Bao Yi Yang v. Shanghai Gourmet, LLC

FILED
NOT FOR PUBLICATION MAR 15 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
BAO YI YANG; WEI WANG; LIANG- No. 10-17830
XIAN FU,
DC No. CV 3:07-04482 JL
Plaintiffs - Appellants,
v. MEMORANDUM *
SHANGHAI GOURMET, LLC, DBA
Shanghai Gourmet; XU LIANG SHEN;
BO JUAN LIU; DOES 1-10,
Defendants - Appellees.
Appeal from the United States District Court
for the Northern District of California
James Larson, Magistrate Judge, Presiding
Argued and Submitted February 16, 2012
San Francisco, California
Before: TASHIMA and SILVERMAN, Circuit Judges, and ADELMAN,
District Judge.**
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable Lynn S. Adelman, United States District Judge for the
Eastern District of Wisconsin, sitting by designation.
Plaintiffs Bao Yi Yang, Wei Wang, and Liang-Xian Fu, former employees
of Defendants Xu Liang Shen and Shanghai Gourmet, appeal from the district
court’s judgment in favor of Defendants after a bench trial. Plaintiffs contend that
the district court: (1) misapplied federal and California wage and hour standards
for determining Wang’s and Yang’s regular rates of pay; (2) erred in determining
the number of hours Wang and Yang worked each week; (3) erred in holding that
Plaintiffs were not entitled to meal period premiums; and (4) erroneously failed to
make any findings of fact regarding Plaintiff Fu’s wages prior to August 2004. We
have jurisdiction under 28 U.S.C. § 1291. We affirm in part, reverse in part, and
remand.
The selection and application of the correct legal standard for claims of
unpaid overtime under the Fair Labor Standards Act (“FLSA”) is reviewable de
novo. Brock v. Seto, 790 F.2d 1446, 1447 (9th Cir. 1986). We also review a
district court’s determination of state law de novo and must apply California law as
we believe the California Supreme Court would apply it. Rabkin v. Or. Health
Scis. Univ., 350 F.3d 967, 970 (9th Cir. 2003); Gravquick A/S v. Trimble
Navigation Int’l, Ltd., 323 F.3d 1219, 1222 (9th Cir. 2003). We review findings of
fact for clear error. Brennan v. Elmer’s Disposal Serv., Inc., 510 F.2d 84, 88 (9th
Cir. 1975).
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1. Under the FLSA, employees who work more than forty hours a week
are entitled to overtime compensation at one and one-half times their regular rate
of pay. 29 U.S.C. § 207(a)(1). Absent explicit proof of a mutually agreed upon
rate of hourly pay, the regular rate actually paid to a salaried employee is obtained
by dividing the employee’s weekly wage by the number of hours worked each
week. Brennan v. Valley Towing Co., 515 F.2d 100, 105-06 (9th Cir. 1975); see
also Marshall v. Chala Enters., Inc., 645 F.2d 799, 801 (9th Cir. 1981). The
district court found that Wang and Yang expressly agreed to a monthly minimum
after-tax salary, but not to hourly rates of pay. The hourly rates listed on Plaintiffs’
pay stubs are insufficient to show their explicit agreement to be paid at those rates.
Elmer’s Disposal Serv., 510 F.2d at 87-88.
Under the FLSA, then, Wang’s and Yang’s regular rates of pay should have
been determined by dividing their weekly salaries, including the value of the room
and board provided to them, by the total number of hours that they worked each
week. On remand, the district court should reassess the FLSA overtime due to
Wang and Yang on this basis. See Hodgson v. Baker, 544 F.2d 429, 433 (9th Cir.
1976).
2. California law likewise requires that any work in excess of forty hours
in a workweek be compensated at one and one-half times the employee’s regular
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rate of pay. Cal. Lab. Code § 510(a). California Labor Code § 515(d) provides
that, for a nonexempt full-time salaried employee, the regular hourly rate is one-
fortieth of the employee’s weekly salary. “Absent an explicit, mutual wage
agreement, a fixed salary does not serve to compensate an employee for the
number of hours worked under statutory overtime requirements.” Hernandez v.
Mendoza, 245 Cal. Rptr. 36, 38 (Ct. App. 1988) (emphasis in original); see also
Ghory v. Al-Lahham, 257 Cal. Rptr. 924, 926 (Ct. App. 1989) (explaining that such
an agreement must specify the hourly rate of compensation and must be made
before the work is performed).
