Eisele v. Home Depot U.S.A. Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

KATHLEEN EISELE, No. 3:24-cv-00764-HZ

Plaintiff, OPINION & ORDER

v.

HOME DEPOT U.S.A., INC., a Delaware

corporation

Defendant.

Jon M. Egan

Jon M. Egan, PC

547 Fifth Street

Lake Oswego, OR 97034-3009

Jim W. Vogele

812 N.W. 17th Avenue

Portland, OR 97209

Attorneys for Plaintiff

Christopher F. McCracken

James M. Barrett

E.A. Meg Barankin

Ogletree Deakins

222 S.W. Columbia Street

Suite 1500

Portland, OR 97201

Evan Reed Moses

Ogletree Deakins

400 South Hope Street, Suite 1200

Los Angeles, CA 90071

Attorneys for Defendant

HERNÁNDEZ, Senior Judge:

This matter is before the Court on Defendant Home Depot U.S.A. Incorporated’s Motion

to Dismiss or Strike, ECF 116 (Case No. 3:20-cv-01740-HZ), ECF 22 (Case No. 3:24-cv-00764-

HZ). For the following reasons the Court grants Defendant’s Motion to Dismiss.

BACKGROUND

On August 28, 2020, Kathleen Eisele filed a class action complaint against Home Depot

U.S.A., Inc., in Multnomah County Circuit Court asserting claims for failure to pay wages when

due in violation of Oregon Revised Statute § 652.120 and failure to pay wages on termination in

violation of Oregon Revised Statute § 652.140. Eisele I, 3:20-cv-01740-HZ. Plaintiff alleged

Defendant “rounded plaintiff’s and other class members’ time punches, resulting in a consistent

net underpayment to them” and “failed to pay plaintiff and the class members all earned and

unpaid wages (including vacation pay) within the statutory deadline to do so upon termination of

their employment.” Eisele I, Compl. ¶¶ 5-6. Defendant removed the matter to this Court pursuant

to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2)(A).

On July 22, 2022, the parties filed cross-motions for summary judgment as to whether

rounding is permissible under Oregon law.

On November 29, 2022, the Court issued an Opinion and Order in which it concluded

Defendant’s rounding practice was not authorized under Oregon law, that any resulting net

underpayment to hourly employees could not be excused as de minimis, and that Defendant had

not willfully violated the law. Eisele v. Home Depot, 643 F. Supp. 3d 1175-76, 1180 (D. Or.

2022).

On January 16, 2023, Defendant stopped its practice of rounding nationwide. On

February 23, 2023, Plaintiff moved for class certification in Eisele I. On May 5, 2023, Defendant

“paid each of the putative class members . . . all net wages that were allegedly due as a result of

Defendant’s rounding practices.” Eisele I, Wilson Decl., ECF 86, at ¶ 3. In addition, “[a]ll

employees who were paid less on net under rounding than the time reflected in their time

punches during their employment have now received payment for the alleged net underpayment

plus interest.” Id. At the May 17, 2023, hearing on Plaintiff’s motion for class certification

Defendant, relying on its “true-up” payments, asserted that Plaintiff’s motion for class

certification was moot. Plaintiff acknowledged receipt of the payments, but did not concede that

putative class members had been properly compensated or that the true-up payments had been

properly calculated. The Court permitted Plaintiff time to review the data that Defendant used to

make the true-up payments in order to submit further briefing on whether class certification was

moot and set a status conference for August 8, 2023.

On August 8, 2023, Plaintiff again acknowledged receipt of payment but asserted

Defendant’s “methodology of how they came up with the numbers, what they did, or how they

calculated the interest, and what they did the deductions for and all of that” was incorrect,

Defendant “did it the wrong way, from our perspective.” Eisele I, Transcript of Proceeding, ECF

104, at 7. The Court permitted Defendant to file an amended answer to include the affirmative

defense of payment, struck the pending motion for class certification, allowed Plaintiff 90 days

to take discovery regarding the payment defense, and set a status conference for January 18,

2024.

