 F.2d 618 (9th Cir. 1981) .......................................................................................................6 Federal Statutes 29 U.S.C. § 2101.................................................................................................................... passim 29 U.S.C. § 2102.................................................................................................................... passim 29 U.S.C. § 2104.................................................................................................................... passim 29 U.S.C. § 2107..............................................................................................................................7 29 U.S.C. § 2901..............................................................................................................................1 Federal Rules Fed. R. Civ. Proc. 8(a)(2)...............................................................................................................10 Fed. R. Civ. Proc. 11......................................................................................................................20 Fed. R. Civ. Proc. 12(b)(6) .................................................................................................... passim Federal Regulations 20 C.F.R. § 629.2(a).......................................................................................................................14 20 C.F.R. § 629.3(a)(2)..................................................................................................................21 20 C.F.R. § 639.1 .......................................................................................................................7, 19 20 C.F.R. § 639.2 ...........................................................................................................................17 20 C.F.R. § 639.4(c)...................................................................................................................9, 21 20 C.F.R. § 639.6 .......................................................................................................................9, 18 54 Fed. Reg. 16042-01, 16045 (1989) ...........................................................................................14 54 Fed. Reg. 16042, 16051 (1989) ................................................................................................21 Other Authorities ABA Model Rule of Professional Conduct 5.6 .............................................................................11 iii 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page5 of 25 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 MOTION AND NOTICE OF MOTION PLEASE TAKE NOTICE that, on Friday, September 25, 2009, at 10:00 a.m., or as soon thereafter as the matter may be heard, in Courtroom 1, 17th Floor, of the United States District Court House, 450 Golden Gate Ave., San Francisco, CA 94102, defendant DLA Piper LLP (US) (misnamed as DLA Piper LLP) will, and hereby does, move the Court to dismiss Plaintiffs’ Complaint as to DLA Piper for failure to state a claim upon which relief can be granted. The Third Cause of Action for Violation of the WARN Act (29 U.S.C. § 2101 et seq.) is the only claim pled against DLA Piper. DLA Piper brings this Motion based upon this Notice, Rules 8 and 12(b)(6) of the Federal Rules of Civil Procedure, the attached Memorandum of Points and Authorities, the Request for Judicial Notice, all records on file with this Court, and such further oral and written argument as may be presented at, or prior to, the hearing of this matter. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Defendant DLA Piper moves to dismiss Plaintiffs’ sole claim against it for violation of the Worker Adjustment and Retraining Notification (“WARN”) Act (29 U.S.C. § 2901 et seq). Plaintiffs have not alleged “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). Plaintiffs have done nothing more than repeat the legal elements of a WARN Act claim in the guise of factual allegations. The U.S. Supreme Court has made clear that a complaint must do more than cut and paste statutory language. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949 (2009). Plaintiffs are alleged to be representatives of a class of employees who worked for Thelen LLP, a San Francisco-based law firm that dissolved on November 30, 2008. Plaintiffs claim that DLA Piper—and four other law firms—violated the WARN Act by failing to give these Thelen employees 60 days’ notice before Thelen dissolved. The only alleged connection between DLA Piper and Thelen’s decision to layoff its employees is Plaintiffs’ conclusory allegation that DLA 1 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page6 of 25 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 Piper “purchased” Thelen’s real estate finance “practice” sometime in 2008. Even assuming this “purchase” allegation is true (and it most certainly is not), there exists no non-frivolous interpretation of the WARN Act that required DLA Piper to give WARN Act notice to employees who never worked for DLA Piper and continued to work for Thelen until they were terminated by Thelen on November 30, 2008. Plaintiffs have not alleged facts sufficient to plead any of the four required elements of a WARN Act claim. And the very few facts they do plead run counter to any plausible WARN Act claim against DLA Piper. First, Plaintiffs do not plead any facts suggesting they ever worked for DLA Piper. Indeed, they admit that they worked for Thelen until November 30, 2008, the day on which Thelen dissolved. If Plaintiffs worked for Thelen, and not DLA Piper, then DLA Piper never had any obligation under the WARN Act to give any notice to the Plaintiffs about anything. Plaintiffs’ admission is fatal to their claim against DLA Piper. Second, Plaintiffs’ admit that Thelen ordered the layoffs that led to Plaintiffs’ job terminations. Under the WARN Act, the employer who orders the layoffs is responsible for giving the required notice. Since Thelen ordered the layoffs, it was Thelen’s responsibility—and not DLA Piper’s—to give the WARN Act notice. Plaintiffs’ admission is fatal to their claim against DLA Piper. Third, Plaintiffs have not alleged facts showing that DLA Piper terminated more than 50 former Thelen employees. The WARN Act requires notice only for a “mass layoff” or “plant closing,” which, in general, means at least 50 employees are terminated within a 30-day period. Although more than 50 Thelen employees were allegedly terminated on November 30, 2008, there is nothing in the complaint to suggest that DLA Piper ever employed more than 50 former Thelen employees. Obviously, if DLA