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1 DAMON M. OTT, Bar No. 215392
dott@littler.com
2 SARAH R. BOXER, Bar No. 322393
sboxer@littler.com
3 ROBERT M. GEIGER, Bar No. 323914
rgeiger@littler.com
4 LITTLER MENDELSON, P.C.
333 Bush Street
5 34th Floor
San Francisco, CA 94104
6 Telephone: 415.433.1940
Fax No.: 415.399.8490
7
Attorneys for Defendant
8 VANGUARD CLEANING SYSTEMS, INC.
9
THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
IN AND FOR THE COUNTY OF SAN MATEO
11
ALIDA MAZARIEGOS, PAULA Case No. 20-CIV-04267
12 GONZALEZ, JAIME AMAYA,
ADRIANA TELLO, and RYNE BASS COMPLEX ACTION
13
Plaintiffs, on behalf of ASSIGNED FOR ALL PURPOSES TO
14 themselves and all others HONORABLE NANCY L. FINEMAN, DEPT 4
similarly situated,
15 DEFENDANT VANGUARD CLEANING
v. SYSTEMS, INC.’S ANSWER TO THIRD
16 AMENDED COMPLAINT
VANGUARD CLEANING SYSTEMS,
17 INC.; RR FRANCHISING, INC., D/B/A
VANGUARD CLEANING SYSTEMS OF
18 SOUTHERN CALIFORNIA AND D/B/A Complaint Filed: October 1, 2020
VANGUARD CLEANING SYSTEMS OF TAC Filed: June 13, 2023
19 NORTHERN CALIFORNIA; BUDDHA Trial Date: None Set
CAPITAL CORPORATION, D/B/A
20 VANGUARD CLEANING SYSTEMS OF
SACRAMENTO, D/B/A VANGUARD
21 CLEANING SYSTEMS OF
THECENTRAL VALLEY, AND D/B/A
22 VANGUARD CLEANING SYSTEMS OF
THE CENTRAL COAST; AND WINE
23 COUNTRY VENTURES, INC. D/B/A
VANGUARD CLEANING
24 SYSTEMS OF THE NORTH BAY, AND
DOES 1 THROUGH 10,
25 INCLUSIVE,
26 Defendants.
27
28
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 Defendant VANGUARD CLEANING SYSTEMS, INC. (“Defendant”) hereby answers
2 Plaintiffs ALIDA MAZARIEGOS, PAULA GONZALEZ, JAIME AMAYA, ADRIANA TELLO,
3 and RYNE BASS’ (“Plaintiffs”) Third Amended Complaint (“Complaint”) as follows:
4 GENERAL DENIAL
5 Pursuant to C.C.P. § 431.30(d), Defendant generally denies each and every allegation
6 contained in Plaintiffs’ unverified Complaint and further specifically denies that Plaintiffs have been
7 damaged in any respect or in any amount as a result of any act or omission of Defendant.
8 AFFIRMATIVE DEFENSES
9 FIRST AFFIRMATIVE DEFENSE
10 As a separate and distinct affirmative defense, Defendant alleges that, for all relevant and
11 applicable periods of time, Defendant has not been subject to the requirements embodied by, but not
12 limited to, the California Labor Code, the California Code of Regulations (8 Cal. Code Regs., Tit. 8,
13 § 11090), California Industrial Welfare Commission Wage Orders, and any other laws predicated on
14 an actual or potential employer-employee relationship with respect to Plaintiffs on the grounds that
15 Defendant never employed Plaintiffs (directly, jointly or otherwise).
16 SECOND AFFIRMATIVE DEFENSE
17 As a separate and distinct affirmative defense, the Complaint is barred to the extent that
18 Plaintiffs’ and the putative class members’ claims are subject to mandatory and binding arbitration
19 on an individual basis, pursuant to arbitration agreements they entered into.
20 THIRD AFFIRMATIVE DEFENSE
21 As a separate and distinct affirmative defense, the Complaint is barred on the grounds of
22 preemption; specifically, preemption of California’s “ABC” worker-classification test (“ABC test”)
23 by, inter alia, the F.T.C. Franchise Rule and the Lanham Act (see, e.g., U.S. Const. Art. VI; the
24 Lanham Act (15 U.S.C. § 1051, et seq.); F.T.C. Franchise Rule (16 CFR 436.1, et seq.)), as well as
25 California state laws, including, inter alia, the California Franchise Investment Law (Cal. Corp.
26 Code § 31000, et seq.) and the California Franchise Relations Act (Cal. Bus. & Prof. Code § 20000,
27 et seq.). Federal and state law preempts application of the “ABC test” (now embodied in Cal. Labor
28 Code § 2775 et seq.) to the relationship between Defendant and each Plaintiff (and putative class
LITTLER MENDELSON, P.C.
333 Bush Street
2. CASE NO. 20-CIV-04267
34th Floor
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 member) and, therefore, prohibits use of the ABC test to determine the nature of these relationships.
2 Accordingly, to the extent Plaintiffs’ claims are based on an alleged employment relationship
3 between Plaintiffs and Defendant arising from application of California’s “ABC test”, Plaintiffs’
4 claims fail as a matter of law.
