Dev Oman v. Delta Air Lines, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DEV ANAND OMAN; TODD No. 17-15124
EICHMANN; MICHAEL LEHR;
ALBERT FLORES, D.C. No.
individually, on behalf of 3:15-cv-00131-WHO
others similarly situated, and
on behalf of the general
public, ORDER CERTIFYING
Plaintiffs-Appellants, QUESTIONS TO THE
SUPREME COURT OF
v. CALIFORNIA
DELTA AIR LINES, INC.,
Defendant-Appellee.
Filed May 9, 2018
Before: Paul J. Watford and Michelle T. Friedland, Circuit
Judges, and Jed S. Rakoff,* Senior District Judge.
*
The Honorable Jed S. Rakoff, Senior United States District Judge
for the Southern District of New York, sitting by designation.
2 OMAN V. DELTA AIR LINES
SUMMARY**
Certified Questions to California Supreme Court
The panel certified the following questions of state law to
the Supreme Court of California:
(1) Do California Labor Code §§ 204 and 226
apply to wage payments and wage statements
provided by an out-of-state employer to an
employee who, in the relevant pay period,
works in California only episodically and for
less than a day at a time?
(2) Does California minimum wage law
apply to all work performed in California for
an out-of-state employer by an employee who
works in California only episodically and for
less than a day at a time? See Cal. Labor
Code §§ 1182.12, 1194; 8 C.C.R. § 11090(4).
(3) Does the Armenta/Gonzalez bar on
averaging wages apply to a pay formula that
generally awards credit for all hours on duty,
but which, in certain situations resulting in
higher pay, does not award credit for all hours
on duty? See Gonzalez v. Downtown LA
Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct.
App. 2013); Armenta v. Osmose, Inc., 37 Cal.
Rptr. 3d 460, 468 (Ct. App. 2005)?
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
OMAN V. DELTA AIR LINES 3
ORDER
We respectfully ask the Supreme Court of California to
exercise its discretion to decide the certified questions set
forth in section II of this order.
I. Administrative Information
We provide the following information in accordance with
California Rule of Court 8.548(b)(1). The caption of this case
is:
No. 17-15124
DEV ANAND OMAN; TODD EICHMANN;
MICHAEL LEHR; ALBERT FLORES,
individually, on behalf of others similarly
situated, and on behalf of the general public,
Plaintiffs-Appellants,
v.
DELTA AIR LINES, INC., Defendant-
Appellee.
The names and addresses of counsel for the parties are:
For Plaintiffs-Appellants Dev Anand Oman,
Todd Eichmann, Michael Lehr, and Albert
Flores: Daniel S. Brome and Matthew C.
Helland, Nichols Kaster, LLP,
235 Montgomery Street, Suite 810, San
Francisco, CA 94104.
4 OMAN V. DELTA AIR LINES
For Defendant-Appellee Delta Air Lines, Inc.:
Andrew P. Frederick, Robert Jon Hendricks,
and Thomas M. Peterson, Morgan Lewis &
Bockius LLP, One Market Street, Spear Street
Tower, San Francisco, CA 94105.
We designate Dev Anand Oman, Todd Eichmann,
Michael Lehr, and Albert Flores as the petitioners if our
request for certification is granted. They are the appellants
before our court.
II. Certified Questions
We certify to the Supreme Court of California the
following three questions of state law:
(1) Do California Labor Code §§ 204 and 226
apply to wage payments and wage statements
provided by an out-of-state employer to an
employee who, in the relevant pay period,
works in California only episodically and for
less than a day at a time?
(2) Does California minimum wage law
apply to all work performed in California for
an out-of-state employer by an employee who
works in California only episodically and for
less than a day at a time? See Cal. Labor
Code §§ 1182.12, 1194; 8 C.C.R. § 11090(4).
(3) Does the Armenta/Gonzalez bar on
averaging wages apply to a pay formula that
generally awards credit for all hours on duty,
but which, in certain situations resulting in
OMAN V. DELTA AIR LINES 5
higher pay, does not award credit for all hours
on duty? See Gonzalez v. Downtown LA
Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct.
App. 2013); Armenta v. Osmose, Inc., 37 Cal.
Rptr. 3d 460, 468 (Ct. App. 2005).
We certify these questions pursuant to California Rule of
Court 8.548. The answers to these questions will determine
the outcome of the appeal currently pending in our court. We
will accept and follow the decision of the California Supreme
Court on these questions. Our phrasing of the questions
should not restrict the California Supreme Court’s
consideration of the issues involved.
