Cesar Moreno v. Utiliquest, LLC

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CESAR ANTONIO MORENO, an No. 21-55313

individual,

Plaintiff-Appellant, D.C. No.

2:20-cv-03156-

v. AB-MRW

UTILIQUEST, LLC, a Georgia Limited

Liability Company, OPINION

Defendant-Appellee.

Appeal from the United States District Court

for the Central District of California

Andre Birotte, Jr., District Judge, Presiding

Argued and Submitted January 12, 2022

Pasadena, California

Filed March 18, 2022

Before: A. WALLACE TASHIMA and MILAN D.

SMITH, JR., Circuit Judges, and STEPHEN J.

MURPHY, III, * District Judge.

Opinion by Judge Milan D. Smith, Jr.

*

The Honorable Stephen Joseph Murphy, III, United States District

Judge for the Eastern District of Michigan, sitting by designation.

2 MORENO V. UTILIQUEST

SUMMARY **

Labor Law

The panel affirmed the district court’s dismissal, as

preempted by the National Labor Relations Act (“NLRA”),

of Cesar Moreno’s wrongful termination lawsuit against his

former employer, UtiliQuest, LLC.

Although the NLRA does not contain express

preemption provisions, the Supreme Court held that two

categories of state action are implicitly preempted: (1) laws

that regulate conduct that is either protected or prohibited by

the NLRA (Garmon preemption); and (2) laws that regulate

in an area Congress intended to leave unregulated or

controlled by the free play of economic forces (Machinists

preemption). UtiliQuest contends that Garmon preemption

applied to Moreno’s claims related to his termination.

Moreno brought several California state law claims

relating to his termination: intentional misrepresentation;

fraud and deceit; whistleblowing retaliation; and wrongful

termination in violation of public policy. The panel held that

all of these claims arguably implicated NLRA sections 7 and

8, and were subject to Garmon preemption.

The panel considered, and rejected, Moreno’s three

arguments for why these claims were not subject to Garmon

preemption. First, he argued that even if his termination-

based claims implicated the NLRA, preemption was

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

MORENO V. UTILIQUEST 3

inappropriate because of the compelling local interest

underlying his claims. The panel held that the risk of

interference with the National Labor Relations Board’s

jurisdiction was sufficient to outweigh the state’s interest in

Moreno’s claims, and Garmon preemption was appropriate.

Second, Moreno argued that his grievances with UtiliQuest

were personal in nature and lacked any element of

“concerted activity” necessary to establish an NLRA

violation. The panel rejected his contention and held that

when Moreno received a raise and other employees did not,

the NLRB could consider Moreno’s advocacy for his fellow

co-workers to be “concerted activity.” Third, Moreno

argued that he was a statutory supervisor exempt from the

NLRA. The panel held that the NLRB could arguably

consider Moreno an employee, rather than a supervisor.

Moreno also asserted wage and hour-related claims

against UtiliQuest after his termination. The district court

dismissed the claims for failure to state a claim. On January

10, 2022, UtiliQuest informed this court of a class action

settlement in California Superior Court. The class consisted

of UtiliQuest employees who, like Moreno, used company

vehicles to commute to and from worksites. As part of the

settlement, class members released their wage and hour

claims. Because Moreno did not opt out of the settlement,

UtiliQuest argued these claims were moot. The panel held

that the California Superior Court’s settlement judgment was

entitled to full faith and credit. Applying the principles of

claim preclusion, the panel affirmed the district court’s

dismissal of Moreno’s wage and hour claims.

4 MORENO V. UTILIQUEST

COUNSEL

Joshua M. Mohrsaz (argued) and Edwin Pairavi, Pairavi

Law, P.C., Los Angeles, California, for Plaintiff-Appellant.

Alex Meier (argued) and Jill A. Porcaro, Seyfarth Shaw

LLP, Los Angeles, California, for Defendant-Appellee.

