Case 5:15-cv-06337-EJD Document 41 Filed 08/23/17 Page 1 of 5

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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PAUL YALE,

Case No. 5:15-cv-06337-EJD
Plaintiff,

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ORDER GRANTING MOTION TO
DISMISS WITH LEAVE TO AMEND

v.
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Re: Dkt. No. 18

WIZARDS OF THE COAST LLC,

United States District Court
Northern District of California

Defendant.
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Plaintiff Paul Yale (“Plaintiff”) seeks to represent a class of individuals who “worked” as

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“Judges” for Defendant Wizards of the Coast, LLC (“Defendant”), a for-profit business that sells

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products related to a collectible card game called Magic the Gathering (“Magic”). Magic is a

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trading card game for players ages 13 and over set in a fantasy world of powerful Wizards who

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have the ability to teleport between planes of existence. Magic players may participate in

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tournaments that are usually held at stores. First Amended Complaint, ¶9. Tournaments are

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overseen by “Judges,” who have completed Defendant’s Certification Program. Id. at ¶10.

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Plaintiff alleges that he has “worked” as a “Judge” for Defendant since 1997, but that Defendant

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failed to pay him minimum wages and overtime, failed to provide meal and rest breaks, failed to

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maintain accurate payroll records, and failed to reimburse him for business expenses, in violation

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of the California Labor Code, the Fair Labor Standards Act (“FLSA”) and California Business and

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Professions Code §17200.

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Pending before the Court is Defendant’s motion to dismiss for failure to state a claim upon
which relief may be granted. Defendant essentially contends that Plaintiff is a Magic card game

CASE NO.: 5:15-CV-06337-EJD
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
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 Case 5:15-cv-06337-EJD Document 41 Filed 08/23/17 Page 2 of 5

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enthusiast who voluntarily became a Judge in pursuit of his hobby and is now seeking to turn his

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hobby into an employment relationship. Defendant seeks dismissal of the lawsuit with prejudice,

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arguing that Plaintiff has not alleged, and cannot allege, facts to show he is an “employee” within

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the meaning of the California Labor Code and the FLSA. Plaintiff opposes the motion,

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contending that he should be “presumed” to be an employee under Labor Code §§2750.5 and 3357

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because he performed labor benefitting Defendant, and that Defendant meets the definition of

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employer set forth in the leading case of Martinez v. Combs, 49 Cal.4th 35, 50 (2010). Plaintiff

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also relies on the “economic realities” standard articulated in Alamo Found. v. Sec’y of Labor, 471

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U.S. 290 (1985) to support his claims under the FLSA.

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United States District Court
Northern District of California

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Claims re: Labor Code Violation
As a preliminary matter, Plaintiff’s reliance on Labor Code §§2750.5 and 3357 is

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misplaced. Section 2750.5 is inapplicable because its plain language provides a rebuttable

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presumption of employment status only when a worker is performing services for which a license

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is required, which is not the case here. Section 3357 is also inapplicable. As interpreted by the

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California appellate courts, Section 3357 creates a presumption that a service provider is presumed

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to be an employee unless the principal proves otherwise, as in the case of an independent

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contractor. See e.g. Yellow Cab Cooperative, Inc. v. Workers’ Comp. Appeals. Bd., 226

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Cal.App.3d 1288, 1292-1293 (1991).

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For purposes of California Labor Code violations, to “employ” a worker means: “(a) to

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exercise control over the wages, hours, or working conditions, or (b) to suffer or permit to work,

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or (c) to engage, thereby creating a common law employment relationship.” Martinez, 49 Cal.4th

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at 64. Other than using the conclusory term “work,” Plaintiff has failed to allege facts to establish

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an employer-employee relationship with Defendant. The complaint lacks any allegations

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regarding a job application or a hiring process for employment. Indeed, the word “hire” is not

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mentioned in the First Amended Complaint. There are also no facts to support any inference that

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the parties had an understanding, agreement or even contemplated entering an employee-employer

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ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
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 Case 5:15-cv-06337-EJD Document 41 Filed 08/23/17 Page 3 of 5

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relationship. There are also no allegations regarding wages. Instead, the complaint makes clear

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that Defendant does not compensate Judges, although some stores occasionally “compensate

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Judges with playing cards.” First Amended Complaint, ¶12. Further, the complaint lacks any

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allegations regarding Defendant’s control over Plaintiff’s hours. There are no allegations

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regarding the number of hours Plaintiff was to “work” as a Judge; when and where Plaintiff was

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required to “work” any hours; how often Plaintiff was required to “work”; or to whom Plaintiff

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was to report his hours.

