Danny Flores et al v. City of San Gabriel et al
Filing
37
ORDER GRANTING DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT 20 AND GRANTING IN PART PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT 23 by Judge Jesus G. Bernal: (see document image for further details). For the reasons set forth above, the Co urt GRANTS Defendants Motion for Partial Summary Judgment and GRANTS IN PART Plaintiffs Motion for Partial Summary Judgment. The Court directs the parties to submit further briefing addressing the issue of liquidated damages. Plaintiffs may file a supplemental brief on the issue, due by September 18, 2013. Defendant may file an opposition by September 25, 2013. (ad)
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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DANNY FLORES, ROBERT
BARADA, KEVIN WATSON, VY
VAN, RAY LARA, DANE
WOOLWINE, RIKIMARU
NAKAMURA, CHRISTOPHER
WENZEL, CRUZ HERNANDEZ,
SHANNON CASILLAS, JAMES
JUST, RENE LOPEZ, GILBERT
LEE, STEVE RODRIGUES, and
ENRIQUE DEANDA,
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Plaintiffs,
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v.
CITY OF SAN GABRIEL, and
DOES 1 THROUGH 10,
inclusive,
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Defendants.
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Case No.
CV 12-04884 JGB (JCGx)
ORDER GRANTING
DEFENDANT’S MOTION FOR
PARTIAL SUMMARY JUDGMENT
AND GRANTING IN PART
PLAINTIFFS’ MOTION FOR
PARTIAL SUMMARY JUDGMENT
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20
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Before the Court is the Motion for Summary
22
Judgment, or in the alternative, Partial Summary
23
Judgment filed by Defendant City of San Gabriel on May
24
13, 2013.
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Plaintiffs’ Motion for Partial Summary Judgment filed
26
on May 13, 2013.
27
papers timely filed and the arguments presented at the
(Doc. No. 20.)
Also before the Court is
(Doc. No. 23.)
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1
After considering the
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August 19, 2013 hearing, the Court GRANTS Defendant’s
2
Motion for Partial Summary Judgment and GRANTS IN PART
3
Plaintiffs’ Motion for Partial Summary Judgment.
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Court directs the parties to submit further briefing
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addressing the issue of liquidated damages.
The
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I.
BACKGROUND
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A.
Procedural Background
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Plaintiffs Danny Flores, Robert Barada, Kevin
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Watson, Vy van, Ray Lara, Dane Woolwine, Rikimaru
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Nakamura, Christopher Wenzel, Cruz Hernandez, Shannon
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Casillas, James Just, Rene Lopez, Gilbert Lee, Steve
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Rodrigues, and Enrique Deanda (collectively,
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“Plaintiffs”)
filed their Complaint on June 4, 2012.
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(Doc. No. 1.)
Defendant City of San Gabriel
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(“Defendant”) filed its Answer on June 26, 2012.
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No. 5.)
(Doc.
20
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Defendant filed its Motion for Summary Judgment, or
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in the alternative, Partial Summary Judgment, on May
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13, 2013.
24
its Motion, Defendant filed:
25
26
(“Def. Mot.,” Doc. No. 20.)
In support of
Separate Statement of Uncontroverted Facts and
Conclusions of Law (“Def. SUF,” Doc. No. 22-1);
27
28
2
1
Declaration of Rayna Ospino (“Ospino Mot.
2
Decl.,” Exh. 1 to Defendant’s Appendix of
3
Evidentiary Support (“Def. Mot. Appendix”),
4
Doc. No. 21);
5
Exh. 2 to Def. Mot. Appendix);
6
7
Declaration of Linda Tang (“Tang Mot. Decl.,”
Excerpts from City of San Gabriel Resolution
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No. 02-12, adopted January 7, 2013 (“Resolution
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No. 02-12,” Exh. A to Def. Mot. Appendix);
10
Excerpts from the City of San Gabriel Salary,
11
Compensation and Benefit Policy Manual, dated
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July 3, 2010 (“Policy Manual,” Exh. B to Def.
