DocketNumber: Case No. 17-CV-00062-LHK
Citation Numbers: 319 F. Supp. 3d 1180
Judges: Koh
Filed Date: 5/11/2018
Status: Precedential
Modified Date: 7/25/2022
Plaintiff Roderick Magadia ("Plaintiff") brings the instant suit on behalf of himself and others similarly situated against Defendants Wal-Mart Stores, Inc. and Wal-Mart Associates, Inc. (collectively, "Wal-Mart"). Before the Court is Plaintiff's motion for partial summary judgment. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Plaintiff's motion for partial summary judgment.
I. BACKGROUND
A. Factual Background
Wal-Mart is a national retailer with locations throughout the United States. ECF No. 84. Plaintiff worked as a non-exempt employee in Wal-Mart's store in San Jose, California from June 17, 2008 to September 16, 2016. Id.
When one of Wal-Mart's non-exempt California employees works overtime during a given pay period and earns "non-discretionary remuneration in the same pay period," Wal-Mart pays an employee an "additional overtime wage" that appears as "OVERTIME/INCT" on the employee's wage statement. ECF No. 67 ("Mot.") at 19; see ECF No. 67-1, Ex. C, Deposition of Todd Stokes ("Stokes Dep.") at 66-68, 69, 76-77. INCT is an abbreviation for incentive. See Stokes Dep. at 67. This ensures Wal-Mart is in compliance with California Labor Code § 510(a), which requires employers to factor in an employee's non-discretionary remuneration when calculating that employee's overtime pay. See Marin v. Costco Wholesale Corp. ,
Wal-Mart employees like Plaintiff are paid biweekly. ECF No. 67-1, Ex. 1, Declaration of Todd Stokes ("Stokes Decl.") ¶ 9. Wal-Mart provides employees with biweekly wage statements that correspond to the particular pay period.
B. Procedural History
Plaintiff filed this putative class action in the Superior Court for the County of Santa Clara on December 2, 2016. See Compl. Plaintiff's complaint alleges causes of action for (1) violation of California Labor Code §§ 226.7 and 512 ; (2) violation of California Labor Code § 226(a) ; (3) violation of the Private Attorney Generals Act,
On May 31, 2017, this Court "order[ed] the parties to prepare a neutral notice for putative class members to opt-out of having their names and contact information provided to Plaintiff's counsel. A third party administrator shall distribute the notice and accept opt-outs from the putative class at Plaintiff's expense." ECF No. 27, at 1. Then, on June 5, 2017, Plaintiff filed an "Administrative Motion Regarding Belaire-West Opt-Out Notice Procedure" requesting this Court to (1) order "that the putative class members be given 30 days to opt-out of having their contact information provided to Plaintiff's counsel"; and (2) order Wal-Mart to "provide all known email addresses and cell phones to the administrator in connection with the opt-out process and upon the expiration of the opt-out period, that this information be provided to Plaintiff's counsel." ECF No. 31 at 3.
On June 21, 2017, this Court granted Plaintiff's first request and denied Plaintiff's second request. ECF No. 33. Accordingly, the Court ordered Wal-Mart to "provide the third-party administrator the known mailing addresses and last known home telephone numbers of all putative class members as defined by Plaintiff."
On January 9, 2018, the Court granted Plaintiff's motion for class certification. ECF No. 84. The Court certified three classes:
Meal Period Regular Rate Class: All current and former California non-exempt retail store employees of Wal-Mart who received non-discretionary remuneration, including "MYSHARE INCT," and was paid any meal period premium payments in the same period that the non-discretionary remuneration was earned, at any time between December 2, 2012, through the present.
OVERTIME/INCT Wage Statement Class: All current and former California non-exempt employees of Wal-Mart who *1185received "OVERTIME/INCT," at any time between December 2, 2015, through the present.