OPINION

M. SMITH, Circuit Judge:

Plaintiff Cesar Moreno appeals the district court’s

dismissal of his lawsuit against his former employer,

Defendant UtiliQuest. Moreno alleges that UtiliQuest

promised him that if he convinced all of his fellow

employees to “sign away” their union rights, they would

each receive a ten percent raise. Once Moreno obtained

signatures from his co-workers releasing their union rights,

UtiliQuest gave him a ten percent raise. Moreno soon

learned, however, that UtiliQuest did not give any other

employees the promised raise. Moreno contends he was

terminated after confronting his supervisors about

UtiliQuest’s breach of its promise.

Moreno brought various claims related to his

termination, but the district court dismissed them because it

found that they were preempted by the National Labor

Relations Act (NLRA), 29 U.S.C. § 151 et seq. Moreno also

appeals the dismissal of his wage and hour claims, but as his

appeal was pending, the Superior Court of California entered

judgment on a final settlement precluding these claims. We

affirm the district court’s dismissal of Moreno’s complaint.

MORENO V. UTILIQUEST 5

FACTUAL AND PROCEDURAL BACKGROUND

Moreno worked for UtiliQuest as a Field Technician

from 2007 until 2018. At the time he was terminated,

Moreno was a Lead Field Technician “responsible for

supervising the work of field technicians” on job sites.

Moreno alleges that in June 2017, UtiliQuest’s management

asked him to collect signatures from “all other employees”

to “release their [union] rights” in exchange for a ten percent

raise “in their hourly pay per year” for all who signed.

Moreno and the other employees each signed “the union

release” in June 2017. UtiliQuest gave Moreno a ten percent

raise but did not give a raise to his fellow employees. On

multiple occasions, Moreno complained to his managers

about his co-workers not receiving the promised raises. He

alleges that UtiliQuest retaliated against him because of his

advocacy on behalf of the other employees. On February 13,

2018, Moreno contends that someone in Human Resources

falsely accused him of taking money from other employees

in exchange for providing them with overtime hours. On

February 28, 2018, Moreno’s manager fired him without

explanation.

Moreno brought several state law claims related to his

termination. Moreno also asserted wage and hour-related

claims against UtiliQuest after his termination. He contends

that UtiliQuest did not provide him with compensation for

travel time between his home and the first and last job sites

for the day. Moreno also alleges that the nature of his job

responsibilities, together with UtiliQuest’s policies,

prevented him from taking an “uninterrupted 30 minute meal

break.”

The district court held that the NLRA preempted

Moreno’s termination claims and dismissed them. The

district court also dismissed Moreno’s wage and hour claims

6 MORENO V. UTILIQUEST

pursuant to Federal Rule of Civil Procedure 12(b)(6) because

he failed to state a cause of action. Moreno appealed.

On January 10, 2022—two days before oral argument in

our court—UtiliQuest informed us of a class action

settlement in California Superior Court that was finalized on

November 29, 2021. The California class consisted of

UtiliQuest employees who, like Moreno, used company

vehicles to commute to and from worksites. As part of the

settlement, class members released their wage and hour

claims. Because Moreno did not opt out of the California

settlement, UtiliQuest argued that the wage and hour claims

portion of Moreno’s appeal was moot. We ordered, and have

now received, supplemental briefing on this issue.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291. We

review de novo the district court’s dismissal pursuant to

Federal Rule of Civil Procedure 12(b)(6) for failure to state

a claim. Okwu v. McKim, 682 F.3d 841, 844 (9th Cir. 2012)

(citing AE ex rel. Hernandez v. County of Tulare, 666 F.3d

631, 636 (9th Cir. 2012)). In reviewing a motion to dismiss,

we accept as true all factual allegations in the complaint and

draw all reasonable inferences in favor of the nonmoving

party. Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1003

(9th Cir. 2008).

ANALYSIS

I.

The NLRA does not contain express preemption

provisions, but the Supreme Court held that “two categories

of state action are implicitly preempted: (1) laws that

regulate conduct that is either protected or prohibited by the

MORENO V. UTILIQUEST 7

NLRA (Garmon preemption), and (2) laws that regulate in

an area Congress intended to leave unregulated or

‘controlled by the free play of economic forces’ (Machinists

preemption).” Interpipe Contracting, Inc. v. Becerra, 898

F.3d 879, 887 (9th Cir. 2018) (quoting Chamber of Com. of

the U.S. v. Brown, 554 U.S. 60, 65 (2008)). UtiliQuest

contends that Garmon preemption applies to Moreno’s

claims.

