Opinion
B317119
06-17-2022
Dave MEZA, Plaintiff and Appellant, v. PACIFIC BELL TELEPHONE COMPANY, Defendant and Respondent.
The Dion-Kindem Law Firm, Peter R. Dion-Kindem, Woodland Hills; The Blanchard Law Group and Lonnie C. Blanchard, Los Angeles, for Plaintiff and Appellant. Paul Hastings, Raymond Bertrand, San Diego, James de Haan ; Mayor Brown, Shaeff | Jaffe and Donald M. Falk for Defendant and Respondent. O'Melveny & Myers, Adam Karr and Heather Welles for Chamber of Commerce of the United States of America and California Chamber of Commerce as Amici Curiae on behalf of Defendant and Respondent. Morgan, Lewis & Bockius, Max C. Fischer and Aimee Mackay for California Employment Law Council and Employers Group as Amici Curiae on behalf of Defendant and Respondent
Certified for Partial Publication.
Under California Rules of Court, rule 8.1110, this opinion is certified for publication with the exception of sections I, II, and IV of the DISCUSSION section.
The Dion-Kindem Law Firm, Peter R. Dion-Kindem, Woodland Hills; The Blanchard Law Group and Lonnie C. Blanchard, Los Angeles, for Plaintiff and Appellant.
Paul Hastings, Raymond Bertrand, San Diego, James de Haan ; Mayor Brown, Shaeff | Jaffe and Donald M. Falk for Defendant and Respondent.
O'Melveny & Myers, Adam Karr and Heather Welles for Chamber of Commerce of the United States of America and California Chamber of Commerce as Amici Curiae on behalf of Defendant and Respondent.
Morgan, Lewis & Bockius, Max C. Fischer and Aimee Mackay for California Employment Law Council and Employers Group as Amici Curiae on behalf of Defendant and Respondent
LIPNER, J. Dave Meza filed this consolidated class action lawsuit against his former employer, Pacific Bell Telephone Company (Pacific Bell). Meza alleged Pacific Bell violated California law by failing to provide lawful meal and rest periods and failing to provide lawful itemized wage statements among other Labor Code violations. Meza appeals four trial court orders: (1) an order denying class certification to five meal and rest period classes (the class certification order); (2) an order granting summary adjudication of Meza's claim relating to wage statements under section 226, subdivision (a)(9) (the wage statement order); (3) an order striking Meza's claim under section 226, subdivision (a)(6) (the order to strike); and (4) an order granting summary adjudication of Meza's claim under the Labor Code Private Attorneys General Act of 2004 (PAGA) (§ 2698 et seq.) (the PAGA order).
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
All unspecified statutory references are to the Labor Code.
We first consider whether each order is appealable. We conclude that Meza's appeal of the order to strike must be dismissed because Meza did not include it in his notice of appeal. We agree that the other orders are appealable under the death knell doctrine, which allows immediate appeals of certain interlocutory orders that resolve all representative claims but leave individual claims intact.
On the merits, we conclude that the trial court erred in refusing to certify the meal and rest period classes based on its conclusion that common issues do not predominate. On remand, however, the trial court must consider whether Meza is an adequate class representative, an issue it did not reach in its previous ruling.
We affirm the wage statement order and the PAGA order. In the published portion of the opinion, we explain that the trial court correctly granted summary adjudication of Meza's wage statement claim because Pacific Bell's wage statements do not violate the Labor Code. The trial court also correctly granted summary adjudication of the PAGA claim because it was barred by claim preclusion in light of the settlement and dismissal of a previous PAGA lawsuit.
BACKGROUND
A. Meza's allegations
Pacific Bell is a telecommunications corporation providing voice, video, data, internet and professional services to businesses, consumers, and government agencies. It has branches around the world, including in California. Pacific Bell hired Meza in January 2014 as a premises technician. Meza's duties included installing and repairing Pacific Bell's products and services including UVerse TV, telephones, and internet, transporting equipment and products to and from client locations, conducting pretrip and posttrip inspections of the company van, cleaning and maintaining the company van's interior, and keeping the company van stocked. Though not alleged in the complaint, Pacific Bell employed Meza until October 2015.
