Monaghan v. Telecom Italia Sparkle of North America, Inc. ( 2016 )

FILED
NOT FOR PUBLICATION APR 05 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN MONAGHAN, an individual, No. 14-56279
Plaintiff - Appellee, D.C. No. 2:13-cv-00646-ABC-
PLA
v.
TELECOM ITALIA SPARKLE OF MEMORANDUM*
NORTH AMERICA, INC., a New York
Corporation,
Defendant - Appellant.
Appeal from the United States District Court
for the Central District of California
Audrey B. Collins, District Judge, Presiding
Argued and Submitted February 10, 2016
Pasadena, California
Before: FARRIS, CLIFTON, and BEA, Circuit Judges.
This is an appeal from a judgment entered in a suit by Plaintiff-Appellee
Kevin Monaghan (“Monaghan”) against Defendant-Appellant Telecom Italia
Sparkle of North America (“TISNA”) for wrongful termination, willful
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
misclassification, and several additional violations of California labor law. On
appeal, TISNA asserts a number of legal errors at various stages of these
proceedings. For the reasons set forth herein, we affirm in part and reverse and
remand in part.
A. Summary Judgment
We review de novo a district court’s grant of summary judgment and may
affirm on any ground in the record. Olson v. Morris, 188 F.3d 1083, 1085 (9th Cir.
1999). We agree with TISNA that the district court erred in granting summary
judgment to Monaghan on his claim that he was contractually entitled to the dollar
equivalent of 7,100 euros in canvass bonus compensation. The district court
ignored evidence demonstrating a genuine issue of material fact. See Fed. R. Civ.
Proc. 56(a). In opposing Monaghan’s motion for summary judgment, TISNA
offered an email from Vincent Suppa (“Suppa”) to Monaghan dated August 8,
2011 that purported “to serve as an addendum to [Monaghan’s original] contract”
and provided for a “canvass bonus” of 7,100 dollars. The contrary evidence
offered by Monaghan (a one-page document signed by Monaghan on August 9,
2011, which provided for a canvass bonus of 7,100 euros and deposition testimony
from TISNA executives that they understood the August 9, 2011 document to
provide for payment in euros) did not compel a finding in Monaghan’s favor as a
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matter of law because it did not conclusively resolve the factual discrepancy as to
which document reflected the correct terms of the parties’ contract. Neither
document was a fully integrated contract. We therefore conclude that the parties’
contract was ambiguous as to how the canvass bonus was to be calculated. See
Benach v. Cnty. of Los Angeles, 57 Cal. Rptr. 3d 363, 373 (Cal. App. 2007) (“The
initial question of whether an ambiguity exists is one of law.”). Resolution of this
ambiguity will, under California law, turn on the credibility of conflicting extrinsic
evidence as to the parties’ intent. Thus, both documents, along with any other
evidence of the parties’ intent, should be submitted to a trier of fact. Id.1
We accordingly reverse the district court’s grant of summary judgment to
Monaghan on his canvass bonus claim, vacate the award of $2,606.75 in unpaid
canvass bonus compensation to Monaghan, and remand for a trial on this issue.
We also hold that the district court committed legal error in granting
summary judgment to Monaghan on his California Business and Professions Code
1
Monaghan’s objections to TISNA’s evidence on appeal lack merit. There is
no evidence in the record that Monaghan objected to the authenticity of the August
8, 2011 email before the district court, and a failure to challenge the authenticity of
evidence operates to waive such objection on appeal. See, e.g., Reynolds v. Boeing
Co., No. 2:15-CV-2846-SVW-AS, 2015 WL 4573009, at *6 n.6 (C.D. Cal. July
28, 2015). Moreover, the record shows that TISNA submitted the August 8, 2011
email and attachment as Exhibit 7 to its Notice of Lodgment in opposition to
Monaghan’s motion for summary judgment. Thus, Monaghan’s argument that the
conflicting evidence was not properly before the district court lacks merit.
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§ 17200 (“UCL”) claim on the basis of TISNA’s conceded violation of California
Labor Code § 226 (requiring employers to provide periodic wage statements).2
Section 226 cannot—as a matter of law—provide the basis for a § 17200 claim
because § 226 does not provide for restitution. See, e.g., Cal. Labor Code § 226(providing only statutory penalties); Korea Supply Co. v. Lockheed Martin Corp.,
63 P.3d 937, 946 (Cal. 2003) (explaining that penalty provisions, like § 226,
cannot be enforced through § 17200, which permits a violation of another law to be
actionable as an “unfair competitive practice” only if the remedy sought is
equitable in nature); see also Cortez v. Purolator Air Filtration Products Co., 999
P.2d 706, 712 (Cal. 2000).
