Lesnik v. Eisenmann SE (374 F. Supp. 3d 923, 2019)

Citations

374 F. Supp. 3d 923

Full opinion text

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 300

LUCY H. KOH, United States District Judge Plaintiffs Gregor Lesnik and Stjepan Papes (collectively, "Plaintiffs") have brought suit stemming from their time working at a facility owned by Tesla, Inc. ("Tesla") in Fremont, California, against 36 different Defendants. Before the Court is an omnibus motion to dismiss filed by Defendants Eisenmann Corporation ("Eisenmann"), Tesla, Mercedes-Benz U.S. International, Inc. ("Mercedes-Benz"), Deere & Company ("Deere"), REHAU Inc. ("REHAU"), LaX Fabricating Ltd. ("LaX"), Volkswagen Group of America Chattanooga Operations, LLC ("VW"), Dicastal North America, Inc. ("Dicastal"), Volvo Car Corp. and Volvo Car US Operations Inc. ("Volvo"), and BMW Manufacturing Co., LLC ("BMW"). ECF No. 300 ("Mot."). However, after the omnibus motion to dismiss was filed, Plaintiffs voluntarily dismissed with prejudice all claims against Mercedes-Benz, Deere, REHAU, LaX, VW, Discatal, Volvo, and BMW. ECF Nos. 315-22. Thus, the only remaining Defendants who filed the omnibus motion to dismiss are Eisenmann and Tesla ("Moving Defendants"). Having considered the parties' submissions, the relevant law, and the record in this case, the Court GRANTS in part and DENIES in part Moving Defendants' motion to dismiss.

I. BACKGROUND

A. Factual Background

Defendant Eisenmann is a manufacturer of specialized paint shop equipment. See ECF No. 269 (third amended complaint, or "TAC") at ¶ 213(g); ECF No. 219 at 4. Eisenmann had relationships with a number of manufacturing entities, such as Tesla, to perform construction work related to Eisenmann's equipment. TAC at ¶ 70. The TAC then alleges that Eisenmann, to fulfill these agreements, would hire an array of subcontractors who would then provide the laborers necessary to complete the equipment installation. TAC at ¶ 84, 107. Although the TAC names a number of these subcontractors as Defendants, the one that matters for present purposes is Defendant "Vuzem. "

Although all of the work described in the TAC occurred in the United States, Vuzem did not use American workers. Instead, the TAC alleges that Vuzem and the other subcontractor Defendants hired workers internationally. For example, to help install a paint shop at a Tesla facility in Fremont, California, Vuzem hired Plaintiff Gregor Lesnik, a resident of Slovenia, and Plaintiff Stjepan Papes, a resident of Croatia. Id. at ¶¶ 1-2, 60, 111, 213. Lesnik and Papes (like other workers) were brought to the United States on B-1 visas that are generally reserved for skilled work, even though Vuzem, Eisenmann, and Tesla allegedly knew the workers would actually be performing unskilled construction work. Id. at ¶¶ 87-95, 115, 145, 211. Eisenmann even allegedly submitted letters to the United States Consulate containing allegedly false statements to obtain B-1 visas on Lesnik and Papes' behalf. Id. at ¶¶ 140, 211, 213, 217. The TAC also alleges that Eisenmann supervised Lesnik and Papes' work at the Tesla facility. Id. at ¶ 140, 213.

The TAC alleges that the foreign workers, once in the United States, were paid far below minimum wage and were forced to work extreme hours. Lesnik allegedly worked at least 10 and on average 12 hours a day, over 80 hours a week, and received only 1 day in 14 off. Id. at ¶ 237. Papes is alleged to have generally "work[ed] the same number of hours for his work at all of the major manufacturing construction sites throughout his time working in the United States." Id. Vuzem also allegedly threatened to withhold pay if workers became too sick to work or reported a job injury; threatened to withhold medical benefits if workers reported a job injury; threatened to withhold visas and immigration status; threatened to file a civil suit against Lesnik while he was hospitalized; and even told Lesnik that "this will not go well for you." Id. at ¶ 315, 338-39. The TAC also alleges that the foreign workers were subject to poor living conditions in the United States, such as being housed in facilities without kitchens, having multiple workers sleep in the same bedroom, or typically having 6 to 10 workers share a single bathroom. Id. at ¶ 318.

B. Procedural History

The Court first discusses the instant case, then a previously-filed case by Lesnik against Eisenmann, Tesla, and Vuzem in Alameda County Superior Court, and lastly, a previously-filed workers' compensation action against Vuzem.

1. The Instant Case

Plaintiffs filed the complaint initiating this suit on March 7, 2016. ECF No. 1. On July 15, 2016, Plaintiffs filed the first amended complaint. ECF No. 20. On April 25, 2017, the United States filed a notice that it would not intervene in the instant case. ECF No. 25. On April 25, 2017, the Court unsealed the complaint. ECF No. 26.

On August 8, 2017, the Court granted Plaintiffs' motion to file a second amended complaint, and directed the United States to make a "prompt decision" regarding intervention. ECF No. 31. On October 5, 2017, the United States filed another notice that it would not intervene in the instant case. ECF No. 34. On November 11, 2017, Plaintiffs filed the second amended complaint. ECF No. 37 (second amended complaint, or "SAC").

On July 12, 2018, various moving Defendants-Eisenmann, Tesla, Mercedes-Benz, Deere, REHAU, LaX, VW, Discatal, and BMW-filed a motion to dismiss the SAC. ECF No. 219. On October 1, 2018, the Court granted in part and denied in part the motion to dismiss the SAC. ECF No. 255 ("October 1, 2018 Order"). The Court dismissed Plaintiffs' False Claims Act ("FCA") claim without prejudice for, inter alia , failing to satisfy the heightened pleading standards of Federal Rule of Civil Procedure 9(b) as to all moving Defendants except Eisenmann, and failing to identify who was responsible for paying the visa fees for allegedly fraudulently-obtained B-1 visas that formed the basis of the alleged false claim. Id. at 14-15. In addition, the Court dismissed Plaintiffs' Fair Labor Standards Act ("FLSA") claim without prejudice because Plaintiffs failed to show that Eisenmann was Plaintiffs' joint employer liable under the FLSA for labor violations while Plaintiffs were employed. Id. at 19-20. Furthermore, the Court dismissed Plaintiffs' California Labor Code claims because Plaintiffs failed to identify the statutes and theories under which Plaintiffs were proceeding. Id. at 20. Additionally, the Court denied the motion to dismiss Plaintiffs' Trafficking Victims Protection Reauthorization Act ("TVPRA") claim and the California Trafficking Victims Protection Act ("CTVPA") claim as to Tesla and Eisenmann because Plaintiffs alleged enough facts to demonstrate that Tesla and Eisenmann knew or should have known of Vuzem's alleged mistreatment of its workers. Id. at 24-25. Lastly, the Court dismissed Plaintiffs' Racketeer Influenced and Corrupt Organizations Act ("RICO") claim without prejudice because Plaintiffs failed to adequately allege the existence of a RICO enterprise and failed to adequately allege a common purpose. Id. at 28, 30.