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Mot. Appendix); and
14
Excerpts from the Memorandum of Understanding
15
between the City of San Gabriel and the San
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Gabriel Police Officers’ Association for 2005-
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2007, signed August 2, 2005 (“Mot. MOU,” Exh. C
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to Def. Mot. Appendix).
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On June 10, 2013, Plaintiffs filed their Opposition
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to Defendant’s Motion.
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Plaintiffs filed the following documents in support of
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their Opposition:
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(“Pl. Opp.,” Doc. No. 27.)
Declaration of Joseph N. Bolander (“Bolander
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Opp. Decl.,” Doc. No. 27-1) attaching Exhibits
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A-B; and
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28
3
1
Statement of Genuine Disputes of Material Fact
(“Pl. SGD,” Doc. No. 27-2).
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3
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Defendant filed its Reply on June 24, 2013.
(“Def.
5
Reply,” Doc. No. 31.)
In support of its Reply,
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Defendant also filed its Objections to Plaintiffs’
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Evidence.
(“Def. Reply Obj.,” Doc. No. 32.)
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Plaintiffs filed their Motion for Partial Summary
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Judgment on May 13, 2013.
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In support of their Motion, Plaintiffs also filed the
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following:
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Declaration of Joseph N. Bolander (“Bolander
Mot. Decl.,” Doc. No. 23-2);
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(“Pl. Mot.,” Doc. No. 23.)
Statement of Uncontroverted Facts and
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Conclusions of Law (“Pl. SUF,” Doc. No. 23-3);
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and
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Request for Judicial Notice (“RJN,” Doc. No.
23-4).1
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On June 10, 2013, Defendant filed its Opposition to
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Plaintiffs’ Motion.
(“Def. Opp.,” Doc. No. 26.)
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Defendant filed the following documents in support of
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its Opposition:
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26
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1
Since the Court does not rely on the district
court’s order in Rob Morris v. City of Santa Maria, LA
CV 12-04989 JAK (FFMx) to reach its decision, it does
not take judicial notice of that document.
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1
(“Def. SGD,” Doc. No. 26-2);
2
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Statement of Genuine Disputes of Material Fact
Declaration of Rayna Ospino (“Ospino Opp.
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Decl.,” Exh. 1 to Defendant’s Appendix of
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Evidentiary Support in Opposition to
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Plaintiffs’ Motion (“Def. Opp. Appendix”), Doc.
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No. 26-1);
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Exh. 2 to Def. Opp. Appendix);
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Declaration of Alex Y. Wong (“Wong Decl.,” Exh.
4 to Def. Opp. Appendix);
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Declaration of Marcella Marlowe (“Marlowe
Decl.,” Exh. 3 to Def. Opp. Appendix);
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Declaration of Linda Tang (“Tang Opp. Decl.,”
Excerpts from the Memorandum of Understanding
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Between City of San Gabriel and the San Gabriel
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Police Officers’ Association for 2005-2007,
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signed August 2, 2005 (“Opp. MOU,” Exh. C to
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Def. Opp. Appendix); and
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Proposed Joint Stipulation of Fact (“Joint
Stipulation,” Exh. D to Def. Opp. Appendix).
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Plaintiffs filed their Reply on June 24, 2013.
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(“Pl. Reply,” Doc. No. 29.)
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following documents in support of their Reply:
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Plaintiffs filed the
Response to Defendant’s Statement of Genuine
Issues (“Pl. Resp.,” Doc. No. 28); and
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28
5
1
Objections to Defendant’s Evidence Offered in
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Support of Defendant’s Opposition (“Pl. Reply
3
Obj.,” Doc. No. 30.)
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B.
Complaint
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In their Complaint, Plaintiffs allege that they are
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employed as police officers in the City of San Gabriel
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Police Department.
(Compl., ¶¶ 3-17.)
The City of San
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Gabriel and the San Gabriel Police Officers Association
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entered into the Memorandum of Understanding (“MOU”)
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that allowed officers to choose a health insurance cash
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out option.