Nonetheless, we affirm the district court’s grant of summary judgment to
Monaghan on his § 17200 claim for two reasons. First, the district court properly
granted summary judgment to Monaghan on his California Labor Code § 212
claim. See Cal. Labor Code § 212(a)(1) (requiring an employer to pay wages
earned “without discount”). Because this finding entitled Monaghan to restitution
2
The panel rejects TISNA’s argument that the UCL permits only class
actions as an incorrect reading of § 17203. In context, it is clear that § 17203's
reference to class actions is permissive—not mandatory. Indeed, the fact that
California courts have routinely permitted individual actions under the UCL, see,
e.g., Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 959 (Cal. 2003),
belies TISNA’s reading of the statute.
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of all transfer fees incurred by Monaghan in receiving his paychecks (a
restitutionary remedy), it entitled Monaghan to judgment as a matter of law on his
derivative § 17200 claim as well. See Cortez, 999 P.2d at 715–16. Second, the
jury found that Monaghan was entitled to benefits and wages unlawfully withheld
by means of TISNA’s misclassification of Monaghan as an independent contractor.
The payment of wages unlawfully withheld from an employee is also a
restitutionary remedy, and thus compels a finding in Monaghan’s favor on his §
17200 claim. See id.
B. Alleged Errors at Trial
This court “review[s] evidentiary rulings for abuse of discretion and
reverse[s] [only] if the exercise of discretion [was] both erroneous and prejudicial.”
Wagner v. Cty. of Maricopa, 747 F.3d 1048, 1052 (9th Cir. 2013).
We hold that the district court did not err in ordering a read-back of Suppa’s
trial testimony in response to the jury’s question. Even if TISNA is correct that the
jury requested only Suppa’s deposition testimony, the trial testimony included
portions of Suppa’s deposition testimony and was therefore responsive. In any
event, the judge’s conclusion that the trial testimony was responsive to the jury’s
request was a reasonable interpretation of the jury’s note. But even if the read-
back was permitted in error, TISNA suffered no prejudice because the judge
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granted both mitigation measures requested by TISNA: She ordered all forty pages
of Suppa’s trial testimony be read back to give “context,” and admonished the jury
multiple times against placing undue emphasis on that testimony. See United
States v. Newhoff, 627 F.3d 1163, 1168 (9th Cir. 2010).
Nor did the district court abuse its discretion in admitting into evidence the
one-page summary of a damage report prepared by Monaghan’s damage expert
(the “Summary”). At trial and on appeal, TISNA primarily objects to the
admission of the Summary into evidence on hearsay grounds.3 However, the
Summary was not hearsay because (a) the expert fully discussed its contents during
her testimony on direct examination; and (b) the expert was subject to cross-
examination as to the contents of the Summary. TISNA failed to object that the
Summary was cumulative of the expert’s trial testimony or more prejudicial than
3
We note that TISNA is correct that the Summary was not admissible under
Federal Rule of Evidence (“FRE”) 1006, which permits a “proponent [to] use a
summary, chart, or calculation to prove the content of voluminous writings,
recordings, or photographs that cannot be conveniently examined in court.” Fed.
R. Evid. 1006. Monaghan’s argument to the contrary overlooks that summaries are
admissible under FRE 1006 only if “the underlying materials upon which the
summary is based are admissible in evidence.” Paddack v. Dave Christensen, Inc.,
745 F.2d 1254, 1259 (9th Cir. 1984). Monaghan makes no argument (nor could
he) that the underlying expert report was admissible; he therefore cannot show a
necessary predicate to admissibility of the Summary under FRE 1006.
Nevertheless, we hold that FRE 1006 is inapposite because the Summary was no
longer hearsay after the expert testified to its contents in court and was subject to
cross-examination.
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probative (FRE 403). We therefore find no basis upon which to hold that the
district court abused its discretion in admitting the Summary. See United States v.
Anekwu, 695 F.3d 967, 981–82 (9th Cir. 2012) (explaining that a district court has
“discretion” under FRE 611(a) to admit into evidence summaries of “material[s]
already in evidence”).