Final Wage Statement Class : All former non-exempt employees who worked for Wal-Mart in the State of California and whose employment terminated (whether voluntarily or involuntarily) at any time from December 2, 2015 to the present.
On October 30, 2017, Plaintiff moved for partial summary judgment on Plaintiff's claim under California's he Private Attorneys General Act ("PAGA"). ECF No. 67. Plaintiff's motion for partial summary judgment was filed after Plaintiff moved for class certification, but before the Court issued its order granting class certification. On January 16, 2018, Wal-Mart filed its opposition. ECF No. 86 ("Opp."). On February 5, 2018, Plaintiff filed his reply. ECF No. 91 ("Reply").
On February 5, 2018, the Court denied Wal-Mart's motion to stay and struck disputed language from the class notice. ECF No. 92.
On March 12, 2018, the Court ordered Plaintiff to file a class notice update. ECF No. 97. Plaintiff filed the class notice update on March 14, 2018. ECF No. 98. On March 30, 2018, the Court ordered Plaintiff to file a second class notice update. ECF No. 106. On April 2, 2018, Plaintiff filed a second class notice update. ECF No. 107.
II. LEGAL STANDARD
Summary judgment is proper where the pleadings, discovery, and affidavits show that there is "no genuine dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc.,
The party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, discovery and affidavits which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett ,
At the summary judgment stage, the Court must view the evidence in the light most favorable to the nonmoving party: if evidence produced by the moving party conflicts with evidence produced by the nonmoving party, the judge must assume the truth of the evidence set forth by the nonmoving party with respect to that fact. See Leslie v. Grupo ICA ,
III. DISCUSSION
Plaintiff moves for summary judgment on Plaintiff's PAGA claim, and argues that Wal-Mart has violated California Labor Code § 226(a)(6) and § 226(a)(9). Wal-Mart contests the underlying § 226(a)(6) and § 226(a)(9) violations. Wal-Mart also advances the threshold arguments that Plaintiff's summary judgment motion is barred by the one-way intervention rule, that Plaintiff can only claim limited damages under *1186California Labor Code § 226(e), and that Plaintiff failed to administratively exhaust his PAGA claim before filing this action. The Court first addresses Wal-Mart's threshold arguments, and then turns to the alleged § 226(a)(6) and § 226(a)(9) violations that undergird Plaintiff's PAGA claim. The Court finds that Wal-Mart's threshold arguments are unpersuasive, and agrees with Plaintiff's § 226(a)(6) and § 226(a)(9) arguments.
A. Wal-Mart's Threshold Arguments
1. One-Way Intervention Rule
Wal-Mart argues that the Court should refuse to rule on Plaintiff's motion for summary judgment under the one-way intervention rule. This is unpersuasive.
Federal Rule of Civil Procedure 23(c)(2) seeks "to ensure that the plaintiff class receives notice of the action well before the merits of the case are adjudicated." Schwarzschild v. Tse ,
The problem for Wal-Mart is that the one-way intervention rule does not apply here. The Court granted Plaintiff's motion for class certification on January 9, 2018. ECF No. 84. On March 5, 2018, Rust Consulting (acting on Plaintiff's behalf) mailed the first round of the class opt-out notices to 89,750 class members. ECF No. 107 at 3. The notices set an opt-out deadline of April 13, 2018, 45 days from the date of mailing.
There is another independent reason that the one-way intervention rule does not prevent deciding Plaintiff's motion for partial summary judgment. Plaintiff has not moved for summary judgment on his class claims, but rather has moved for summary judgment on his PAGA claim. Mot. at 1 ("Plaintiff Roderick Magadia ('Plaintiff') now seeks a ruling from the Court granting partial summary judgment *1187on Plaintiff's Fourth Cause of Action for Violation of the Private Attorney General's Act"). Unlike class actions where a lead plaintiff represents a class of similarly situated individuals, a plaintiff suing under PAGA seeks civil penalties "as the proxy or agent of [California's] labor law enforcement agencies." Arias v. Superior Court ,
2. California Labor Code § 226(e) Damages
Wal-Mart next contends that Plaintiff can only receive one award of damages under California Labor Code § 226(e) for each wage statement that violates California Labor Code § 226(a), even if the wage statement violates § 226(a) in multiple respects. Wal-Mart's argument is not relevant at this point.