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Plaintiffs are entitled to receive cash back payments
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for any unused portion of their medical benefits.
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(Compl., ¶ 20.)
(Compl., ¶ 19.)
Pursuant to the MOU,
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Plaintiffs have been exercising their option to
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receive the cash back payment for the unused portion of
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their medical benefits.
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Defendant does not apply the cash back portions of
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Plaintiffs’ unused medical benefits to their regular
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rate of pay.
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Plaintiffs received for overtime hours worked did not
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include the cash back portions of Plaintiffs’ unused
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medical benefits.
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Defendant failed to pay Plaintiffs for overtime
(Compl., ¶ 23.)
(Compl., ¶ 24.)
However,
Therefore, the rate
(Compl., ¶ 25.)
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As a result,
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compensation at one and a half times their regular rate
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of pay.
(Compl., ¶ 26.)
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Plaintiffs’ cause of action arises under the Fair
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Labor Standards Act “FLSA”, 29 U.S.C. § 207, et seq.
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Plaintiffs request an award of liquidated damages in a
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sum equal to the amount of the unpaid compensation
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pursuant to 29 U.S.C. § 216(d) and recovery of
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reasonable attorney fees and costs pursuant to 29
10
U.S.C. § 216(b).
(Compl., ¶¶ 31-32.)
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C.
Parties’ Requests for Relief
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Defendant filed its Motion for Summary Judgment
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15
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asserting the following:
Defendant is entitled to summary judgment on
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the ground that payments made in lieu of
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benefits to employees are excluded under 29
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U.S.C. § 207(e)(2) or, alternatively, under 29
20
U.S.C. § 207(e)(4).
21
Alternatively, Defendant is entitled to partial
22
summary judgment on the ground that it
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implemented a partial overtime exemption
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pursuant to 29 U.S.C. § 207(k).
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Plaintiffs filed their Motion asserting that they
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are entitled to partial summary judgment on the
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following grounds:
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Defendant cannot meet its burden of
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demonstrating that payments made in lieu of
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benefits are excluded under section 207(e)(4)
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since these payments are not made to a trustee
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or third person;
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Each Plaintiff’s total monthly benefit
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allowance should be included in the regular
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rate of pay calculation because Defendant’s
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plan does not qualify as a “bona fide” plan
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pursuant to section 207(e)(4);
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Plaintiffs are entitled to an award of
liquidated damages; and
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Plaintiffs are entitled to a three-year statute
of limitation.
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D.
Summary of Court’s Ruling:
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For the reasons set forth below, the Court finds
the following:
Defendant’s payments to Plaintiffs made in lieu
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of benefits are not excludable under section
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207(e)(2) from the regular rate calculation;
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25
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The payments made in lieu of benefits are also
not excludable under section 207(e)(4);
To the extent that Defendant makes
contributions under the Plan to third parties,
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1
these contributions are excludable under 29
2
U.S.C. § 207(e)(4);
3
Plaintiffs’ claims are governed by a two-year
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statute of limitations under 29 U.S.C. §
5
255(a);
6
Defendant is liable to Plaintiffs for FLSA
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overtime only to the extent that Plaintiffs
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worked in excess of 86 hours in a 14-day work
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period since Defendant implemented a partial
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overtime exemption pursuant to section 207(k);
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and
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Before the Court decides the issue of
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liquidated damages, the Court directs the
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parties to submit further briefing addressing
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the issue.
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II. LEGAL STANDARD2
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Federal Rule of Civil Procedure 56 empowers the
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Court to enter summary judgment on factually
21
unsupported claims or defenses, and thereby “secure the
22
just, speedy and inexpensive determination of every
23
action.”
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(1986).
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“pleadings, depositions, answers to interrogatories,
Celotex Corp. v. Catrett, 477 U.S. 317, 325
Summary judgment is appropriate if the
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Unless otherwise noted, all references to “Rule”
refer to the Federal Rules of Civil Procedure.