In sum, we find no error in the district court’s evidentiary rulings at trial.
C. TISNA’s Rule 50 Motions
Denials of a party’s Rule 50 motion for judgment as a matter of law are
reviewed de novo. First Nat’l Mortg. Co. v. Fed. Realty Inv. Trust, 631 F.3d 1058,
1067 (9th Cir. 2011). However, we may reverse only if the evidence would permit
“a reasonable jury to reach only one conclusion”—that the nonmoving party failed
to offer evidence sufficient to support an essential element of his case. Lyall v.
City of Los Angeles, 807 F.3d 1178, 1192 (9th Cir. 2015); see also Fed. R. Civ. P.
50. In making this determination, we must view the evidence in the light most
favorable to the party in whose favor the jury returned a verdict (here, Monaghan)
and draw all reasonable inferences in that party’s favor. Lakeside-Scott v.
Multnomah Cty., 556 F.3d 797, 802 (9th Cir. 2009).
The district court properly denied TISNA’s Rule 50 motions on the issue of
Monaghan’s entitlement to residual commissions. Even if TISNA is correct that
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the $16,250 in quarterly incentive compensations that Monaghan earned
throughout his employment with TISNA were “bonuses,” and not “commissions”
within the meaning of California Labor Code § 204.1, TISNA has failed to explain
or to cite any authority—at any stage in this proceeding—as to why that
classification entitles TISNA to judgment as a matter of law. On the contrary,
California law appears to treat “commissions” and “bonuses” equally; both are
recoverable as “wages” under California Labor Code § 200 and as damages for
wrongful termination if not too speculative. See, e.g., Bihun v. AT&T Info. Sys.,
Inc., 16 Cal. Rptr. 2d 787, 798 (Cal. App. 1993) (affirming a judgment in favor of
an employee that included damages for lost future bonus payments, on the basis
that the employee had consistently received a bonus from her former employer),
disapproved of on other grounds (relating to prejudgment interest) by Lakin v.
Watkins Associated Indus., 25 Cal. Rptr. 2d 109 (Cal. 1993). We accordingly
affirm the district court’s denial of TISNA’s Rule 50 motions on the issue of
residual commissions.
On the other hand, we agree with TISNA that the district court erred in
denying TISNA’s Rule 50 motions on the issue of Monaghan’s entitlement to
“accelerator” or “multiplier” compensation. The parties’ written contract
unambiguously stated that Monaghan was not entitled to any accelerator. The
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contract also provided that all modifications must be in writing. In these
circumstances, Monaghan could prevail on his accelerator claim only by showing
the existence of a valid, executed oral modification of his contract. See Cal. Civ.
Code § 1698(b)–(c); Kelley v. R.F. Jones Co., 77 Cal. Rptr. 170, 173 (Cal. App.
1969) (holding that an executed oral modification of a written contract is binding,
even if the contract expressly provides that it can be modified only in writing);
Raedeke v. Gibraltar Sav. & Loan Assoc., 517 P.2d 1157, 1162 (Cal. 1974); see
also Cal. Civ. Code § 1661.
But Monaghan admitted at trial that there had been “[n]o executed
amendment” entitling him to an accelerator. In light of this uncontradicted
evidence,4 no reasonable jury could find that Monaghan was entitled to accelerator
4
We acknowledge that Monaghan also testified briefly that TISNA “offered”
him an accelerator during group meetings. But that testimony, at best, supports an
inference that one element of contract formation (offer) may have been satisfied.
In light of Monaghan’s uncontroverted admission that no “executed” contract
entitling him to an accelerator was ever formed, Monaghan’s inconsistent
testimony was insufficient as a matter of law to support a finding of contract
formation.
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compensation.5 We accordingly reverse the district court’s order denying TISNA’s
Rule 50 motions for judgment as a matter of law on Monaghan’s accelerator claim.