Piper never employed more than 50 former Thelen employees, then it could not have ordered a “mass layoff” or “plant closing” affecting 50 such people. Plaintiffs’ silence on this point is fatal to their claim against DLA Piper. Fourth, Plaintiffs have not alleged any temporal link between DLA Piper’s alleged “purchase” of a Thelen practice group sometime in 2008 and the November 30, 2008 layoffs of 2 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page7 of 25 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 Thelen employees. Under the WARN Act, the sale of a business could lead to a “covered employment loss” under the statute if certain employees are not hired by the purchaser and, as a result, lose their jobs at the time of the purchase. But Plaintiffs have not pled any such facts. To the contrary, they admit that their employment loss resulted from their termination by Thelen on November 30, 2008. Therefore, those terminations could not have resulted from any alleged “purchase” of a practice group by DLA Piper. Plaintiffs’ admission is fatal to their claim against DLA Piper. Finally, Plaintiffs’ allegations against the four other law firm defendants—which mirror the allegations against DLA Piper—show the folly of their WARN Act claim. Plaintiffs claim that each of these five law firms purchased “part of Thelen’s business” and therefore became liable under the WARN Act to all of Thelen’s employees when they were later terminated. There is nothing in the language of the WARN Act, the regulations promulgated by the Labor Department or the caselaw to suggest that five different companies could be simultaneously responsible for providing notice under the WARN Act to the same set of employees. Plaintiffs’ legal theory is fatal to its claim against DLA Piper. Plaintiffs have not pled facts sufficient to state a claim under the WARN Act against DLA Piper, and their judicial admissions are fatal to any such claim. The Court should dismiss the First Amended Complaint as to DLA Piper, without leave to amend. II. A. FACTUAL BACKGROUND Plaintiffs’ insufficient allegations against DLA Piper. This putative class action arises out of the dissolution of Thelen LLP, a law firm formerly based in San Francisco. The named Plaintiffs—Kendrick Patterson, Adam Bergman, Michael Attianese, Andrea Levy, Daryl Yeakle, and Raymond R. Plante—claim they worked for Thelen as associate attorneys or staff members until they were laid off on November 30, 2008. First Amended Complaint (“FAC”) ¶¶ 3, 6, 41 (Docket No. 6). Plaintiffs allege that Thelen informed them and “substantially all other employees” on or about October 30, 2008 that their last day of employment would be November 30, 2008, and that Thelen was dissolving its partnership. FAC ¶ 41. Plaintiffs purport to bring their WARN Act claims on behalf of a class of similarly situated 3 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page8 of 25 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 former Thelen employees against DLA Piper, Nixon Peabody LLP, Howrey LLP, Morgan Lewis & Bockius LLP, and Orrick Herrington & Sutcliffe LLP (together, the “Law Firm Defendants”). Plaintiffs contend that DLA Piper was required to, but did not, give Plaintiffs 60 days’ notice that their employment with Thelen would be terminated as of November 30, 2008. FAC ¶¶ 77-84. In particular, Plaintiffs contend “[i]n 2008, Defendant DLA Piper purchased the real estate finance practice and perhaps other parts of Thelen’s business,” FAC ¶ 19, and that, as a result, “Thelen’s employees became employees” of DLA Piper. FAC ¶ 77. Plaintiffs have not alleged how, when, and where the alleged purchase occurred, or who and what was involved. From this bare “purchase” allegation, Plaintiffs leap to the next conclusory allegation, asserting that “Thelen and/or the Law Firm Defendants ordered a ‘mass layoff’ or ‘plant closing’ of the [Thelen] Facilities, as those terms are defined in 29 U.S.C. § 2101(a)(2),(3),” and that the “‘mass layoff’ or ‘plant closing’ was caused at least in part by the Law Firm Defendants’ having purchased all or part of Thelen’s business.” FAC ¶ 78. Plaintiffs also assert that the layoffs resulted in “‘employment losses,’ as that term is defined by 29 U.S.C. § 2101(a)(2) for at least 50 of Thelen’s employees as well as 33% of Thelen’s workforce at each of the [Thelen] Facilities, excluding part time employees,” FAC ¶ 79, and that Plaintiffs and the putative class members are “‘affected employees’ of Thelen and/or the Law Firm Defendants within the meaning of 29 U.S.C. § 2101(a)(5).” FAC ¶ 81. In other words, Plaintiffs simply looked at the statutory requirements for a WARN Act violation, disregarded the absence of relevant concrete facts, and did nothing more than paraphrase those requirements in the First Amended Complaint, adding the phrase “Thelen and/or the Law Firm Defendants” where the word “employer” appears in the statute. See 29 U.S.C. § 2102(a); 29 U.S.C. § 2104(a)(1). Plaintiffs further contend that they were “discharged by Thelen and/or the Law Firm Defendants without cause on their part, as part of or as the reasonably foreseeable result of [the layoffs],” FAC ¶ 80 (emphasis added), and that “Thelen and/or the Law Firm Defendants failed to give Plaintiffs and other members of the Federal WARN class written notice that complied with the requirements of the WARN Act.” FAC ¶ 82 (emphasis added). Based on those 4 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page9 of 25 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 allegations, Plaintiffs seek to recover 60 days’ wages and benefits from DLA Piper and the other Law Firm Defendants, as a penalty for their allegedly deficient WARN Act notice. FAC ¶ 84. B. Procedural history Plaintiffs filed this action on July 6, 2009, asserting essentially identical WARN Act claims against DLA Piper and the four other Law Firm Defendants. Plaintiffs do not assert any other claims against DLA Piper and the Law Firm Defendants.1 Eight months before filing this action, Plaintiffs filed in this Court a separate WARN Act lawsuit against Thelen and assorted Doe defendants: Bergman v. Thelen LLP, No. 3:08-cv05322-EDL (“Bergman”). Request for Judicial Notice (RJN), Ex. 1 (Complaint). Plaintiffs in the Bergman action have since amended their complaint several times. The operative Third Amended Complaint pleads claims against Thelen under the WARN Act, California’s equivalent to the WARN Act, and California, D.C., and New York labor laws, as well as claims of breach of contract and promissory estoppel. RJN, Ex. 2 (Third Amended Complaint). Plaintiffs in this action are represented by the same attorneys who represent the plaintiffs