At the January 18, 2024, conference Plaintiff’s counsel reported he was “still trying to

figure out exactly how [Defendant] did the math to come up with the payments that they made

because it doesn’t match our math.” Eisele I, Transcript of Proceeding, ECF 105, at 4. Plaintiff’s

counsel stated, however, that “[Defendant’s] number and my number are not far enough apart

that I think it’s going to go to trial[,]” and “[o]nce we figure out why the numbers are different, I

have fairly good confidence that it will be able to settle.” Id. at 5. The parties requested time to

allow them time to see if they could “close [their] gap.” Id. at 7-8. The Court agreed and set a

status conference for March 19, 2024.

At the March 19, 2024 status conference Plaintiff’s counsel reported that “[t]here was a

problem with the payments that [Defendant] made . . . that’s going to result in additional claims.”

Eisele I, Transcript of Proceeding, ECF 106, at 4. The parties requested another status conference

in 60 days. The Court set a status conference for May 10, 2024.

On April 16, 2024, Plaintiff filed a class action complaint against Defendant in

Multnomah County Circuit Court (Eisele II) alleging that when Defendant made the true-up

payments in Eisele I, it improperly included prejudgment interest as wages on the putative class

members’ W-2 forms rather than issuing them form 1099s for the prejudgment interest. Plaintiff

brings claims for wrongful deduction in violation of Oregon Revised Statute § 652.610; for filing

a fraudulent federal information return in violation of 26 U.S.C. § 7434; and for declaratory

judgment. Plaintiff seeks $96,777,200 in statutory damages and declaratory relief.

Defendant removed Eisele II to this Court on the basis of federal-question and CAFA

jurisdiction. On May 25, 2024, Plaintiff moved to remand Eisele II to Multnomah County Circuit

Court on the grounds that this Court lacks Article III standing and that the Tax Injunction Act

and the comity doctrine required remand. On September 12, 2024, the Court issued an Opinion

and Order denying the Motion to Remand. On that same date, the Court granted the parties’

Motion to Consolidate and consolidated Eisele I and II.

On October 10, 2024, Plaintiff filed a First Amended Class Action Complaint (“FAC”) in

Eisele II which she alleges Defendant wrongfully included interest on back wages on Plaintiff

and the putative class members’ W-2 forms. Plaintiff brings claims for wrongful deduction in

violation of Oregon Revised Statute § 652.610; for filing a fraudulent federal information return

in violation of 26 U.S.C. § 7434; and for declaratory, injunctive, and “further equitable” relief.

On November 1, 2024, Defendant filed a Motion to Dismiss or Strike the FAC filed in

Eisele II. The Court took the Motion under advisement on January 31, 2025.

STANDARDS

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency

of the claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). When evaluating the

sufficiency of a complaint’s factual allegations, the court must accept all material facts alleged in

the complaint as true and construe them in the light most favorable to the non-moving party.

Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012). A motion to dismiss under

Rule 12(b)(6) will be granted if a plaintiff alleges the “grounds” of his “entitlement to relief”

with nothing “more than labels and conclusions, and a formulaic recitation of the elements of a

cause of action[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Factual allegations

must be enough to raise a right to relief above the speculative level on the assumption that all the

allegations in the complaint are true (even if doubtful in fact)[.]” Id. (citations and footnote

omitted).

To 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) (internal quotation marks omitted). A plaintiff must “plead[] factual content that

allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. In other words, a complaint must state a plausible claim for relief and contain “well-

pleaded facts” that “permit the court to infer more than the mere possibility of misconduct[.]” Id.

at 679.

DISCUSSION

Defendant moves to dismiss the FAC filed in Eisele II on the grounds that Plaintiff fails

to state claims for violation of § 7434 and Or. Rev. Stat. § 652.610(3) and her claims for

declaratory and injunctive relief are predicates of, and subsumed by, other claims.