On October 31, 2018, Plaintiffs filed a 108-page third amended complaint. See generally TAC. The TAC alleges 13 causes of action (some of which are duplicative), which can be grouped into the following general categories: (1) violations of the FCA (count 1); (2) violations of the FLSA for failure to pay minimum wage and adequate overtime pay (counts 2 and 3); (3) violations of the California Labor Code (counts 4 to 8); (4) violation of the TVPRA (counts 9 and 11); (5) violation of the CTVPA (counts 10 and 12); and (6) violations of RICO (count 13). Id. at ¶¶ 125-401.

On November 28, 2018, Defendants Eisenmann, Tesla, Mercedes-Benz, Deere, REHAU, LaX, VW, Dicastal, Volvo, and BMW moved to dismiss the TAC in an omnibus motion to dismiss. See generally Mot. On December 17, 2018, Plaintiffs filed 18 dismissal notices, abandoning multiple class action claims and also dismissing with prejudice all of the Defendants that filed the omnibus motion to dismiss the TAC with the exception of Eisenmann and Tesla. ECF Nos. 304-13, 315-22. On December 20, 2018, Plaintiffs filed their opposition. ECF No. 325 ("Opp."). On January 7, 2019, Moving Defendants filed their reply. ECF No. 342 ("Reply"). On February 14, 2019, the United States filed a notice that the United States takes no position on Moving Defendants' motion to dismiss the TAC. ECF No. 349.

2. The Alameda County Superior Court Case

On June 5, 2015, Lesnik filed suit in Alameda County Superior Court against, inter alia , Eisenmann, Tesla, and Vuzem. ECF No. 130, Dresser Decl. at ¶ 4. Lesnik's Superior Court complaint was amended twice. Id. Lesnik's suit stated, inter alia , a negligence claim, various wage and hour claims, and an unfair business practices claim against Eisenmann, Tesla, and Vuzem. Id. at Ex. C. The factual predicate of Lesnik's Superior Court case all stemmed from generally the same factual predicate as the instant case, including the issuance of visas based on allegedly fraudulent statements and poor working and living conditions. Id. Lesnik, in his Superior Court case, also alleged that he was injured from a fall while working at Tesla. Id. at ¶ 72. Lesnik eventually agreed to settle the Superior Court action. Id. , Dresser Decl. at ¶ 8. A settlement agreement was executed in June 2016. ECF No. 300-3, Ex. A at 8. This settlement agreement was entered into more than a year after Lesnik stopped working at the Tesla facility. TAC at ¶ 136.

The TAC makes no mention of this prior Superior Court case or settlement. However, Moving Defendants seek judicial notice of the settlement agreement despite it not being referenced in the TAC. The Ninth Circuit has held that a district court may consider a document extrinsic to a plaintiff's complaint on a Rule 12 motion if the document is "integral to the plaintiff's claims and its authenticity is not disputed." Parrino v. FHP, Inc. , 146 F.3d 699, 706 n.4 (9th Cir. 1998), superseded by statute on other grounds as stated in Lacey v. Maricopa Cty. , 693 F.3d 896 (9th Cir. 2012). In considering such a document, the district court need not convert the Rule 12 motion to a motion for summary judgment. Id. at 706. The rationale behind this doctrine is simple: a plaintiff's failure to incorporate an extrinsic document "rais[es] the spectre that plaintiff failed to incorporate [the document] by reference in the complaint as a means of avoiding Rule 12(b)(6) dismissal." Hotel Emps. & Rest. Emps. Local 2 v. Vista Inn Mgmt. Co. , 393 F.Supp.2d 972, 979 (N.D. Cal. 2005). Furthermore, "the primary problem raised by looking to documents outside the complaint-lack of notice to the plaintiff-is dissipated [w]here the plaintiff has actual notice." Id. (internal quotations marks and citation omitted).

Here, the Court finds that the settlement agreement is integral to Plaintiffs' claims in the instant case because the settlement agreement settled and released, among other things, "all wage and hour and employment-related claims" against Moving Defendants. ECF No. 300-3, Ex. A at 4. In the instant case, Plaintiffs also assert various state and federal wage and hour and employment-related claims, as well as other claims all stemming from the same factual predicate as the Superior Court case. See, e.g. , Birdsong v. AT & T Corp. , 2013 WL 1120783, at *2 (N.D. Cal. Mar. 18, 2013) (taking judicial notice of a release not cited in the complaint because "[t]he Release is an integral part of [plaintiff's] allegations"). Thus, the Hotel Employees court's enunciation of the principles behind allowing consideration of an extrinsic document on a Rule 12 motion appears correct. Lesnik should not be allowed to avoid potential dismissal of his claims in the instant case via Plaintiffs' strategic decision not to include or mention the settlement agreement that settled substantially similar claims based on substantially similar facts. Moreover, Plaintiffs do not dispute the authenticity of the settlement agreement. See Opp. at 31-35. Furthermore, Lesnik cannot argue that he had no notice of the settlement agreement. Lesnik signed the settlement agreement and was even represented by the same counsel representing him in the instant case. Therefore, the Court GRANTS Moving Defendants' request to take judicial notice of the settlement agreement. The Court also takes judicial notice of Lesnik's complaints in the Superior Court to better understand the scope of the Superior Court case, and what claims or potential claims might be implicated by the settlement agreement. See ECF No. 130, Exs. A-C.

3. Workers' Compensation Action

On June 2, 2015, Lesnik brought a workers' compensation action against Vuzem before the California Workers' Compensation Appeals Board. ECF No. 130, Ex. D. Lesnik's settlement of the Alameda County Superior Court action also settled his workers' compensation action against Vuzem. ECF No. 300-3, Ex. A at 3.

II. LEGAL STANDARD

A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include "a short and plain statement of the claim showing that the pleader is entitled to relief." A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The U.S. Supreme Court has held that Rule 8(a) requires a plaintiff to plead "enough facts to state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (internal quotation marks omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008).