5 FOURTH AFFIRMATIVE DEFENSE
6 As a separate and distinct affirmative defense, the Complaint is barred on the grounds that
7 Plaintiffs’ interpretation of California’s “ABC” worker-classification test is violative of, barred by
8 and/or preempted by the California Franchise Investment Law (Cal. Corp. Code 31000, et seq.) and
9 the California Franchise Relations Act (Cal. Bus. & Prof. Code § 20000, et seq.). Defendant has
10 acted in compliance with California and federal franchise laws in its operations, and given this
11 compliance and the (indirect) nature of the parties’ relationships, the ABC test does not and may not
12 be applied to determine the nature of Defendant’s relationship with Plaintiffs or the putative class
13 members.
14 FIFTH AFFIRMATIVE DEFENSE
15 As a separate and distinct affirmative defense, Defendant alleges that, even assuming,
16 arguendo, Defendant failed to comply with any provision of the Labor Code, Defendant
17 substantially complied with the Labor Code, thus rendering an award of penalties inappropriate
18 under the circumstances. For the same reason, should the Court find a violation of the Labor Code
19 occurred, and such violation gives rise to potential penalties, the Court must exercise its discretion
20 and significantly discount or eliminate any potential penalties owed by Defendant due to
21 Defendant’s good faith efforts to comply with the Labor Code and/or substantial compliance with
22 the Labor Code.
23 SIXTH AFFIRMATIVE DEFENSE
24 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims are
25 barred, in whole or in part, by the applicable statute(s) of limitations, including, but not limited to,
26 California Code of Civil Procedure sections 335.1, 338, 339, 340, 343 and California Business and
27 Professions Code section 17208.
28
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
3. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 SEVENTH AFFIRMATIVE DEFENSE
2 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims are
3 barred, in whole or in part, by the doctrines of consent and/or estoppel.
4 EIGHTH AFFIRMATIVE DEFENSE
5 As a separate and distinct affirmative defense, Defendant alleges the Complaint is barred in
6 whole or in part by the doctrine(s) of laches, estoppel, unclean hands, waiver, release, and/or unjust
7 enrichment.
8 NINTH AFFIRMATIVE DEFENSE
9 As a separate and distinct affirmative defense, Defendant asserts that the Complaint and each
10 cause of action set forth therein, or some of them, are subject to the doctrines of set-off, offset and/or
11 recoupment on the part of Defendant.
12 TENTH AFFIRMATIVE DEFENSE
13 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims for
14 penalties are barred, in whole or in part, on the grounds that, at all times alleged herein, Defendant
15 acted in good faith, with a reasonable basis for so acting, and never willfully violated any laws,
16 including any sections of the California Labor Code.
17 ELEVENTH AFFIRMATIVE DEFENSE
18 As a separate and distinct affirmative defense, Defendant alleges any claims for penalties
19 under the PAGA are barred, in whole or in part, because such claims violate the Fifth, Eighth and
20 Fourteenth Amendments of the United States Constitution and Article 1, §§ 7 and 8 of the California
21 Constitution, including the prohibition against excessive fines and punishment. See Timbs v.
22 Indiana, 193 S. Ct. 682 (2019) (Excessive Fines Clause of the Eighth Amendment prohibits the
23 government from imposing “excessive fines” as punishment); United States v. Mackby, 261 F.3d
24 821, 830 (9th Cir. 2001) (civil sanctions under False Claims Act should be analyzed under “the
25 Excessive Fines Clause because the sanctions represent a payment to the government, at least in part,
26 as punishment.”); City & Cty. of San Francisco v. Sainez, 77 Cal. App. 4th 1302, 1321 (2000)
27 (applying the prohibition of excessive fines to penalties imposed under California’s Building
28
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
4. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 Code: “The law is settled that a civil penalty such as the one here, by virtue of its partially punitive
2 purpose, is a fine for purposes of the constitutional protection.”).
3 TWELTH AFFIRMATIVE DEFENSE
4 As a separate and distinct affirmative defense, Defendant alleges the award of penalties as
5 requested by Plaintiffs would violate Defendant’s procedural and substantive due process rights (vis-
6 à-vis the Fourteenth Amendment of the United States Constitution and the Due Process and Equal
7 Protection Clauses in Article 1 of the California Constitution). See State Farm Mutual Automobile
8 Insurance Company v. Campbell, 538 U.S. 408 (2003) or People ex. rel. Lockyer v. R.J. Reynolds,
9 37 Cal. 4th 707 (2005).
10 THIRTEENTH AFFIRMATIVE DEFENSE
11 As a separate and distinct affirmative defense, Defendant alleges any claims based on the
12 PAGA are barred, in whole or in part, because the prosecution of this matter as a representative
13 action under PAGA, and/or an award of penalties pursuant to the PAGA, would violate the Equal
14 Protection Clause of the United States and California Constitutions, as it arbitrarily and unjustly
15 exempts certain employers/alleged employers to the exclusion of others. Labor Code § 2699.6.
16 FOURTEENTH AFFIRMATIVE DEFENSE
17 As a separate and distinct affirmative defense, Defendant alleges Plaintiff and the alleged
18 “aggrieved employees” Plaintiffs seek to represent are not entitled to recover civil penalties under
19 PAGA, to the extent that such penalties are sought in addition to other civil penalties for the same
20 claims, as such double recovery is prohibited and would constitute unjust enrichment.