In his operative second amended complaint, Meza alleged many Labor Code violations. Meza alleged that Pacific Bell failed to accurately document hours worked, failed to pay overtime wages, failed to provide legally required meal and rest periods, failed to furnish accurate and complete wage statements, and failed to pay costs for the upkeep of uniforms. Based on the allegations of Labor Code violations, Meza asserted a claim for unlawful business practices under Business and Professions Code section 17200 and a claim under PAGA. Meza also asserted a claim for wrongful termination. Meza sought compensatory and punitive damages, restitution, and penalties.
B. The class certification order
In December 2017, Meza moved to certify six statewide classes of premises technicians, five of which pertained to Meza's meal and rest period claims, and one of which pertained to his wage statement claim under section 226, subdivision (a)(9). In support of certification of the meal and rest break claims, Meza cited the "Premises Technician Guidelines" Pacific Bell adopted in 2011 and modified in 2013 and 2015. These written guidelines were provided to premises technicians, who were asked to sign an agreement stating that they had received the guidelines and agreed to comply with them. The agreement also provided that that failure to sign did not excuse compliance with the guidelines.
The 2011 guidelines, for example, provided that technicians: were not to abandon their vehicles, were required to protect company property at all times, were not allowed to travel "out of route," were not allowed to sleep in their vehicles at any time, were not permitted to congregate their vehicle with other company vehicles during meal or rest periods, and were expected to conduct themselves in a manner to project a positive image of the company during meal and rest periods. Meza asserted that these guidelines substantially limited the activities of premises technicians during their meal and rest periods in violation of law, and that common issues predominated because the guidelines "uniformly apply to all Premise Technicians."
Pacific Bell opposed certification of the meal and rest period classes, arguing that its meal and rest period policies were facially compliant. Pacific Bell further argued that the 2011 guidelines on which Meza relied were not in effect during his employment, and that Meza testified that he had no recollection of receiving the operative guidelines. Pacific Bell further contended that the guidelines in effect during Meza's employment did not specifically limit how premise technicians spend their meal and rest periods. Pacific Bell argued that individualized issues predominated based on testimony from premise technicians and their managers indicating that technicians’ understanding and managers’ enforcement of the guidelines differed.
Pacific Bell also argued that Meza was an inadequate class representative because he "repeatedly lied in his deposition" and because of the circumstances of his discharge. Pacific Bell asserted that Meza was in a disciplinary meeting but halted the meeting with a purported medical emergency, and then, while on disability leave, applied and obtained a job with a competitor. The trial court denied Meza's class certification motion for the meal and rest period classes, stating, "While the policies are undisputed," "it appears that the actual management practices of [Pacific Bell]’s supervisors result in a diverse application of the company's Premises Technician Guidelines" that renders the claims "unsuitable for class action treatment." Because it did not certify these proposed classes, the trial court did not address the argument that Meza was an inadequate class representative. The trial court certified a class to pursue Meza's wage statement claim under section 226, subdivision (a)(9).
In 2018, Meza appealed the class certification order. The Fifth Appellate District dismissed this appeal in July 2020. ( Meza v. Pacific Bell Telephone Co., 2020 WL 3821071 (July 8, 2020, F077604) [nonpub. opn.].) It found that the order was not yet appealable under the death knell doctrine. C. The wage statement order
In June 2018, Meza and Pacific Bell filed cross-motions for summary adjudication of the sole class claim that had been certified: Meza's wage statement claim under section 226, subdivision (a)(9). This claim, described in more detail in our review of the trial court's order, involved Meza's allegation that certain entries in Pacific Bell's wage statements violated statutory requirements. The parties stipulated to the applicable facts. The trial court granted summary adjudication in favor of Pacific Bell, ruling that the wage statements complied with the law. With this ruling, no further class claims remained in the case.
D. The order to strike
In April 2019, Meza filed his third amended complaint. Meza added a claim under section 226, subdivision (a)(6) alleging that Pacific Bell's wage statements failed to accurately show the inclusive dates of the pay period.
Pacific Bell filed a motion to strike these portions of the third amended complaint for failure to state a claim because Pacific Bell's pay statements listed the first and last day of the regular pay period. The court granted the motion to strike without leave to amend.
