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O'Bosky v. Starbucks Corp.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
Apr 19, 2018
No. D071628 (Cal. Ct. App. Apr. 19, 2018)

Opinion

D071628

04-19-2018

DYLAN O'BOSKY, Plaintiff and Appellant, v. STARBUCKS CORPORATION, Defendant and Respondent.

Sullivan Law Group and William B. Sullivan, Eric K. Yaeckel, Clint S. Engleson for Plaintiff and Appellant. Akin Gump Strauss Hauer & Feld and Rex S. Heinke, Gregory W. Knopp, Jonathan P. Slowik for Defendant and Respondent.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00014973-CU-OE-CTL) APPEAL from a judgment of the Superior Court of San Diego County, Ronald L. Styn, Judge. Affirmed. Sullivan Law Group and William B. Sullivan, Eric K. Yaeckel, Clint S. Engleson for Plaintiff and Appellant. Akin Gump Strauss Hauer & Feld and Rex S. Heinke, Gregory W. Knopp, Jonathan P. Slowik for Defendant and Respondent.

Dylan O'Bosky sued his former employer, Starbucks Corporation (Starbucks) under the Private Attorneys General Act of 2004 (PAGA; Labor Code § 2698 et seq.) to recover civil penalties for Labor Code violations that Starbucks allegedly committed. O'Bosky appeals from a judgment entered after the court granted Starbucks's motion to strike a portion of his complaint and a subsequent motion for summary judgment. We affirm.

Undesignated statutory references are to the Labor Code.

FACTUAL AND PROCEDURAL SUMMARY

From 2008 until July 2014, O'Bosky worked as a Starbucks barista and eventually became a shift supervisor. In this action, O'Bosky alleges Starbucks maintained a "standard system of 'time calculation/revision,' where actual recorded time is 'altered' by Starbucks, prior to employee payment. This system appears to have been installed and/or revised in the October 2013 time period." (Some capitalization omitted.) O'Bosky alleges Starbucks failed to provide its employees timely regular and overtime compensation because of its system of " 'altering' recorded work-time," thus violating sections 204, 510, 1194 and 1199. He specifically alleges Starbucks failed to properly calculate the correct regular rate and "on certain occasions, [it] will provide a higher rate of compensation for the minutes actually recorded by the employees. However, [it] will not use this actual accurate regular rate when calculating the accurate overtime rate." (Some capitalization omitted.)

In paragraph No. 26 of the complaint, O'Bosky alleges that Starbucks violated section 226 by failing to provide its employees accurate itemized wage statements: "Starbucks also failed to provide an accurate showing of the 'total hours worked' by its employees pursuant to section 226[, subdivision] (a)(2). For example, Starbucks states that it paid Mr. O'Bosky '13.75' of regular time for the pay period of '[June 30, 2014 to July 13, 2014]'. . . . In fact, Mr. O'Bosky cannot 'readily ascertain' what a '13.75' means at all. This is because Starbucks is apparently using a time-calculating system other than 'minutes,' but without explanation to the employees within the wage statement. As minutes are measured on a scale of 1 through 60, it is not apparent what a '13.75' is meant to represent. Without an explanation for how the '13.75' was arrived at, employees cannot 'readily ascertain' their total hours worked."

Finally, O'Bosky alleges Starbucks willfully failed to provide accurate and complete compensation to aggrieved employees; consequently, on their termination it failed to pay them all their earned wages. (§§ 201, 202, 203.) O'Bosky attached to his complaint a sample portion of his wage statement, and his letter notifying the California Labor and Workforce Development Agency (LWDA) regarding the factual and legal basis for his PAGA suit.

Starbucks demurred to the complaint on the grounds that it failed to state facts sufficient to constitute a cause of action, and alternatively moved to strike several paragraphs from it.