in Bergman. Compare FAC (Docket No. 6) with RJN, Ex. 2. III. ARGUMENT Although Plaintiffs’ essential contentions about DLA Piper are in fact false, DLA Piper recognizes that the Court must accept well-pleaded factual allegations as true for purposes of this motion. As shown above, however, and explained in more detail below, the First Amended Complaint merely parrots the WARN Act’s statutory provisions and recites other bare legal contentions: it offers no factual allegations sufficient to support a claim against DLA Piper even at the pleading stage. Moreover, the factual and legal inconsistencies inherent in Plaintiffs’ apparent theory of liability will prevent Plaintiffs from ever stating a viable claim. Therefore, the Court should dismiss the First Amended Complaint as to DLA Piper without leave to amend. Plaintiffs also assert unrelated causes of action involving Thelen, against a putative class of former Thelen partners, represented by named defendants Stephen O’Neal, Thomas Hill, Ellen Bastier, Mark Weitzel, Julian Millstein, Jeffrey Steiner, and David Graybeal. Plaintiffs’ claims against the Thelen Partner Defendants include a cause of action seeking to set aside alleged fraudulent transfers, and a cause of action for “conspiracy.” Those claims are not asserted against DLA Piper or the other Law Firm Defendants, and are not at issue on this motion. 5 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 1 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page10 of 25 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 A. Plaintiffs cannot state a WARN Act claim against DLA Piper that is “plausible on its face.” To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, “a complaint must contain sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Supreme Court has rejected the familiar formulation, originally recited in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that a plaintiff’s claim could survive a motion to dismiss unless the defendant showed that plaintiff could prove “no set of facts” on which relief might be granted. Twombly, 550 U.S. at 562-63; Iqbal, 129 S.Ct. at 1953 (explaining that Twombly “expounded the pleading standard for ‘all civil actions’”). Rather, under the standard set forth in Twombly and Iqbal, a plaintiff’s “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 1965. Specifically, a claim has the necessary “facial plausibility” to survive a motion to dismiss only “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. As the Ninth Circuit has long recognized, unreasonable fact inferences or conclusory legal allegations cast in the form of factual allegations cannot defeat a motion to dismiss. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 129 S.Ct. at 1949. Thus, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citations omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at 1949. Under this rule, “[d]etermining 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 1950. 6 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page11 of 25 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 Plaintiffs’ WARN Act allegations against DLA Piper are conclusory and, bowing to reality, lack any specific factual details that might “nudge[] [them] across the line from conceivable to plausible.” See Twombly, 550 U.S. at 570. Even construed in a favorable light, Plaintiffs’ few factual allegations do not state a WARN Act claim against DLA Piper. B. Plaintiffs’ claim against DLA Piper is inconsistent with the WARN Act’s basic purpose and statutory requirements. The WARN Act requires an employer to give 60 days’ advance notice to its employees before that employer orders either a “plant closing” or a “mass layoff,” as those terms are defined in the Act. 29 U.S.C. § 2102; 29 U.S.C. § 2101(a)(2)-(3) (definitions). If an employer does not give notice when the WARN Act requires it, terminated employees may sue to recover penalties of up to 60 days’ wages and benefits. 29 U.S.C. § 2104(a). The purpose of the WARN Act is to ensure 60 days’ advance notice to workers of certain large-scale layoffs, to help those workers prepare for and adjust to the hardship of employment loss by seeking new work or training. 20 C.F.R. § 639.1.2 The statute was enacted for workers’ protection, but applies only according to its statutory terms: it does not require advance notice of all events that adversely affect employees, but only of “mass layoffs” and “plant closings” that trigger the Act’s specific notice requirements. See Int’l Alliance of Theatrical & Stage Employees & Moving Picture Machine Operators, AFL-CIO v. Compact Video Servs., Inc., 50 F.3d 1464, 1469 (9th Cir. 1995) (rejecting WARN Act claim based on changes in working conditions) (“Compact Video Servs.”). The WARN Act’s requirements apply only to the employer who orders the subject layoffs, and only where those layoffs meet certain statutory thresholds. Claims for WARN Act violations are governed by 29 U.S.C. § 2104. That section provides that “[a]ny employer who orders a plant closing or mass layoff in violation of [29 U.S.C. § 2102, the WARN Act’s notice provision] shall be liable to each aggrieved employee who suffers an employment loss as a result of such closing or layoff for . . . back pay . . . and [certain employee] benefits . . . up to a The Department of Labor has issued authoritative regulations interpreting the WARN Act, pursuant to 29 U.S.C. § 2107(a). See 20 C.F.R. § 639.1-639.10. 7 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 2 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page12 of 25 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 maximum of 60 days.” 29 U.S.C. § 2104(a)(1). The amount of any liability “shall be reduced by . . . any wages paid by the employer to the employee for the period of the violation,” as well as certain other types of payments. 29 U.S.C. § 2104(a)(2). Accordingly, to plead a viable WARN Act claim against DLA Piper, Plaintiffs must allege facts which plausibly show that: (1) DLA Piper was their “employer” under the WARN Act, 29 U.S.C. § 2104; (2) DLA Piper “order[ed]” the layoffs, 29 U.S.C. §§ 2102, 2104; (3) the layoffs qualified as a “mass layoff” or “plant closing” as defined in the WARN Act, 29 U.S.C. §§ 2101 (definitions), 2104; and (4) Plaintiffs suffered a covered “employment loss” as a result, 29 U.S.C. § 2104. Plaintiffs failed in every respect. 1. Plaintiffs have not alleged—and cannot allege—that DLA Piper was ever their “employer” under the WARN Act. The first, fundamental requirement for a WARN Act claim is an employment relationship linking the defendant to the wrongs alleged: terminated employees must seek relief from their “employer,” not from other persons or entities. 