The Court, however, need not accept as true allegations contradicted by judicially noticeable facts, see Shwarz v. United States , 234 F.3d 428, 435 (9th Cir. 2000), and it "may look beyond the plaintiff's complaint to matters of public record" without converting the Rule 12(b)(6) motion into a motion for summary judgment, Shaw v. Hahn , 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). Nor must the Court "assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Fayer v. Vaughn , 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (internal quotation marks omitted). Mere "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson , 355 F.3d 1179, 1183 (9th Cir. 2004).

B. Motion to Dismiss Under Federal Rule of Civil Procedure 9(b)

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Bly-Magee v. California , 236 F.3d 1014, 1018 (9th Cir. 2001). Under the federal rules, a plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). To satisfy this standard, the allegations must be "specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner , 780 F.2d 727, 731 (9th Cir. 1985). Thus, claims sounding in fraud must allege "an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP , 476 F.3d 756, 764 (9th Cir. 2007). In other words, "[a]verments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (citation omitted). The plaintiff must also plead facts explaining why the statement was false when it was made. See In re GlenFed, Inc. Sec. Litig. , 42 F.3d 1541, 1549 (9th Cir. 1994) (en banc), superseded by statute on other grounds as stated in Marksman Partners, L.P. v. Chantal Pharm. Corp. , 927 F.Supp. 1297 (C.D. Cal. 1996).

"When an entire complaint ... is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint...." Vess , 317 F.3d at 1107 (9th Cir. 2003). The Ninth Circuit has recognized that "it is established law in this and other circuits that such dismissals are appropriate," even though "there is no explicit basis in the text of the federal rules for the dismissal of a complaint for failure to satisfy 9(b)." Id. A motion to dismiss a complaint "under Rule 9(b) for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim." Id.

C. Leave to Amend

If the Court determines that a complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend "shall be freely given when justice so requires," bearing in mind "the underlying purpose of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities." Lopez v. Smith , 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation marks omitted). When dismissing a complaint for failure to state a claim, "a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Id. at 1130 (internal quotation marks omitted). Accordingly, leave to amend generally shall be denied only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ'g , 512 F.3d 522, 532 (9th Cir. 2008).

III. DISCUSSION

Plaintiffs' 108-page complaint is lengthy and unclear. See, e.g. , TAC at ¶ 177 ("The racketeering activity included a forced labor scheme ... including as alleged in paragraphs _ to _ herein.") Plaintiffs' counsel did not heed this Court's instruction "to be more concise and clear if [Plaintiffs] opt to amend the [second amended complaint]," which already totaled 62 pages. ECF No. 255 at 6. Plaintiffs' counsel also ignored the Court's comment that the SAC was also at times incomprehensible. Id. Instead, Plaintiffs' TAC is almost double the number of pages of Plaintiffs' SAC, and is similarly difficult to parse.

Moreover, 10 Defendants filed the instant omnibus motion to dismiss, and Plaintiffs waited until 3 days before Plaintiffs' opposition was due before Plaintiff dismissed with prejudice 8 of the 10 defendants who filed the omnibus motion. Thus, Plaintiffs' questionable timing left Moving Defendants no opportunity to brief the actual claims that remain at issue in the instant case until the reply, and required 8 other Defendants to expend significant resources and pages in briefing the motion to dismiss the TAC on claims and parties that are no longer part of the instant case.

Nonetheless, the Court addresses the remaining claims at issue in the instant case. First, Plaintiffs allege that the Moving Defendants violated the False Claims Act ("FCA") with respect to both Plaintiffs Lesnik and Papes. Second, Plaintiffs contend that the Moving Defendants violated various wage and hour laws, including the Fair Labor Standards Act ("FLSA") and numerous portions of the California Labor Code, with respect to Papes only. Third, Plaintiffs claim that the Moving Defendants violated the federal Trafficking Victims Protection Reauthorization Act ("TVPRA") and the California Trafficking Victims Protection Act with respect to both Plaintiffs. Fourth, Plaintiffs argue that Eisenmann violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The Court considers each of the causes of action in turn.

A. False Claims Act Claim (Count 1)

Plaintiffs allege that Moving Defendants have violated the False Claims Act ("FCA"). Plaintiffs' FCA theories are a reverse FCA claim under 31 U.S.C. § 3729(a)(1)(G) and a conspiracy to violate the FCA claim under 31 U.S.C. § 3729(a)(1)(C). The crux of Plaintiffs' claims lies in the visas that Plaintiffs were issued in connection with their work in the United States. Plaintiffs allegedly entered the United States on B-1 visas. TAC at ¶¶ 61, 68-69. However, to perform construction work and unskilled labor, Plaintiffs assert the workers should have obtained petition-based visas, such as the "L-1B, H1-B, or the most appropriate H2-B visas." Opp. at 9. Plaintiffs' reverse FCA argument is that "[b]ecause Defendants falsely obtained cheaper [B-1] visas, they avoided an obligation to pay the government the higher fees associated with the more expensive unskilled-worker visa." Id.

Moving Defendants advance 3 arguments for why Plaintiffs' FCA claims fail. First, Moving Defendants claim that the TAC fails to allege that any Moving Defendant "either incurred or avoided any fee associated with a visa application submitted by any Plaintiffs." Mot. at 5. Second, Moving Defendants argue that Plaintiffs' TAC does not meet the heightened pleading standard of Rule 9(b). Id. Third, Moving Defendants assert that the TAC fails to allege that any Moving Defendant paid a fee associated with Plaintiffs' B-1 visas. The Court finds Moving Defendants' first argument dispositive of Plaintiffs' FCA claims, and thus does not address the remaining arguments.

1. Whether any Moving Defendant Incurred or Avoided a Visa Fee

Moving Defendants argue that Plaintiffs have not stated a reverse FCA violation because Moving Defendants were never under any obligation to pay visa fees associated with the petition-based visas. Plaintiffs claim that Moving Defendants were under an obligation to pay for the more expensive petition-based visas, such as H1-B or H2-B visas, as opposed to the less expensive B-1 visas Plaintiffs obtained to enter the United States.

Since its enactment in 1863, the FCA has been focused on "those who present or directly induce the submission of false or fraudulent claims" to the government. Universal Health Servs., Inc. v. United States , --- U.S. ----, 136 S.Ct. 1989, 1996, 195 L.Ed.2d 348 (2016). Plaintiffs proceed under the reverse false claims provision, 31 U.S.C. § 3729(a)(1)(G). A reverse FCA claim under § 3729(a)(1)(G) involves "fraudulently reducing the amount owed to the government," which constitutes a false claim. See Cafasso, United States ex rel. v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1056 (9th Cir. 2011). § 3729(a)(1)(G) makes liable any person who "knowingly" uses "a false record or statement material to an obligation to pay ... the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay ... the Government." Id. (emphasis added).