Sections 7 and 8 of the NLRA provide a private cause of

action for claims “based on the conduct of labor

organizations or their agents that constitute unfair labor

practices.” Retail Prop. Tr. v. United Bhd. of Carpenters &

Joiners of Am., 768 F.3d 938, 950 (9th Cir. 2014).

Specifically, NLRA Section 7 protects the right of

employees “to form, join, or assist labor organizations, to

bargain collectively through representatives of their own

choosing, and to engage in other concerted activities for the

purpose of collective bargaining or other mutual aid or

protection.” 29 U.S.C. § 157. Section 8 bars unfair labor

practices by employers and labor organizations and also

makes it illegal “for an employer to interfere with, restrain,

or coerce employees in the exercise of the rights guaranteed

in section [7 of the NLRA].” Id. at § 158(a)–(b).

“When an activity is arguably subject to § 7 or § 8 of the

Act, the States as well as the federal courts must defer to the

exclusive competence of the National Labor Relations Board

if the danger of state interference with national policy is to

be averted.” San Diego Bldg. Trades Council v. Garmon,

359 U.S. 236, 245 (1959). Garmon’s central concern “is the

potential for conflict with federal policy.” Retail Prop. Tr.,

768 F.3d at 952. The Supreme Court acknowledged that it

is not always clear whether a particular activity is preempted,

but “[e]ven when a court is unsure,” it should leave the

8 MORENO V. UTILIQUEST

determination to the National Labor Relations Board

(NLRB). Bassette v. Stone Container Corp., 25 F.3d 757,

760 (9th Cir. 1994) (citing Garmon, 359 U.S. at 244–45).

Moreno brought several California state law claims

relating to his termination: intentional misrepresentation

(Count 7); fraud and deceit (Count 8); whistleblowing

retaliation (Counts 9 & 10); and wrongful termination in

violation of public policy (Count 11). In connection with

Garmon preemption, “[i]t is not the label affixed to the cause

of action under state law that controls the determination of

the relationship between state and federal jurisdiction.”

United Ass’n of Journeymen & Apprentices v. Borden, 373

U.S. 690, 698 (1963). In Borden the Supreme Court held

that plaintiff’s claims were preempted even though his

complaint “sounded in contract as well as in tort” because

the “facts as alleged in the complaint, and as found by the

jury,” could arguably support a finding that the conduct

violated the NLRA. Id. at 694, 698. As the district court

correctly found here, all of Moreno’s claims arguably

implicate NLRA Sections 7 and 8 and are subject to Garmon

preemption.

Moreno’s intentional misrepresentation and fraud claims

are both treated the same under California law. Compare

Lazar v. Superior Court, 909 P.2d 981, 984–85 (Cal. 1996),

with Tenet Healthsystem Desert v. Blue Cross of Cal., 199

Cal. Rptr. 3d 901, 914–15 (Ct. App. 2016). The elements of

a fraud or intentional misrepresentation claim are:

(1) misrepresentation, (2) knowledge of falsity, (3) intent to

defraud or induce reliance, (4) justifiable reliance, and

(5) damage. Lazar, 909 P.2d at 984. Moreno’s underlying

theory for both counts is that UtiliQuest deceived him into

convincing other employees to sign away their union rights

for a ten percent raise. What Moreno alleges UtiliQuest

MORENO V. UTILIQUEST 9

did—offering employees a benefit to give up their union

rights—is a textbook NLRA violation. See 29 U.S.C.

§§ 157, 158(a)(1).

Moreno’s fraud and misrepresentation claims deal not

primarily with UtiliQuest’s alleged illegal conduct, but

rather with the fact that UtiliQuest deceived him. In

determining whether there is potential for conflict with the

NLRA, however, we cannot ignore the subject of

UtiliQuest’s alleged deception. The elements of

misrepresentation and intent to defraud in the state law

claims both touch on conduct clearly covered by the NLRA.

For example, a jury would need to determine whether

UtiliQuest made the misrepresentation, and such a finding

would strongly suggest an NLRA Section 8 violation.