I. 26 U.S.C. § 7434

Plaintiff alleges in her claim for violation of § 7434 that Defendant willfully filed

fraudulent W-2 forms in connection with the true-up payments it made to Plaintiff and putative

class members. FAC ¶ 19. Specifically Plaintiff alleges Defendant improperly included on

Plaintiff’s and the putative class members’ W-2 forms the portion of the true-up payments for

interest on back wages rather than issuing them form 1099s for the interest portion of true-up

payments.

Defendant asserts Plaintiff’s claim fails because (1) Plaintiff does not allege the kind of

misreporting that is actionable under § 7434, (2) Defendant’s reporting of the true-up payment

was legally correct, and (3) Plaintiff fails to allege fraud with the specificity required under

Federal Rules of Civil Procedure 9(b).

A. Foreclosure

Plaintiff asserts Defendant is foreclosed by the arguments it made in response to

Plaintiff’s Motion to Remand from arguing that reporting of interest on backpay on Plaintiff’s

W-2 is not the type of harm that Congress sought to prevent in enacting § 7434. Specifically, in

its opposition to remand Defendant asserted that Plaintiff had pled a concrete injury sufficient to

establish Article III standing under § 7434, but in its Motion to Dismiss Defendant is asserting

Plaintiff has not established that Defendant’s actions are the kind of harm that § 7434 is intended

to prevent. Defendant asserts that Plaintiff misstates its position and the Court’s ruling on the

Motion to Remand and conflates Article III or constitutional standing with statutory standing.

In her Motion to Remand Plaintiff asserted she had not alleged a concrete injury

and, therefore, the Court lacked Article III standing over her § 7434 claim. As the Court

explained in its September 12, 2024 Opinion and Order, constitutional standing consists of three

elements: “‘[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to

the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable

judicial decision.’” Eisele v. Home Depot U.S.A., Inc., No. 3:24-CV-00764-HZ, 2024 WL

4164547, at *3 (D. Or. Sept. 12, 2024)(quoting Spokeo, Inc. v. Robins, 578 U.S. 330, 338

(2016)). “To establish injury-in-fact, a plaintiff must show that she suffered ‘an invasion of a

legally protected interest” that is “concrete and particularized.’” Id. (quoting Lujan v. Defs. of

Wildlife, 504 U.S. 555, 560-61 (1992)). The Court concluded “the inconvenience and possible

‘significant personal loss’ resulting from the IRS receiving fraudulent information on a plaintiff's

return is a concrete injury,” therefore, a statutory violation of § 7434 “alone is sufficient to

establish a concrete injury-in-fact for Article III standing.” Id., at *5.

Statutory standing, on the other hand, examines “‘whether a particular plaintiff

has been granted a right to sue by the statute under which he or she brings suit.’” Thompson

Metal Fab, Inc. v. U.S. Dep't of Transp., 289 F.R.D. 637, 641 (D. Or. 2013)(quoting Nuclear

Info. and Res. Serv. v. Nuclear Regulatory Comm'n, 457 F.3d 941, 950 (9th Cir. 2006)).

Statutory standing was not the subject of the Court’s analysis in deciding the Motion to Remand.

Statutory standing is, however, the question at issue Defendant’s Motion to Dismiss Plaintiff’s §

7434 claim. Accordingly, the Court concludes that Defendant is not foreclosed from asserting

Plaintiff has not stated a claim under § 7434 by arguments asserted in its opposition to remand or

by the Court’s decision on that motion.

B. Merits

Defendant asserts that Plaintiff does not allege the kind of misreporting that is

actionable under § 7434 and, therefore, this claim should be dismissed.

26 U.S.C. § 7434(a) provides: “If any person willfully files a fraudulent

information return with respect to payments purported to be made to any other person, such other

person may bring a civil action for damages against the person so filing such return.” Section

7434 was passed in reaction “to a specific policy problem: malcontents who sometimes file

fraudulent information returns reporting large amount[s] of income for judges, law enforcement

officials, and others who have incurred their wrath.” Eisele, 2024 WL 4164547, at *4 (quotations

omitted). See also Serving Seniors Care, Inc. v. Serratore-Rebong Grp. of Companies Corp., No.