The court overruled the demurrer. It granted Starbucks's motion to strike paragraph No. 26 of the complaint regarding Starbucks's alleged section 226 violation, reasoning: "Starbucks submits authority demonstrating that its wage statements include a statement of the 'total hours worked' in decimals (not in minutes) and that this calculation is allowable under [section] 226. [O'Bosky] fails to provide any authority holding that Starbucks must provide wage statements in minutes, and fails to provide authority holding that wage statements must include an explanation of the method of calculation (i.e., decimals as opposed to minutes). Rather, all that is required is that the statement contain the 'total hours worked by the employee.' "

The court also struck from the complaint a sentence in paragraph No. 22 stating, "When calculating its employees' regular rates of pay, Starbucks also failed to include the value of certain employee benefits, including, but not limited to, regular provisions of free coffee." (Some capitalization omitted.) It explained: "[O'Bosky] fails to point to any portion of the LWDA letter providing notice of this claim." O'Bosky does not challenge this ruling.

Starbucks subsequently moved for summary judgment or in the alternative summary adjudication on grounds O'Bosky's claim that Starbucks engaged in a practice of "altering" time failed as a matter of law because Starbucks complied with California law regarding rounding, and the practice benefited the employees. Starbucks also argued that O'Bosky's derivative claims, including that Starbucks did not properly calculate the overtime rate, failed along with the time-altering claim. It argued that it calculated O'Bosky's overtime rate at 1.5 times his base hourly rate in compliance with California law, and O'Bosky would not have received a higher wage under his proposed calculation.

Starbucks submitted a declaration by its production support analyst, Holly Kinney, who had personal knowledge of Starbucks's timekeeping system that "captures the actual time on which an employee punches 'in' or 'out' and then rounds punches to the nearest three-minute increment. For example, a punch at 3:58 p.m. is rounded down to 3:57 p.m., while a punch at 3:59 p.m. is rounded up to 4:00 p.m. No rounding occurs if the punch is made at a time that is a three-minute increment (e.g., 4:00, 4:03, 4:06, 4:09). Employees are paid based on their hours worked as measured by the rounded punch times." Kinney reviewed O'Bosky's time punch records and concluded: "The records for O'Bosky's July 18, 2014 shift show simultaneous 'out' and 'in' punches at 5:25 p.m., 8:00 p.m. and 9:40 p.m. Similarly, the records for his July 20, 2014 shift show simultaneous 'out' and 'in' punches at 4:25 p.m., 6:45 p.m. and 8:40 p.m. In each case, these are intermediate time entries that reflect O'Bosky's switching work codes (e.g., from 'operations' to 'key holder') while remaining on the clock. These intermediate time entries have no impact on pay, so they are not subject to rounding. Rather, only the times at which he actually clocked in and out were subject to rounding."

In opposing the summary judgment motion, O'Bosky argued: (1) Starbucks could not prove its time records are accurate: "Starbucks prevents its employees from 'punching back in' from a meal period early (i.e. before 30 minutes have elapsed. Starbucks will not allow an employee to 'punch back in' early, even if the employee has started working before the 30-minute meal period has ended." (Some capitalization and emphasis omitted.) (2) Starbucks's practice of rounding is not recognized under federal regulations as it is not "to the nearest [five] minutes, or to the nearest one-tenth or quarter of an hour." (3) Starbucks's manner of calculating overtime rate is contrary to law. (4) Starbucks ignores the amended version of section 226 that favors employees by requiring employers to include accurate and ascertainable information in wage statements.

O'Bosky objected to each of the two substantive paragraphs in Kinney's declaration on grounds of speculation, hearsay, improper legal conclusion, and relevance. He additionally claimed Kinney's declaration lacked foundation, authentication and a showing of personal knowledge. The court overruled O'Bosky's objection because he in effect made a global attack on Kinney's declaration without identifying specific objectionable statements in it.

O'Bosky submitted a declaration by Erik Arneson, an independent consultant specializing in software and database development and technology research.