Holding that Moreno’s fraud and misrepresentation

claims are preempted reflects a logical extension of our

holding in Milne Employees Ass’n v. Sun Carriers, Inc., 960

F.2d 1401 (9th Cir. 1991). In Milne we considered whether

the NLRA preempted a fraud claim. We concluded that

because an employer’s alleged misrepresentations did not

implicate the NLRA, the fraud claim survived Garmon

preemption. Id. at 1414–15. Here, UtiliQuest’s alleged

misrepresentation would violate the NLRA and thus

involves national labor policy. The challenged conduct

could be seen as “an attempt on the part of [the employer] to

interfere with the collective bargaining process or to

diminish the union’s representative role.” Id. at 1415–16

(quoting Wells v. Gen. Motors Corp., 881 F.2d 166, 171 (5th

Cir. 1989)) (alteration in the original).

Moreno’s whistleblowing retaliation and wrongful

termination claims are also preempted. Cal. Lab. Code

§§ 98.6; 1102.5. To establish a prima facie whistleblowing

case, a plaintiff must show that (1) he engaged in a protected

10 MORENO V. UTILIQUEST

activity, (2) his employer subjected him to an adverse

employment action, and (3) there is a causal link between the

two. See St. Myers v. Dignity Health, 257 Cal. Rptr. 3d 341,

352 (Ct. App. 2019). A California wrongful termination in

violation of public policy claim “requires a showing that

there has been a violation of a fundamental public policy

embodied in statute.” Merrick v. Hilton Worldwide, Inc.,

867 F.3d 1139, 1150 (9th Cir. 2017).

Moreno’s central theory in his whistleblowing retaliation

and wrongful termination claims is that he was terminated

for advocating on behalf of his fellow employees after

UtiliQuest refused to give them a promised raise. In

Bassette, we held that an employee’s wrongful termination

claim against her employer was preempted because the

employer’s alleged conduct arguably violated the NLRA.

25 F.3d at 761. The same reasoning applies in this case

because UtiliQuest’s conduct arguably violated the NLRA.

Thus, there is clear potential for conflict between state law

and federal policy.

On appeal, Moreno advances three arguments for why

his claims are not subject to Garmon preemption. He

contends that the local interest exception to Garmon

preemption applies, that his grievances lack the “concerted

activity” element necessary for an NLRA claim, and that he

is a statutory supervisor exempt from the NLRA. We

address, and reject, each in turn.

A.

Moreno argues that even if his termination-based claims

implicate the NLRA, preemption is inappropriate because of

the compelling local interest underlying his claims.

Although Garmon preemption is broad, one well-recognized

exception is when a regulation “touches on interests so

MORENO V. UTILIQUEST 11

deeply rooted in local feeling and responsibility that”

preemption could not be inferred. Loc. 926, Int’l Union of

Operating Eng’rs v. Jones, 460 U.S. 669, 676 (1983) (citing

Garmon, 359 U.S. at 243–44). State laws “of general

applicability” can be enforced “even though aspects of the

challenged conduct” are arguably covered by the NLRA.

Sears, Roebuck & Co. v. San Diego Cnty. Dist. Council of

Carpenters, 436 U.S. 180, 194–95 (1978). To determine

whether this exception applies, courts are required to balance

the state’s interest in protecting its citizens with the risk of

interfering with the NLRB’s ability to adjudicate the

controversy. Id. at 196–97.

In determining whether adjudicating a state claim risks

interference with the NLRB’s jurisdiction, we inquire

whether “the controversy presented to the state court is

identical with that which could be presented to the Board.”

Belknap, Inc. v. Hale, 463 U.S. 491, 510 (1983). When

controversies are identical, “a state court’s exercise of

jurisdiction necessarily involves a risk of interference with

the unfair labor practice jurisdiction of the Board.” Sears,

Roebuck & Co., 436 U.S. at 197. Importantly, the claims

need not be identical, but rather the focus is on whether the

“controversy presented” is identical. A finding of Garmon

preemption does not require “that a plaintiff have a certain

remedy before the Board, or even that the Board will hear

the claim in the first place.” Bassette, 25 F.3d at 759–60.

When we consider Moreno’s fraud and

misrepresentation claims, we note that a state has a

“substantial interest in protecting its citizens from

misrepresentations that have caused them grievous harm.”