E. The PAGA order
In February 2020, Pacific Bell moved for summary adjudication of Meza's PAGA claim, arguing that a final, approved settlement in a prior action, Hudson v. Pacific Bell Telephone Co. (Super. Ct. Sacramento County, 2016, No. 34-2016-00202203) (Hudson ), barred Meza from pursuing his claim under the doctrines of res judicata and settlement and release. The Hudson action had alleged failure to pay all minimum and overtime wages ( §§ 510, 1194, 1197 ); failure to provide compliant meal periods ( §§ 226.7, 512 ); failure to provide rest periods ( § 226.7 ); failure to provide accurate wage statements ( § 226 ); failure to pay wages owed at termination ( §§ 201, 202, 203 ); unfair business practices ( Bus. & Prof. Code, § 17200 et seq. ); and derivative penalties under PAGA ( § 2698 et seq. ). The court in Hudson granted final approval of a settlement and entered judgment.
The Hudson settlement contained a lengthy definition of "RELEASED CLAIMS." The definition included a release of: "any and all known and unknown wage and hour related claims that arise out of the facts asserted in the operative complaint in the Action," which included but was not limited to the asserted claims and claims under sections 201, 202, 203, 226, 226.7, 510, 512, 558, 1194 and 2698 et seq., among other code provisions and orders, "based on the facts in the complaint." The period of the released claims ran from October 24, 2012, until the date of preliminary approval.
The release explicitly exempted claims for damages under section 226, subdivision (e) brought by Meza in the current case concerning whether Pacific Bell violated section 226 by failing to list on its wage statements "hours worked" and "hourly rate" for certain overtime payments.
On July 24, 2020, the trial court granted Pacific Bell's summary adjudication motion. The trial court agreed that Meza's PAGA claims were barred under the theory of res judicata.
On July 28, 2020, Meza appealed to the Fifth Appellate District. On December 20, 2021, our Supreme Court transferred this matter to the Second Appellate District.
See footnote *, ante .
III. The trial court correctly granted summary adjudication as to Meza's wage statement claim
Section 226, subdivision (a)(9) provides that an employee wage statement must include "all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee." Meza contends Pacific Bell violated this statute by failing to include the "rate" and "hours" attributable to Pacific Bell's overtime true-up payments. Pacific Bell, supported by amici curiae, argues that its wage statement complies with the statute and that Meza's reading of the statute would expose employers to serious compliance burdens, disincentivize bonus pay, and result in confusing wage statements. We find no error in the trial court's order granting summary adjudication of Meza's claim on the basis that Pacific Bell's wage statements comply with the statutory requirements.
A. Standard of review and principles of statutory construction
"We review the ruling on a motion for summary judgment de novo, applying the same standard as the trial court." ( Manibog v. MediaOne of Los Angeles, Inc. (2000) 81 Cal.App.4th 1366, 1369, 98 Cal.Rptr.2d 297.) "We exercise our independent judgment as to the legal effect of the undisputed facts [citation] and must affirm on any ground supported by the record." ( Jimenez v. County of Los Angeles (2005) 130 Cal.App.4th 133, 140, 29 Cal.Rptr.3d 553.)
The propriety of the trial court's order involves the proper construction of section 226, subdivision (a)(9). We review questions of statutory interpretation de novo. ( County of Los Angeles v. City of Los Angeles (2013) 214 Cal.App.4th 643, 653, 154 Cal.Rptr.3d 263.) "[O]ur primary task is determining legislative intent. [Citation.] In doing so, we ‘look first to the words of the statute, "because they generally provide the most reliable indicator of legislative intent." ’ [Citations.] Where a statutory term ‘is not defined, it can be assumed that the Legislature was referring to the conventional definition of that term.’ [Citations.] We thus give the words in a statute ‘their plain and commonsense meaning.’ [Citation.] ‘Furthermore, a particular clause in a statute must be read in harmony with other clauses and in the context of the statutory framework as a whole.’ " ( Heritage Residential Care, Inc. v. Division of Labor Standards Enforcement (2011) 192 Cal.App.4th 75, 81–82, 120 Cal.Rptr.3d 363.)