C 23-02333 WHA, 2023 WL 6048782, at *3 (N.D. Cal. Sept. 15, 2023)(“The legislative history

of Section 7434 makes clear that it was enacted to address the fact that some taxpayers may

suffer significant personal loss and inconvenience as the result of the IRS receiving fraudulent

information returns, which have been filed by persons intent on either defrauding the IRS or

harassing taxpayers.”)(quotation omitted)). As “‘Congress was aware of this issue - ‘the

malicious reporting of false payments’ – . . . it is reasonable to conclude that § 7434 was

designed specifically ‘to afford a damages remedy for victims of that problem[,]’ i.e., the filing

of false information returns overstating a person's income.’” Id. (quoting Queen v. Zefco Inc.,

No. 8:19-CV-2966-TMC, 2020 WL 9350977, at *5 (D.S.C. June 18, 2020)(emphasis in Queen)).

Although the Ninth Circuit has not discussed the boundaries of § 7434, in Liverett

v. Torres Advanced Enter. Sols. LLC, 192 F. Supp. 3d 648 (E.D. Va. 2016), the court conducted

a thorough statutory analysis of § 7434 to address the issue. In that case the plaintiff brought an

action against the defendant alleging it violated § 7434 when it incorrectly identified the plaintiff

as an independent contractor and reported its payments to the plaintiff on a form 1099 when,

according to the plaintiff, he was an employee and his payments should have been reported on a

W-2. The plaintiff did not allege that the 1099 forms reflected inaccurate amounts of payments,

only that the payments were reported on the wrong form. The court analyzed “whether § 7434(a)

creates a private cause of action where . . . the alleged misrepresentation is the filing of the

wrong type of information return rather than a misrepresentation as to the amount of the

payments made.” Id. at 650 (emphasis in original). The court noted that although § 7434(a)

appears “simple and straightforward,” it contains an ambiguity in the phrase “with respect to

payments purported to be made to any other person” because it is unclear what that phrase

modifies. Id. On the one hand, “with respect to” may “describe[] [an] ‘information return.’” Id.

Under that interpretation “such an information return that is false or misleading in any respect

aimed at obtaining something of value is ‘fraudulent’ and therefore actionable.” Id. On the other

hand, “with respect to payments purported to be made to any other person” may be interpreted

“as limiting ‘fraudulent.’ Under [that] interpretation, the filing of an information return is

actionable only if the information return is false or misleading as to the amount of payments

purportedly made.” Id. (emphasis added). The court noted that no court of appeals had addressed

the ambiguity and although some district courts had found allegations similar to those in Liverett

were sufficient to state a claim for violation of § 7434(a), those courts overlooked the

ambiguity.” Id. The court looked to the provisions of other sections of § 7434 and other sections

of the Internal Revenue Code referred to in § 7434 and concluded that the logical inference is

that “Congress intended for the actionable frauds to stem only from misrepresentations

concerning the amounts paid.” Id. at 652-53. The court also examined the legislative history of §

7434 and found the narrower scope of actionable frauds “accords with Congress’s express desire

‘not . . . to open the door to unwarranted or frivolous actions or abusive litigation practices’ such

as ‘an unfounded or frivolous action . . . by a current . . . employee . . . who is not pleased with

one or more items that . . . her current or former employer has included on the employee’s Form

W-2.’” Id. (quoting H.R. Rep. No. 104–506, at 35 (1996), reprinted in 1996 U.S.C.C.A.N. 1143,

1158). Ultimately, the court concluded that Ҥ 7434(a) must be read to provide a private cause of

action only where a defendant willfully files information returns that misrepresent the amount of

payments made.” Id. at 655 (emphasis added). The majority of courts that have addressed the

issue have adopted the reasoning and conclusion of Liverett. See, e.g. Bruehl v. Duke Univ., No.