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1
and admissions on file, together with the affidavits,
2
if any, show that there is no genuine issue as to any
3
material fact and that the moving party is entitled to
4
judgment as a matter of law.”
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A fact is material when it affects the outcome of the
6
case.
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248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th
8
Cir. 1997).
Fed. R. Civ. P. 56(c).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
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The party moving for summary judgment bears the
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initial burden of establishing an absence of a genuine
12
issue of material fact.
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This burden may be satisfied by either (1) presenting
14
evidence to negate an essential element of the non-
15
moving party's case; or (2) showing that the non-moving
16
party has failed to sufficiently establish an essential
17
element to the non-moving party's case.
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Where the party moving for summary judgment does not
19
bear the burden of proof at trial, it may show that no
20
genuine issue of material fact exists by demonstrating
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that “there is an absence of evidence to support the
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non-moving party's case.”
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party is not required to produce evidence showing the
24
absence of a genuine issue of material fact, nor is it
25
required to offer evidence negating the non-moving
26
party's claim.
27
U.S. 871, 885 (1990); United Steelworkers v. Phelps
28
Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989).
Celotex, 477 U.S. at 323.
Id. at 325.
Id. at 322-23.
The moving
Lujan v. National Wildlife Fed'n, 497
10
1
2
However, where the moving party bears the burden of
3
proof at trial, the moving party must present
4
compelling evidence in order to obtain summary judgment
5
in its favor.
6
Property at 8110 E. Mohave, 229 F. Supp. 2d 1046, 1047
7
(S.D. Cal. 2002) (citing Torres Vargas v. Santiago
8
Cummings, 149 F.3d 29, 35 (1st Cir. 1998) (“The party
9
who has the burden of proof on a dispositive issue
United States v. One Residential
10
cannot attain summary judgment unless the evidence that
11
he provides on that issue is conclusive.”)).
12
to meet this burden results in denial of the motion and
13
the Court need not consider the non-moving party's
14
evidence.
15
229 F. Supp. 2d at 1048.
Failure
One Residential Property at 8110 E. Mohave,
16
17
Once the moving party meets the requirements of
18
Rule 56, the burden shifts to the party resisting the
19
motion, who “must set forth specific facts showing that
20
there is a genuine issue for trial.”
21
U.S. at 256.
22
burden by showing “some metaphysical doubt as to the
23
material facts.”
24
Zenith Radio Corp., 475 U.S. 574, 586 (1986).
25
United States Supreme Court has held that “[t]he mere
26
existence of a scintilla of evidence in support of the
27
non-moving party's position is not sufficient.”
28
Anderson, 477 U.S. at 252.
Anderson, 477
The non-moving party does not meet this
Matsushita Elec. Indus. Co., Ltd. v.
The
Genuine factual issues must
11
1
exist that “can be resolved only by a finder of fact
2
because they may reasonably be resolved in favor of
3
either party.”
4
judgment motion, the Court must examine all the
5
evidence in the light most favorable to the non-moving
6
party.
7
engage in credibility determinations, weighing of
8
evidence, or drawing of legitimate inferences from the
9
facts; these functions are for the jury.
Id. at 250.
When ruling on a summary
Celotex, 477 U.S. at 325.
The Court cannot
Anderson, 477
10
U.S. at 255.
Without specific facts to support the
11
conclusion, a bald assertion of the “ultimate fact” is
12
insufficient.
13
986, 990-91 (9th Cir. 1991).
See Schneider v. TRW, Inc., 938 F.2d
14
15
Cross-motions for summary judgment do not
16
necessarily permit the judge to render judgment in
17
favor of one side or the other.
18
512 F.2d 109, 112 (9th Cir. 1975).
19
consider each motion separately “on its own merits” to
20
determine whether any genuine issue of material fact
21
exists.
22
Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001).
23
When evaluating cross-motions for summary judgment, the
24
court must analyze whether the record demonstrates the
25
existence of genuine issues of material fact, both in
26
cases where both parties assert that no material
27
factual issues exist, as well as where the parties
Starsky v. Williams,
The Court must
Fair Hous. Council of Riverside Cnty., Inc. v.