B. Meza's claim challenged Pacific Bell's failure to include hours and rates for overtime true-up
Meza's claim under section 226, subdivision (a)(9) involved how Pacific Bell represented a lump sum overtime payment on its wage statements. For regular pay and regular overtime, the wage statements, as required, listed the "rate" and "hours" for that pay period. There is no dispute that these entries complied with statutory requirements.
Pacific Bell also, however, included a lump sum on certain wage statements titled "OVERTIME TRUE-UP PMT" (the overtime true-up). For the overtime true-up, Pacific Bell left the "rate" and "hour" columns blank. This is the entry that Meza challenges.
The overtime true-up—additional overtime wages owed based on performance bonuses earned in earlier periods—was calculated using a complex formula involving bonus amounts and hours from prior pay periods. Pursuant to Pacific Bell's incentive program, each month employees earned "points" that could be exchanged for merchandise based on the achievement of specified metrics. Pacific Bell assigned the points a cash value for tax purposes (which it called a non-cash award) and calculated the additional income taxes owed on the points (which it called a "Non-Cash Awd Tax Gross Up"). Pacific Bell generally listed these monetary amounts on the first wage statement of the month after the employee earned them.
Pacific Bell was required by law to include the value of the points, which was a form of bonus, in the regular rate pay for purposes of calculating the employee's overtime pay. Because employees earned the bonus over the course of an entire month and the bonus amount was not known until the close of that month, there was no way to determine the overtime owed in relation to that bonus on a pay-period by pay-period basis. Instead, Pacific Bell calculated the additional overtime owed—the overtime true-up—after the close of the month and generally reflected it in the next month's first wage statement.
By way of example, Pacific Bell paid Meza a lump sum overtime true-up in the first paycheck of June 2015 (a paycheck that covered the first two weeks in June). That overtime true-up was based on the Meza's specific bonus earned and hours worked throughout the entirety of the month of May. As stipulated to by the parties, the formula to calculate the overtime true-up paid in a lump sum at the beginning of June was: the total monetary value of the points the employee earned throughout May, divided by the total hours the employee worked throughout May, with the resulting value then multiplied by one-half, and the resulting value then multiplied by the overtime hours the employee worked throughout May.
The value of the points from May was calculated by adding the "Non-Cash Award" and "Non-Cash Awd Tax Gross Up."
In the example to which the parties stipulated, the first June wage statement represents the overtime true-up derived from this formula as "OVERTIME TRUE-UP PMT" in the amount of $32.76. It is the lack of "hours" and "rates" next to this figure that forms the basis for Meza's claim.
The trial court ruled that Pacific Bell's wage statements complied with statutory requirements. The trial court found that "[t]here were no applicable hourly rates in effect during the pay period that correspond to the incentive program pay" and that the "overtime hours were worked in previous pay period for which the employees had already received their standard overtime pay." The trial court concluded that an "employer must only identify on the wage statement the hourly rate in effect during the pay period for which the employee was currently being paid and the corresponding hours worked" under section 226, subdivision (a)(9), and thus granted Pacific Bell's motion.
C. Pacific Bell's wage statements do not violate section 226, subdivision (a)(9)
While Pacific Bell's calculation of overtime true-up payments is quite complicated, the statutory issue is straightforward. Does the statutory requirement to list on the wage statement "hourly rates in effect during the pay period " ( § 226, subd. (a)(9) ), (italics added) and the "corresponding number of hours" worked at such rates (ibid. ) encompass a requirement that Pacific Bell list the rates and hours from prior pay periods underlying an overtime true-up calculation? We agree with the trial court that the statute contains no such requirement.