The FCA statute defines "obligation" as "an established duty ... arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment." 31 U.S.C. § 3729(b)(3). "The obligation cannot be merely a potential liability...." United States v. Bourseau , 531 F.3d 1159, 1169 (9th Cir. 2008) (quoting Am. Textile Mfrs. Inst., Inc. v. The Ltd., Inc. , 190 F.3d 729, 735 (6th Cir. 1999) ). "[A]n obligation under the meaning of the False Claims Act[ ] must be for a fixed sum that is immediately due." Am. Textile Mfrs. , 190 F.3d at 735.

Here, there are no allegations that Moving Defendants ever submitted a visa application for the petition-based visas. To the contrary, Plaintiffs' allegations that Moving Defendants did not submit a visa application for the petition-based visas form the basis for Plaintiffs' reverse FCA claim. FAC at ¶¶ 61, 68-69. Thus, there was no obligation to pay the government for a petition-based visa because no visa application for a petition-based visa was ever actually submitted. Even Plaintiffs concede that "[a]n employer is obligated to pay fees when applying for petition based visas." Id. at ¶ 209 (emphasis added).

As the Ninth Circuit held in Bourseau , "[t]he obligation cannot be merely a potential liability." 531 F.3d at 1169 (emphasis added). However, that is exactly what Plaintiffs are predicating their reverse FCA claim on: a potential liability incurred only if Moving Defendants had applied for the petition-based visas. Moreover, because no petition-based visa application was made, there was no "fixed sum that [was] immediately due," which is a requirement of an obligation pursuant to American Textile Manufacturers. 190 F.3d at 735.

Plaintiffs do not have a response to Moving Defendants' argument. Strangely, Plaintiffs seem to agree with Moving Defendants' argument. Plaintiffs concede: "[v]isa fees are an obligation to pay upon applying for a visa the approximated cost to the government for visa related expenses." Opp. at 9 (emphasis added).

However, Plaintiffs focus on the fact that they alleged that it was fraudulent for Plaintiffs to have entered the United States on their B-1 visas because Plaintiffs were performing unskilled labor on their B-1 visas, thus Moving Defendants avoided an obligation to pay the government higher visa fees associated with the petition-based visas. Id. Plaintiffs' argument misses the mark. As explained above, the obligation to pay the government only arises upon applying for a visa. Thus, Plaintiffs' reverse FCA claim under 31 U.S.C. § 3729(a)(1)(G) fails because Plaintiffs have not shown that Moving Defendants applied for a visa that obligated Defendants to pay a higher "fixed sum that is immediately due."

Moreover, because Plaintiffs' reverse FCA claim under § 3729(a)(1)(G) fails as to Moving Defendants, there can be no underlying conspiracy to commit a violation of the FCA claim under § 3729(a)(1)(C). § 3729(a)(1)(C) requires a conspiracy "to commit a violation" of the other subparagraphs constituting a claim under the FCA. Numerous courts have found that an underlying violation of the other subparagraphs constituting a claim under the FCA is required to state a claim for conspiracy to commit a violation of the FCA. See, e.g. , Bishop v. Wells Fargo & Co. , 823 F.3d 35, 50 (2d Cir. 2016) ("[T]he relators cannot show a conspiracy to commit fraud given that they have not sufficiently pleaded fraud under the FCA"), vacated on other grounds by --- U.S. ----, 137 S.Ct. 1067, 197 L.Ed.2d 169 (2017) ; United States ex rel. Petras v. Simparel, Inc. , 857 F.3d 497, 507 (3d Cir. 2017) ("[T]here can be no liability for conspiracy where there is no underlying violation of the FCA."); United States ex rel. Godfrey v. KBR, Inc. , 360 Fed. App'x 407, 413 (4th Cir. 2010) ("Since Godfrey's conspiracy claim is premised on those claims of underlying FCA violations, the conspiracy claim rises and falls with the individual claims"); United States v. Strock , 2018 WL 647471, at *12 n.7 (W.D.N.Y. Jan. 31, 2018) ("Plaintiff's FCA conspiracy claim fails for the separate reason that a plaintiff cannot allege a conspiracy to commit an FCA violation when it has failed to allege an underlying violation of the statute."); United States ex rel. Holbrook v. Brink's Co. , 336 F.Supp.3d 860, 873 (S.D. Ohio 2018) ("[T]here can be no liability for conspiracy where there is no underlying violation of the FCA") (quoting Pencheng Si v. Laogai Res. Found. , 71 F.Supp.3d 73, 89 (D.D.C. 2014) ); United States ex rel. Kasowitz Benson Torres LLP v. BASF Corp. , 285 F.Supp.3d 44, 56 (D.D.C. 2017) (same); United States v. Univ. of N. Tex. , 2016 WL 369693, at *6 (E.D. Tex. Feb. 1, 2016) ("Relator cannot plead a conspiracy claim under the FCA when his allegations fail to demonstrate an underlying violation of the FCA."). Therefore, because Plaintiffs have failed to allege a reverse FCA claim under § 3729(a)(1)(G), Plaintiffs also fail to state a conspiracy claim under § 3729(a)(1)(C). Thus, Moving Defendants' motion to dismiss the FCA claims under §§ 3729(a)(1)(G) and 3729(a)(1)(C) (count 1) is GRANTED.

Because Plaintiffs cannot state a reverse FCA claim based on visas for which they never applied, further amendment would be futile. This is a legal deficiency that cannot be cured by additional factual pleadings. Because any amendment would be futile, and it would be unduly prejudicial to Moving Defendants to litigate a third motion to dismiss regarding the same deficiencies, leave to amend is DENIED. Leadsinger, Inc. , 512 F.3d at 532.

The Court now turns to Papes' federal and state wage and hour claims.

B. Wage and Hour Claims (Counts 2 to 8)

Plaintiff Papes alleges that Moving Defendants violated federal and state wage and hour laws. Specifically, Papes alleges that Moving Defendants violated the federal Fair Labor Standards Act ("FLSA") by failing to pay minimum wage (count 2) and failing to pay overtime wages (count 3). Also, Papes claims that Moving Defendants violated California labor laws by: failing to pay minimum wage (count 4); failing to pay overtime wages (count 5); failing to provide rest periods (count 6); failing to provide accurate wage statements (count 7); and failing to pay waiting time penalties (count 8). The Court first analyzes Papes' FLSA claims, then Papes' California Labor Code claims.

