Cinnamon Mills v. Target Corporation ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 6 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CINNAMON MILLS, individually on a No. 21-56308
representative basis, and on behalf of all
others similarly situated, D.C. No.
5:20-cv-01460-JGB-KK
Plaintiff-Appellee,
v. MEMORANDUM*
TARGET CORPORATION,
Defendant-Appellant.
CINNAMON MILLS, individually on a No. 21-56309
representative basis, and on behalf of all
others similarly situated, D.C. No.
5:20-cv-01460-JGB-KK
Plaintiff-Appellant,
v.
TARGET CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Jesus G. Bernal, District Judge, Presiding
Argued and Submitted February 9, 2023
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
San Francisco, California
Before: McKEOWN, BYBEE, and BUMATAY, Circuit Judges.
Cinnamon Mills, on behalf of herself and others similarly situated, sued
Target Corporation, alleging several violations of California labor law. As relevant
here, Mills alleged Target failed to pay her vested vacation in violation of California
Labor Code § 227.3 and willfully failed to pay final wages in violation of § 203.
Specifically, Mills alleges Target violated § 227.3 because it paid her at her final
base rate of $13 per hour rather than her final wage rate, which included a $2 per
hour shift differential at the time she was terminated. The district court granted
summary judgment in favor of Mills on her § 227.3 claim but granted summary
judgment to Target on her § 203 claim. The parties cross-appealed. We have
jurisdiction under 28 U.S.C. § 1291 and affirm.
We review the grant of summary judgment de novo. Vaz v. Neal, 33 F.4th
1131, 1135 (9th Cir. 2022). On review, “we must determine whether the evidence,
viewed in a light most favorable to the non-moving party, presents any genuine
issues of material fact and whether the district court correctly applied the law.” Lenz
v. Universal Music Corp., 815 F.3d 1145, 1150 (9th Cir. 2016) (simplified).
1. California Labor Code § 227.3 provides,
[W]henever a contract of employment or employer policy provides for
paid vacations, and an employee is terminated without having taken off
his vested vacation time, all vested vacation shall be paid to him as
wages at his final rate in accordance with such contract of employment
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or employer policy respecting eligibility or time served[.]
At issue is the meaning of the term “final rate.” The district court concluded that
“final rate” refers to the terminated employee’s final “wage” rate, which includes
shift differentials. Target, on the other hand, reads “final rate” to mean the
employee’s final “vacation” rate, which in this case was Mills’s base rate. We agree
with the district court.
Because California courts have not answered this question, our job is to
“predict as best we can what the California Supreme Court would do in these
circumstances.” Pacheco v. United States, 220 F.3d 1126, 1131 (9th Cir. 2000).
Under California law, courts give statutory language “a plain and commonsense
meaning” and consider that language “in the context of the statutory framework as
a whole.” Skidgel v. Cal. Unemployment Ins. Appeals Bd., 493 P.3d 196, 202 (Cal.
2021) (simplified).
We read “final rate” to refer to final “wage” rate for three reasons. First, the
term “at his final rate” follows “wages.” Under the nearest-reasonable-referent
canon, “final rate” modifies “wages.” See Hall v. U.S. Dep’t of Agric., 984 F.3d
825, 837–38 (9th Cir. 2020). So it would be natural to read the phrase “paid to him
as wages at his final rate” as requiring employers to pay terminated employees vested
vacation “as wages at his final [wage] rate.” Indeed, “wage rate” appears in other
provisions throughout the Labor Code, unlike “vacation rate.” See, e.g., Cal. Lab.
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Code § 1773.11 (requiring state agencies to provide “wage rates” for workers to
execute a contract with a private entity); § 2673.2 (referring to overtime hourly rates
as “premium wage rates”).
Second, interpreting § 227.3 as requiring payment at the “wage rate” gives a
more natural meaning to the term “final.” For many employees, “wage rates” change
over time. And so, “final” indicates that the rate of wages to be paid is the rate at
the employee’s termination—no matter when the employee accrued the vacation.
Following Target’s interpretation, “final” has meaning only in the rare situation
when an employer’s policy prescribes paying vested vacation based on the rate of
vacation pay applicable at the time the employee accrued the vacation. Under
Target’s interpretation, the term “final” would supersede the employer’s vacation
policy and require the employer to pay the employee under the “final” vacation rate
in the policy. While possible, Target’s interpretation is less straightforward.
Third, Target argues that § 227.3’s “final rate” is determined “in accordance
with such contract of employment or employer policy.” Cal. Lab. Code § 227.3.
But that clause refers to contracts or policies “respecting eligibility or time served.”
Id. Thus, the phrase most naturally refers to policies regarding the “amount of
vacation time for which an employee is eligible”—not vacation pay rates. Suastez
v. Plastic Dress-Up Co., 647 P.2d 122, 127 (Cal. 1982).
Target also relies on policy concerns and a California state agency’s
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interpretation of § 227.3. But our duty is to interpret the statute as the California
Supreme Court would. Pacheco, 220 F.3d at 1131. And giving “a plain and
commonsense meaning” to the text here counsels interpreting “final rate” to mean
the “final rate of wage pay,” which in this case includes Mills’s base pay and the pay
differentials she received when she was terminated.
2. California Labor Code § 203 penalizes employers who “willfully fail[] to
pay . . . any wages of an employee who is discharged.” At issue is whether Target
acted “willfully” when it paid Mills her vested vacation at only her base rate. The
district court concluded that Target acted in good faith and therefore did not act
“willfully” under § 203. We agree.
California courts recognize a good faith defense that precludes liability under
§ 203. See Barnhill v. Robert Saunders & Co., 177 Cal. Rptr. 803, 806–07 (Cal. Ct.
App. 1981). In Barnhill, the court concluded that because the law was uncertain,
and because the defendant’s actions were based on a good faith belief of what the
law required, the defendant did not act “willfully” under § 203. Id.
The facts here track Barnhill neatly. Mills has presented no evidence showing
Target’s withholding of wages was based on anything other than its
misunderstanding of the law. And the law on this issue has been uncertain, as
multiple courts have reached opposing conclusions. Compare, e.g., Wang v. Chinese
Daily News, Inc., 435 F. Supp. 2d 1042, 1049 (C.D. Cal. 2006) (supporting Mills’s
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position), aff’d, 623 F.3d 743, 762 (9th Cir. 2020), judgment vacated, 565 U.S. 801(2011) (Mem.), with Drumm v. Morningstar, 695 F. Supp. 2d 1014, 1019 (N.D. Cal.
2010) (supporting Target’s position). Target therefore did not act “willfully” under
§ 203.
AFFIRMED.1
1
We deny Mills’s motion for judicial notice as unnecessary. See Fed. R. Evid.
201(a), advisory comm. note to 1972 amendments; Von Saher v. Norton Simon
Museum of Art, 592 F.3d 954, 960 (9th Cir. 2010).
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