28
12
1
dispute the facts.
2
Cnty., 249 F.3d at 1136 (citation omitted).
See Fair Hous. Council of Riverside
3
III. DISCUSSION
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5
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A.
Evidentiary Objections
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8
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All of Defendant’s objections to Plaintiffs’
evidence filed in support of Plaintiffs’ Opposition to
10
Defendant’s Motion are on grounds of relevance under
11
Federal Rule of Evidence 402.
12
Doc. No. 32.)
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evidence offered to show that Defendant did not have
14
actual knowledge that its actions constituted
15
violations of the FLSA, in part, on the ground that it
16
constituted an improper legal conclusion.
17
Reply Obj.,” Doc. No. 30.)
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the ground that it is irrelevant, speculative, and/or
19
argumentative, or that it constitutes an improper legal
20
conclusion are all duplicative of the summary judgment
21
standard itself" and are thus "redundant" and
22
unnecessary to consider here.
23
Univ. of California, 433 F. Supp. 2d 1110, 1119 (E.D.
24
Cal. 2006); see Anderson, 477 U.S. at 248 ("Factual
25
disputes that are irrelevant or unnecessary will not be
26
counted.").
27
the parties’ relevance objections or objections as to
28
improper legal conclusions.
(See “Def. Reply Obj.,”
Plaintiffs also object to Defendant’s
(See “Pl.
"Objections to evidence on
Burch v. Regents of
Thus, the Court does not rule on any of
13
1
2
Plaintiffs also object to Defendant’s evidence
3
regarding Defendant’s lack of actual knowledge on the
4
ground that such evidence constituted improper lay
5
opinion in violation of Federal Rule of Evidence 701.
6
(See “Pl. Reply Obj.,” Doc. No. 30.)
7
between lay and expert witness testimony is that lay
8
testimony results from a process of reasoning familiar
9
in everyday life, while expert testimony results from a
“The distinction
10
process of reasoning which can be mastered only by
11
specialists in the field.”
12
Appx. 848, 851 (9th Cir. 2009) (internal citations and
13
quotations omitted).
14
upon scientific, technical, or other specialized
15
knowledge, its admissibility must be determined by
16
reference to Rule 702, not Rule 701.”
17
413 F.3d 201, 215 (2nd Cir. 2005) (internal citations
18
and quotations omitted); see also, S.E.C. v. Sabhlok,
19
495 Fed. Appx. 786, 787 (9th Cir. 2012) (citing Fed. R.
20
Evid. 701(c)) (“Rule 701(c) of the Federal Rules of
21
Evidence forbids only lay opinion testimony that is
22
‘based on scientific, technical, or other specialized
23
knowledge within the scope of Rule 702.’”).
24
Marlowe’s statements in her declaration are rationally
25
based on her perception and knowledge of the absence of
26
any prior complaints as to the regular rate
27
calculation.
28
Appendix, ¶¶ 5-8.)
U.S. v. Corona, 359 Fed.
“If the opinion rests in any way
U.S. v. Garcia,
Marcella
(“Marlowe Decl.,” Exh. 3 to Def. Opp.
Given her position as the Human
14
1
Resources Director and the top manager in the Human
2
Resources Office, Ms. Marlowe would have known of any
3
issues or complaints regarding the regular rate
4
calculation.
5
opinion qualifies as a lay opinion.
6
Court OVERRULES Plaintiffs’ objections as Ms. Marlowe’s
7
statement to the extent that they object to her
8
statement as an improper lay opinion.
(Id., ¶ 7.)
Therefore, Ms. Marlowe’s
Accordingly, the
9
10
B.
Uncontroverted Facts
11
12
Both sides cite facts that are not relevant to
13
resolution of the motions.
To the extent certain facts
14
are not mentioned in this Order, the Court has not
15
relied on them in reaching its decision.