1:21CV590, 2022 WL 1137295, at *6, *8 (M.D.N.C. Apr. 18, 2022)(“The ‘dominant view’

among courts is that these allegations do not state a claim under 26 U.S.C. § 7434,” adopting

Liverett, and dismissing the plaintiff’s § 7434 claim)(citing Butler v. Enter. Integration Corp.,

459 F. Supp. 3d 78, 106 (D.D.C. 2020)(describing the court's conclusion in Liverett); Sirin v.

Portx, Inc., No. CV 20-7853 (SRC), 2020 WL 6194018, at *6 (D.N.J. Oct. 22, 2020)(“This

Court agrees with the Liverett court's statutory analysis and its conclusion. . . . The Complaint

does not allege that the returns filed misrepresented the amount of payments made to Plaintiffs.

As such, it fails to plead a sufficient claim for violation of 26 U.S.C. § 7434(a).”); Evans v.

United Parcel Serv., Inc., No. 19 CV 4818, 2020 WL 777253, at *3 (N.D. Ill. Feb. 18, 2020)

(“[T]he majority of the district courts to have interpreted section 7434 agree: a violation requires

misrepresenting the amount of payments made. Those decisions are persuasive.”); Sims v.

UNATION, LLC, 292 F. Supp. 3d 1286, 1299 (M.D. Fla. 2018)(“an employer's filing of the

wrong information-return form cannot establish liability under Section 7434 unless the form

willfully misstates the amount of payment”)(quotation omitted)).

Plaintiff points to two cases that she contends support her position that she has

alleged the kind of misreporting that states a claim under § 7434: Campbell v. Manpow, LLC,

No. 4:22-cv-00786-O, 2023 WL 8580279 (N.D. Tex. Aug. 14, 2023), and Doherty v. Turner

Broad. Systems, Inc., 72 F.4th 324 (D.C. Cir. 2023). In Campbell the court noted the Liverett

court performed a “thorough analysis,” but it declined to adopt Liverett’s conclusion and instead

found that the “text [of § 7434] is clear on its face, making consideration of the legislative

history inappropriate” and that an information return that is false or misleading in any respect is

fraudulent and therefore actionable. 2023 WL 8580279, at *4. In so doing, the court

acknowledged that “it reache[d] a result that differs from the majority of courts to address this

issue.” Id. No other court has joined Campbell in rejecting the ambiguity finding of Liverett. This

Court finds that Liverett is the better reasoned case.

Doherty involved circumstances different from those at issue here and in Liverett.

In Doherty the defendant included the plaintiff’s workers’ compensation payments as taxable

income on the plaintiff’s W-2 form. The plaintiff brought a claim under § 7434(a) on the basis

that “[t]he federal tax code excludes workers’ compensation payments from an employee’s

taxable gross income,” and, therefore, those payments should not have been included on any IRS

tax form. Doherty does not involve a dispute about whether an employer who reported taxable

income in the correct amount should have reported the taxable income on a different form. As a

result, the Doherty court did not distinguish Liverett and, in fact cited its central holding with

approval.

The Court adopts the reasoning of Liverett and concludes that § 7434(a) provides

a private cause of action only when a defendant willfully files information returns that

misrepresent the amount of payments made. Plaintiff does not contend that Defendant

misrepresented the total amount of payments it made to Plaintiff and the putative class members,

only that Defendant should have reported the interest on back pay on a form 1099 rather than a

form W-2. The Court, therefore, concludes Plaintiff has not established a claim for violation of §

7434.1 Accordingly, the Court grants Defendant’s Motion to Dismiss this claim.

II. Oregon Revised Statute § 652.610(3)

Plaintiff alleges that by including the interest portion of Defendant’s true-up payment in

Plaintiff’s W-2, Defendant “overdeducted” Oregon income tax and FICA from Plaintiff in

violation of Or. Rev. Stat. § 652.610(3):

[Defendant] . . . wrongfully treat[ed] both the back wages and interest on

back wages portions of the true-up payment as wages. As such,

[Defendant] overdeducted Oregon income tax and FICA [from the

payments]

* * *

[Defendant] knew that the payments for interest on back wages were not

wages subject to withholding, yet it . . . filed [W-2s] falsely listing wages

in that amount. . . . Thus, the W-2s list amounts in boxes 1 (“Wages, tips,

other compensation”), 3 (“Social security wages”), and 5 (“Medicare

wages and tips”) that are inaccurate.