III. Statement of Facts
In this case, flight attendants have sued their employer,
Delta Air Lines, Inc. (Delta), for alleged violations of
California labor law. Delta is a major passenger and cargo
airline that operates throughout the United States and the
world. It is a Delaware corporation, headquartered in Atlanta,
Georgia. From 2012 to 2015, approximately 7% of its almost
22,000 United States-based flight attendants were based out
of California airports.
The plaintiffs are four Delta flight attendants, only two of
whom reside in California. Dev Anand Oman was a flight
attendant for Delta from 2011 to 2014, during which time he
lived in New York and was based out of New York’s John F.
Kennedy Airport. Todd Eichmann and Michael Lehr began
working for Delta in 2009, when Delta acquired their
previous employer. Eichmann has lived in California and
been based out of California’s Los Angeles International
Airport (LAX) since 2014. Lehr has lived in Nevada and
6 OMAN V. DELTA AIR LINES
been based out of California’s San Francisco International
Airport throughout his time with Delta. Albert Flores has
been a flight attendant for Delta since around 2008. He has
lived in California and been based out of LAX since 2010.
The plaintiffs proposed a class of Delta flight attendants “who
have performed work” in California, but they never sought to
certify it.
During a sample of the time period in question, the
plaintiffs spent at most 14% of their “flight-related working
hours” in California. From January 2014 to June 2016, Oman
worked 3% of his time in California; Eichmann, 9%; Lehr,
14%; and Flores, 11%. These percentages are not in dispute.
The plaintiffs were paid according to a complicated
credit-based pay formula that is explained in the Delta Work
Rules. (Because Delta flight attendants are not unionized, the
Work Rules, rather than a collective bargaining agreement,
govern their pay.) The pay formula calculates a flight
attendant’s pay by “rotation,” which is a set of flights that can
include layovers. The pay formula incorporates four different
credit calculations. The credit calculations award credits
based on different criteria. For example, the Flight Pay
calculation awards one credit per hour flown or scheduled to
be flown, while the Duty Period Credit calculation awards
one credit per two hours on duty. The pay formula compares
the result of the four credit calculations to determine which
yields the most credits per rotation. Delta then multiplies the
highest number of credits by the flight attendant’s hourly
wage rate (plus additions not relevant here) to determine the
flight attendant’s pay.
The pay formula at times fails to award credit for all
hours on duty, but it never results in an hourly rate that is
OMAN V. DELTA AIR LINES 7
below California’s minimum wage. The pay formula can fail
to award credit for all hours on duty because the Flight Pay
calculation provides credit only for hours flown or scheduled
to be flown, not for hours preparing the airplane for
passengers, for example. Still, a flight attendant is always
paid an above-minimum-wage hourly rate because the Duty
Period Credit calculation, in effect, guarantees a flight
attendant half her hourly wage rate per hour on duty, and
even the lowest flight attendant wage rate is more than double
California’s minimum wage. The plaintiffs cannot identify
a rotation in which they were paid an average hourly wage
below California’s minimum wage.
The plaintiffs sued Delta in federal court, alleging that the
Flight Pay calculation violates California minimum wage law
by failing to pay the minimum wage “per hour for all hours
worked.” 8 C.C.R. § 11090(4)(A); see Armenta, 37 Cal. Rptr.
3d at 468. They argue that the Flight Pay formula
impermissibly averages a flight attendant’s wages for paid,
productive time and unpaid, unproductive time. See
Gonzalez, 155 Cal. Rptr. 3d at 20. They also contend that
Delta failed to pay their wages on time, in violation of
California Labor Code § 204, and failed to issue them wage
statements that complied with California Labor Code § 226.
The plaintiffs demand damages and unpaid wages under
California Labor Code §§ 1194 and 1194.2; damages and
statutory penalties under California Labor Code §§ 203
and 226; civil penalties under the Private Attorneys General
Act (PAGA), Cal. Labor Code § 2699; and restitution and
attorney’s fees under California Business & Professions Code
§ 17200.
The plaintiffs seek to apply California law to their claims
based solely on the location of their work. They seek to
8 OMAN V. DELTA AIR LINES
apply California law to work that lasted only for hours and
minutes, not days, in California. They argue that California
Labor Code §§ 204 and 226 apply to any pay period in which
they performed work in California and that California
minimum wage law applies to any work performed in
California, however short the duration.
The district court granted summary judgment to Delta and
denied it to the plaintiffs in two orders. First, the district
court held that Delta complied with California minimum
wage law. Oman v. Delta Air Lines, Inc., 153 F. Supp. 3d
1094, 1095 (N.D. Cal. 2015). Second, the district court
granted summary judgment on the § 204, § 226, and other
remaining claims. Oman v. Delta Air Lines, Inc., 230 F.