Plaintiff has only moved for summary judgment on Plaintiff's PAGA claim. "PAGA plaintiffs are private attorneys general who, stepping into the shoes of the LWDA, bring claims on behalf of the state agency." Baumann ,
The distinction between a PAGA claim and a traditional damages claim disposes of Wal-Mart's § 226(e) argument. If Plaintiff had moved for summary judgment based on Plaintiff's claim for damages under § 226(a), Plaintiff would need to satisfy § 226(e)(1)'s requirement that employees seeking damages suffer an "injury as a result of a knowing and intentional failure by an employer to comply with ... [ § 226(a) ]."
3. Administrative Exhaustion
Wal-Mart's final threshold argument is that Plaintiff's PAGA claim is barred because Plaintiff did not fully exhaust his administrative remedies before initiating this action. The Court agrees that Plaintiff did not exhaust his administrative remedies before filing suit, but finds this does not bar Plaintiff's PAGA claim.
Before a plaintiff can pursue a PAGA claim the plaintiff must exhaust the administrative remedies specified in California Labor Code § 2699.3. In particular, § 2699.3 requires that prospective PAGA plaintiffs "give written notice by online filing with the Labor and Workforce Development Agency ["LWDA"] and by certified mail to the employer of the specific provisions of this code alleged to have been violated, including the facts and theories to support the alleged violation."
Plaintiff provided notice to Wal-Mart and the LWDA on October 4, 2016. ECF No. 67-1, Declaration of Larry W. Lee ("Lee Decl.") ¶ 2. LWDA has never provided Plaintiff with notice that the agency intends to investigate. Reply at 5. Plaintiff was therefore permitted to file this action 65 days after providing notice on October 4, 2016. Sixty-five days from October 4, 2016 is December 8, 2016. Plaintiff filed the instant lawsuit on December 2, 2016. ECF No. 1 at 1 (copy of state court complaint filed on December 2, 2016). Plaintiff's suit was therefore six days too early. Reply at 4.
Plaintiff does not dispute that Plaintiff's suit was premature. Instead, Plaintiff argues that the Court should excuse the premature filing because the LWDA has not acted on Plaintiff's notice in the 17 months since Plaintiff originally provided it. In other words, Plaintiff argues the Court should excuse his failure to exhaust his administrative remedies before bringing this suit because administrative exhaustion occurred after the suit began.
The Court agrees and adopts the approach used in Bradescu v. Hillstone Restaurant Group, Inc. ,
*1189Moreover, Bradescu found it was unnecessary to require plaintiff to file an amended complaint at that late stage of the proceedings because "at this point in time, well more than [65] ... days have elapsed since Plaintiff issued her notice pursuant to section 2699.3(a)(1)... and there is no indication in the record that the LWDA has decided to step forward in any manner in connection with Plaintiff's claims."
The Court will do the same here. It has now been well over a year since Plaintiff submitted notice to the LWDA, and no action has been forthcoming. Thus, "the Court sees little reason to punish [Plaintiff] for acting too quickly once [he] had taken the requisite step of providing notice under section 2699.3(a)(1)." Id. ; see Donnelly v. Sky Chefs, Inc. ,
In sum, the Court finds that Plaintiff's failure to complete the 65 day exhaustion waiting period before filing Plaintiff's PAGA claim does not bar adjudicating Plaintiff's PAGA claim because has exhaustion subsequently occurred.