29 U.S.C. § 2104. Plaintiffs have not alleged any facts plausibly suggesting that DLA Piper was their employer, and cannot assert any cognizable legal theory under which DLA Piper could be liable under the WARN Act without being Plaintiffs’ employer. Plaintiffs’ only assertions of an employment relationship between DLA Piper and Plaintiffs are conclusory legal contentions, not factual allegations. Plaintiffs make no attempt to allege an employment relationship in the ordinary sense; they do not allege any facts indicating that any of them ever did work for DLA Piper, were paid salaries by DLA Piper, or otherwise had a direct employment relationship with DLA Piper that was subject to DLA Piper’s day-today control. To the contrary, Plaintiffs admit that they were Thelen employees until their November 30, 2008 terminations. FAC ¶¶ 3, 6, 31, 41. Plaintiffs do contend that DLA Piper became their employer under the WARN Act by operation of law when DLA Piper allegedly “purchased” part of Thelen’s business, FAC ¶ 77, or 8 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page13 of 25 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 that DLA Piper was otherwise “a successor of Thelen for labor law purposes.” FAC ¶ 20. But Plaintiffs have not alleged any facts plausibly supporting either claim. For example, Plaintiffs do not allege how DLA Piper could become a “successor” to an entity that remained in existence. Plaintiffs’ assertions of an employment relationship with DLA Piper are bare legal conclusions, not factual allegations, and the Court should not credit them. See Iqbal, 129 S.Ct. at 1949-50; Doe v. Wal-Mart Stores, Inc., __ F.3d __, 2009 WL 1978730, at III.B (9th Cir. July 10, 2009) (affirming Rule 12(b)(6) dismissal; rejecting similarly conclusory allegations of employment relationship). a. Plaintiffs have not adequately alleged that DLA Piper became their employer by “purchasing” a part of Thelen’s business. Plaintiffs appear to rely on the WARN Act’s “sale of a business” provision, contained in 29 U.S.C. § 2102(b). Under that section, when all or part of a business is sold, “the seller shall be responsible for providing notice for any plant closing or mass layoff in accordance with [29 U.S.C. § 2102], up to and including the effective date of the sale.” 29 U.S.C. § 2101(b). After that date, “any person who is an employee of the seller (other than a part-time employee) as of the effective date of the sale shall be considered an employee of the purchaser immediately after the effective date of the sale,” and “the purchaser shall be responsible for providing notice [of layoffs in accordance with 29 U.S.C. § 2102].” 29 U.S.C. § 2101(b). This provision provides for orderly business transitions by establishing who the employer is at any given time, in order to preserve WARN Act notice rights, but it creates no other rights. See 20 C.F.R. § 639.4(c); 20 C.F.R. § 639.6. In fact, the provision creates an exception to WARN Act liability, which bars gratuitous WARN Act claims in situations where a business is sold—resulting in a technical termination of employees’ relationship with their original employer—but the purchaser carries on the business with the same employees, and no actual employment losses result. See 20 C.F.R. § 639.6; 29 U.S.C. § 2101(b) (“Exclusions from definition of employment loss”); Compact Video Servs., 50 F.3d at 1467 (explaining this “sales exception”). 9 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page14 of 25 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 Plaintiffs’ allegations that DLA Piper became Plaintiffs’ employer track this provision in conclusory fashion, without offering any corroborating factual allegations to make the claim plausible. Plaintiffs simply assert that DLA Piper “purchased the real estate finance practice and perhaps other parts of Thelen’s business” at some unspecified point “[i]n 2008,” and became Plaintiffs’ employer as a result. FAC ¶ 19; see also id. ¶¶ 40, 77. But Plaintiffs admit they continued to be employees of Thelen until November 30, 2008 FAC ¶ 6. Plaintiffs do not make any concrete factual allegations from which the Court might infer that a purchase actually took place, and do not begin to answer the “basic questions” presented in any factual inquiry: “who, did what, to whom (or with whom), where, and when?” Kendall v. VISA U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008) (affirming Rule 12(b)(6) dismissal). Without such allegations, Plaintiffs have failed to “show”—rather than simply to contend—that they may be entitled to relief. Twombly, 550 U.S. at 555 n.3 (“Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.); Fed. R. Civ. P. 8(a)(2). Plaintiffs’ deficient pleading prevents the Court from conducting any meaningful review of Plaintiffs’ claim. See First Advantage Background Servs. Corp. v. Private Eyes, Inc., 569 F. Supp. 2d 929, 938 (N.D. Cal. 2008). A complaint must include enough concrete facts for the Court to evaluate whether the plaintiff has stated a plausible claim. Compare, e.g., Johnson v. Riverside Healthcare System, LP, 534 F.3d 1116, 1119-20, 1123 (9th Cir. 2008) (accepting as true and drawing reasonable inferences from concrete allegations of discriminatory workplace conduct), with Moss v. U.S. Secret Service, ___ F.3d ___, 2009 WL 2052985, at *6 (9th Cir. July 16, 2009) (rejecting bald allegation of impermissible motives by government actors, without supporting factual content, as conclusory and not entitled to credence). As presented here, Plaintiffs’ claim of a “purchase” by DLA Piper is not plausible on its face. The Court may employ its judicial experience and common sense in evaluating Plaintiffs’ claim. See Iqbal, 129 S.Ct. at 1940 (“[D]etermining whether a complaint states a plausible claim is context-specific, requiring the reviewing court to draw on its experience and common sense.”). Indeed, the Supreme Court did so in evaluating the anti-trust claims at issue in Twombly, and found no basis to infer unlawful conduct when lawful action was at least equally probable. 