Supp. 3d 986, 994 (N.D. Cal. 2017). It held that California
labor law does not apply to the four plaintiffs because they
worked only a de minimis amount of time in California. Id.
at 993–94. The plaintiffs appealed both orders.
We heard oral argument on March 16, 2018. The Air
Transport Association of America, Inc., filed an amicus brief
in support of Delta. The California Employment Lawyers
Association filed an amicus brief in support of the plaintiffs.
On the same day that we heard oral argument in this case,
we also heard oral argument in two related cases, Ward v.
United Airlines, Inc., No. 16-16415, and Vidrio v. United
Airlines, Inc., No. 17-55471. Those cases raise questions
about the extraterritoriality of California Labor Code § 226
that are similar to the questions raised here. We are also
certifying the state-law questions in Ward and Vidrio to the
California Supreme Court, in a separate certification order.
OMAN V. DELTA AIR LINES 9
IV. Explanation of Certification Request
No controlling California precedent answers the certified
questions on the proper territorial reach of the California
Labor Code provisions at issue, or on the application of
California minimum wage law to a credit-based pay formula.
Because the first two certified questions both concern the
extraterritorial application of the Labor Code, we explain our
certification of those two questions together in section IV.A.
We explain our certification of the third question, which
arises out of Armenta and Gonzalez, in section IV.B. The
answers to these certified questions matter greatly to the
many out-of-state employers whose employees work in
California for only brief periods of time.
A.
There is no controlling California precedent on the
question whether California labor law applies to an employee
who works for an out-of-state employer and does not work
principally, or even for days at a time, in California. The
three principles that generally guide our evaluation of the
propriety of a potentially extraterritorial application of
California law, and the California Supreme Court’s
application of those principles, do not provide sufficient
guidance here.
The first principle is that “[o]rdinarily the statutes of a
state have no force beyond its boundaries.” N. Alaska Salmon
Co. v. Pillsbury, 162 P. 93, 94 (Cal. 1916). To evaluate
whether a claim seeks to apply the force of a state statute
beyond the state’s boundaries, courts consider where the
conduct that “creates liability” under the statute occurs.
Sullivan v. Oracle Corp., 254 P.3d 237, 248 (Cal. 2011); see
10 OMAN V. DELTA AIR LINES
also RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090,
2101 (2016) (where the “conduct relevant to the statute’s
focus occur[s]”). If the conduct that “creates liability” occurs
in California, California law properly governs that conduct.
Sullivan, 254 P.3d at 248; see also Diamond Multimedia Sys.,
Inc. v. Superior Court, 968 P.2d 539, 554 (Cal. 1999). By
contrast, if the liability-creating conduct occurs outside of
California, California law generally should not govern that
conduct (unless the Legislature explicitly indicates otherwise,
which it did not in the Labor Code). See Sullivan, 254 P.3d
at 248.
The second principle is that the proper reach of Labor
Code provisions can differ because the provisions regulate
different conduct and implicate different state interests. See
id. at 243–44. For example, because “California’s interest in
the content of an out-of-state business’s pay stubs” may be
weaker than its interest in the payment of overtime wages,
wage statement provisions may apply more narrowly than
overtime provisions do. See id. at 243.
The third principle is that courts must balance
California’s interest in applying its law with considerations of
“interstate comity,” in order to avoid unnecessary conflicts of
state law. See id. at 242–43. For example, courts should
consider whether the proposed use of California law would
displace another state’s law or would protect an employee
who is otherwise not protected by any state law. See id. at
243 (citing Bostain v. Food Express, Inc., 153 P.3d 846
(Wash. 2007)).
The California Supreme Court has applied these
principles twice to the Labor Code. Tidewater held that wage
orders apply to an employee who “resides in California,
OMAN V. DELTA AIR LINES 11
receives pay in California, and works exclusively, or
principally, in California.” Tidewater Marine W., Inc. v.
Bradshaw, 927 P.2d 296, 309 (Cal. 1996). Sullivan held that
overtime provisions apply to day-long or week-long work
performed in California for a California employer by an out-
of-state resident. 254 P.3d at 243, 247.
But with regard to the required strength of the California
connection, Tidewater did not address whether California law
applies to California residents “who work primarily outside
California[],” as the California-resident plaintiffs in this case
do. 927 P.2d at 309. Sullivan did not resolve whether
California law applies to nonresident employees who work
less than a full day in California, as the nonresident plaintiffs
do. See 254 P.3d at 242–43. Neither case discussed how to
balance California’s interest in applying its law to its
residents with California’s interest in avoiding interstate
conflict by not applying its law to an out-of-state employer,
such as Delta.
With regard to the different Labor Code provisions,
Sullivan confined its holding to overtime provisions, leaving
uncertain whether it applies to similar minimum wage claims.