B. Plaintiff's Substantive Claims
As noted above, PAGA plaintiffs stand in the shoes of the LWDA and pursue penalties for defendants' violations of the California Labor Code. Plaintiff's motion for partial summary judgment on Plaintiff's PAGA claim therefore relies on two alleged violations of the California Labor Code. First, Plaintiff argues that Wal-Mart violated § 226(a)(9) by failing to include employees' overtime hourly rates and hours worked in wage statements. Second, Plaintiff argues that Wal-Mart violated § 226(a)(6) by failing to include the start and end dates of the pay period in employees' Statements of Final Pay. The Court agrees with Plaintiff on both counts.
1. California Labor Code § 226(a)(9)
California Labor Code § 226(a) provides that "[a]n employer ... at the time of each payment of wages, shall furnish to his or her employee ... an accurate itemized statement in writing" that includes "(9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee...."
Wal-Mart employees who receive a MyShare incentive award at the end of a quarter and also worked overtime during that quarter are given additional overtime pay based on having received the incentive. Stokes Dep. at 69-70 (noting the MyShare incentive was "added into the total wages that the associate received over the course of a quarter, and it was calculated out to overtime, so they were the beneficiary of the right amount of overtime."). The additional overtime pay appears retroactively on the employee's wage statement as "OVERTIME/INCT".
*1190Stokes Dep. at 67-68, 71; ECF No. 67-1 at 35 (one of Plaintiff's wage statements). The amount of additional overtime pay is determined by a formula that accounts for the number of hours the employee worked and the employee's overtime rate. Stokes Dep. at 67-68, 69-70. The OVERTIME/INCT item appears on the employee's wage statement as a lump sum and does not specify how many hours the employee worked or the employee's hourly rate. ECF No. 67-1 at 35.
A wage statement complies with § 226(a) if it includes the information § 226(a) requires-here, rates and hours pursuant to § 226(a)(9). Courts also hold that a wage statement does not violate § 226(a) if "a plaintiff employee can ascertain the required information by performing simple math, using figures on the face of the wage statement." Hernandez v. BCI Coca-Cola Bottling Co. , 554 Fed. App'x 661, 662 (9th Cir. 2014).
Plaintiff's wage statements do not include the overtime rate that § 226(a)(9) requires. Plaintiff's wage statements include an "OVERTIME EARN" item that lists rate of pay, hours worked, and earnings. ECF No. 67-1 at 35. On the other hand, Plaintiff's wage statements also include an OVERTIME/INCT item that lists earnings, but does not include a rate of pay or hours worked.
Nor do the wage statements allow employees to determine the overtime rate through application of simple math. Absent any indication as to what OVERTIME/INCT is, employees have no idea how it relates to regular overtime pay and how to use the OVERTIME/INCT sum to calculate the new overtime rate. Underscoring the point, Todd Stokes, Wal-Mart's Regional Human Resources Director and Rule 30(b)(6) witness, testified that the formula used to determine the OVERTIME/INCT sum did not appear on wage statements because it was "too complex." Stokes Dep. at 69, 77. Indeed, there is no guarantee that an employee would think to apply a calculation at all. Nor can Wal-Mart *1191fall back on the usual rule that overtime is simply 1.5 times base pay-that calculation is no longer simple math when the wage statement lists two different overtime payments and only provides a rate for one of them. McKenzie ,
Wal-Mart contends that this is not dispositive because § 226(a)(9) does not apply to the OVERTIME/INCT item. Specifically, Wal-Mart argues that because a MyShare award is not based on an hourly rate or hours worked, the OVERTIME/INCT that derives from the MyShare award is not based on an hourly rate or hours worked. It follows that the OVERTIME/INCT item is not subject to § 226(a)(9) because the statute requires wage statements to include "hourly rates" and "hours worked."