21 FIFTEENTH AFFIRMATIVE DEFENSE
22 As a separate and distinct affirmative defense, Defendant alleges any claims based on the
23 PAGA are barred, in whole or in part, because the prosecution of this matter as a representative
24 action under PAGA, and/or an award of penalties pursuant to the PAGA, would violate the
25 constitutionally based separation of powers doctrine by impermissibly usurping prosecutorial
26 authority assigned to the executive branch of government and impermissibly delegating it to private
27 attorneys without essential safeguards, including continuing oversight or control by the executive
28 branch.
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
5. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 SIXTEENTH AFFIRMATIVE DEFENSE
2 As a separate and distinct affirmative defense, the Complaint is barred in whole or in part to
3 the extent that it exceeds the scope of the charges made by Plaintiffs on behalf of themselves and
4 other allegedly aggrieved employees before the Labor and Workforce Development Agency
5 (“LWDA”). Plaintiffs’ notice to the LWDA consists of recitations of the law, but contains
6 insufficient facts to support the allegations of violations of the law, among other deficiencies.
7 Accordingly, Plaintiffs have failed to properly exhaust all administrative remedies required to bring
8 the PAGA claims asserted in their Complaint and, therefore, such claims are barred in whole or in
9 part to the extent they exceed the scope of the charges contained in Plaintiffs’ notice to the LWDA.
10 SEVENTEENTH AFFIRMATIVE DEFENSE
11 As a separate and distinct affirmative defense, Defendant alleges that the Complaint, in
12 whole or in part, fails to state a claim sufficient to constitute a cause of action upon which relief can
13 be granted, including because the Complaint lacks necessary details relating to the causes of action
14 asserted therein.
15 EIGHTEENTH AFFIRMATIVE DEFENSE
16 As a separate and distinct affirmative defense, Defendant alleges that the Complaint, and
17 each cause of action set forth therein, or some of them, are barred to the extent Plaintiffs and/or
18 members of the putative class Plaintiffs purport to represent have released claims it/he/she/they may
19 otherwise have been able to assert against Defendant.
20 NINETEENTH AFFIRMATIVE DEFENSE
21 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims and
22 those of putative class members are barred, or must be offset, to the extent that Defendant must be
23 indemnified for any damages, penalties, or losses.
24 TWENTIETH AFFIRMATIVE DEFENSE
25 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs have failed to
26 include necessary parties to this action. Specifically, Plaintiffs fail to name as defendants the
27 commercial cleaning businesses (and “Vanguard Cleaning Systems®” franchises) for which
28 Plaintiffs directly worked. These commercial cleaning businesses/franchises (the names and details
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
6. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 of which Defendant intends to obtain through discovery) are necessary parties because, as the parties
2 for which Plaintiffs directly work/worked, they were and are wholly responsible and liable for any
3 payments and all other obligations imposed by law as a result of the Plaintiffs’ work for the
4 businesses. During the relevant period, there existed no relationship or business arrangement
5 directly between Defendant and any of the Plaintiffs or putative class members (Defendant entered
6 into no contracts with Plaintiffs, paid no amounts to Plaintiffs, received no payments from Plaintiffs,
7 and generally had no specific knowledge or information regarding Plaintiffs or the work Plaintiffs
8 performed.) Accordingly, to the extent Defendant could even be found liable for any of Plaintiffs’
9 claims, which Defendant strenuously disputes, it could only be based on a joint-employer or similar
10 legal theory, adjudication of which necessarily requires consideration and determination of the status
11 of the other entities involved. And of these entities, the most important -- because it is foundational
12 to all other alleged relationships – is the entity for which a plaintiff directly works/worked: here, the
13 commercial cleaning businesses/franchises. Accordingly, these businesses are necessary parties, as
14 their relationship with the individual Plaintiff associated with them must be determined before