1. Fair Labor Standards Act Claims (Counts 2 and 3)

In its October 1, 2018 Order, the Court granted the motion to dismiss the SAC's Fair Labor Standards Act ("FLSA") claims with leave to amend. ECF No. 255 at 20. Plaintiffs have now filed their third amended complaint, reasserting the FLSA claims against Moving Defendants. After reviewing Plaintiffs' TAC, the Court agrees with Moving Defendants that Plaintiffs' fourth attempt at stating a claim fails to address the deficiencies identified by the Court in the October 1, 2018 Order.

In particular, in dismissing Plaintiffs' FLSA claims against Eisenmann in the October 1, 2018 Order, the Court explained that a prerequisite to FLSA liability was being considered an employer, yet "the only allegations Plaintiffs identif[ied] ... in support of joint employer status relate[d] to Eisenmann's control over working conditions." Id. (emphasis added). The Court warned that "failure to cure the deficiencies ... will result in a dismissal with prejudice of the deficient claims of theories." Id. at 32.

Here, Moving Defendants argue that first, Moving Defendants were not Papes' joint employers, and second, Papes' FLSA claims are barred by the statute of limitations. Mot. at 23-25. The Court finds Moving Defendants' first argument dispositive, and does not reach the second argument.

a. Whether Moving Defendants were Papes' Joint Employers

Moving Defendants argue that they were not Papes' joint employers, so they cannot be liable for any FLSA causes of action. The Court agrees.

The joint employer doctrine recognizes that "even where business entities are separate, if they share control of the terms or conditions of an individual's employment, both companies can qualify as employers." Johnson v. Serenity Transp., Inc. , 2016 WL 270952, at *10 (N.D. Cal. Jan. 22, 2016) (" Serenity I ") (quoting Guitierrez v. Carter Bros. Sec. Servs., LLC , 2014 WL 5487793, at *3 (E.D. Cal. Oct. 29, 2014) ). At the pleadings stage, although the "plaintiff is not required to conclusively establish that defendants were her joint employers ... [the plaintiff] must at least allege some facts in support of this legal conclusion." Id. (quoting Hibbs-Rines v. Seagate Techs., LLC , 2009 WL 513496, at *5 (N.D. Cal. Mar. 2, 2009) ).

A defendant must be an "employer" of the plaintiff to be liable under the FLSA. Bonnette v. Cal. Health & Welfare Agency , 704 F.2d 1465, 1470 (9th Cir. 1983), abrogated on other grounds by Garcia v. San Antonio Metro. Transit Auth. , 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). "Two or more employers may be 'joint employers' for the purposes of the FLSA." Maddock v. KB Homes, Inc. , 631 F.Supp.2d 1226, 1232 (C.D. Cal. 2007). "All joint employers are individually responsible for compliance with the FLSA." Id. ; see also 29 C.F.R. § 791.2(a). Whether an entity is a "joint employer" under the FLSA is a question of law. Torres-Lopez v. May , 111 F.3d 633, 638 (9th Cir. 1997).

The Ninth Circuit has adopted a four-part "economic reality" test to determine when the employer-employee relationship exists. See Bonnette , 704 F.2d at 1470. These factors include whether the employer: "(1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records." Id. ; see also Moreau v. Air France , 356 F.3d 942, 946-47 (9th Cir. 2004) (confirming the applicability of the Bonnette factors for the economic reality test); Serenity I , 2016 WL 270952, at *10 (applying Bonnette factors). The Court takes each factor in turn, first for Eisenmann, then for Tesla.

i. Bonnette Factors as Applied to Eisenmann

The first Bonnette factor is whether the alleged joint employer has the power to hire and fire the purported employees. The TAC does not allege that Eisenmann had the power to hire and fire Papes. The most to which Plaintiffs can point in their opposition are allegations that Eisenmann "contracted with other entities such as ISM Vuzem, d.o.o. to hire construction workers including Stjepan Papes." TAC at ¶ 79. As discussed above, the TAC makes clear that "Eisenmann ... used a series of labor contractor entities, including ISM Vuzem d.o.o. ... to act as subcontractors and to hire enough foreign workers to do the construction work." Id. at ¶ 84. There are no allegations that Eisenmann itself "post[ed] available ... jobs, review[ed] resumes or applications, or interview[ed] candidates," nor was Eisenmann involved in "drafting, approving, or executing contracts" between Vuzem and the workers, including Papes. Johnson v. Serenity Transportation, Inc. , 2017 WL 1365112, at *6 (N.D.Cal.). Without engaging in the aforementioned activities, the Serenity I court held that the first Bonnette factor weighed against a finding of joint employment status. Id. Thus, this Bonnette factor weighs against a finding of a joint employer status for Eisenmann.

The second Bonnette factor is whether the alleged joint employer had control over the employees' work schedules or conditions. The TAC alleges that "Eisenmann ... had supervisors that came from time to time to take a look to see how the work performed by ... Gregor Lesnik [and] Stjepan Papes ... was progressing and to assess it. Further, Eisenmann ... through multiple employees and agents provided instructions to ... Gregor Lesnik and Stjepan Papes." TAC at ¶ 140. TAC at ¶ 140. The Court, as it must, construes the TAC in Plaintiffs' favor. See Manzarek , 519 F.3d at 1031 (noting courts accept "factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party"). So construed, the picture that emerges is of Eisenmann using subcontractors like Vuzem to supply laborers which Eisenmann periodically supervised at job sites. Consequently, this Bonnette factor weighs in favor of finding that Eisenmann was a joint employer.

The third Bonnette factor is whether the alleged joint employer determined the rate and method of the employees' payment. The TAC alleges that "Eisenmann by its contracts with the Labor Contractor Defendants [such as Vuzem] determined the rate of compensation." TAC at ¶ 140 (emphasis added). The TAC makes no allegation that Eisenmann determined the method of payment. The TAC alleges that Vuzem was the direct employer of Papes. Id. at ¶¶ 135-36.

Curiously, the TAC strategically deletes the SAC's allegations that Vuzem was responsible for paying workers. Specifically, the SAC alleged that Vuzem paid workers small cash per diems while the workers were in the United States. SAC at ¶ 14, 112. The SAC also alleged that "the workers received a monthly salary in most instances of 800 euros that was deposited directly in their bank account in their home country (expressly stated in the Potrdilo O Zaposlitvi (Certificate of Employment) dated 13.02.2013 signed by Direktor Ivan Vuzem as being E 783,66 gross pay)." Id. at ¶ 14 (emphasis added). Thus, the SAC indicated that Vuzem , not Eisenmann, deposited wages in the workers' bank accounts in the workers' home countries. The SAC's allegations that Vuzem was responsible for paying the workers indicated that Eisenmann did not control the rate and method of the workers' payment. The "court may also consider the prior allegations as part of its 'context-specific' inquiry based on its judicial experience and common sense to assess whether the Third Amended Complaint plausibly suggests an entitlement to relief, as required under Iqbal. " Cole v. Sunnyvale , 2010 WL 532428, at *4 (N.D. Cal. Feb. 9, 2010).