Wal-Mart's premise is flawed. Wal-Mart's designated Rule 30(b)(6) witness admitted that OVERTIME/INCT is overtime pay. Indeed, the reason the OVERTIME/INCT item exists is to account for the increase in an employee's overtime pay that stems from an employee's receipt of an incentive award. Stokes Dep. at 67-68 ("If an associate received an incentive at the end of the quarter and worked overtime during that quarter, that incentive is, then, calculated into their overtime rate and given to them on that line item, OVERTIME/INCENTIVE."); id. at 69-70 ("[T]he fact that ... [an employee] received a MyShare Incentive, it was then added into the total wages that the associate received over the course of a quarter, and it was calculated out to overtime, so they were the beneficiary of the right amount of overtime."). Wal-Mart cites no authority holding that overtime ceases to be based on rates and hours simply because the overtime derives from a nondiscretionary incentive award.
Moreover, the cases Wal-Mart cites are readily distinguishable. Apodaca v. Costco Wholesale Corp. , 675 Fed. App'x 663 (9th Cir. 2017) ; Morgan v. United Retail Inc. ,
Morgan is no better, as it found in a footnote that meal periods and bonus payments were not "hours worked" but did not suggest that overtime pay was not hours worked. Morgan ,
Wal-Mart's final argument is that it has not violated § 226(a)(9) because it "substantially complied" with the statute. It is unclear from Wal-Mart's brief how distinct this argument is from Wal-Mart's theory that it complied with § 226(a)(9) because employees can determine the hourly rate through simple math. Yet in any case, Wal-Mart's argument on this issue fails because the two cases on which Wal-Mart relies both found that the employees there could calculate the information absent from the wage statement via basic arithmetic, which is not the case here. Hernandez v. BCI Coca-Cola Bottling Co. ,
In sum, the Court finds that Wal-Mart's wage statements violate § 226(a)(9) because they do not list all applicable hourly rates and an employee would not be able to determine those rates through the application of simple math.
2. California Labor Code § 226(a)(6)
Plaintiff also claims that Wal-Mart has violated California Labor Code § 226(a)'s requirement that wage statements list "(6) the inclusive dates of the period for which the employee is paid".
Wal-Mart pays employees on a biweekly basis. Stokes Decl. ¶ 9. In line with this practice, Wal-Mart provides employees with biweekly wage statements corresponding to the pay period.
Wal-Mart does not dispute that the Statement of Final Pay omits the start and end dates for the pay period. Wal-Mart's position instead is that a terminated employee's subsequent receipt of a final wage statement-which contains the pay period dates-cures the dates' absence from the Statement of Final Pay.
This argument is unpersuasive. Wal-Mart points to Derum v. Saks & Co. ,
However, Derum is inapplicable here because both the compliant and noncompliant wage documents in that case were provided when the employee received their wages. By contrast, Wal-Mart here provides the final on-cycle pay statement up to two weeks after the employee receives their check and Statement of Final Pay. That matters because Derum 's finding that a compliant wage statement could cure a noncompliant one was premised on the compliant wage statement being provided at the same time that the employee's wages were paid. See
On the other hand, Plaintiff's leading case lends strong support to Plaintiff's claim that the Statement of Final Pay violated § 226(a)(6). McKenzie ,
In sum, the Court finds that the Statement of Final pay violates § 226(a)(6) because it does not include the pay period start and end dates.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff's motion for summary judgment on Plaintiff's PAGA claim based Wal-Mart's wage statements' violation of California Labor Code §§ 226(a)(6) and 226(a)(9).
IT IS SO ORDERED.
In PAGA actions where the underlying statute does not specify a civil penalty, courts award the catchall penalties set forth in California Labor Code § 2699(f). See McKenzie v. Fed. Exp. Corp. ,
At the time Bradescu was decided, the mandatory waiting period in California Labor Code § 2699.3(a)(1) was 33 days instead of the current 65 days.
These holdings are premised on the idea that a plaintiff has not suffered an injury under § 226(e) if the plaintiff has simply been forced to do basic math. See Reinhardt v. Gemini Motor Transp. ,