FAC ¶¶ 7-8.

Or. Rev. Stat. § 652.610(3) provides: “An employer may not withhold [or] deduct . . . any

portion of an employee's wages” except under certain circumstances. Emphasis added.

1 Because the Court concludes that Plaintiff has not stated a claim because Plaintiff has not

alleged that Defendant misrepresented the amount of payments on Plaintiff’s and putative class

members’ W-2 forms, the Court does not address Defendant’s other bases for dismissal of

Plaintiff’s § 7434 claim.

Defendant moves to dismiss Plaintiff’s claim for violation of § 652.610(3) on the grounds that

the claim is based on her allegation that Defendant improperly deducted Oregon income tax and

FICA from interest on back wages and Plaintiff explicitly alleges interest is not wages.

Defendant points out that in the FAC Plaintiff identifies two subclasses: (1) the overdeduction

subclass, consisting of all putative class members who had “overdeductions taken from their

wages due to [Defendant’s] wrongful treatment of interest on back wages as wages” and (2) the

fraudulent information return subclass consisting of all putative class members “for whom

[Defendant] filed a W-2 . . . misidentifying interest on back wages as wages.” FAC ¶ 9. Plaintiff

also incorporates all of the allegations that the interest portion of the true-up payment is not

wages into her claim for violation of Or. Rev. Stat. § 652.610(3). FAC ¶ 15.

Although Plaintiff does not appear to dispute that § 652.610(3) applies only to improper

withholdings from wages, Plaintiff asserts “[t]hat factual disagreement is premature and not a

basis for a motion to dismiss.” Pl. Resp. at 23. Plaintiff asserts she has stated a claim for

violation of § 652.610(3) because “there is a distinction between a deduction from interest, and a

deduction from wages for interest. . . . At the pleading stage, plaintiff has pled a plausible

allegation that defendant made deductions from her wages that were not authorized by law.” Id.

(emphasis in original).

Plaintiff’s assertion that there is a factual disagreement misses the mark. Defendant bases

its argument on the facts alleged in the Amended Complaint and asserts those facts do not state a

claim. Plaintiff alleges that because Defendant included interest in the amount of payments

reported on the W-2, Defendant “overdeducted Oregon income tax and FICA.” In other words,

Defendant wrongfully deducted Oregon income tax and FICA from the interest portion of the

payment to Plaintiff. Plaintiff explicitly pleads that “[Defendant] knew that the payments for

interest on back wages were not wages subject to withholding.” It is unclear what Plaintiff is

asserting with her statement that there is a “difference between a deduction from interest, and a

deduction from wages for interest,” but in any event, Plaintiff did not plead that Defendant made

a deduction “from wages for interest.”

The Court concludes that § 652.610(3) on its face provides a cause of action only if an

employer withholds or deducts any portion of an employee’s wages except under the

circumstances set out in that section, which do not apply here. Plaintiff’s claim for violation of §

652.610(3) as pled is that Defendant wrongfully withheld Oregon income tax and FICA from the

interest portion of its payment to Plaintiff and that interest is not a wage. The Court, therefore,

concludes that Plaintiff has failed to state a viable claim for violation of § 652.610(3).

Accordingly, the Court grants Defendant’s Motion to Dismiss this claim.

III. Declaratory Relief

In her third claim Plaintiff seeks three declarations from the Court:

a. that the interest paid to them as part of the true-up payments does

not constitute wages for FICA or Oregon income tax withholding

purposes;

b. that no FICA or Oregon income tax withholdings should have been

taken for the interest portion of the true-up payments; and

c. that plaintiff and the Class members did not and do not owe FICA

taxes on the interest portion of the true-up payments.

FAC ¶ 22.

Defendant moves to dismiss or to strike Plaintiff’s third claim on several bases including

that it is redundant of Plaintiff’s other claims and subsumed within those claims.