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United States District Court
Northern District of California

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The complaint also lacks allegations regarding Defendant’s purported control over working
conditions. The complaint describes in detail the process for becoming a Judge and guidelines for

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maintaining status as a Judge, but there are no allegations in the complaint from which to

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reasonably infer that this process led to an employee-employer relationship. Instead, the

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allegations suggest that the relationship between Plaintiff and Defendant was purely voluntary.

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Plaintiff alleges that Defendant “permits” its Judges to “work” at store-based events. First

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Amended Complaint, ¶14. Plaintiff does not allege that Defendant required Plaintiff (or any

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Judge) to “work” or to attend a particular event or tournament. That Defendant could suspend or

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de-certify a Magic Judge does alter the voluntary nature of the position.

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Under the second prong of the Martinez test, an employment relationship is created when

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the employer “suffers” or “permits” an alleged employee to work. The basis for liability is the

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employer’s failure to prevent an unlawful labor condition, such as permitting a person to work

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without having been formally hired or while being paid less than minimum wage. Martinez, 49

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Cal.4th at 69. For reasons already discussed, the complaint fails to allege that Plaintiff “worked”

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for Defendant, much less that Defendant “suffered or permitted” work, as that phrase is defined by

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caselaw. See Futrell v. Payday Cal., Inc., 190 Cal.App.4th 1419, 1434 (2010) (rejecting “to suffer

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or permit to work” theory because there was no evidence showing defendant had the

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power to either cause [plaintiff] to work or prevent him from working.”). In opposition to the

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present motion, Plaintiff asserts that Defendant “has both the power to allow individuals to work

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as certified Judges and to prevent them from acting as Judges by suspending or decertifying

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them.” Opposition at 14. The Court need not, however, accept such conclusory allegations.

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The complaint lacks sufficient facts to show that Defendant caused Plaintiff to “work.” Plaintiff’s

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position appears to be that the Magic “Judges” should be considered employees because acquiring

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and maintaining certification took effort and conferred a benefit to Defendant by promoting and

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increasing participation in the Magic card game. But the complaint makes clear that Defendant’s

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program is purely voluntary and could be abandoned at any time.

United States District Court
Northern District of California

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With respect to the third prong of the Martinez test, the complaint fails to set forth

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sufficient facts to show that Defendant “engaged” Plaintiff for employment. Plaintiff relies on

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numerous allegations regarding the close supervision and control Defendant exercised over the

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manner in which Judges oversaw tournaments. As stated previously, however, there are no

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allegations to suggest that Defendant required Plaintiff (or any Judge) to become certified as a

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Judge, much less required Plaintiff to serve as a Judge at any tournaments. Those decisions were

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Plaintiff’s alone.
Claim for Violation of the FLSA

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Under the FLSA, putative employees may only seek redress from “employers.” 29 U.S.C.

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§216(b). The FLSA defines “employer” as “any person acting directly or indirectly in the interest

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of any employer in relation to an employee . . . .” 29 U.S.C. §203(d). An “employee” is defined

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as “any individual employed by an employer.” 29 U.S.C. §203(e)(1). The test for employment

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under the FSLA ultimately depends upon the “economic reality” of the relationship of the parties.

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See Alamo, 471 U.S. at 301.

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Plaintiff contends the “economic reality” of the Judge program was that both Plaintiff and

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Defendant expected compensation. Plaintiff emphasizes that Defendant is a for-profit business

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that depended on Judges to maintain the “lifeblood” of its business (Plaintiff’s Opposition at 19),

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and in exchange, Plaintiff was compensated, albeit in the form of Magic playing cards.

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Plaintiff’s reliance on Alamo, however, is misplaced. In Alamo, the Secretary of Labor

CASE NO.: 5:15-CV-06337-EJD
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
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 United States District Court
Northern District of California

Case 5:15-cv-06337-EJD Document 41 Filed 08/23/17 Page 5 of 5

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brought an action against a religious foundation to enforce the FLSA. The religious foundation

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provided its “associates” with food, shelter and clothing, but no cash wages, and the “associates”

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were entirely dependent upon the foundation for several years. The Supreme Court held that the

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“associates” were “employees” for purposes of the FLSA because they worked “in contemplation

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of compensation.” In the present case, the only “compensation” Defendant provided to Plaintiff

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throughout his eighteen plus years as a Judge was in the form of Magic playing cards and product.

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Unlike the “associates” in Alamo, Plaintiff was not entirely dependent upon Defendant for the

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basic necessities of life.

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Accordingly, Defendant’s motion to dismiss the First Amended Complaint is granted with

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leave to amend. Plaintiff may file and serve a Second Amended Complaint if he is able to state a

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legally viable claim no later than September 23, 2017.

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IT IS SO ORDERED.
Dated: August 23, 2017
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EDWARD J. DAVILA
United States District Judge

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CASE NO.: 5:15-CV-06337-EJD
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
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