By contrast to the SAC, the TAC's allegation that "Eisenmann by its contracts with the Labor Contractor Defendants [such as Vuzem] determined the rate of compensation" is vague and conclusory. TAC at ¶ 140. Again, the TAC lacks any allegation that Eisenmann determined the method of workers' payment. The TAC also does not explain how Eisenmann's contracts with Vuzem dictate the rate at which Vuzem pays Vuzem's workers. Under Twombly and Iqbal , the TAC does not sufficiently allege that Eisenmann determined the rate and method of the workers' payment.

Moreover, the TAC does not allege that Eisenmann, directly or indirectly, paid workers from Eisenmann's own funds or provided employment benefits. In Singh v. 7-Eleven, Inc. , the fact that a defendant "was not responsible for setting plaintiffs' wages, using its funds to pay plaintiffs, or providing any employment benefits" weighed against a finding of joint employment. 2007 WL 715488, at *6 (N.D. Cal. Mar. 8, 2007).

Furthermore, the TAC does not allege that Eisenmann had a contract with the workers or that the workers received a cut of the monies Eisenmann paid Vuzem. As stated earlier, the TAC does not allege how any of Eisenmann's payments to Vuzem pursuant to Eisenmann's contracts with Vuzem were distributed. Even if the workers received a cut of Eisenmann's payments to Vuzem, courts have held that such facts do not establish a joint employer relationship.

In Johnson v. Serenity Transp., Inc. , the defendant Serenity Transportation was a mortuary transport company that employed the plaintiffs. 141 F.Supp.3d 974, 980 (N.D. Cal. 2015) (" Serenity II "). The Serenity II plaintiffs sued Serenity Transportation and its "customer defendants" for whom the mortuary services were provided. Id. The question before the Serenity II court was whether the customer defendants were the plaintiffs' joint employers. The Serenity II plaintiffs had a contract with Serenity Transportation, a contract that indicated that "drivers receive a percentage of the fees for services that the Customer Defendants pay." Id. at 992. However, despite the fact that there was a contractual relationship between the plaintiffs and Serenity Transportation that gave the plaintiffs a cut of the fees for the services that the customer defendants paid, that was not enough to show that the third Bonnette factor weighed in favor of joint employment. Id. at 993.

The TAC's allegations indicate that Eisenmann had even less control over worker payments than the customer defendants in Serenity II. The TAC vaguely alleges that Eisenmann participated in the workers' compensation scheme via its contracts with Vuzem. However, the Serenity II plaintiffs actually received a cut of the fees the customer defendants paid to Serenity Transportation, a cut that was dictated by the contract between the Serenity II plaintiffs and Serenity Transportation. Thus, the Serenity II plaintiffs were contractually direct beneficiaries of a percentage of the customer defendants' payments. In contrast, the TAC only vaguely alleges that Eisenmann's contracts with Vuzem somehow dictate the rate of Vuzem's workers' payment. The TAC also makes no allegation that Eisenmann had any impact on the workers' method of payment.

The TAC's allegations do not sufficiently allege that Eisenmann determined the rate and method of the employees' payment. Therefore, the third Bonnette factor weighs against a finding that Eisenmann was a joint employer.

The fourth Bonnette factor is whether the alleged joint employer maintained employment records for the workers. The TAC alleges that "Eisenmann by its control of the job sites maintained records of the entry to the job sites and to the hours worked by each employee, which constituted the time records for the employed workers." TAC at ¶ 140 (emphasis added). Thus, the TAC alleges that Eisenmann had control of workers' timesheets. That is not enough for a finding that Eisenmann maintained employment records. For instance, the Pfohl v. Farmers Ins. Grp. court found that keeping timesheets and various invoices was insufficient to show that the alleged joint employer maintained employment records for workers. 2004 WL 554834, at *6 (C.D. Cal. Mar. 1, 2004). Moreover, the Singh court found that control over payroll functions, including "keeping and generating time records ; ... calculating, generating, and delivering the employees' paychecks; filing quarterly returns; and providing employees with annual W2's" were among "ministerial functions" that did not establish that an alleged joint employer maintained employment records for workers. 2007 WL 715488, at *6 (emphasis added). In coming to its conclusion, the Singh court considered the totality of the circumstances surrounding the purported joint employer who, like Eisenmann, lacked control over the workers' rate and method of payment under the third Bonnette factor. Id. Thus, the Singh court concluded that "ministerial functions" did not actually demonstrate a joint employment relationship between the Singh plaintiffs and the purported joint employer because the purported joint employer lacked control over significant aspects of the workers' employment. Id. The fact that the purported joint employer in Singh kept and generated time records was a "mere convenience" for the Singh workers' actual employer. Id. Consequently, the fourth Bonnette factor weighs against a finding that Eisenmann was a joint employer.

In sum, 3 of the 4 Bonnette factors and the totality of the circumstances weigh against finding that Eisenmann was Papes' joint employer. The Court next turns to Tesla.

ii. Bonnette Factors as Applied to Tesla

The first Bonnette factor is whether the alleged joint employer has the power to hire and fire the purported employees. The TAC contains no allegations, and Plaintiffs point to none in their opposition, that Tesla had the power to hire and fire workers. Thus, the first Bonnette factor weighs against a finding that Tesla was a joint employer.

The second Bonnette factor is whether the alleged joint employer had control over the employees' work schedules or conditions. The TAC contains no allegations, and Plaintiffs point to none in their opposition, that Tesla had control over workers' work schedules or conditions. Therefore, the second Bonnette factor weighs against a finding that Tesla was a joint employer.

The third Bonnette factor is whether the alleged joint employer determined the rate and method of the employees' payment. Again, the TAC contains no allegations, and Plaintiffs point to none in their opposition, that Tesla determined the rate and method of workers' payment. Thus, the third Bonnette factor weighs against a finding that Tesla was a joint employer.

The fourth Bonnette factor is whether the alleged joint employer maintained employment records for the employees. The TAC alleges that "[t]he entry logs for the Tesla site were maintained by the security personnel of Tesla." Id. at ¶ 268. However, as the Pfohl court found, solely possessing timesheets and invoices counseled against a finding that an alleged joint employer maintained employment records. 2004 WL 554834, at *6. Likewise, the Singh court found that "keeping and generating time records," among other activities, was not sufficient to establish a joint employer relationship. 2007 WL 715488, at *6. Thus, the fourth Bonnette factor weighs against a finding that Tesla was a joint employer.