15 Plaintiffs’ relationships with Defendant (and the other named defendants) may be determined.
16 TWENTY-FIRST AFFIRMATIVE DEFENSE
17 As a separate and distinct affirmative defense, Defendant alleges that the Complaint and all
18 claims asserted therein are barred by the doctrine of unclean hands and/or the non-waivable conflict
19 of interest created by each Plaintiff’s ownership and management of the commercial cleaning
20 business for which they directly work/worked, which businesses are necessary parties/defendants to
21 this action. Each Plaintiff owns/owned (in whole or substantial part) and is/was responsible for
22 managing the commercial cleaning franchise for which they perform/performed the work on which
23 their claims are based. In each instance, as an owner and manager of the respective commercial
24 cleaning franchise, each Plaintiff (along with any other owners/managers of the franchise) had
25 exclusive control over all personnel the franchise used to perform cleaning services, including
26 control over the selection, hiring, and firing of all workers, as well as the exclusive right and
27 obligation to determine worker classifications, compensation rates, scheduling, timing of meal and
28 rest periods, responsibility for timely payment, issuance of wage statements, timekeeping,
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
7. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 recordkeeping, and compliance with all other legal, contractual, and actual obligations related to
2 personnel working for Plaintiff’s cleaning franchise. As with all other personnel, to the extent a
3 Plaintiff personally performs/performed cleaning and/or other work for the Plaintiff’s cleaning
4 business, Plaintiff (along with any other owners and managers) is/was responsible for determining
5 the capacity in which Plaintiff performed the work (e.g. as a non-exempt employee, an exempt
6 employee under the executive or administrative exemption (or a combination thereof), or as a
7 subcontracted independent contractor). As the owners and persons responsible for managing and
8 operating their respective businesses, Plaintiffs are/were individually responsible for ensuring
9 compliance with all legal requirements and obligations with respect to the work they personally
10 performed for their businesses. As such, Plaintiffs are barred from bringing claims against
11 Defendant (and the other currently named defendants) by the doctrine of unclean hands. Plaintiff
12 cannot recover damages from Defendant for alleged statutory violations Plaintiff him/herself
13 committed (even if Defendant is found to be a joint employer, which it disputes). Moreover,
14 Plaintiffs are barred from asserting the claims alleged in their Complaint by the direct, non-waivable
15 conflict created by their concurrent status as plaintiffs and owners and managing directors/managers
16 of their respective cleaning businesses, which are necessary defendants/parties to this litigation.
17 Plaintiffs are further conflicted due to their potential personal liability for the damages Plaintiffs seek
18 due to their direct control over their respective businesses’ wage payments, worker classification
19 decisions, and compliance with other employment laws for which individual liability can arise.
20 More simply, Plaintiffs cannot sue their own businesses nor bring claims for legal violations they
21 committed and for which they may be individually liable. They likewise cannot bring claims against
22 alleged joint-employers to recover from them damages owed by dint of Plaintiffs’ violations.
23 TWENTY-SECOND AFFIRMATIVE DEFENSE
24 As a separate and distinct affirmative defense, Defendant alleges that the Complaint and all
25 claims asserted therein are barred for lack of standing because Plaintiffs and/or the putative class
26 members, or some of them, are duly organized and/or established business entities that operated as
27 such in connection with defendants, including the franchise agreements and franchising
28 arrangements Plaintiffs and/or the putative class members entered into and maintained with the
LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
8. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 master franchisee defendants named in this action (which does not include Defendant Vanguard
2 Cleaning Systems, Inc.). As business entities, the Plaintiffs and/or putative class member
3 franchisees are not natural persons and, therefore, do not qualify as “employees” for purposes of the
4 allegedly violated employment laws. Accordingly, Plaintiffs and/or the putative class members lack
5 standing to assert the claims contained in the Complaint.
6 TWENTY-THIRD AFFIRMATIVE DEFENSE
7 As a separate and distinct affirmative defense, Defendant alleges that this lawsuit and any
8 individual claims may not properly be maintained as a representative or class action because: (a)
9 Plaintiffs cannot establish the necessary procedural elements for representative/class treatment; (b)
10 considerations of necessity, convenience and justice do not augur in favor of representative/class
11 treatment; (c) individual issues are predominant; and (d) proceeding on a representative/class basis
12 would be unmanageable.
13 TWENTY-FOURTH AFFIRMATIVE DEFENSE
14 As a separate and distinct affirmative defense, Defendant alleges that the Complaint fails to
15 state a claim upon which prejudgment interest may be granted, as the damages claimed are not
16 sufficiently certain to allow an award of prejudgment interest.
17 TWENTY-FIFTH AFFIRMATIVE DEFENSE
18 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs and/or the
19 members of the alleged putative class they seek to represent are not entitled to payment of overtime
20 premiums because they were exempted from overtime requirements under the executive,
21 administrative and/or combination exemptions pursuant to the California Labor Code and the
22 provisions of the California Industrial Welfare Commission’s wage orders.
23 RESERVATION OF ADDITIONAL DEFENSES
24 Defendant reserves the right to amend this answer should Defendant later discover facts
25 demonstrating the existence of new and/or additional affirmative defenses, and/or should a change in
26 the law support the inclusion of new and/or additional affirmative defenses.
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LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
9. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
1 PRAYER FOR RELIEF
2 WHEREFORE, Defendant prays for relief as follows:
3 1. That Plaintiffs take nothing by way of this Complaint.
4 2. That Plaintiffs’ Complaint be dismissed in its entirety with prejudice;
5 3. That judgment be entered against Plaintiffs in favor of Defendant on all of
6 Plaintiffs’ causes of action;
7 4. That Defendant be awarded its costs of suit and attorneys’ fees incurred in this
8 action, provided by law and/or contract; and
9 5. For such other and further relief as the Court deems fair and just.
10 Dated: July 17, 2023
11
12 DAMON M. OTT
SARAH R. BOXER
13 ROBERT M. GEIGER
LITTLER MENDELSON, P.C.
14
Attorneys for Defendant
15 VANGUARD CLEANING SYSTEMS, INC.
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LITTLER MENDELSON, P.C.