10 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page15 of 25 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 Twombly, 550 U.S. at 566-567. There, the Court noted that the alleged conspiratorial acts by competitors in the telecommunications industry were equally consistent with lawful, “routine market conduct,” and found no reasonable basis “to infer that the companies had agreed among themselves to do what was only natural anyway.” Id. at 566. Similarly, following Twombly, the Ninth Circuit in Kendall affirmed a Rule 12(b)(6) dismissal where the only facts alleged in the complaint were not “factually suggestive” of illegal behavior (specifically, anti-competitive conspiracy), but “could just as easily suggest rational, legal business behavior.” Kendall, 518 F.3d at 1049. Employing the same principle, the Court may—and should—consider the nature of the legal profession in evaluating Plaintiffs’ claims. As a general matter, lawyers enjoy complete professional autonomy and freedom to leave one firm and join another, and agreements restricting their right to do so are strictly limited. See, e.g., ABA Model Rules of Professional Conduct 5.6. Thus, when individuals or small groups of lawyers move from one firm to another (facts which Plaintiffs have not even alleged), the most reasonable explanation is not that a “purchase” of all or part of a law firm has occurred, but that those individuals have exercised their personal autonomy and chosen to move to a different firm. See McCaffrey v. Brobeck, Phleger & Harrison, L.L.P., No. C 03-2082 WWS, 2005 WL 3358775 (N.D. Cal. April 27, 2005) (“McCaffrey II”). In that case, the court analyzed a WARN Act claim by employees against a second law firm that allegedly purchased the firm that originally employed the plaintiffs. In so doing, the court recognized that “each partner’s move to [the second firm] was his or her individual decision (as was that of individual clients).” Id. at *4. Plaintiffs have alleged no facts here that might counteract these common-sense principles and allow the court to draw a reasonable inference that DLA Piper actually “purchased” any part of Thelen’s business. Plaintiffs also failed to allege that DLA Piper ever exerted control and responsibility over Thelen’s business operations. The Ninth Circuit has explained that, in evaluating whether a defendant is an “employer” under the WARN Act, “the crucial question is not the status of the defendant’s legal relationship to the business but, instead, if at the time of the plant closing or mass layoff the defendant is responsible for operating the business as a going concern.” 11 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page16 of 25 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 Chauffeurs, Sales Drivers, Warehousemen & Helpers Union Local 572 v. Weslock Corp., 66 F.3d 241, 244 (9th Cir. 1995). Without evidence of a defendant’s “involvement in the functional operations of the [facility at issue], there can be no finding that [the defendant] is an employer under WARN.” Id. at 245. Consistent with those principles, the Ninth Circuit has taken a functional approach to defining sale of a business under the WARN Act. See Int’l Alliance of Theatrical & Stage Employees & Moving Picture Machine Operators, AFL-CIO v. Compact Video Servs., Inc., 50 F.3d 1464, 1468 (9th Cir. 1995). Even under the most expansive reading of that approach, Plaintiffs have not plausibly alleged that DLA Piper actually “purchased” all or part of Thelen’s business under 29 U.S.C. § 2101(b)(1). The only court to consider this issue in the law firm context has identified a number of factors that—taken together—may suggest a sale. McCaffrey v. Brobeck, Phleger & Harrison, L.L.P., No. C 03-2082 CW, 2004 WL 345231, at *3 (N.D. Cal. Feb. 17, 2004) (“McCaffrey I”). The court in McCaffrey I found that plaintiffs had articulated a plausible “purchase” claim under the WARN Act where they alleged in detail that one law firm “put together a series of transactions that allowed many of the same lawyers [from a second firm] to practice law using much of the same infrastructure with the explicit hope that this would allow [the first firm] to acquire [the second firm’s] clients.” Id. There, plaintiffs alleged that the purported purchaser had previously discussed a merger with the other firm; then hired hundreds of the other firm’s partners, associates, and staff; leased the other firm’s premises; purchased its fixtures, equipment, and access to its informational infrastructure; obtained access to its client files; and continued operations seamlessly, emphasizing the continuity of the transition in client relationships in its press releases. Id. at *1, *3. Plaintiffs have not alleged—and cannot allege— any such facts suggesting that DLA Piper actually “purchased” all or part of Thelen’s business. As a result, Plaintiffs’ WARN Act claim against DLA Piper fails as a matter of law. b. Plaintiffs cannot pursue their WARN Act claim against DLA Piper as a “successor” to Thelen. Plaintiffs also apparently seek to impose successor liability on DLA Piper for Thelen’s obligations, based on the following conclusory allegation: 12 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page17 of 25 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 Plaintiffs are informed and believe and thereon allege that Defendant DLA Piper is a successor of Thelen for labor law purposes. Defendant DLA Piper is a law firm that has substantially continued the same business operations of Thelen, with substantially the same employees working in similar jobs and working conditions, with similar supervisory personnel, using similar methods and offering similar services. FAC ¶ 20. Plaintiffs make the same “allegation” against each of the other Law Firm Defendants. FAC ¶¶ 17, 23, 26, 27. Like Plaintiffs’ “purchase” allegations, this allegation lacks any factual content that could make an inference of successor liability plausible, even if the conclusions it states were enough to support successor liability as a matter of law. See Twombly, 550 U.S. at 570. Plaintiffs make no allegations about how, when, or where DLA Piper allegedly “continued” Thelen’s business operations, or what aspects of the business have been continued in what ways, by whom. See Kendall, 518 F.3d at 1048. Nor can Plaintiffs reasonably assert (or ask the Court to infer) that each one of five separate law firms is independently “continu[ing the] business operations of Thelen, with substantially the same employees working in similar jobs and working conditions, with similar supervisory personnel, using similar methods and offering similar services.” FAC ¶¶ 17, 20, 23, 26, 29. Moreover, the only court to consider this issue in the law firm context has correctly refused to apply common law doctrines of successorship to hold one law firm responsible for another law firm’s failure to provide a WARN Act notice. See McCaffrey I, 2004 WL 345231, at *3. The rights and obligations of sequential business owners under the WARN Act are determined solely by the WARN Act’s express provision concerning sale of a business, 29 U.S.C. § 2101(b). See McCaffrey I, 2004 WL 345231 at *3. That express provision does not contemplate or leave room for common law successor liability doctrines