16
finds the following material facts are supported
17
adequately by admissible evidence and are
18
uncontroverted.
19
controversy" for the purposes of this Motion.
20
3; see generally Fed. R. Civ. P. 56.
The Court
They are "admitted to exist without
L.R. 56-
21
22
1.
The Work Period and Overtime
23
24
Plaintiffs are employed as full-time police
25
officers by Defendant and are members of the San
26
Gabriel Police Officers’ Association (“POA”), a
27
collective bargaining unit.
28
SGD, ¶¶ 1-2; Def. SUF, ¶ 5; Pl. SGD, ¶ 5.)
(Pl. SUF, ¶¶ 1-2; Def.
15
At all
1
times during their employment, Plaintiffs have been
2
“non-exempt” hourly employees.
3
SGD, ¶ 3.)
(Pl. SUF, ¶ 3; Def.
4
5
Since 1994, Defendant has utilized a 14-day work
6
period for calculation of overtime for sworn law
7
enforcement personnel.
8
Since 2003, Defendant’s adoption of the 14-day law
9
enforcement work period has been memorialized in
(Def. SUF, ¶ 1; Pl. SGD, ¶ 1.)
10
various City resolutions and documents.
(Def. SUF, ¶
11
2; Pl. SGD, ¶ 2.)
12
time Police Department personnel in a “bi-weekly”
13
period is 80 hours.
14
Article 10 of the 2005-2007 Memorandum of understanding
15
(“MOU”) between Defendant and POA defines overtime as
16
“all hours worked over (80) in the two (2) week pay
17
period of employees.”
18
Accordingly, Defendant calculated and paid overtime
19
based upon hours worked over 80 in the 14-day period.
20
(Def. SUF, ¶ 7; Pl. SGD, ¶ 7.)
21
2005-2007 MOU’s definition of overtime in its Salary,
22
Compensation and Benefits Policy Manual.
23
9; Pl. SGD, ¶ 9.)
24
the 2005-2007 MOU has not been incorporated into
25
subsequent MOUs, Defendant’s practice of calculating
26
and paying overtime based upon the 80 hour/14-day
27
period has not changed.
28
¶¶ 8, 10.)
The number of hours worked by full-
(Def. SUF, ¶ 3-4; Pl. SGD, ¶ 3-4.)
(Def. SUF, ¶ 6; Pl. SGD, ¶ 6.)
Defendant restated the
(Def. SUF, ¶
Although the overtime language in
(Def. SUF, ¶¶ 8, 10; Pl. SGD,
The 14-day payroll period in use by
16
1
Defendant coincides with the 14-day work period for
2
sworn law enforcement personnel.
3
SGD, ¶ 11.)
(Def. SUF, ¶ 11; Pl.
4
5
Defendant requires Plaintiffs to record their hours
6
worked, including any overtime hours, on bi-weekly, 14-
7
day “Time and Attendance Reports” which indicate they
8
cover a two-week, 14-day work period.
9
Pl. SGD, ¶ 12.)
(Def. SUF, ¶ 12;
Defendant assigns certain police
10
officers to a 3/12 schedule under which each employee
11
was assigned three 12-hour shifts one week and four 12-
12
hour shifts in the other, resulting in a total of 84
13
hours worked.
14
the 3/12 schedule was first implemented, Defendant
15
credited each employee with 4 hours of compensatory
16
time off in each payroll period to compensate for the
17
84 hours worked in the two-week period.
18
14; Pl. SGD, ¶ 14.)
(Def. SUF, ¶ 13; Pl. SGD, ¶ 13.)
When
(Def. SUF, ¶
19
20
Subsequently, pursuant to the 2005-2007 MOU, the
21
City and the POA agreed that employees assigned to a
22
3/12 schedule would be credited with four hours of
23
compensatory time at time and a half for the four
24
regularly scheduled hours worked over 80 during each
25
work period.
26
According to Defendant’s current practice, for officers
27
assigned a 3/12 schedule, hours worked in excess of 84
28
regularly scheduled hours may either be paid out or
(Def. SUF, ¶ 15; Pl. SGD, ¶ 15.)