Because Yang and Wang never explicitly agreed to an hourly wage before
their work was performed, the district court erred when it assumed the hourly rates
listed on their pay stubs were their regular rates under California law. On remand,
the district court should divide Yang’s and Wang’s weekly salaries by forty hours
in order to calculate their regular rates under California law, and reassess their
unpaid overtime on the basis of these hourly rates.
3. Under both federal and California law, where an employer’s records
of the hours an employee worked are inaccurate, the employee carries his burden
“if he proves that he has in fact performed work for which he was improperly
compensated and if he produces sufficient evidence to show the amount and extent
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of that work as a matter of just and reasonable inference.” Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 687 (1946) (partially superseded by statute on
other grounds, as described in IBP, Inc. v. Alvarez, 546 U.S. 21, 26 (2005));
Hernandez, 245 Cal. Rptr. at 39-40. The burden then shifts to the employer to
come forward with evidence that either shows the precise amount of work
performed or negates the reasonableness of the inferences to be drawn from the
employee’s evidence. Anderson, 328 U.S. at 687-88.
The district court’s finding that Wang and Yang worked eight hours a day,
six days a week was clearly erroneous, because it was based on pay stub records
that were obviously inaccurate. It is contradicted by the district court’s findings
about the daily schedule worked by the two employees, according to which Yang
worked seven and a half hours a day and Wang worked between seven and a half
and nine and a half hours a day. Accordingly, it is impossible to conclude that
both Yang and Wang worked exactly eight hours a day, every day, as their pay
stubs indicated.
Given the inaccuracy of Defendants’ timekeeping records, the district court
failed properly to apply the Anderson burden-shifting analysis. Because it is
undisputed that Yang and Wang worked over forty hours a week, Yang and Wang
have made a sufficient showing that Defendants did not properly pay them for their
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overtime work under both the FLSA and California law. On remand, the district
court should explicitly apply Anderson in weighing the evidence to determine how
many hours Yang and Wang worked each week.
4. California Labor Code § 512(a) states that an employer must provide a
meal period not less than thirty minutes for employees working more than five
hours in one shift. Six recent decisions of the California Courts of Appeal, all
depublished pending hearing by the California Supreme Court, have concluded
that, in order to satisfy the requirements of § 512(a), employers are required only
to supply a meal break, not to ensure employees take that break. Santos v. VITAS
Healthcare Corp. of Cal., No. B222645, 2011 WL 2803370, at *9 (Cal. Ct. App.
Jul. 14, 2011); In re Lamps Plus Overtime Cases, 125 Cal. Rptr. 3d 590, 602-03
(Ct. App. 2011); Tien v. Tenet Healthcare Corp., 121 Cal. Rptr. 3d 773, 783-84
(Ct. App. 2011); Hernandez v. Chipotle Mexican Grill, Inc., 118 Cal. Rptr. 3d 110,
118 (Ct. App. 2010); Brinkley v. Pub. Storage, Inc., 84 Cal. Rptr. 3d 873, 881-82
(Ct. App. 2008); Brinker Rest. Corp. v. Superior Court, 80 Cal. Rptr. 3d 781, 802-
08 (Ct. App. 2008). We may consider such depublished California decisions when
construing California law, even though those decisions have no precedential value.
Emp’rs Ins. of Wausau v. Granite State Ins. Co., 330 F.3d 1214, 1220 n.8 (9th Cir.
2003).
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In the absence of any other indicia of California law, we find the reasoning
in these six cases persuasive. In interpreting a California statute, the court must be
“mindful that words are to be given their plain and commonsense meaning.”
Murphy v. Kenneth Cole Prods., Inc., 155 P.3d 284, 289 (Cal. 2007). Consistent
with the ordinary meaning of the term “provide,” § 512’s requirement that an
employer “provide” a meal period requires only that employers “supply or make
available” such a meal period. See Brinkley, 84 Cal. Rptr. 3d at 881. We therefore
affirm the district court’s interpretation of California’s meal period requirement.
5. The statute of limitations for claims under the California Unfair
Competition Law (“UCL”) is four years. See Cal. Bus. & Prof. Code § 17208.
Consequently, Fu was not barred from bringing UCL claims based on his wages
from August 2003. Given that evidence was presented at trial about Fu’s wages
prior to August 2004, it was error for the district court to fail to make any findings
regarding Fu’s wages for that period because it prevented the court’s consideration
of whether Fu had any entitlement to unpaid overtime under the UCL between
August 2003 and August 2004. On remand, the district court should reconsider the
evidence presented at trial and make appropriate findings of Fu’s compensation
during the relevant time period.
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Plaintiffs-Appellants shall recover their costs on appeal from Defendants-
Appellees.
AFFIRMED in part, REVERSED in part, and REMANDED.
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