333 Bush Street
34th Floor
10. CASE NO. 20-CIV-04267
San Francisco, CA 94104
415.433.1940
VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT
Preview
1 DAMON M. OTT, Bar No. 215392 dott@littler.com 2 SARAH R. BOXER, Bar No. 322393 sboxer@littler.com 3 ROBERT M. GEIGER, Bar No. 323914 rgeiger@littler.com 4 LITTLER MENDELSON, P.C. 333 Bush Street 5 34th Floor San Francisco, CA 94104 6 Telephone: 415.433.1940 Fax No.: 415.399.8490 7 Attorneys for Defendant 8 VANGUARD CLEANING SYSTEMS, INC. 9 THE SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 IN AND FOR THE COUNTY OF SAN MATEO 11 ALIDA MAZARIEGOS, PAULA Case No. 20-CIV-04267 12 GONZALEZ, JAIME AMAYA, ADRIANA TELLO, and RYNE BASS COMPLEX ACTION 13 Plaintiffs, on behalf of ASSIGNED FOR ALL PURPOSES TO 14 themselves and all others HONORABLE NANCY L. FINEMAN, DEPT 4 similarly situated, 15 DEFENDANT VANGUARD CLEANING v. SYSTEMS, INC.’S ANSWER TO THIRD 16 AMENDED COMPLAINT VANGUARD CLEANING SYSTEMS, 17 INC.; RR FRANCHISING, INC., D/B/A VANGUARD CLEANING SYSTEMS OF 18 SOUTHERN CALIFORNIA AND D/B/A Complaint Filed: October 1, 2020 VANGUARD CLEANING SYSTEMS OF TAC Filed: June 13, 2023 19 NORTHERN CALIFORNIA; BUDDHA Trial Date: None Set CAPITAL CORPORATION, D/B/A 20 VANGUARD CLEANING SYSTEMS OF SACRAMENTO, D/B/A VANGUARD 21 CLEANING SYSTEMS OF THECENTRAL VALLEY, AND D/B/A 22 VANGUARD CLEANING SYSTEMS OF THE CENTRAL COAST; AND WINE 23 COUNTRY VENTURES, INC. D/B/A VANGUARD CLEANING 24 SYSTEMS OF THE NORTH BAY, AND DOES 1 THROUGH 10, 25 INCLUSIVE, 26 Defendants. 27 28 LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 Defendant VANGUARD CLEANING SYSTEMS, INC. (“Defendant”) hereby answers 2 Plaintiffs ALIDA MAZARIEGOS, PAULA GONZALEZ, JAIME AMAYA, ADRIANA TELLO, 3 and RYNE BASS’ (“Plaintiffs”) Third Amended Complaint (“Complaint”) as follows: 4 GENERAL DENIAL 5 Pursuant to C.C.P. § 431.30(d), Defendant generally denies each and every allegation 6 contained in Plaintiffs’ unverified Complaint and further specifically denies that Plaintiffs have been 7 damaged in any respect or in any amount as a result of any act or omission of Defendant. 8 AFFIRMATIVE DEFENSES 9 FIRST AFFIRMATIVE DEFENSE 10 As a separate and distinct affirmative defense, Defendant alleges that, for all relevant and 11 applicable periods of time, Defendant has not been subject to the requirements embodied by, but not 12 limited to, the California Labor Code, the California Code of Regulations (8 Cal. Code Regs., Tit. 8, 13 § 11090), California Industrial Welfare Commission Wage Orders, and any other laws predicated on 14 an actual or potential employer-employee relationship with respect to Plaintiffs on the grounds that 15 Defendant never employed Plaintiffs (directly, jointly or otherwise). 16 SECOND AFFIRMATIVE DEFENSE 17 As a separate and distinct affirmative defense, the Complaint is barred to the extent that 18 Plaintiffs’ and the putative class members’ claims are subject to mandatory and binding arbitration 19 on an individual basis, pursuant to arbitration agreements they entered into. 20 THIRD AFFIRMATIVE DEFENSE 21 As a separate and distinct affirmative defense, the Complaint is barred on the grounds of 22 preemption; specifically, preemption of California’s “ABC” worker-classification test (“ABC test”) 23 by, inter alia, the F.T.C. Franchise Rule and the Lanham Act (see, e.g., U.S. Const. Art. VI; the 24 Lanham Act (15 U.S.C. § 1051, et seq.); F.T.C. Franchise Rule (16 CFR 436.1, et seq.)), as well as 25 California state laws, including, inter alia, the California Franchise Investment Law (Cal. Corp. 26 Code § 31000, et seq.) and the California Franchise Relations Act (Cal. Bus. & Prof. Code § 20000, 27 et seq.). Federal and state law preempts application of the “ABC test” (now embodied in Cal. Labor 28 Code § 2775 et seq.) to the relationship between Defendant and each Plaintiff (and putative class LITTLER MENDELSON, P.C. 333 Bush Street 2. CASE NO. 20-CIV-04267 34th Floor San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 member) and, therefore, prohibits use of the ABC test to determine the nature of these relationships. 2 Accordingly, to the extent Plaintiffs’ claims are based on an alleged employment relationship 3 between Plaintiffs and Defendant arising from application of California’s “ABC test”, Plaintiffs’ 4 claims fail as a matter of law. 5 FOURTH AFFIRMATIVE DEFENSE 6 As a separate and distinct affirmative defense, the Complaint is barred on the grounds that 7 Plaintiffs’ interpretation of California’s “ABC” worker-classification test is violative of, barred by 8 and/or preempted by the California Franchise Investment Law (Cal. Corp. Code 31000, et seq.) and 9 the California Franchise Relations Act (Cal. Bus. & Prof. Code § 20000, et seq.). Defendant has 10 acted in compliance with California and federal franchise laws in its operations, and given this 11 compliance and the (indirect) nature of the parties’ relationships, the ABC test does not and may not 12 be applied to determine the nature of Defendant’s relationship with Plaintiffs or the putative class 13 members. 