O'Bosky asserted in his own declaration: "Starbucks claims that I would sometimes 'switch codes' in the middle of a shift, but not actually clock in or out in such instances. This is false. I never 'switched codes' during a shift, and only clocked in or out (when permitted by Starbucks['s] system) at the beginning or end of a shift."

In granting summary judgment, the court ruled that "Starbucks['s] rounding policy [] forms the basis for all of [O'Bosky's] claims," and concluded that the practice was lawful under this court's ruling in See's Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 903 (See's Candy). It further found that O'Bosky's opposing arguments and evidence were insufficient to create triable issues of material fact. The court additionally set forth O'Bosky's arguments from his separate statement regarding Starbucks's practice of rounding and concluded that none of his evidence established Starbucks's time records are inaccurate: "Starbucks'[s] response [to O'Bosky's request for admission] evidences only that Starbucks cannot verify that [O'Bosky] accurately recorded his hours worked. This fact is not in issue in this case. Rather, the issue is whether Starbucks'[s] rounding practice, as applied to the hours worked as recorded by [O'Bosky] (and all other employees) is 'fair and neutral on its face.' " The court ruled as a matter of law that Starbucks properly calculated O'Bosky's overtime rate "based not on a factor of the total number of hours worked, but on [his] hourly rate, multiplied by 1.5, and then multiplied by the total number of overtime hours worked." The court ruled that O'Bosky's argument regarding Starbucks's policy of "locking out" employees from clocking in and out for meal periods was not properly before the court as O'Bosky had not pleaded that theory in his complaint.

DISCUSSION

I. Motion to Strike

A ruling on a motion to strike is not appealable but may be reviewed on appeal from the final judgment. (See Jackson v. Rogers & Wells (1989) 210 Cal.App.3d 336, 341.)

O'Bosky contends the court erroneously applied the standard applicable to demurrers in adjudicating the motion to strike, arguing a court may not strike portions of a complaint for " 'failure to state a claim.' " He contends the court erroneously struck paragraph No. 26 of his complaint, thus "remov[ing] the following issue of fact from the jury: whether Mr. O'Bosky and other employees could 'promptly and easily determine' their actual hours worked without 'reference to other documents or information' outside the wage statements." O'Bosky argues the court's ruling contradicts the plain language of section 226 and that statute's amendment codified in section 226, subdivision (e)(2)(B) because Starbucks does not explain to its employees that it rounds their hours worked. He furthermore argues its itemized wage statements fail to explain how listed hours are calculated and do not list employees' actual hours worked.

O'Bosky claims he is not attacking Starbucks's ability to list hours worked in decimal format; rather, he challenges the court's ruling that " 'all that is required is that the statement contain the "total hours worked by the employee." ' " He argues that the court's ruling would lead to an "absurd result"; for example, "[W]here an employee worked 8 hours and 30 minutes within a pay period, this ruling would find compliance where the employer listed just '8' hours of work." A. Applicable Law

Code of Civil Procedure section 436 provides: "The court may, upon a motion made . . . [¶] (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [¶] (b) Strike out all or any part of the pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court." "[The statute's] purpose is to authorize the excision of superfluous or abusive allegations. 'Matter that is essential to a cause of action should not be struck and it is error to do so.' " (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528.) We review for abuse of discretion. (Pacific Gas & Electric Co. v. Superior Court (2006) 144 Cal.App.4th 19, 23.)

"We recognize that in some cases a portion of a cause of action will be substantively defective on the face of the complaint. . . . [I]n such cases, the defendant should not have to suffer discovery and navigate the often dense thicket of proceedings in summary adjudication. We conclude that when a substantive defect is clear from the face of a complaint, such as a violation of the applicable statute of limitations or a purported claim of right which is legally invalid, a defendant may attack that portion of the cause of action by filing a motion to strike." (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682-1683.)