Belknap, 463 U.S. at 511. We also observe that it would be

irrelevant to the NLRB that UtiliQuest’s promise to Moreno

was false—UtiliQuest’s alleged promise would likely

12 MORENO V. UTILIQUEST

violate the NLRA regardless of its intent to honor its

promise. In any event, the underlying controversy is

substantially identical and the facts as alleged in Moreno’s

complaint could support a finding that UtiliQuest violated

the NLRA. See Borden, 373 U.S. at 694. The risk of

interference with the NLRB’s jurisdiction is sufficient to

preclude the state’s interest in combatting fraud. Garmon

preemption is appropriate.

The risk of interference between Moreno’s

whistleblowing and retaliation claims and NLRA-related

conduct is even more extensive than with the fraud claims.

Moreno alleges that UtiliQuest terminated him for

advocating on behalf of his fellow employees for a promised

ten percent raise. Such conduct arguably violates the NLRA.

Of course, the state also has an interest in protecting its

citizens from employers’ illegal actions, but the

controversies presented in Moreno’s whistleblowing and

retaliation claims are substantially identical.

B.

Moreno contends that his grievances with UtiliQuest

were personal in nature and lacked any element of

“concerted activity” necessary to establish an NLRA

violation. See NLRB v. City Disposal Sys. Inc., 465 U.S.

822, 830–31 (1984). The term “concerted activit[y]” in

Section 7 of the NLRA “embraces the activities of

employees who have joined together in order to achieve

common goals,” but can also include actions of a single

employee. Id. Section 7 requires both “concert” and activity

for “mutual aid or protection.” E.I. Du Pont De Nemours &

Co. v. NLRB, 707 F.2d 1076, 1077–78 (9th Cir. 1983). The

NLRA does not protect an employee acting alone to

complain about an issue, even if the issue concerns mutual

aid or protection. “[I]t is the backdrop of other group activity

MORENO V. UTILIQUEST 13

that transforms it into concerted action.” Id. at 1079. Even

if “the employees’ conduct constituted merely individual

activity,” the NLRB would still be entitled to find that

“individual actions were concerted to the extent they

involved a ‘logical outgrowth’ of prior concerted activity.”

NLRB v. Mike Yurosek & Son, Inc., 53 F.3d 261, 265 (9th

Cir. 1995). This is so because “[t]he lone act of a single

employee is concerted if it ‘stems from’ or ‘logically grew’

out of prior concerted activity.” Id.

The question before us is whether the “activity is

arguably subject to § 7 or § 8 of the Act.” Garmon, 359 U.S.

at 245. If conduct is “arguably” protected, the party claiming

preemption must show that the NLRB could legally decide

the case in its favor. Int’l Longshoremen’s Ass’n, v. Davis,

476 U.S. 380, 395 (1986). “This is not a demanding

standard.” Idaho Bldg. & Const. Trades Council v. Inland

Pac. Chapter of Associated Builders & Contractors, 801

F.3d 950, 965 (9th Cir. 2015). UtiliQuest must (1) “advance

an interpretation of the [NLRA] that is not plainly contrary

to its language and that has not been ‘authoritatively

rejected’ by the courts or the [NLRB]” and (2) offer “enough

evidence to enable the court to find that the [NLRB]

reasonably could uphold a claim based on such an

interpretation.” Davis, 476 U.S. at 394–95 (quoting Marine

Eng’rs v. Interlake S.S. Co., 370 U.S. 173, 184 (1962)).

UtiliQuest has met this burden. Although Moreno

contends that he acted on his own volition, the NLRB could

reasonably find that his “individual actions were concerted

to the extent they involved a ‘logical outgrowth’ of prior

concerted activity.” Mike Yurosek & Son, Inc., 53 F.3d at

265. Moreno convinced other employees to relinquish their

union rights in exchange for a ten percent raise. When

Moreno received a raise and other employees did not, the

14 MORENO V. UTILIQUEST

NLRB could consider Moreno’s advocacy for his fellow co-

workers to be “concerted activity.”

C.