17
1
credited as compensatory time at time and one half at
2
the discretion of the employee.
3
SGD, ¶ 16.)
4
hours worked over 80 are paid out, or compensatory time
5
is credited, at time and one half.
6
Pl. SGD, ¶ 17.)
(Def. SUF, ¶ 16; Pl.
For employees working other schedules,
(Def. SUF, ¶ 17;
7
8
2.
Flexible Benefit Plan
9
10
In August of 1993, Defendant adopted a Flexible
11
Benefit Plan (“Plan”) for purposes of providing
12
benefits to employees.
13
¶¶ 18, 24.) Pursuant to the Plan, Defendant makes a set
14
and fixed Employer Contribution on behalf of employees
15
on an annual basis pursuant to City Council resolution.
16
(Def. SUF, ¶ 19; Pl. SGD, ¶ 19.)
17
Contribution is converted into Cafeteria Plan Benefit
18
Dollars which are then made available to employees for
19
purchase of select benefits.
20
¶ 20.)
21
is applied toward dental and vision insurance for the
22
employee.
23
employee may then elect one or more additional
24
benefits.
(Def. SUF, ¶¶ 18, 24; Pl. SGD,
The Employer
(Def. SUF, ¶ 20; Pl. SGD,
A portion of the Cafeteria Plan Benefit Dollars
(Def. SUF, ¶ 21; Pl. SGD, ¶ 21.)
The
(Def. SUF, ¶ 22; Pl. SGD, ¶ 22.)
25
26
Upon providing proof of alternative medical
27
coverage, the employee may opt out of enrollment in
28
medical coverage under the Plan.
18
(Def. SUF, ¶ 23; Pl.
1
SGD, ¶ 23.)
2
alternate medical coverage the option to waive medical
3
coverage offered by Defendant and receive any unused
4
portion of their monthly benefit allowance as taxable
5
income on their paycheck.
6
7.)
7
have not been applied toward the purchase of available
8
benefits, any excess amounts are paid to the employee
9
as taxable income in lieu of benefits.
10
The Plan gives employees who have
(Pl. SUF, ¶ 7; Def. SGD, ¶
Likewise, if any of the Employer Contributions
(Def. SUF, ¶
25; Pl. SGD, ¶ 25.)
11
Employees who elect to receive some or all of their
12
13
monthly benefit allowance in cash3 receive two direct
14
payments per month that appear as a designated line
15
item on their paychecks.
16
13.)
17
Plan are not made to a trustee or third person on
18
behalf of the employee.
19
14.)
20
state withholding taxes, Medicare taxes, and
21
garnishment.
(Pl. SUF, ¶ 13; Def. SGD, ¶
Cash payments made to employees pursuant to the
(Pl. SUF, ¶ 14; Def. SGD, ¶
The cash value received is subject to federal and
(Pl. SUF, ¶ 16; Def. SGD, ¶ 16.)
22
23
24
25
26
27
28
3
The term “cash payments,” as used by the parties,
refers to the unused portion of the monthly benefit
allowance that employees receive as taxable income on
their paychecks. Employees do not receive these
payments in the form of cash. Rather, the payments
appear as a designated line item on the employees’
paychecks every pay period. (Pl. SUF, ¶ 13; Def. SGD,
¶ 13.)
19
1
The Employer Contribution to the Plan in a given
2
pay period is fixed and does not vary based upon the
3
number of hours an employee works.
4
Pl. SGD, ¶ 26.)
5
receive back as cash from the Plan each month is also
6
fixed, and is based upon the extent of the employee’s
7
utilization of available benefits.
8
Pl. SGD, ¶ 28.)
9
receive as cash in lieu of benefits is not contingent
(Def. SUF, ¶ 26;
The excess amount an employee may
(Def. SUF, ¶ 28;
Therefore, the amount an employee may
10
upon the number of hours worked or the employee’s
11
productivity.