to apply. Id. In addition, even in non-WARN Act contexts, a business that purchases another is generally “insulated from the debts and liabilities of its predecessor.” Monarch Bay II v. Prof. Serv. Indus., Inc., 75 Cal. App. 4th 1213, 1216 (1999). A purchaser can be held liable as a successor only if it both purchases the “principal assets” of the purchased business and falls within one of four exceptions to the general rule of nonliability. McCaffrey II, 2005 WL 3358775 at *5. Specifically, successor liability can exist only if “(1) there is an express or 13 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page18 of 25 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 implied agreement of assumption; (2) the transaction amounts to a consolidation or merger of the two corporations; (3) the purchasing corporation is a mere continuation of the seller; or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts.” Id. (citing Ray v. Alad Corp., 19 Cal. 3d 22, 28 (1977). Plaintiffs do not allege any such facts, nor could they. Plaintiffs have not alleged—and cannot allege—that DLA Piper ever was their employer. As a result, their WARN Act claim against DLA Piper fails as a matter of law. 2. Plaintiffs have not alleged—and cannot allege—that DLA Piper “ordered” that Plaintiffs be terminated from employment. Under the statute’s plain language, the WARN Act’s notice requirements apply only to the employer who “orders” a mass layoff or plant closing. 29 U.S.C. § 2102. Accordingly, WARN Act plaintiffs may proceed only against an “employer who orders a plant closing or mass layoff in violation of [29 U.S.C. § 2102].” 29 U.S.C. § 2104 (emphasis added). Making or controlling the decision to “order” a layoff that violates the Act is an essential element of any WARN Act liability. Id. The Department of Labor has explained that it is “axiomatic in the WARN scheme” that “an employer is only responsible for giving notice to its employees for covered employment losses that occur as a result of its actions”—not the actions of others. 54 Fed. Reg. 16042-01, 16045 (1989) (commentary on 20 C.F.R. § 629.2(a); emphasis added). The courts have interpreted the WARN Act in keeping with this plain meaning, requiring control of the business operations to support any liability. The Ninth Circuit has explained that “the crucial question” under the WARN Act is whether “at the time of the plant closing or mass layoff the defendant is responsible for operating the business as a going concern”—and thus in control of the layoffs. Chauffeurs, Sales Drivers, Warehousemen & Helpers Union Local 572 v. Weslock Corp., 66 F.3d 241, 244 (9th Cir. 1995). Likewise, the “basic point of the [courts’] inquiry” in determining whether two entities constitute a single, jointly responsible employer under the WARN Act is whether one entity has “structured its relationship with [the other] in such a fashion as to control [the other]” while seeking to avoid liability on its own behalf. Int’l 14 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page19 of 25 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 Broth. of Teamsters, Chauffeurs, Sales Drivers, Warehousemen & Helpers Union Local 952 v. Am. Delivery Serv. Co., 50 F.3d 770, 776 (9th Cir. 1995) (emphasis added). The Ninth Circuit and other courts have consistently applied this core principle. See Coppola v. Bear Stearns & Co., Inc., 499 F.3d 144, 148-50 (2d Cir. 2007) (applying Weslock test in creditor context); Adams v. Erwin Weller Co., 87 F.3d 269, 272 (8th Cir. 1996) (same); Pearson v. Component Tech. Corp., 247 F.3d 471, 493 (3d Cir. 2001) (applying statute’s “single employer” factors to determine whether unrelated creditor was plaintiffs’ employer under WARN Act). The rule is central to the statutory scheme, and applies in all WARN Act contexts: “[t]he critical inquiry is not what entity employed the affected employees at the time of the layoff; rather, it is who ordered the layoff to occur.” Deveraturda v. Globe Aviation Sec. Servs., 454 F.3d 1043, 1049 (9th Cir. 2006) (rejecting WARN Act claim where federal government, not employer, ordered terminations). Accordingly, dismissal under Rule 12(b)(6) is proper wherever a defendant is not alleged to have made or controlled the decision to conduct layoffs. See Vogt v. Greenmarine Holding, LLC, 318 F. Supp. 2d 136, 143, 145 (S.D.N.Y. 2004) (sustaining WARN Act claim against defendants alleged to have controlled layoff decisions, but dismissing as to other defendants). The rule remains unchanged even where the sale of a business is alleged: notice requirements are the responsibility of the party that actually controls and implements the decision to terminate. The Ninth Circuit has confirmed that the WARN Act’s sale-of-business exception, like the rest of the statute, “allocates notice responsibility to the party who actually makes the decision that creates an ‘employment loss.’” Compact Video Servs., 50 F.3d at 1468. Here, that was Thelen and its partners as of October 2008—not DLA Piper. Plaintiffs have not alleged facts plausibly suggesting that DLA Piper ordered a plant closing or mass layoff, instead relying on conclusory assertions. Plaintiffs’ only specific factual allegations are not even consistent with, let alone suggestive of, the necessary control by DLA Piper. And under Twombly, mere consistency would not be enough to sustain the claim. Twombly, 550 U.S. at 557. 15 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page20 of 25 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 Plaintiffs allege that “[o]n or about October 30, 2008, Thelen and/or the Law Firm Defendants ordered a ‘mass layoff’ or ‘plant closing’ of the Facilities [as defined under the WARN Act and associated regulations].” FAC ¶ 78. This allegation simply tracks the relevant WARN Act provision, however, without any factual substance. See 29 U.S.C. § 2104. (Indeed, Plaintiffs’ resort to the inherently speculative “and/or” in this and other allegations highlights the absence of any concrete factual substance. See FAC ¶¶ 78, 80-84.) Therefore, the Court need not accept it as true for purposes of this motion. Iqbal, 129 S.Ct. 1949-50. In fact, the only reasonable inference from Plaintiffs’ few concrete fact allegations here is that Thelen made and controlled the decision to terminate Plaintiffs’ employment. As explained above, Plaintiffs have not alleged that they had a direct employment relationship with DLA Piper: there are no allegations that DLA Piper controlled the terms and conditions of Plaintiffs’ employment day to day, or that Thelen ever gave DLA Piper control over all or part of its operations and personnel decisions. To the contrary, Plaintiffs