In sum, 4 of the 4 Bonnette factors and the totality of the circumstances weigh against a finding that Tesla was a joint employer.

iii. Summary

In sum, the Bonnette factors counsel against a finding that either Eisenmann or Tesla was Papes' joint employer. Thus, Moving Defendants' motion to dismiss the FLSA claims (counts 2 and 3) is GRANTED.

The Court finds that granting leave to amend would be futile and unduly prejudicial to Moving Defendants. Leadsinger, Inc. , 512 F.3d at 532. Plaintiffs have already had 4 opportunities to clearly state and allege facts in support of their claims. Plaintiffs' latest attempt to do so totals 108 pages. From the motion to dismiss the SAC, Plaintiffs had notice of the argument that neither Tesla nor Eisenmann were Papes' joint employers under the FLSA. See ECF No. 219 at 29-30. Moreover, in its October 1, 2018 Order dismissing the FLSA claims against Eisenmann because the SAC failed to sufficiently allege that Eisenmann was Plaintiffs' joint employer, the Court warned that "failure to cure the deficiencies ... will result in a dismissal with prejudice." ECF No. 255 at 32. Nonetheless, Plaintiffs failed to cure the deficiencies. Because any amendment would be futile, and it would be unduly prejudicial to Moving Defendants to litigate a third motion to dismiss regarding the same deficiencies, leave to amend is DENIED.

The Court now turns to Papes' wage and hour claims under the California Labor Code.

2. California Labor Code Claims (Counts 4 to 8)

In its October 1, 2018 Order, the Court granted the motion to dismiss the SAC's California Labor Code claims with leave to amend. ECF No. 255 at 21. Plaintiffs have now filed their third amended complaint, reasserting the California Labor Code claims against Moving Defendants. After reviewing Plaintiffs' TAC, the Court agrees with Moving Defendants that Plaintiffs' fourth attempt at stating a claim fails, especially because the motion to dismiss the SAC provided Plaintiffs notice that Plaintiffs had failed to allege that Moving Defendants were not Papes' employers under California law. ECF No. 219 at 29-32.

Papes claims that Moving Defendants violated California labor laws by: failing to pay minimum wage (count 4); failing to pay overtime wages (count 5); failing to provide rest periods (count 6); failing to provide accurate wage statements (count 7); and failing to pay waiting time penalties (count 8). Moving Defendants argue that Papes' claims against Moving Defendants under the California Labor Code fail because Plaintiffs fail to allege facts establishing that either Eisenmann or Tesla was Papes' employer under California law. The Court agrees with Moving Defendants' argument.

To be liable for violations of the California Labor Code, a defendant must be the plaintiff's employer. See, e.g. , Martinez v. Combs , 49 Cal. 4th 35, 49, 109 Cal.Rptr.3d 514, 231 P.3d 259 (2010) (affirming the application of the FLSA "economic reality" test, which requires an employer-employee relationship to exist for liability to arise, to California law); Luna v. Universal Studio City Prods. LLLP , 2013 WL 12308198, at *3 (C.D. Cal. Aug. 27, 2013) ("Under California law, only an 'employer' is liable for failing to provide an employee with meal or rest periods and failing to furnish accurate, itemized wage statements.... Similarly, only an 'employee' may bring actions to recover for unpaid overtime compensation and failure to pay minimum wages"); Cal. Lab. Code § 203 (requiring that an "employer" pay waiting time penalties).

California has adopted the California Industrial Welfare Commission's ("IWC") definition of employer. Martinez , 49 Cal. 4th at 64, 109 Cal.Rptr.3d 514, 231 P.3d 259. The IWC provides three alternative definitions of what it means "to employ" someone: "(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship." Id. The Court takes each IWC prong in turn.

a. IWC Prong 1-Whether Moving Defendants Exercised Control over Papes' Wages, Hours, or Working Conditions

Under the first prong of the IWC's definition of employer, "an entity employs workers if it 'directly or indirectly, or through an agent or any other person, employs or exercises control' over their wages, hours, or working conditions." Ochoa v. McDonald's Corp. , 133 F.Supp.3d 1228, 1233 (N.D. Cal. 2015). However, the Ochoa court noted that "[w]hile this language is potentially quite broad in scope, California courts have circumscribed it by denying employer liability for entities that may be able to influence the treatment of employees but lack the authority to directly control their wages, hours or conditions." Id. (emphasis added).

As to Eisenmann, there is no indication that Eisenmann meets the IWC's first prong. The TAC alleges that "Eisenmann ... had supervisors that came from time to time to take a look to see how the work performed by ... Stjepan Papes ... was progressing and to assess it. Further, Eisenmann ... through multiple employees and agents provided instructions to ... Papes." TAC at ¶ 140. However, in Martinez , the plaintiffs-seasonal agricultural workers-sued a farmer and two of the produce merchants through whom the farmer sold his strawberries. Martinez , 49 Cal. 4th at 42, 109 Cal.Rptr.3d 514, 231 P.3d 259. Martinez recognized that the produce merchants could leverage their business relationship to influence the farmer, but determined that the merchants were not the workers' joint employers. Id. at 72, 74-75, 109 Cal.Rptr.3d 514, 231 P.3d 259. The fact that a merchant's representatives would explain to the Martinez workers "how the merchant wanted strawberries packed," would "check the packed containers as workers brought them from the field," and "would also sometimes speak directly to the workers, pointing out mistakes in packing such as green and rotten berries" did not establish that the merchants were the workers' joint employers. Id. at 76, 109 Cal.Rptr.3d 514, 231 P.3d 259. Here, the fact that Eisenmann's supervisors periodically checked Papes' work or gave Papes instructions-like how the Martinez merchants' representatives would check the workers' packed containers or give the workers' instructions in how the merchants wanted the strawberries picked-would not be enough under controlling California Supreme Court law in Martinez to establish that Eisenmann had control over Papes' hours or working conditions.

As for control over wages, the TAC alleges that "Eisenmann by its contracts with the Labor Contractor Defendants [such as Vuzem] determined the rate of compensation." Id. at ¶ 140 (emphasis added). Nonetheless, it was still Vuzem that directly employed and paid Papes. Id. at ¶¶ 135-36. As the Ochoa court held, merely being able to "influence the treatment of workers" is not enough to show that there was an employer-employee relationship. 133 F.Supp.3d at 1233. Here, notably, the TAC does not allege that Eisenmann set the employees' rate of compensation. At most, Plaintiffs have alleged that Eisenmann had influence over the workers' wages through its contracts with the "Labor Contractor Defendants" like Vuzem.