The Declaratory Judgment Act, 28 U.S.C. § 2201, authorizes federal courts to “declare

the rights and other legal relations of any interested party seeking such declaration, whether or

not further relief is or could be sought.” The Declaratory Judgment Act “confers a discretion on

the courts rather than an absolute right upon the litigant.” Pub. Serv. Comm'n v. Wycoff Co., 344

U.S. 237, 241 (1952).

“It is well-established that declaratory judgment is not an independent cause of action,

but an equitable remedy.” SVB Fin. Grp. v. Fed. Deposit Ins. Corp., No. 23-CV-06543-BLF,

2024 WL 3745009, at *18 (N.D. Cal. Aug. 8, 2024)(citing Brown v. Transworld Sys., Inc., 73

F.4th 1030, 1038 (9th Cir. 2023)(noting that a requests for declaratory and injunctive relief are

not stand-alone claims)). See also City of Reno v. Netflix, Inc., 52 F.4th 874, 878 (9th Cir.

2022)(“The Declaratory Judgment Act does not provide a cause of action when a party . . . lacks

a cause of action under a separate statute and seeks to use the Act to obtain affirmative relief.

The availability of relief under the Declaratory Judgment Act ‘presupposes the existence of a

judicially remediable right.’”)(quoting Schilling v. Rogers, 363 U.S. 666, 677 (1960); and citing

Republic of Marshall Islands v. United States, 865 F.3d 1187, 1199 n.10 (9th Cir. 2017)). In City

of Reno v. Netflix, Inc., the plaintiff filed a complaint against the defendants seeking to represent

a class of “[a]ll Nevada cities and counties in which one or more of the Defendants has provided

video service.” 52 F.4th at 877. The plaintiff alleged that the defendants were “video service

providers” within the meaning of Nevada's Video Service Law (“VSL”), Nev. Rev. Stat. §

711.020 et seq, and therefore they must pay franchise fees. The plaintiff sought damages for the

defendants’ alleged failure to pay franchise fees and a declaration that the defendants “are

covered by the VSL and were required . . . pay franchise fees.” Id. The defendants moved to

dismiss the plaintiffs’ claims. The district court granted the defendants’ motions because, among

other things, the plaintiff “lacked a private right of action under the VSL.” Id. On appeal the

Ninth Circuit affirmed the district court’s conclusion that the VSL did not provide a cause of

action for the plaintiff. The Ninth Circuit also held the district court did not err in dismissing the

plaintiff’s request for declaratory judgment because “[t]he Declaratory Judgment Act does not

provide a cause of action when a party, such as [the plaintiff], lacks a cause of action under a

separate statute and seeks to use the Act to obtain affirmative relief. The availability of relief

under the . . . Act ‘presupposes the existence of a judicially remediable right.’” Id. at 878

(quoting Schilling, 363 U.S. at 677 and citing Republic of Marshall Islands, 865 F.3d at 1199

n.10).

The Court has found that Plaintiff has not established that either § 7434 or Or. Rev. Stat.

§ 652.610(3) create a cause of action for reporting the correct amount of payments on an

allegedly incorrect form or for deductions taken from interest. Because the Declaratory Judgment

Act does not provide a cause of action when a party lacks a cause of action under a separate

statute and seeks to use the Act to obtain affirmative relief, the Court concludes the Act does not

provide a cause of action for Plaintiff here. The Court, therefore, grants Defendant’s Motion to

Dismiss Plaintiff’s claim for declaratory relief. See Spangler v. Selene Fin. LP, No. 16-cv-05103-

WHO, 2016 WL 5681311, at *7 (N.D. Cal. Oct. 3, 2016)(dismissing claim for declaratory

judgment because declaratory relief is not an independent cause of action and plaintiff's

complaint otherwise failed to state a claim under which any relief could be granted)).