allege that “Thelen was an ‘employer’ [under the WARN Act and associated regulations] and continued to operate as a business until deciding to order a mass layoff or plant closing at the Facilities.” FAC ¶ 76 (emphasis added). That allegation alone directly contradicts a necessary element of Plaintiffs’ WARN Act claim against DLA Piper and requires dismissal without leave to amend. In addition, the Court can take judicial notice of Plaintiffs’ similar allegations in their Bergman case against Thelen itself, without converting this motion into one for summary judgment. See Operating Engineers’ Pension Trust Fund v. Clark’s Welding and Machine, No. 09-0044 SC, 2009 WL 1324049, *1 (N.D. Cal. May 8, 2009). Those allegations support the same result. In Bergman, Plaintiffs have alleged (and Thelen has stipulated at least for purposes of class certification), that Thelen announced the layoffs, affecting Thelen’s employees. RJN, Ex. 3, at 1:7-10 (Joint Stipulation and Order to Amend Class Certification Order). Common sense does not support any inference that DLA Piper—an independent law firm and market competitor—had any interest in or authority to order a ‘mass layoff’ or ‘plant closing’ affecting Thelen’s employees. 16 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page21 of 25 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 3. Plaintiffs have not alleged—and cannot allege—any “mass layoff” or “plant closing” by DLA Piper that triggered WARN Act notification requirements. The WARN Act’s notice requirements apply only when an employer orders a “mass layoff” or “plant closing” as specifically defined in the Act. 29 U.S.C. § 2101 (definitions); 29 U.S.C. § 2102 (notice requirements). “Not all plant closings and layoffs are subject to the Act, and certain employment thresholds must be reached before the Act applies.” 20 C.F.R. § 639.2. A “plant closing” is defined as a shutdown of a “single site of employment” that causes an employment loss at that site for 50 or more employees during a 30-day period. 29 U.S.C. § 2101(a)(2). A “mass layoff” is a defined as any other work force reduction that results in an employment loss for either (1) 50 to 499 full-time employees, if that number equals at least 33 percent of the work force, or (2) 500 full-time employees. 29 U.S.C. § 2101(a)(3). Therefore, neither a “mass layoff” nor a “plant closing” can occur unless a defendant employer terminates at least 50 of its employees. 29 U.S.C. § 2101(a); Weslock, 66 F.3d at 243. Plaintiffs have not alleged—and cannot allege—that DLA Piper ever employed 50 former Thelen employees or that DLA Piper laid off 50 Thelen employees. Instead, Plaintiffs allege that more than 700 Thelen employees lost their jobs on November 30, 2008 as a result of the five Law Firm Defendants’ alleged separate purchases of Thelen’s business. FAC ¶ 31. Plaintiffs further claim that more than 50 people and more than 33 percent of Thelen’s workforce at each of the Thelen facilities (its offices) were terminated on November 30, 2008. See FAC ¶¶ 43, 79. But even if DLA Piper had “purchased” some portion of Thelen’s business and subsequently employed those former Thelen employees who worked in that “practice” (which it most certainly did not), DLA Piper’s potential WARN Act liability would be assessed on the basis of what DLA Piper actually purchased and controlled—not what happened to the Thelen business DLA Piper didn’t buy. Plaintiffs have not alleged—and cannot allege—that DLA Piper purchased Thelen’s entire business, and cannot reasonably contend that by allegedly “purchasing” part of Thelen’s business, DLA Piper became responsible for all Thelen 17 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC Case3:09-cv-03031-SC Document14 Filed08/11/09 Page22 of 25 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 employees, rather than simply the employees in the part of the business that was allegedly purchased. Common sense makes any such inference unreasonable. For example, if Coca Cola sold a single plant or product line to a competitor, one could not reasonably contend that the purchaser therefore became the employer of all of Coca Cola’s employees in other plants and product lines, and responsible for any layoffs company-wide. In contrast, if the purchaser bought a plant, but fired half its workforce upon the purchase, the purchaser might be held responsible for WARN Act violations associated with those layoffs, which it actually ordered and controlled. Ultimately, in order to hold DLA Piper liable under the WARN Act, Plaintiffs must maintain two inconsistent legal positions simultaneously: Plaintiffs’ contend that DLA Piper was Plaintiffs’ employer, but that Thelen’s layoffs triggered the WARN Act’s notice requirements. Plaintiffs cannot have it both ways. If DLA Piper bought part of Thelen’s business and became the WARN Act employer of certain employees (a necessary element of Plaintiffs’ proof), then the Court must consider whether DLA Piper—not Thelen—ordered layoffs broad enough to trigger the WARN Act (another necessary element). On the other hand, if Thelen remained Plaintiffs’ employer, Plaintiffs can rely on the full scope of Thelen’s layoffs to prove a “mass layoff” or “plant closing” (a necessary element), but cannot hold DLA Piper responsible for those layoffs (another necessary element). Either way, Plaintiffs’ claim against DLA Piper fails as a matter of law. 4. Plaintiffs have not alleged—and cannot allege—that they suffered an “employment loss” covered by the WARN Act as a result of any alleged purchase by DLA Piper. Plaintiffs’ claim against DLA Piper fails because a sale of a business does not trigger WARN Act notice requirements unless it results in a covered “employment loss.” Plaintiffs have not alleged such a loss here. Following the WARN Act regulations, the Ninth Circuit has recognized that a “sale of a business” does not trigger WARN Act notice requirements unless it results in a covered employment loss. Compact Video Servs., 50 F.3d at 1467; 20 C.F.R. § 639.6. When a business is sold and the purchaser continues to operate it, its employees could be viewed as technically 18 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page23 of 25 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 “terminated” by the seller and “rehired” by the purchaser upon the purchase. Even if an employee is deemed “technically” terminated upon the purchase, however, the Ninth Circuit has explained that such a technical termination, in itself, does not trigger the WARN Act: if the employee is “immediately rehired” and “never ‘face[s] the need to readjust, retrain, find new work or seek unemployment compensation’” upon the sale, there