D. TISNA’s Motion for a New Trial
A district court’s denial of a motion for a new trial under Federal Rule of
Civil Procedure 59(a) is reviewed for abuse of discretion and may be reversed
“only if the record contains no evidence in support of the verdict,” and the error is
such that “the trial was not fair to the party moving.” Molski v. M.J. Cable, Inc.,
481 F.3d 724, 729 (9th Cir. 2007).
We hold that TISNA’s motion for a new trial should have been granted in
part because there was “no evidence” at trial to support the jury’s damage award of
$335,000 on Monaghan’s willful misclassification claim. Even using the damage
5
The rest of Monaghan’s arguments lack merit. First, there is nothing
ambiguous about the directive, “no accelerator.” Second, that Monaghan “should
have been” classified as an “employee” is irrelevant to whether he was entitled to
an accelerator. Had Monaghan been classified as an employee, it would not have
been unlawful for TISNA to offer him a different compensation package than the
company offered its New York-based employees. It is therefore pure speculation
that Monaghan’s contract would have provided for an accelerator. Third, the
contract’s unlawful classification of Monaghan as an independent contractor had
no bearing on the contract’s “no accelerator” provision, which was perfectly valid
under California law. Cf. Cal. Civ. Code § 1670.5, cmt. 2; Armendariz v. Found.
Health Psychcare Servs., Inc., 6 P.3d 669, 696 (Cal. 2000) (“If the illegality [of a
contract] is collateral to the main purpose of the contract, and the illegal provision
can be extirpated from the contract by means of severance or restriction, then such
severance and restriction are appropriate.”).
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figures to which Monaghan’s own expert testified, the most the jury could have
awarded Monaghan consistent with the evidence at trial was $176,765. The
difference between this figure and the amount actually awarded cannot be justified
as compensating Monaghan for unpaid accelerator compensation because, as
explained above, no reasonable jury could have found in Monaghan’s favor on the
accelerator issue given the evidence presented at trial. Nor can the difference be
explained as attributable to non-economic damages, since the jury expressly
awarded Monaghan $0 in non-economic losses. Finally, the difference cannot be
justified as including some amount for “residual commissions,” because the
damages awarded on Monaghan’s wrongful termination claim already
compensated Monaghan for future wages lost as a result of Monaghan’s
termination from TISNA—including lost commission wages. To award damages
for those commissions again on Monaghan’s misclassification claim would be
double-counting. In sum, “the record contains no evidence” to support the jury’s
verdict to the extent it exceeded $176,765. For obvious reasons, therefore, the
jury’s award of $335,000 rendered the trial unfair to TISNA as to damages.
We accordingly reverse the district court’s order denying TISNA’s motion
for a new trial. We order that TISNA’s motion for a new trial be granted in part, as
to (a) Monaghan’s claim for $2,606.75 in additional canvass bonus compensation,
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and (b) damages on Monaghan’s willful misclassification claim. Alternatively, and
in lieu of granting a new trial, the district court may issue a remittitur reducing the
total damage award to $1,072,351.60 (a reduction of $160,841.75).6 Should the
court decide instead to order a new trial on the limited issues set forth above,
Monaghan shall be precluded from introducing any evidence relating to his claims
for an accelerator or for residual commissions.7
E. The Attorneys’ Fees Award
The district court relied on the fee-shifting provision of the Private
Attorneys General Act of 2004 (the “PAGA”), see Cal. Labor Code § 2699(g), to
award attorneys’ fees to Monaghan on his wrongful termination and “inextricably
intertwined” statutory violation claims. TISNA argues (correctly, for the reasons
6
This number includes a reduction for the difference between the damages
awarded on Monaghan’s misclassification claim ($335,000) and the maximum
damage award that the evidence at trial could have supported ($176,765). The
difference between these figures is $158,235. We add the $2,606.75 improperly
awarded based on the court’s erroneous grant of summary judgment to Monaghan
on his canvass bonus claim, resulting in a total remittitur of $160,841.75.
7
For the reasons previously explained herein, no figures attributable to those
claims could, consistent with the evidence presented at trial and with the jury’s
damage award on Monaghan’s wrongful termination claim, be included in any
damage award for wrongful misclassification.
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set forth below) that this was legal error because the PAGA applies only to
employee suits brought in a representative capacity.8
California courts have never squarely addressed whether PAGA’s fee-
shifting provision, specifically, may be invoked by a claimant suing only on his
own behalf. Yet courts have time and again reiterated that the PAGA creates only
a representative right of action. See, e.g., Reyes v. Macy’s, Inc., 135 Cal. Rptr.
832, 835–36 (Cal. App. 2011) (holding that a PAGA claim did not fall within the
scope of an arbitration clause requiring arbitration of all “individual” claims
because, as a matter of law, a “plaintiff may not . . . bring the PAGA claim as an
individual claim”); see also Williams v. Superior Court, 188 Cal. Rptr. 3d 83, 87
(Cal. App. 2015) (“[A] PAGA claim is not an individual claim . . . .”); Ortiz v.
