United States District Court, D. Nevada
LANDRY'S, INC. et al., Plaintiffs,
BRIAN SANDOVAL et al., Defendants.
M. Navarro, Chief Judge United States District Court
before the Court are three Motions to Dismiss Plaintiffs
Landry's, Inc.; Bubba Gump Restaurants, Inc.; Claim
Jumper Acquisition Company, LLC's (collectively,
“Plaintiffs'”) Second Amended Complaint
(“SAC”). The first Motion to Dismiss was filed by
Defendants Governor Brian Sandoval (“Governor” or
“Sandoval”) and Labor Commissioner Shannon
Chambers (“Labor Commissioner” or
“Chambers”), and the second was filed by
Defendant Nevada Insurance Commissioner Barbara Richardson
(“Insurance Commissioner” or
“Defendants”). (ECF Nos. 54, 55). Intervenor
Nevada State Federation of Labor, AFL-CIO
(“Intervenor”) filed the third Motion to Dismiss.
(ECF No. 76). All three motions are fully briefed.
case arises as a challenge to the Nevada Minimum Wage
Amendment, Article 15, Section 16 of the Nevada Constitution
(“Minimum Wage Amendment” or “MWA”)
and its related Regulations, Nevada Administrative Code
(“NAC”) Chapter 608.100-108 (the
“Regulations”). (SAC ¶ 1, ECF No. 50). The
Minimum Wage Amendment was a ballot initiative enacted after
voter approval in two general elections, 2004 and 2006.
(Id. ¶ 22-25). Plaintiffs' SAC focuses on
the following language from the MWA:
The rate shall be five dollars and fifteen cents ($5.15) per
hour worked, if the employer provides health benefits as
described herein, or six dollars and fifteen cents ($6.15)
per hour if the employer does not provide such benefits.
Offering health benefits within the meaning of this section
shall consist of making health insurance available to the
employee for the employee and the employee's dependents
at a total cost to the employee for premiums of not more than
10 percent of the employee's gross taxable income from
Nev. Const. art. 15, § 16(A). From the MWA, Plaintiffs
allege that “Nevada's Labor Commissioner began
issuing regulations . . . found in NAC 608.100 through
608.108.” (SAC ¶ 29). These Regulations include
further specification regarding the health benefits that
qualify under the Nevada Wage Amendment. (Id.
¶¶ 30-32). Plaintiffs also allege that the Labor
Commissioner enforces the Amendment while relying on the
“Nevada Division of Insurance to determine whether an
insurance plan offered by an employer ‘qualifies'
as a health insurance [plan] under the two-tier minimum wage
system established by the Minimum Wage Amendment.”
(Id. ¶ 35).
19, 2015, Plaintiffs filed their Complaint in this Court,
which they amended as a matter of course on July 15, 2015.
(ECF Nos. 1, 17). Defendants filed two Motions to Dismiss
(ECF Nos. 25, 27) asserting, inter alia, that
Plaintiffs lacked standing. On March 31, 2016, the Court
granted Defendants' Motions, explaining that
Plaintiffs' allegations regarding pending lawsuits were
not sufficient to establish concrete injury, as required
under standing doctrine. (Order 6:1-21, ECF No. 47). The
Court then allowed Plaintiff leave to file a SAC.
(Id. 6:22-7:1). Plaintiffs timely filed their SAC,
which alleges four causes of action: (1) Declaration that
ERISA Preempts the Amendment and Regulations, under ERISA
§ 502(A)(3); (2) “Declaration Pursuant to 42
U.S.C. § 1983 that the Governor's Delegation of
Authority to Promulgate the Regulations and Enforce the
Regulations and Amendment Deprives Plaintiffs of Rights
Secured by the Due Process Clause of the United States
Constitution”; (3) “Declaration Pursuant to 42
U.S.C. § 1983 that the Regulations Are Unconstitutional
Because They Exceed the Labor Commissioner's and the
Insurance Commissioner's Authority and Thus Violate
Plaintiffs' Right to Due Process Under the United States
Constitution”; and (4) “Declaration Pursuant to
Pursuant to 42 U.S.C. § 1983 that the Amendment and
Regulations Violate Due Process Protected by the Fifth and
Fourteenth Amendments to the United States
Constitution.” (SAC ¶¶ 52-104, ECF No. 50).