The parties also disagree about whether Moreno was a

supervisor at the time of his termination. Section 2(3) of the

NLRA excludes supervisors from the protections of the

NLRA. 29 U.S.C. § 152(3). Therefore, if Moreno was a

statutory supervisor, his claims would not be preempted

because he could not bring them before the NLRB. The

NLRA defines a supervisor as one who (1) has authority to

engage in certain supervisory functions defined in the Act, 1

(2) uses independent judgment when exercising this

authority, and (3) holds this authority in the interest of the

employer. NLRB v. Ky. River Cmty. Care, Inc., 532 U.S.

706, 713 (2001). We need not determine whether Moreno

was a supervisor. Rather, the relevant question is whether

he “was arguably an employee, rather than a supervisor.”

Davis, 476 U.S. at 394.

Moreno contends that as Lead Field Technician, he was

a supervisor responsible for “assigning all work to the field

technicians and managing all of the work orders.” The

district court rejected Moreno’s supervisor argument

because it found his allegations in the complaint conclusory.

Because UtiliQuest had the burden to show that the NLRB

could legally decide that Moreno was an employee, the

district court erred in its reasoning. See Chamber of Com. of

the U.S. v. City of Seattle, 890 F.3d 769, 795 (9th Cir. 2018).

1

Supervisory functions are defined as the power “to hire, transfer,

suspend, lay off, recall, promote, discharge, assign, reward, or discipline

other employees, or responsibility to direct them, or to adjust their

grievances.” 29 U.S.C. § 152(11).

MORENO V. UTILIQUEST 15

“Nevertheless, we may affirm based on any ground

supported by the record.” Johnson v. Riverside Healthcare

Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008).

UtiliQuest’s motion to dismiss included notices of

election from the NLRB, which are public records subject to

judicial notice. See Santa Monica Food Not Bombs v. City

of Santa Monica, 450 F.3d 1022, 1025 n.2 (9th Cir. 2006).

The notices reveal that in two prior California union

elections involving UtiliQuest’s workforce, the NLRB

determined that Lead Technicians fall within the collective

bargaining unit. As UtiliQuest admits, these records are not

conclusive proof as to what the NLRB would decide in

Moreno’s case, but readily meet the burden to show that the

NLRB would “arguably” consider Moreno an employee.

II.

The Full Faith and Credit Act, 28 U.S.C. § 1738, “directs

all courts to treat a state court judgment with the same

respect that it would receive in the courts of the rendering

state.” Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367,

373 (1996). The California Superior Court’s settlement

judgment is entitled to full faith and credit. Applying the

principles of claim preclusion, we affirm the district court’s

dismissal of Moreno’s wage and hour claims.

The Supreme Court’s decision in Matsushita, controls

the outcome here. Id. In Matsushita, the plaintiffs appealed

a summary judgment dismissal to our court. Id. at 370.

While the appeal was pending, a related state court class

action settlement was finalized. Id. at 370–71. The federal

appellants had not opted out of the class, and the settlement

explicitly released their federal claims that were on appeal

before this court. Id. at 371–72. The Supreme Court later

reversed our court for not applying the Full Faith and Credit

16 MORENO V. UTILIQUEST

Act as a bar to further prosecution of the federal action. Id.

at 373. The same principle applies here. As Moreno’s

federal case was pending appeal, the Los Angeles County

Superior Court entered a final settlement order and judgment

that bars his wage and hour claims. 2

Our court must treat a state court judgment with the same

respect it would receive in the courts of the rendering state.

28 U.S.C. § 1738. We apply California law to determine a

judgment’s preclusive effect. See Manufactured Home

Cmtys. Inc. v. City of San Jose, 420 F.3d 1022, 1031 (9th

Cir. 2005). In California, claim preclusion applies when

“(1) the decision in the prior proceeding is final and on the

merits; (2) the present proceeding is on the same cause of

action as the prior proceeding; and (3) the parties in the

present proceeding or parties in privity with them were

parties to the prior proceeding.” Fed’n of Hillside & Canyon

Ass’ns v. City of Los Angeles, 24 Cal. Rptr. 3d 543, 557 (Ct.

App. 2004).

All three elements of claim preclusion are satisfied here.