14 FIFTH AFFIRMATIVE DEFENSE 15 As a separate and distinct affirmative defense, Defendant alleges that, even assuming, 16 arguendo, Defendant failed to comply with any provision of the Labor Code, Defendant 17 substantially complied with the Labor Code, thus rendering an award of penalties inappropriate 18 under the circumstances. For the same reason, should the Court find a violation of the Labor Code 19 occurred, and such violation gives rise to potential penalties, the Court must exercise its discretion 20 and significantly discount or eliminate any potential penalties owed by Defendant due to 21 Defendant’s good faith efforts to comply with the Labor Code and/or substantial compliance with 22 the Labor Code. 23 SIXTH AFFIRMATIVE DEFENSE 24 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims are 25 barred, in whole or in part, by the applicable statute(s) of limitations, including, but not limited to, 26 California Code of Civil Procedure sections 335.1, 338, 339, 340, 343 and California Business and 27 Professions Code section 17208. 28 LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 3. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 SEVENTH AFFIRMATIVE DEFENSE 2 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims are 3 barred, in whole or in part, by the doctrines of consent and/or estoppel. 4 EIGHTH AFFIRMATIVE DEFENSE 5 As a separate and distinct affirmative defense, Defendant alleges the Complaint is barred in 6 whole or in part by the doctrine(s) of laches, estoppel, unclean hands, waiver, release, and/or unjust 7 enrichment. 8 NINTH AFFIRMATIVE DEFENSE 9 As a separate and distinct affirmative defense, Defendant asserts that the Complaint and each 10 cause of action set forth therein, or some of them, are subject to the doctrines of set-off, offset and/or 11 recoupment on the part of Defendant. 12 TENTH AFFIRMATIVE DEFENSE 13 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims for 14 penalties are barred, in whole or in part, on the grounds that, at all times alleged herein, Defendant 15 acted in good faith, with a reasonable basis for so acting, and never willfully violated any laws, 16 including any sections of the California Labor Code. 17 ELEVENTH AFFIRMATIVE DEFENSE 18 As a separate and distinct affirmative defense, Defendant alleges any claims for penalties 19 under the PAGA are barred, in whole or in part, because such claims violate the Fifth, Eighth and 20 Fourteenth Amendments of the United States Constitution and Article 1, §§ 7 and 8 of the California 21 Constitution, including the prohibition against excessive fines and punishment. See Timbs v. 22 Indiana, 193 S. Ct. 682 (2019) (Excessive Fines Clause of the Eighth Amendment prohibits the 23 government from imposing “excessive fines” as punishment); United States v. Mackby, 261 F.3d 24 821, 830 (9th Cir. 2001) (civil sanctions under False Claims Act should be analyzed under “the 25 Excessive Fines Clause because the sanctions represent a payment to the government, at least in part, 26 as punishment.”); City & Cty. of San Francisco v. Sainez, 77 Cal. App. 4th 1302, 1321 (2000) 27 (applying the prohibition of excessive fines to penalties imposed under California’s Building 28 LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 4. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 Code: “The law is settled that a civil penalty such as the one here, by virtue of its partially punitive 2 purpose, is a fine for purposes of the constitutional protection.”). 3 TWELTH AFFIRMATIVE DEFENSE 4 As a separate and distinct affirmative defense, Defendant alleges the award of penalties as 5 requested by Plaintiffs would violate Defendant’s procedural and substantive due process rights (vis- 6 à-vis the Fourteenth Amendment of the United States Constitution and the Due Process and Equal 7 Protection Clauses in Article 1 of the California Constitution). See State Farm Mutual Automobile 8 Insurance Company v. Campbell, 538 U.S. 408 (2003) or People ex. rel. Lockyer v. R.J. Reynolds, 9 37 Cal. 4th 707 (2005). 10 THIRTEENTH AFFIRMATIVE DEFENSE 11 As a separate and distinct affirmative defense, Defendant alleges any claims based on the 12 PAGA are barred, in whole or in part, because the prosecution of this matter as a representative 13 action under PAGA, and/or an award of penalties pursuant to the PAGA, would violate the Equal 14 Protection Clause of the United States and California Constitutions, as it arbitrarily and unjustly 15 exempts certain employers/alleged employers to the exclusion of others. Labor Code § 2699.6. 16 FOURTEENTH AFFIRMATIVE DEFENSE 17 As a separate and distinct affirmative defense, Defendant alleges Plaintiff and the alleged 18 “aggrieved employees” Plaintiffs seek to represent are not entitled to recover civil penalties under 19 PAGA, to the extent that such penalties are sought in addition to other civil penalties for the same 20 claims, as such double recovery is prohibited and would constitute unjust enrichment. 21 FIFTEENTH AFFIRMATIVE DEFENSE 22 As a separate and distinct affirmative defense, Defendant alleges any claims based on the 23 PAGA are barred, in whole or in part, because the prosecution of this matter as a representative 24 action under PAGA, and/or an award of penalties pursuant to the PAGA, would violate the 25 constitutionally based separation of powers doctrine by impermissibly usurping prosecutorial 26 authority assigned to the executive branch of government and impermissibly delegating it to private 27 attorneys without essential safeguards, including continuing oversight or control by the executive 28 branch. LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 5. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 SIXTEENTH AFFIRMATIVE DEFENSE 2 As a separate and distinct affirmative defense, the Complaint is barred in whole or in part to 3 the extent that it exceeds the scope of the charges made by Plaintiffs on behalf of themselves and 4 other allegedly aggrieved employees before the Labor and Workforce Development Agency 5 (“LWDA”). Plaintiffs’ notice to the LWDA consists of recitations of the law, but contains 6 insufficient facts to support the allegations of violations of the law, among other deficiencies. 7 Accordingly, Plaintiffs have failed to properly exhaust all administrative remedies required to bring 8 the PAGA claims asserted in their Complaint and, therefore, such claims are barred in whole or in 9 part to the extent they exceed the scope of the charges contained in Plaintiffs’ notice to the LWDA. 10 SEVENTEENTH AFFIRMATIVE DEFENSE 11 As a separate and distinct affirmative defense, Defendant alleges that the Complaint, in 12 whole or in part, fails to state a claim sufficient to constitute a cause of action upon which relief can 13 be granted, including because the Complaint lacks necessary details relating to the causes of action 14 asserted therein. 15 EIGHTEENTH AFFIRMATIVE DEFENSE 16 As a separate and distinct affirmative defense, Defendant alleges that the Complaint, and 17 each cause of action set forth therein, or some of them, are barred to the extent Plaintiffs and/or 18 members of the putative class Plaintiffs purport to represent have released claims it/he/she/they may 19 otherwise have been able to assert against Defendant. 20 NINETEENTH AFFIRMATIVE DEFENSE 21 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs’ claims and 22 those of putative class members are barred, or must be offset, to the extent that Defendant must be 23 indemnified for any damages, penalties, or losses. 24 TWENTIETH AFFIRMATIVE DEFENSE 25 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs have failed to 26 include necessary parties to this action. Specifically, Plaintiffs fail to name as defendants the 27 commercial cleaning businesses (and “Vanguard Cleaning Systems®” franchises) for which 28 Plaintiffs directly worked. These commercial cleaning businesses/franchises (the names and details LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 6. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 of which Defendant intends to obtain through discovery) are necessary parties because, as the parties 2 for which Plaintiffs directly work/worked, they were and are wholly responsible and liable for any 3 payments and all other obligations imposed by law as a result of the Plaintiffs’ work for the 4 businesses. During the relevant period, there existed no relationship or business arrangement 5 directly between Defendant and any of the Plaintiffs or putative class members (Defendant entered 6 into no contracts with Plaintiffs, paid no amounts to Plaintiffs, received no payments from Plaintiffs, 7 and generally had no specific knowledge or information regarding Plaintiffs or the work Plaintiffs 8 performed.) Accordingly, to the extent Defendant could even be found liable for any of Plaintiffs’ 9 claims, which Defendant strenuously disputes, it could only be based on a joint-employer or similar 10 legal theory, adjudication of which necessarily requires consideration and determination of the status 11 of the other entities involved. And of these entities, the most important -- because it is foundational 12 to all other alleged relationships – is the entity for which a plaintiff directly works/worked: here, the 13 commercial cleaning businesses/franchises. Accordingly, these businesses are necessary parties, as 14 their relationship with the individual Plaintiff associated with them must be determined before 15 Plaintiffs’ relationships with Defendant (and the other named defendants) may be determined. 16 TWENTY-FIRST AFFIRMATIVE DEFENSE 17 As a separate and distinct affirmative defense, Defendant alleges that the Complaint and all 18 claims asserted therein are barred by the doctrine of unclean hands and/or the non-waivable conflict 19 of interest created by each Plaintiff’s ownership and management of the commercial cleaning 20 business for which they directly work/worked, which businesses are necessary parties/defendants to 21 this action. Each Plaintiff owns/owned (in whole or substantial part) and is/was responsible for 22 managing the commercial cleaning franchise for which they perform/performed the work on which 23 their claims are based. In each instance, as an owner and manager of the respective commercial 24 cleaning franchise, each Plaintiff (along with any other owners/managers of the franchise) had 25 exclusive control over all personnel the franchise used to perform cleaning services, including 26 control over the selection, hiring, and firing of all workers, as well as the exclusive right and 27 obligation to determine worker classifications, compensation rates, scheduling, timing of meal and 28 rest periods, responsibility for timely payment, issuance of wage statements, timekeeping, LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 7. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 recordkeeping, and compliance with all other legal, contractual, and actual obligations related to 2 personnel working for Plaintiff’s cleaning franchise. As with all other personnel, to the extent a 3 Plaintiff personally performs/performed cleaning and/or other work for the Plaintiff’s cleaning 4 business, Plaintiff (along with any other owners and managers) is/was responsible for determining 5 the capacity in which Plaintiff performed the work (e.g. as a non-exempt employee, an exempt 6 employee under the executive or administrative exemption (or a combination thereof), or as a 7 subcontracted independent contractor). As the owners and persons responsible for managing and 8 operating their respective businesses, Plaintiffs are/were individually responsible for ensuring 9 compliance with all legal requirements and obligations with respect to the work they personally 10 performed for their businesses. As such, Plaintiffs are barred from bringing claims against 11 Defendant (and the other currently named defendants) by the doctrine of unclean hands. Plaintiff 12 cannot recover damages from Defendant for alleged statutory violations Plaintiff him/herself 13 committed (even if Defendant is found to be a joint employer, which it disputes). Moreover, 14 Plaintiffs are barred from asserting the claims alleged in their Complaint by the direct, non-waivable 15 conflict created by their concurrent status as plaintiffs and owners and managing directors/managers 16 of their respective cleaning businesses, which are necessary defendants/parties to this litigation. 17 Plaintiffs are further conflicted due to their potential personal liability for the damages Plaintiffs seek 18 due to their direct control over their respective businesses’ wage payments, worker classification 19 decisions, and compliance with other employment laws for which individual liability can arise. 20 More simply, Plaintiffs cannot sue their own businesses nor bring claims for legal violations they 21 committed and for which they may be individually liable. They likewise cannot bring claims against 22 alleged joint-employers to recover from them damages owed by dint of Plaintiffs’ violations. 23 TWENTY-SECOND AFFIRMATIVE DEFENSE 24 As a separate and distinct affirmative defense, Defendant alleges that the Complaint and all 25 claims asserted therein are barred for lack of standing because Plaintiffs and/or the putative class 26 members, or some of them, are duly organized and/or established business entities that operated as 27 such in connection with defendants, including the franchise agreements and franchising 28 arrangements Plaintiffs and/or the putative class members entered into and maintained with the LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 8. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 master franchisee defendants named in this action (which does not include Defendant Vanguard 2 Cleaning Systems, Inc.). As business entities, the Plaintiffs and/or putative class member 3 franchisees are not natural persons and, therefore, do not qualify as “employees” for purposes of the 4 allegedly violated employment laws. Accordingly, Plaintiffs and/or the putative class members lack 5 standing to assert the claims contained in the Complaint. 6 TWENTY-THIRD AFFIRMATIVE DEFENSE 7 As a separate and distinct affirmative defense, Defendant alleges that this lawsuit and any 8 individual claims may not properly be maintained as a representative or class action because: (a) 9 Plaintiffs cannot establish the necessary procedural elements for representative/class treatment; (b) 10 considerations of necessity, convenience and justice do not augur in favor of representative/class 11 treatment; (c) individual issues are predominant; and (d) proceeding on a representative/class basis 12 would be unmanageable. 13 TWENTY-FOURTH AFFIRMATIVE DEFENSE 14 As a separate and distinct affirmative defense, Defendant alleges that the Complaint fails to 15 state a claim upon which prejudgment interest may be granted, as the damages claimed are not 16 sufficiently certain to allow an award of prejudgment interest. 17 TWENTY-FIFTH AFFIRMATIVE DEFENSE 18 As a separate and distinct affirmative defense, Defendant alleges that Plaintiffs and/or the 19 members of the alleged putative class they seek to represent are not entitled to payment of overtime 20 premiums because they were exempted from overtime requirements under the executive, 21 administrative and/or combination exemptions pursuant to the California Labor Code and the 22 provisions of the California Industrial Welfare Commission’s wage orders. 23 RESERVATION OF ADDITIONAL DEFENSES 24 Defendant reserves the right to amend this answer should Defendant later discover facts 25 demonstrating the existence of new and/or additional affirmative defenses, and/or should a change in 26 the law support the inclusion of new and/or additional affirmative defenses. 27 28 LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 9. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT 1 PRAYER FOR RELIEF 2 WHEREFORE, Defendant prays for relief as follows: 3 1. That Plaintiffs take nothing by way of this Complaint. 4 2. That Plaintiffs’ Complaint be dismissed in its entirety with prejudice; 5 3. That judgment be entered against Plaintiffs in favor of Defendant on all of 6 Plaintiffs’ causes of action; 7 4. That Defendant be awarded its costs of suit and attorneys’ fees incurred in this 8 action, provided by law and/or contract; and 9 5. For such other and further relief as the Court deems fair and just. 10 Dated: July 17, 2023 11 12 DAMON M. OTT SARAH R. BOXER 13 ROBERT M. GEIGER LITTLER MENDELSON, P.C. 14 Attorneys for Defendant 15 VANGUARD CLEANING SYSTEMS, INC. 16 17 18 19 20 21 22 23 24 25 26 27 28 LITTLER MENDELSON, P.C. 333 Bush Street 34th Floor 10. CASE NO. 20-CIV-04267 San Francisco, CA 94104 415.433.1940 VANGUARD CLEANING SYSTEMS, INC.’S ANSWER TO THIRD AMENDED COMPLAINT