As relevant here, section 226, subdivision (a) provides: "An employer, semimonthly or at the time of each payment of wages, shall furnish to his or her employee, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately if wages are paid by personal check or cash, an accurate itemized statement in writing showing (1) gross wages earned, (2) total hours worked by the employee." B. Analysis

On appeal, O'Bosky having disclaimed that he is challenging Starbucks's "ability to list hours worked in decimal format," in effect concedes the court properly struck paragraph No. 26 of his complaint, given that it was the sole issue raised in that paragraph. We conclude the court did not abuse its discretion in striking that paragraph. Starbucks's listing of its employees' time worked as a percentage of an hour on a wage statement does not violate any statute or regulation raised in this appeal. By striking the paragraph, therefore, the court achieved the purpose of such a motion, ensuring that Starbucks not "have to suffer discovery and navigate the often dense thicket of proceedings in summary adjudication." (PH II, Inc. v. Superior Court, supra, 33 Cal.App.4th at p. 1682.)

We reject O'Bosky's other contentions that the court erroneously ruled the total hours worked was all that was required in the itemized wage statements, and in so doing it ignored the legislative intent behind the amended version of section 226. These claims are unavailing because they are not implicated by paragraph No. 26. We therefore do not address them. For the same reason we do not discuss O'Bosky's speculative claim that the trial court's ruling would lead to "absurd results."

II. Summary Judgment

O'Bosky contends that he presented triable issues of material fact, as his declaration contradicted Starbucks's claim that it applied the nearest three-minute rounding practice uniformly because some of the time entries on his wage statements were not rounded in that way. He further contends summary judgment was not proper as a matter of law because: the trial court misapplied the law regarding rounding by concluding that Starbucks did not need to explain how it was recording and listing work times on its itemized wage statements; he properly objected to Holly Kinney's declaration; under section 226, Starbucks's rounding was flawed because its employees could not promptly and easily determine from the wage statements alone their actual hours worked; and the court erroneously calculated the regular rate of pay for computing overtime pay owed to Starbucks's employees. A. Review Standard

"[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, fn. omitted (Aguilar).) "Once the [movant] has met that burden, the burden shifts to the [other party] to show that a triable issue of one or more material facts exists as to that cause of action." (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, at p. 850.) The party opposing summary judgment "shall not rely upon the mere allegations or denials of its pleadings," but rather "shall set forth the specific facts showing that a triable issue of material fact exists." (Code Civ. Proc., § 437c, subd. (p)(2).) A triable issue of material fact exists where "the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar, at p. 850.)

Summary judgment serves to "cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar, supra, 25 Cal.4th at p. 843.) We review the grant of summary judgment independently, "considering all of the evidence the parties offered in connection with the motion (except that which the trial court properly excluded) and the uncontradicted inferences the evidence reasonably supports." (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) Because we review "the ruling, not the rationale," we may affirm summary judgment on a different basis than the trial court. (Salazar v. Southern Cal. Gas Co. (1997) 54 Cal.App.4th 1370, 1376.) B. Analysis

O'Bosky claims he presented triable issues of material fact because his wage statements showed that in at least some instances Starbucks's rounding policy was not uniformly applied, as he had explained in his declaration. But Kinney explained that discrepancy in her declaration, pointing out that those instances reflected O'Bosky switching work codes and those intermediate time entries had no impact on his pay; therefore, they were not subject to rounding. Rather, only the times at which he actually clocked in and out were subject to rounding. O'Bosky claims he never switched job codes. We conclude that no triable issue of material fact is presented. While O'Bosky insists he did not make any code switch, Kinney did not assert that it was he who made the code switch. She merely states that the discrepancy "shows" and "reflects" that the switch was made, without attributing responsibility to O'Bosky for having done so.