is no “employment loss” requiring WARN Act notice. Compact Video Servs., 50 F.3d at 1467; 20 C.F.R. § 639.6. This result flows from the WARN Act’s fundamental purpose, which is to provide a reasonable notice period to help employees who suffer job losses to prepare for and cope with that unfortunate experience—not to create technical traps for employers. See id.; 20 C.F.R. § 639.1. Here, Plaintiffs do not allege that the purported “purchase” by DLA Piper resulted in any “employment loss” immediately upon the purchase; rather, Plaintiffs allege that they remained employed at Thelen until November 30, 2008. Plaintiffs do not allege when the alleged “purchase” by DLA Piper occurred, except to say it occurred “[i]n 2008.” FAC ¶ 19. Plaintiffs’ theory appears to be that DLA Piper “purchased” a part of Thelen’s business at some time before the November 30 terminations and that all Thelen employees who did not move to DLA Piper were effectively “fired” by DLA Piper. But Plaintiffs admit that they continued to work for Thelen through November 30, meaning they could not have suffered any “employment loss” under the WARN Act as a result of the alleged “purchase” by DLA Piper. Rather, according to the principles of Compact Video Services, Plaintiffs were in effect immediately re-hired by Thelen, which continued to employ, manage, and pay them through November 30, 2008. Plaintiffs could be considered “terminated” by DLA Piper on November 30, 2008 only if that date coincided with the alleged purchase by DLA Piper from Thelen. It would make no sense to say that Plaintiffs worked for a business unit “purchased” by DLA Piper, and were terminated by DLA Piper, but continued to work for Thelen between the “purchase” and the termination. Although Plaintiffs do not identify the date (or even month) of any alleged purchase here, they do allege that the DLA Piper “purchase” combined with other Law Firm Defendants’ alleged purchases “left Thelen as an empty husk that was unable to pay wages owed to more than 700 employees who lost their jobs on November 30, 2008 because of these purchases.” FAC ¶ 19 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page24 of 25 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 31. That allegation (while itself irrelevant to the WARN Act claim) suggests that any DLA Piper purchase occurred before November 30. Given the number of months in a year, the complaint offers no reasonable basis for the Court to infer that the alleged purchase “in 2008” occurred around the same time as the October 30 layoff notice or November 30 terminations. Opposing inferences are equally probable, and all are speculative on this record.3 See Twombly, 550 U.S. at 566. 5. Plaintiffs’ conspiracy allegations do not plausibly state a claim for relief. Finally, no plausible basis exists for Plaintiffs to assert any claim premised on joint action or agreement between DLA Piper and the other Law Firm Defendants, or between DLA Piper and Thelen. Plaintiffs’ conspiracy and related allegations against DLA Piper, like much of the rest of their complaint, are simply legal conclusions couched as factual allegations. Plaintiffs allege, on information and belief, “that each of the Defendants herein”—thus including DLA Piper—“gave consent to, ratified or authorized the acts alleged herein, and that each of the Defendants knowingly aided, abetted or conspired with the others to commit the acts alleged herein.” FAC ¶ 32. Plaintiffs do not identify any factual context or allegations that could support any reasonable inference that DLA conspired with the other Law Firm Defendants, Thelen, or anyone else. Accordingly, the Court need not accept these allegations as true, and should disregard them. Iqbal, 129 S.Ct. at 1949. More fundamentally, Plaintiffs’ allegations of conspiracy have no plausible connection to their WARN Act claim. The WARN Act provides no basis for considering together the actions of multiple, unrelated defendants to determine whether WARN Act notice was required. As explained in the WARN regulations, “independent contractors and subsidiaries which are wholly or partially owned by a parent company” may be considered together with that parent as a single In fact, based on publicly available news accounts, it is clear that Plaintiffs did not conduct a reasonable pre-filing investigation as required by Rule 11. Those press accounts, of which the Court may take judicial notice, show that Plaintiffs were on notice for months before they filed their complaint that eight Thelen partners from that firm’s real estate finance practice announced in August 2008 that they would leave Thelen and join DLA Piper. See RJN, Ex. 4 (press account); see also Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002) (explaining counsel’s Rule 11 obligation to make “a reasonable and competent inquiry” into the facts and law underlying a complaint before filing it). 20 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC 3 448969.01 Case3:09-cv-03031-SC Document14 Filed08/11/09 Page25 of 25 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 employer in certain situations, 20 C.F.R. § 629.3(a)(2), but the Act and regulations do not otherwise contemplate joint WARN Act responsibility by separate entities. In particular, Plaintiffs do not and cannot plausibly claim that the five independent professional partnerships at issue here constituted a single employer under the WARN Act. Such a claim is contrary to the express language of the Act and the regulations, which contemplate that a single employer bears WARN Act responsibility in any given situation. See 29 U.S.C. § 2104; 20 C.F.R. § 639.4(c); 54 Fed. Reg. 16042, 16051. Thus, an argument for such joint responsibility here lacks any good faith basis in the law, and would be legally frivolous. See Christian, 286 F.3d at 1127 (Lawyers have a duty “not only to conduct a reasonable factual investigation, but also to perform adequate legal research that confirms whether the theoretical underpinnings of the complaint are ‘warranted by existing law or a good faith argument for an extension, modification or reversal of existing law.’”) (citing Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1537 (9th Cir. 1986)). IV. CONCLUSION For all the foregoing reasons, DLA Piper respectfully requests that the Court dismiss Plaintiffs’ First Amended Complaint as to DLA Piper. Respectfully submitted, Dated: August 11, 2009 KEKER & VAN NEST LLP By: /s/ Wendy J. Thurm WENDY J. THURM AUDREY H. WALTON-HADLOCK Attorneys for Defendant DLA PIPER LLP (US) 21 448969.01 NOTICE OF MOTION AND MOTION OF DEFENDANT DLA PIPER LLP (US) TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT CASE NO. 09-cv-03031-SC