IV. Injunctive Relief

Plaintiff also seeks injunctive relief pursuant to 28 U.S.C. § 2202 “requiring [Defendant]

to issue corrected W-2c forms to the Class members and file them with the IRS, showing in

boxes 1, 3, and 5 only the back wages paid as part of the true-up payments.” FAC ¶ 23. Plaintiff

also requests the Court require Defendant to either:

a. repay or reimburse them the amounts of FICA deductions that

were made from the true-up payments for interest; or

b. take the following actions allowing the Class and Subclass

members to make refund requests for those amounts under 26

C.F.R. § 31.6402(a)-2:

1. provide them with statements supporting the employees’

claims, per 26 C.F.R. § 31.6402(a)-2(b)(2), including

“setting forth (a) the extent, if any, to which the employer

has repaid or reimbursed the employee in any manner for

the overcollection, and (b) the amount, if any, of credit or

refund of such overpayment claimed by the employer or

authorized by the employee to be claimed by the employer

[and] the fact that it is made in support of a claim against

the United States to be filed by the employee for refund of

employee tax paid by such employer to the IRS”; and

2. Pay the cost for Class and Subclass members to seek the

assistance of tax professionals in order to fill out Form 843

to seek this refund.

FAC ¶ 24.

“[U] under 28 U.S.C. § 2202, ‘[f]urther necessary or proper relief based on a declaratory

judgment or decree may be granted . . . against any adverse party whose rights have been

determined by such judgment.’” United States v. Idaho, No. 1:22-CV-00236-DCN, 2024 WL

3966737, at *19 (D. Idaho Aug. 28, 2024). See also Powell v. McCormack, 395 U.S. 486, 499

(1969)(“A declaratory judgment can then be used as a predicate to further relief, including an

injunction”)). “[A] request for injunctive relief, however, is not a standalone claim, but rather

requires some other substantive basis for liability.” Fish v. Aviation, No. 18-CV-06671-VKD,

2019 WL 690286, at *6 (N.D. Cal. Feb. 19, 2019). “Federal . . . courts have held that an

‘injunction is a remedy, not a cause of action.’” Id. (citing Lutz v. CBRE Grp., Inc., 3:12-CV-

2625-JM (DHB), 2013 WL 4102157, at *9 (S.D. Cal. Aug. 13, 2013)(“As injunctive relief is a

type of relief, [defendant's] motion [to dismiss] is granted without leave to amend as to this

‘claim.’”)).

Because the Court concludes Plaintiff has not stated any claim for which she might be

entitled to statutory or declaratory relief, Plaintiff’s claim for injunctive relief under § 2202 must

be dismissed. Accordingly, the Court grants Defendant’s Motion to Dismiss Plaintiff’s claim for

injunctive relief.

V. Leave to Amend

A district court should provide leave to amend upon granting a motion to dismiss unless

it is clear that the complaint could not be saved by any amendment. See Mueller v. Auker, 700

F.3d 1180, 1191 (9th Cir. 2012)(citing Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d

1025, 1031 (9th Cir. 2008)). “Valid reasons for denying leave to amend include . . . futility.” Cal.

Architectural Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1472 (9th Cir. 1987). See also

Chinatown Neighborhood Ass'n v. Harris, 794 F.3d 1136, 1144 (9th Cir. 2015)(leave to amend is

properly denied if the proposed amendment lacks merit or would be futile in saving plaintiff's

suit); Klamath–Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir.

1983)(holding that while leave to amend shall be freely given, the court does not have to allow

futile amendments).

The Court finds the deficiencies in the FAC may not be cured by amendment because as

pled Plaintiff cannot state a claim for violation of § 7434 or Or. Rev. Stat. § 652.610(3). If,

however, Plaintiff repleads her claims to allege that the portion of the true-up payment that was

for interest on back wages is, in fact, wages, then under both statutes Defendant properly

reported the entire payment on Plaintiff’s W-2. The Court, therefore, declines to grant Plaintiff

leave to file a second amended complaint.

CONCLUSION

The Court GRANTS Defendant’s Motion to Dismiss or Strike, ECF 116 (Case No. 3:20-

cv-01740-HZ), ECF 22 (Case No. 3:24-cv-00764-HZ).

IT IS SO ORDERED.

DATED:__F__e_b_r_u_a_ry_ _2_8_,_ 2_0__2_5_____.

______________________________

MARCO A. HERNÁNDEZ

United States Senior District Judge