On November 29, 2021, the California Superior Court

entered an order granting final settlement approval in

Garcia-Muniz v. UtiliQuest, LLC. See Order Granting

Motion for Final Approval of Class Action Settlement, No.

BC685160 (L.A. Super. Ct. Nov. 29, 2021). The judgment

was entered on December 1, 2021. Final Judgment, Garcia-

Muniz v. UtiliQuest, LLC, No. BC685160 (L.A. Super. Ct.

2

Although preclusion is an affirmative defense, not a jurisdictional

matter, we are nonetheless bound to recognize the preclusive effects of a

state court judgment. See Exxon Mobil Corp. v. Saudi Basic Indus.

Corp., 544 U.S. 280, 293 (2005). This affirmative defense was not—

and could not have been—raised in district court, but we exercise our

discretion to consider it for the first time on appeal. See United States v.

Patrin, 575 F.2d 708, 712 (9th Cir. 1978).

MORENO V. UTILIQUEST 17

Dec. 1, 2021). Under California law, “[a] court-approved

settlement” constitutes a final judgment on the merits,

Consumer Advoc. Grp., Inc. v. ExxonMobil Corp., 86 Cal.

Rptr. 3d 39, 54 (Ct. App. 2008), but a judgment is not final

“if an appeal is pending or could still be taken.” Riverside

Cnty. Transport. Comm’n v. S. Cal. Gas Co., 268 Cal. Rptr.

3d 196, 208 (Ct. App. 2020); see also Franklin & Franklin

v. 7-Eleven Owners for Fair Franchising, 102 Cal. Rptr. 2d

770, 774 (Ct. App. 2000).

As part of the settlement agreement, the parties in

Garcia-Muniz v. UtiliQuest, LLC, agreed to waive any

appeals unless the California Superior Court entered an order

that materially altered the settlement’s terms. The Superior

Court subsequently entered a final judgment “in accordance

with terms of the Settlement.” Final Judgment at 1, Garcia-

Muniz, No. BC685160. Moreover, on January 30, 2022, the

time to appeal California’s judgment lapsed, and so the

judgment is final and free from “direct attack.” 3 People v.

Burns, 131 Cal. Rptr. 3d 121, 125 (Ct. App. 2011). Moreno

does not contest that the settlement releases cover his wage

and hour claims. Moreno also admits that he received notice

of the class settlement and did not opt out within the

timeframe. Accordingly, there is a final judgment on the

merits involving the same parties and same cause of action.

Moreno’s wage and hour claims are precluded.

Moreno argues that he implicitly opted out of the state

settlement by maintaining this federal litigation, and in the

3

As an absent class member, Moreno must have formally intervened

or filed a motion to vacate the judgment and been denied relief to have

the right to appeal the Superior Court’s judgment. Hernandez v.

Restoration Hardware, Inc., 409 P.3d 281, 290 (Cal. 2018). He did

neither. Nor has Moreno, after two rounds of supplemental briefing on

this subject, expressed any intent to appeal the California settlement.

18 MORENO V. UTILIQUEST

alternative, requests permission to file a late opt out. He

raises these issues in the wrong court. A federal court’s

broad collateral review of a state court class action judgment

would be inappropriate. Hesse v. Sprint Corp., 598 F.3d

581, 587 (9th Cir. 2010). Our review is limited to

determining “whether the procedures in the prior litigation

afforded the party against whom the earlier judgment is

asserted a ‘full and fair opportunity’ to litigate the claim or

issue.” Id. (quoting Epstein v. MCA, Inc., 179 F.3d 641,

648–49 (9th Cir. 1999)). “Normally we will satisfy

ourselves that the party received the requisite notice,

opportunity to be heard, and adequate representation by

referencing the state court’s findings.” Id. at 588. The

Superior Court of California made specific findings that the

notice given to class members comported with due process

and that the settlement was fair, adequate, and reasonable.

See Order Granting Motion for Final Approval of Class

Action Settlement at 9–11, Garcia-Muniz, No. BC685160.

Accordingly, the district court’s dismissal of Moreno’s wage

and hour claims is affirmed.

CONCLUSION

For the foregoing reasons, we affirm the district court’s

dismissal of Moreno’s complaint and action.

AFFIRMED.