On May 31, 2016, Defendants brought their Motions to Dismiss
under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
(ECF Nos. 54, 55).
August 16, 2016, the Court granted Intervenor's Motion to
Intervene. (ECF No. 79). The next day, Intervenor filed its
Motion to Dismiss (ECF No. 76), along with its Complaint
against Plaintiffs (ECF No. 77).
12(b)(1) of the Federal Rules of Civil Procedure permits
motions to dismiss for lack of subject matter jurisdiction.
Fed.R.Civ.P. 12(b)(1). When subject matter jurisdiction is
challenged, the burden of proof is placed on the party
asserting that jurisdiction exists. Scott v.
Breeland, 792 F.2d 925, 927 (9th Cir. 1986) (holding
that “[t]he party seeking to invoke the court's
jurisdiction bears the burden of establishing that
jurisdiction exists”). Accordingly, courts will presume
a lack of subject matter jurisdiction until the plaintiff
proves otherwise in response to the motion to dismiss.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994).
motion to dismiss under Rule 12(b)(1) may be construed in one
of two ways. Thornhill Publ'g Co., Inc. v. Gen. Tel.
& Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). It may
be described as “facial, ” meaning that it
attacks the sufficiency of the allegations to support subject
matter jurisdiction. Id. Alternatively, it may be
described as “factual, ” meaning that it
“attack[s] the existence of subject matter jurisdiction
in fact.” Id.
as here, a court considers a ‘facial' attack made
pursuant to Rule 12(b)(1), it must consider the allegations
of the complaint to be true and construe them in the light
most favorable to the plaintiff. Love v. United
States, 915 F.2d 1242, 1245 (9th Cir. 1989).
is appropriate under Rule 12(b)(6) where a pleader fails to
state a claim upon which relief can be granted. Fed.R.Civ.P.
12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). A pleading must give fair notice of a legally
cognizable claim and the grounds on which it rests, and
although a court must take all factual allegations as true,
legal conclusions couched as a factual allegations are
insufficient. Twombly, 550 U.S. at 555. Accordingly,
Rule 12(b)(6) “requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id.
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 555). “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.”
Id. This standard “asks for more than a sheer
possibility that a defendant has acted unlawfully.”
a district court may not consider any material beyond the
pleadings in ruling on a Rule 12(b)(6) motion.” Hal
Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d
1542, 1555 n. 19 (9th Cir. 1990). “However, material
which is properly submitted as part of the complaint may be
considered.” Id. Similarly, “documents
whose contents are alleged in a complaint and whose
authenticity no party questions, but which are not physically
attached to the pleading, may be considered in ruling on a
Rule 12(b)(6) motion to dismiss” without converting the
motion to dismiss into a motion for summary judgment.
E.g., Branch v. Tunnell, 14 F.3d 449, 454
(9th Cir. 1994) overruled on other grounds by Galbraith
v. Cty. of Santa Clara, 307 F.3d 1119, 1123-24 (9th Cir.
2002). On a motion to dismiss, a court may also take judicial
notice of “matters of public record.” Mack v.
S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.
1986). Otherwise, if a court considers materials outside of
the pleadings, the motion to dismiss is converted into a
motion for summary judgment. Fed.R.Civ.P. 12(d).
court grants a motion to dismiss for failure to state a
claim, leave to amend should be granted unless it is clear
that the deficiencies of the complaint cannot be cured by
amendment. DeSoto v. Yellow Freight Sys., Inc., 957
F.2d 655, 658 (9th Cir. 1992). Pursuant to Rule 15(a), the
court should “freely” give leave to amend
“when justice so requires, ” and in the absence
of a reason such as “undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, futility of the amendment, etc.” Foman
v. Davis, 371 U.S. 178, 182 (1962).
instant Motions to Dismiss, Defendants seek to dismiss
Plaintiffs' claims for lack of standing, along with being
barred by the Eleventh Amendment, legislative immunity, or
statute of limitations, and failure to state a claim.
is an essential and unchanging part of the
case-or-controversy requirement of Article III.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992). As such, to survive a motion to dismiss, a plaintiff
bears the burden of alleging sufficient facts to show the
existence of each of three elements. Id.
