United States District Court, D. Arizona
DOUGLAS L. RAYES, UNITED STATES DISTRICT JUDGE
the Court is a motion to dismiss filed on behalf of Defendant
FEC Logging USA Holdings, LLC (“FEC
Logging”). (Doc. 39.) The motion is fully briefed and
neither party requested oral argument. (Docs. 46, 49.) For
the following reasons, FEC Logging's motion is granted in
4, 2017, Plaintiffs filed a complaint in this action, raising
Fair Labor Standards Act (FLSA), Arizona Wage Act (AWA), and
common law breach of contract claims. (Doc. 1) On July 20,
2017, Plaintiffs filed their First Amended Complaint
(“FAC”), which made the same allegations, but
modified the named defendants. Notably, the FAC added FEC
Logging as a defendant. (Doc. 20 ¶ 13.)
general matter, the allegations in the FAC arise out of an
employment dispute. In February 2013, Plaintiff Martin
Gillard entered into an agreement to serve as Chief
Technology Officer for Good Earth Power International Limited
(“GEP Int'l”). (Doc. 20 ¶ 16.) At some
point thereafter, Gillard's contract with GEP Int'l
was assumed by GEPAZ. (¶ 19.) In November 2013,
Plaintiff Darren Gurner was retained to serve as Managing
Director of GEPAZ. (¶ 22.) Gillard and Gurner
(“Plaintiffs”) both worked for GEPAZ until they
were terminated in December 2016. (¶¶ 21, 27.)
During their period of employment, Plaintiffs neither
received the full value of their respective salaries nor
compensation for their equity stake in GEPAZ. (¶¶
30, 38, 40.)
result, Plaintiffs brought suit against GEPAZ. Plaintiffs
sought to extend GEPAZ's liability to FEC Logging under
the theory of successor liability. Under Plaintiff's
theory, because FEC Logging replaced ZR FEC as the lone
Member of GEPAZ in March 2017, it thereby assumed any
liabilities of its predecessor in interest.(Doc. 20 ¶
Logging has moved pursuant to Federal Rule of Civil Procedure
12(b)(6) to dismiss the amended complaint for failure to
state a claim upon which relief may be granted.
analyzing a complaint for failure to state a claim to relief
under Rule 12(b)(6), the well-pled factual allegations are
taken as true and construed in the light most favorable to
the nonmoving party. Cousins v. Lockyer, 568 F.3d
1063, 1067 (9th Cir. 2009). Legal conclusions couched as
factual allegations are not entitled to the assumption of
truth, Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009),
and therefore are insufficient to defeat a motion to dismiss
for failure to state a claim, In re Cutera Sec.
Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). Nor is the
court required to accept as true “allegations that
contradict matters properly subject to judicial notice,
” or that merely are “unwarranted deductions of
fact, or unreasonable inferences.” Sprewell v.
Golden State Warriors, 266 F.3d 979, 988 (9th Cir.
avoid dismissal, the complaint must plead sufficient facts to
state a claim for relief that is plausible on its face.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). This plausibility standard “is not akin to a
‘probability requirement,' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 556). “Where a complaint
pleads facts that are ‘merely consistent with' a
defendant's liability, it ‘stops short of the line
between possibility and plausibility of entitlement to
relief.'” Id. (quoting Twombly,
550 U.S. at 557.)
Logging's argument as to why Plaintiff's FLSA claim
fails is twofold. First, it contends that the FAC alleges no
factual or statutory basis for concluding that FEC Logging is
a successor in interest of any of GEPAZ's prior members.
Second, even if successor liability could be inferred, the
FAC also fails to allege a basis for holding the predecessor
members of GEPAZ liable. Similarly, FEC Logging contends that
the AWA and common law claims fail because there are
insufficient allegations to find FEC Logging is a successor
the general successor liability rule, “when a
corporation sells or transfers its principal assets to a
successor corporation, the latter will not be liable for the
debts and liabilities of the former.” Winsor v.
Glasswerks PHX, LLC, 63 P.3d 1040, 1045 (Ariz.Ct.App.
2003) (citing A.R. Teeters & Assocs., Inc. v. Eastman
Kodak Co., 836 P.2d 1034, 1039 (Ariz.Ct.App. 1992)).
There are, however, four exceptions to this rule: (1) the
successor expressly or impliedly agrees to assume
liabilities; (2) the transaction is a de facto consolidation
or merger; (3) the successor is a mere continuation of the
seller; or (4) the transfer of assets was entered for the
purpose of fraudulently escaping liability. Id.
courts apply different rules for determining successor
liability when a ...