Neither Tidewater nor Sullivan considered a statute that
focused on an employee’s receipt of pay and information
about her pay, as § 204 and § 226 do. See Cal. Labor Code
§§ 204(a), 226(e)(2); see also Lopez v. Friant & Assocs.,
LLC, 224 Cal. Rptr. 3d 1, 6 (Ct. App. 2017); Morgan v.
United Retail, Inc., 113 Cal. Rptr. 3d 10, 19 (Ct. App. 2010).
If that focus makes the relevant location for a § 204 or § 226
claim the place where the employee receives her pay, does an
employee’s California residence and receipt of pay in
California strengthen California’s interest in the content of an
out-of-state employer’s wage statement? Cf. Sullivan,
12 OMAN V. DELTA AIR LINES
254 P.3d at 243. Does an employee’s out-of-state residence
preclude application of California wage-timing or wage-
statement law to her?
In short, Tidewater and Sullivan, even informed by the
principles of extraterritoriality, do not allow us to confidently
resolve the plaintiffs’ California law claims. The claims
implicate the proper reach of California labor law, which in
turn implicates the wage-and-hour protections given to
traveling workers. For this reason, we certify these important
questions.
B.
There is also no directly controlling California precedent
that determines whether Delta’s credit-based pay formula
implicates California’s bar on averaging wages. The
California Court of Appeal has held that the “FLSA model of
averaging all hours worked in any work week to compute an
employer’s minimum wage obligation under California law
is inappropriate.” Armenta, 37 Cal. Rptr. 3d at 468 (internal
quotation marks omitted). Instead, the “minimum wage
standard applies to each hour worked.” Id.; see Gonzalez,
155 Cal. Rptr. 3d at 28. The plaintiffs argue that the Flight
Pay calculation violates this rule because, as they correctly
note, the calculation does not award credits for “each hour
worked.” But the plaintiffs’ proposed application raises two
unresolved issues regarding the proper interpretation of when
the bar applies (assuming that it applies at all).
First, Gonzalez stated that the bar applies “whenever an
employer and employee have agreed that certain work will be
compensated at a rate that exceeds the minimum wage and
other work time will be compensated at a lower rate.”
OMAN V. DELTA AIR LINES 13
Gonzalez, 155 Cal. Rptr. 3d at 29 (emphasis added). Both
Armenta and Gonzalez premised their holdings in part on
California Labor Code §§ 221, 222, and 223, which articulate
the principle that “all hours must be paid at the statutory or
agreed rate and no part of this rate may be used as a credit
against a minimum wage obligation.” Armenta, 37 Cal. Rptr.
3d at 467–68 (emphasis added); see Gonzalez, 155 Cal. Rptr.
3d at 28. The references to a pay agreement leave unresolved
how directly that agreement must link certain work to certain
pay to implicate the Armenta/Gonzalez bar. Does it matter
that the Delta Work Rules state that Delta awards credits,
rather than hourly pay, for certain work? Does it matter that
the Work Rules award credits not only for the exact hours
flown, but also for the hours scheduled to be flown, thus
somewhat severing the link between certain work and certain
pay?
Second, the Armenta/Gonzalez bar applies when
averaging wages “effectively reduces [an employee’s]
contractual hourly rate” and “results in underpayment of
employee wages.” Armenta, 37 Cal. Rptr. 3d at 467–68;
Gonzalez, 155 Cal. Rptr. 3d at 28. In this case, the
challenged Flight Pay calculation operates only to increase a
flight attendant’s hourly wage above the guaranteed
minimum rate promised under the Duty Period Credit
calculation. Does the bar apply to a pay system that
effectively increases an employee’s hourly rate?
Because existing California precedent does not establish
whether the Armenta/Gonzalez bar properly applies here, we
certify the question. Although the question is somewhat fact-
intensive, it implicates California’s strong interest in
enforcing its minimum wage law.
14 OMAN V. DELTA AIR LINES
V. Accompanying Materials
The clerk of this court is hereby directed to file in the
Supreme Court of California, under official seal of the United
States Court of Appeals for the Ninth Circuit, copies of all
relevant briefs and excerpts of the record, and an original and
ten copies of this order and request for certification, along
with a certification of service on the parties, pursuant to
California Rule of Court 8.548(c), (d).
This case is withdrawn from submission. Further
proceedings before us are stayed pending final action by the
Supreme Court of California. The Clerk is directed to
administratively close this docket, pending further order. The
parties shall notify the clerk of this court within seven days
after the Supreme Court of California accepts or rejects
certification, and again within seven days if that court accepts
certification and subsequently renders an opinion. The panel
retains jurisdiction over further proceedings.
IT IS SO ORDERED.