Likewise, in Martinez , the produce merchants paid the farmer an advance, which could be an indirect way of controlling the farmer's ability to pay the workers. 49 Cal. 4th at 72, 109 Cal.Rptr.3d 514, 231 P.3d 259. Nonetheless, that was not enough to show that the produce merchants actually controlled the workers' wages and were the workers' employers. Id. at 72, 74-75, 109 Cal.Rptr.3d 514, 231 P.3d 259. Here, the relationship between Vuzem and Eisenmann is the same as the relationship between the Martinez farmer and produce merchants. Eisenmann may have exercised some level of attenuated control over Papes' salary through Eisenmann's contracts with Vuzem, much like the attenuated control the produce merchants had over the Martinez workers through payment of the advance, but it was Vuzem that ultimately paid Papes. TAC at ¶¶ 135-36.

In sum, Eisenmann does not meet the definition of an employer under the IWC's first prong.

As to Tesla, the TAC contains no allegations, and Plaintiffs point to none in their opposition, that Tesla controlled Papes' wages, hours, or working conditions. Thus, Tesla does not meet the definition of an employer under the IWC's first prong.

b. IWC Prong 2-Whether Moving Defendants Permitted Papes to Work

Under the IWC's second prong, "the basis of liability is the defendant's knowledge of and failure to prevent the work from occurring." Martinez , 49 Cal. 4th at 70, 109 Cal.Rptr.3d 514, 231 P.3d 259 (emphasis in original); see also Betancourt v. Advantage Human Resourcing, Inc. , 2014 WL 4365074, at *5 (N.D. Cal. Sept. 3, 2014) ("The essence of this test is the idea that an employment relationship exists if an entity knows or should know that an individual is doing work, yet fails to prevent the individual from working."). "Merely receiving the benefit of the employees' work is not enough to establish liability" under California law. Serenity II , 141 F.Supp.3d at 997 (internal quotation marks omitted).

As to Eisenmann, the TAC does not allege that Eisenmann had the power to hire and fire Papes. The most Plaintiffs can cite in their opposition are allegations that Eisenmann "contracted with other entities such as ISM Vuzem, d.o.o. to hire construction workers including Stjepan Papes." TAC at ¶ 79. The TAC makes clear that "Eisenmann ... used a series of labor contractor entities, including ISM Vuzem d.o.o. ... to act as subcontractors and to hire enough foreign workers to do the construction work." Id. at ¶ 84. Similarly, in Martinez , the California Supreme Court found that the IWC's second prong was not met because "neither [produce merchants] suffered or permitted plaintiffs to work because neither had the power to prevent plaintiffs from working. [The farmer] and his foremen had the exclusive power to hire and fire his workers...." 49 Cal. 4th at 70, 109 Cal.Rptr.3d 514, 231 P.3d 259. Thus, because Eisenmann is not alleged to have hiring and firing power over Papes, Eisenmann does not meet the definition of employer under the IWC's second prong.

As to Tesla, there are no allegations in the TAC, and Plaintiffs point to none in their opposition, that Tesla had hiring and firing power over Papes. Thus, under Martinez , Tesla does not meet the definition of employer under the IWC's second prong.

c. IWC Prong 3-Whether Moving Defendants had a Common Law Employment Relationship with Papes

Under the third prong of the IWC's employer test, an employer-employee relationship could exist if there was a common law employment relationship with the employee. "[T]he principal test of [a common law] employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired." Ayala v. Antelope Valley Newspapers, Inc. , 59 Cal. 4th 522, 531, 173 Cal.Rptr.3d 332, 327 P.3d 165 (2014). "[T]he strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because '[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent's activities.' " Id. (quoting Burlingham v. Gray , 22 Cal. 2d 87, 100, 137 P.2d 9 (1943) ).

As discussed above, neither Eisenmann nor Tesla are alleged to have possessed the power to hire and fire Papes. Thus, under Ayala , the "strongest evidence of the right to control" points away from an employer-employee relationship between the Moving Defendants and Papes. Id.

Plaintiffs respond by citing Cal. Lab. Code § 2750.5, which states: "There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000 ) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor." However, § 2750.5 is inapplicable to showing that Papes was an employee of the Moving Defendants. First, it is plain from the statutory text that the primary question sought to be resolved by § 2750.5 is whether a worker is an independent contractor or not, a question that is irrelevant to the instant case. Second, Plaintiffs do not question, and Moving Defendants do not deny, that Papes was an employee of Vuzem. TAC at ¶¶ 135-36. The statute does not resolve whether this means that Eisenmann, with whom Vuzem had a contractual relationship, or Tesla, are therefore also Papes' employers. After all, the statute does not answer the question of who is the employer.

The only cases this Court has found to create employment relationships under § 2750.5 have been between an unlicensed subcontractor and a general contractor: " Labor Code section 2750.5 operates to conclusively determine that a general contractor is the employer of not only its unlicensed subcontractors but also those employed by the unlicensed subcontractors." See, e.g. , Hunt Building Corp. v. Bernick , 79 Cal. App. 4th 213, 220, 93 Cal.Rptr.2d 883 (2000). The TAC alleges that "VUZEM USA COMPANY" held a California contractor's license (license number 566486). TAC at ¶ 211. According to a search of the California Contractors State License Board website, an entity named "VUZEM USA COMPANY" was indeed a recipient of contractor's license number 566486 from May 1, 1989 to May 31, 2018. Thus, Cal. Lab. Code § 2750.5 and related case law offer no help in identifying whether Moving Defendants are Papes' employers because Vuzem was not an unlicensed subcontractor. Vuzem was licensed from May 1, 1989 until May 31, 2018. Lesnik was Vuzem's worker in 2015 and Papes was Vuzem's worker from 2013 until 2016. TAC at ¶ 136. Thus, Vuzem employed Lesnik and Papes while Vuzem had an active contractor's license. Therefore, Cal. Lab. Code § 2750.5 is not applicable to the instant case.

d. Summary

Plaintiffs have failed to establish under any of the 3 IWC prongs that the Moving Defendants were employers of Papes. Thus, Papes' California Labor Code causes of action fail. Therefore, Plaintiffs' claims that Moving Defendants violated California labor laws by: failing to pay minimum wage (count 4); failing to pay overtime wages (count 5); failing to provide rest periods (count 6); failing to provide accurate wage statements (count 7); and failing to pay waiting time penalties (count 8) are DISMISSED.