Hobby Lobby Stores, Inc., 52 F. Supp. 3d 1070, 1088 (E.D. Cal. 2014) (“[O]nly
representative PAGA actions fulfill the purpose of the statute [referring to the
PAGA].”). Indeed, Monaghan has not cited a single case that permitted a PAGA
8
Because this is a purely legal question, we review de novo the availability
of PAGA’s fee-shifting provision and the district court’s award of attorneys’ fees
on that basis. See Berkla v. Corel Corp., 302 F.3d 909, 917 (9th Cir. 2002).
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claim to be brought in an individual capacity, much less that awarded attorneys’
fees.9
The conclusion that PAGA applies only to representative actions is
consistent with the text of the PAGA:
Any provision of [the California Labor Code] that provides for a civil
penalty to be assessed [by a government agency] . . . may, as an
alternative, be recovered through a civil action brought by an
aggrieved employee on behalf of himself or herself and other current
or former employees . . . .”
Cal. Labor Code § 2699(a) (emphasis added). Similarly, PAGA’s fee-shifting
provision itself states:
[A]n aggrieved employee may recover the civil penalty described in
subdivision (f) in a civil action pursuant to the procedures specified in
Section 2699.3 filed on behalf of himself or herself and other current
or former employees against whom one or more of the alleged
violations was committed. Any employee who prevails in any action
shall be entitled to an award of reasonable attorney’s fees and costs.
Cal. Labor Code § 2699(g) (emphasis added).
To reach a contrary conclusion, the district court reads the reference to “any
action” in the last sentence quoted above out of context to include individual
actions. But read in light of the immediately preceding sentence, as well as the
PAGA as a whole, the reference to “any action” upon which the district court relied
9
Arias v. Superior Court, 209 P.3d 923 (Cal. 2009) (cited by Monaghan)
merely held that representative actions under the PAGA need not satisfy class
action requirements. Id. at 926.
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is most reasonably construed as referring to “any [PAGA] action”—which, by its
nature, must be a representative action.
In sum, we construe California Labor Code § 2699(g) (PAGA’s fee-shifting
provision) as applying only to representative actions. We hold that it was therefore
error to award all the attorneys’ fees Monaghan requested on his wrongful
termination and related statutory violation claims—most of which appear to have
been brought in Monaghan’s individual capacity only.10 This error was
compounded by the district court’s failure to apportion its attorneys’ fees award
amongst Monaghan’s many claims, some of which have been resolved in TISNA’s
favor and thus cannot provide the basis for a fee award to Monaghan.
Accordingly, we vacate and remand the district court’s fee award for
recalculation in light of this court’s opinion. We note that we find no error in the
district court’s award of attorneys’ fees under California Labor Code § 218.5 on
Monaghan’s claim for unpaid wages due to misclassification. Moreover, we
acknowledge that there may well be other valid bases for granting attorneys’ fees
10
Of course, to the extent Monaghan brought claims for recovery of
statutory penalties payable to the State of California (for example, the $7,500 in
statutory penalties recovered for the State), PAGA’s fee-shifting provision would
be available. But, again, any such fee award must be made, if at all, for services
rendered by counsel as to claims in which Monaghan acted in a representative
capacity, and prevailed thereon.
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on some or all of the claims on which Monaghan prevailed. However, we instruct
the district court to consider each claim separately to determine whether there
exists a valid legal basis upon which to award fees.
F. Conclusion
For the reasons set forth herein, we reverse the district court’s grant of
summary judgment to Monaghan on his canvass bonus claim; we vacate the jury’s
damage award on Monaghan’s willful misclassification claim; we reverse the
district court’s denial of TISNA’s Rule 50 motions on the issue of Monaghan’s
entitlement to an accelerator; and we remand for a new trial on the issue of
Monaghan’s entitlement to additional canvass bonus compensation and for
recalculation of damages on Monaghan’s misclassification claim, or, in the
alternative, for a remittitur reducing the total damage award by $160,841.75 to
$1,072,351.60. Finally, we vacate the district court’s attorneys’ fees award and
remand for recalculation of fees consistent with our opinion. We affirm the district
court’s judgments and the jury’s verdict in all other respects.
Each party shall bear its own costs.
AFFIRMED IN PART, REVERSED AND REMANDED IN PART.
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