First, the plaintiff must have suffered an injury in fact-an
invasion of a legally protected interest which is (a)
concrete and particularized, and (b) actual or imminent, not
conjectural or hypothetical. Second, there must be a causal
connection between the injury and the conduct complained
of-the injury has to be fairly traceable to the challenged
action of the defendant, and not the result of the
independent action of some third party not before the court.
Third, it must be likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision.
Id. at 560-61 (internal quotation marks and
citations omitted). The Supreme Court recently further
explained the terms particularized and concrete:
“Particularized” means the injury “must
affect the plaintiff in a personal and individual way,
” while “concrete” means “it must
actually exist[;] . . . ‘real' and not
‘abstract.'” Spokeo, Inc. v. Robins,
136 S.Ct. 1540, 1548 (2016).
analyzing a motion to dismiss for lack of standing, courts
must accept the allegations in the complaint as true and
construe the complaint in favor of the complaining party.
Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th Cir.
2011). Indeed, at the pleading stage, “general factual
allegations of injury resulting from the defendant's
conduct may suffice” because on a motion to dismiss,
courts “presume that general allegations embrace those
specific facts that are necessary to support the
claim.” Id. (citing Lujan, 504 U.S.
at 561). While the Ninth Circuit in Maya
differentiated between the standard for dismissal due to
standing compared with a 12(b)(6) dismissal under the
standards of Twombly and Iqbal, the Court
nonetheless clarified: “This is not to say that [a]
plaintiff may rely on a bare legal conclusion to assert
SAC asserts the following injury:
(1) increased administrative costs of offering a separate
health insurance plan in Nevada apart from the
ERISA-governed, Affordable Healthcare Act (“ACA”)
compliant plan they offer nationally, (2) paying $8.25 per
hour to their employees rather than the $7.25 otherwise
required, and (3) harm to their reputation and business
goodwill in the eyes of their employees and the public based
on their inability to comply with the vague, unconstitutional
(SAC ¶ 5). Plaintiffs explain that their injury stems
from “a false choice imposed by the preempted and
unconstitutionally adopted Amendment and Regulations . . .
between incurring certain liability and sanctions under these
challenged laws or paying $1.00 more to each minimum wage
earner in Nevada.” (Id. ¶ 45, 51).
Defendants argue that the SAC “suffers from the same
fatal flaws as the First Amended Complaint . . . [and]
Plaintiffs have alleged no new facts demonstrating
standing.” (Sandoval-Chambers MTD 2:13, 5:27, ECF No.
Court finds that Plaintiffs' alleged increased
administrative costs are sufficient to confer standing.
Plaintiffs assert that they “must alter their
ERISA-governed health plans and the administration of those
plans in Nevada to comply with state law.” (SAC ¶
48). Then, “[t]his alteration causes (1) an increase in
administrative costs and (2) an increase in the cost of
funding separate healthcare plans in Nevada that impose more
stringent requirements and cost more than the ERISA-governed,
ACA-compliant plans Plaintiffs offer nationally.”
(Id.). None of the three motions to dismiss address
Plaintiffs' injury of increased administrative costs.
Accepted as true and construed in favor of Plaintiffs,
Plaintiffs are personally suffering an added cost. Such an
alleged cost is real, not abstract. As such, the Court finds
that this injury is sufficiently particularized and concrete.
Further, the injury is causally connected and redressable by
a favorable ruling from the Court because if the Court finds
the MWA is preempted by ERISA, then Plaintiffs will no longer
need to pay the alleged increased administrative costs to
satisfy the MWA's allegedly more stringent requirements.
Accordingly, the Court finds that Plaintiffs have
sufficiently asserted standing in their SAC.