O'Bosky contends that as a matter of law, the court erroneously overruled his objections to Kinney's declaration on the ground that O'Bosky did not specify the objectionable portions of her declaration. O'Bosky is technically correct that he specifically objected to each of the two substantive paragraphs of Kinney's declaration. However, we conclude the court did not err because certain matters are stated within each of those paragraphs that were not plainly objectionable on any ground. O'Bosky did not separate those matters from others that might have been legitimately objectionable. For example, Kinney unremarkably stated that she had personal knowledge of Starbucks's time system, and she had reviewed O'Bosky's declaration. (See Fibreboard Paper Products Corporation v. East Bay Union of Machinists, Local 1304, United Steelworkers of America, AFL-CIO, et al. (1964) 227 Cal.App.2d 675, 712 ["The objection to such exhibit was, however, a general one. An inadmissible portion of a document, the remainder of which is admissible in evidence, cannot be reached by a general objection to the admission of the entire document, but the inadmissible portion must be specified."].) California Rules of Court, rule 3.1354(b)(3) is in accord and requires the objecting party to specifically identify and "[q]uote or set forth the objectionable statement or material."

The parties agree this court stated the applicable law regarding rounding in See's Candy: "Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees." (See's Candy, supra, 210 Cal.App.4th at p. 903.) O'Bosky contends that he "does not challenge the lawfulness of 'rounding' employee work time, per se"; however, he claims the court misapplied the law by concluding Starbucks did not need to round "to a statutorily-permitted increment of time (i.e., the nearest five minutes, or to the nearest one-tenth or quarter of an hour)."

We conclude that, as a matter of law, Starbucks's rounding policy complied with See's Candy because it was fair and neutral. Although the specific rounding increment at stake in See's Candy, supra, 210 Cal.App.4th at pp. 895-896, was one-tenth of an hour and not the three-minute increment at issue here, that difference is not dispositive; rather, as this court stated, the important consideration is that the rounding should not, in practice, result in a systematic failure to compensate employees properly for all the time they have actually worked. (Id. at p. 907.)

O'Bosky contends: "Starbucks was required to calculate employees' regular rates of pay by dividing the 'total remuneration' in a workweek by the 'number of hours actually worked.' " The applicable law on this issue is stated in Huntington Memorial Hosp. v. Superior Court (2005) 131 Cal.App.4th 893: " 'If the employee is employed solely on the basis of a single hourly rate, the hourly rate is his "regular rate." ' [Citation.] On the other hand, '[t]he [federal law] does not require employers to compensate employees on an hourly rate basis; their earnings may be determined on a piece-rate, salary, commission, or other basis, but in such case the overtime compensation due to employees must be computed on the basis of the hourly rate derived therefrom and, therefore, it is necessary to compute the regular hourly rate of such employees during each workweek, with certain statutory exceptions . . . . The regular hourly rate of pay of an employee is determined by dividing his total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid.' " (Huntington Memorial Hosp., at p. 905.)

Here, the court did not err by concluding that, as a matter of law, Starbucks paid O'Bosky based on a single hourly rate; therefore, "the overtime rate is calculated by multiplying the employee's regular rate by one and one-half for any hours worked in excess of eight in a workday or 40 in a workweek, and by multiplying the regular rate by two for any hours worked in excess of 12 in a workday or eight on the seventh day of a workweek." (Morgan v. United Retail Inc. (2010) 186 Cal.App.4th 1136, 1149.) This was the formula the court employed, and therefore it did not err in computing O'Bosky's overtime pay.

DISPOSITION

The judgment is affirmed. Starbucks Corporation is entitled to its costs on appeal.

O'ROURKE, J. WE CONCUR: BENKE, Acting P. J. GUERRERO, J.


Summaries of

O'Bosky v. Starbucks Corp.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
Apr 19, 2018
No. D071628 (Cal. Ct. App. Apr. 19, 2018)
Case details for

O'Bosky v. Starbucks Corp.

Case Details

Full title:DYLAN O'BOSKY, Plaintiff and Appellant, v. STARBUCKS CORPORATION…

Court:COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

Date published: Apr 19, 2018

Citations

No. D071628 (Cal. Ct. App. Apr. 19, 2018)