Section 226, subdivision (a)(9) is explicit that it requires a list of hourly rates "during the pay period." In the example discussed above, the relevant "pay period" consists of the first two weeks in June, and none of the variables involved in the overtime true-up calculation, such as the hours worked, related to the pay period. The statute requires the first June wage statement to reflect a list of hours and rates from the first two weeks in June—not from earlier periods. This reading of the statute is reinforced by our Supreme Court's use of language indicating that the obligation to provide information in connection with section 226 is limited to the pay period in which a statement was issued. ( Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, 753, 264 Cal.Rptr.3d 1, 466 P.3d 309 [ § 226 "appears to contemplate that the information supplied will be comprehensive ... for the given pay period"]; Oman v. Delta Air Lines, Inc. (2020) 9 Cal.5th 762, 774, 264 Cal.Rptr.3d 20, 466 P.3d 325 [ § 226 requires "all relevant information concerning the employee's pay during that period"].)
We cannot read into the statute obligations that are not present. "When a statute omits a particular category from a more generalized list, a court can reasonably infer a specific legislative intent not to include that category within the statute's mandate." ( Soto v. Motel 6 Operating, L.P. (2016) 4 Cal.App.5th 385, 391, 208 Cal.Rptr.3d 618.) We cannot read into the statute a requirement that an employer include hours and rates from prior pay periods when the Legislature omitted such a requirement. Adding requirements for wage statements is especially unwarranted here, where payment is not a simple matter of multiplying a pre-determined rate by overtime hours, as the statute appears to contemplate, but an after-the-fact calculation based in significant part on the amount of bonus the employee happened to earn the prior month.
The parties and amici argue about whether listing information from prior pay periods would be "a simple payroll programming task," as Meza claims, or would entail "significant practical problems" for employers, as the amici curiae and Pacific Bell urge. These issues are better addressed to the Legislature. Based on the text of the statute, we hold that Pacific Bell did not violate section 226, subdivision (a)(9).
The Ninth Circuit recently reached this same conclusion in interpreting this California statute. In Magadia v. Wal-Mart Associates, Inc. (9th Cir. 2021) 999 F.3d 668, the Ninth Circuit also concluded that section 226, subdivision (a)(9) did not require the reporting of rates and hours from prior periods in connection with overtime adjustment payments. That case, too, involved lump sum overtime payments associated with incentive bonuses from prior periods. ( Id. at p. 672.) This payment was calculated using a formula that included the number of hours worked during those earlier periods. ( Ibid. ) The Ninth Circuit explained that an overtime adjustment "is a non-discretionary, after-the-fact adjustment to compensation based on the overtime hours worked and the average of overtime rates," and therefore found that the calculation did not reflect "an ‘hourly rate in effect during the pay period.’ " ( Id. at p. 681.) This statutory term, the Ninth Circuit reasoned, does not apply to an artificial, after-the-fact rate calculated based on overtime hours and rates from preceding pay periods that did not even exist during the time of the pay period covered by the wage statement. ( Ibid. ) Though we are not bound by the Ninth Circuit's views on this issue ( Barrett v. Rosenthal (2006) 40 Cal.4th 33, 58, 51 Cal.Rptr.3d 55, 146 P.3d 510 ), we agree with its analysis.
The Ninth Circuit cited two unpublished California appellate decisions in its analysis of this issue. (See Magadia v. Wal-Mart Associates, Inc. , supra , 999 F.3d at p. 681.) Although we are not permitted to rely on such cases (Airline Pilots Assn. Internat. v. United Airlines, Inc. (2014) 223 Cal.App.4th 706, 724, fn. 7, 167 Cal.Rptr.3d 467 ), a federal court may do so (Employers Ins. of Wausau v. Granite State Ins. Co . (9th Cir. 2003) 330 F.3d 1214, 1220, fn. 8 ).
Section 226, subdivision (a)(9) does not require Pacific Bell to list hours and rates next to its calculation of an overtime true-up. The trial court correctly granted summary adjudication to Pacific Bell on this claim. IV. The trial court correctly granted summary adjudication of Meza's PAGA claim
See footnote *, ante .
DISPOSITION
The appeal from the order disposing of Dave Meza's Labor Code section 226, subdivision (a)(6) claim is dismissed. The order denying class certification is reversed with directions to the trial court to consider whether Meza is an adequate and typical class representative. The orders granting summary adjudication of Meza's section 226, subdivision (a)(9) and the PAGA claims are affirmed. The parties are to bear their own costs on appeal.
We concur:
EDMON, P. J.
LAVIN, J.