(Def. SUF, ¶¶ 29-30; Pl. SGD, ¶¶ 29-30.)
12
In 2009, direct cash payments to employees as cash
13
14
in lieu of benefits amounted to 46.725% of total Plan
15
contributions.
16
2010, direct cash payments to employees made in lieu of
17
benefits totaled 42.842% of total Plan contributions.
18
(Pl. SUF, ¶ 22; Def. SGD, ¶ 22.)
19
payments to employees made in lieu of benefits made up
20
43.934% of total Plan contributions.
21
Def. SGD, ¶ 24.)
22
employees made in lieu of benefits made up 45.179% of
23
total Plan contributions.
24
26.)
(Pl. SUF, ¶ 20; Def. SGD, ¶ 20.)
In
In 2011, direct cash
(Pl. SUF, ¶ 24;
In 2012, direct cash payments to
(Pl. SUF, ¶ 26; Def. SGD, ¶
25
26
Since at least 2003, Defendant has not included the
27
value of cash payments made in lieu of benefits in the
28
calculation of the recipient’s FLSA regular rate of
20
1
pay.
2
Defendant include the entire monthly benefit allowance
3
amount in the calculation of each individual employee’s
4
FLSA regular rate of pay.
5
29.)
6
whether or not these payments are properly excludable
7
from the FLSA regular rate calculation.
8
28; Def. SGD, ¶ 28.)
9
review of its Plan to ascertain what percentage of
(Pl. SUF, ¶ 27; Def. SGD, ¶ 27.)
Neither does
(Pl. SUF, ¶ 29; Def. SGD, ¶
Defendant has not conducted an inquiry into
(Pl. SUF, ¶
Defendant did not conduct a
10
total Plan contributions are paid out in cash to
11
employees prior to the filing of this lawsuit.
12
SUF, ¶ 30; Def. SGD, ¶ 30.)
(Pl.
13
14
Over the years, Defendant regularly met with the
15
POA to discuss issues of concern regarding wages and
16
compensation of employees, including overtime pay.4
17
(Def. SGD, ¶ 17; Pl. Resp., ¶ 17.)
18
meetings and discussions between Defendant and the POA,
19
at no time prior to the filing of this action did
20
either the POA or employees ever raise Defendant’s
21
failure to include in the FLSA regular rate the amounts
Despite these
22
4
23
24
25
26
27
28
Defendant claims that by meeting with the POA,
Defendant, by extension, met with each of the
Plaintiffs. (Def. SGD, ¶ 17.) Defendant’s cited
evidence does not provide support to Defendant’s
statement. (See Marlowe Decl., Exh. 3 to Def. Opp.
Appendix, ¶ 5.) Plaintiffs oppose Defendant’s
statement but do not cite to any supporting evidence to
the contrary. (Pl. Resp., ¶ 17.) The dispute as to
whether meeting with the POA is by extension meeting
with each of the Plaintiffs is immaterial as it has no
bearing on the issues now before the Court.
21
1
contributed into the Plan, including cash payments to
2
employees in lieu of benefits.
3
Resp., ¶ 19.)
(Def. SGD, ¶ 19; Pl.
4
Plaintiffs are paid overtime compensation pursuant
5
6
to their labor agreement with Defendant for all hours
7
worked in excess of eighty hours in a two-week work
8
period.
9
each received cash payments in lieu of benefits at some
(Pl. SUF, ¶ 31; Def. SGD, ¶ 31.)
Plaintiffs
10
point in time between June 1, 2009 and June 1, 2012.
11
(Pl. SUF, ¶ 32; Def. SGD, ¶ 32.)
12
3.
13
Section 207(k) Exemption
14
Defendant’s Salary, Compensation and Benefits
15
16
Policy (“Policy”) expressly states that firefighters
17
employed by Defendant are subject to the 207(k)
18
exemption, but it makes no reference to the 207(k)
19
exemption as it pertains to police officers.5
20
¶ 46; Exh. B to Bolander Opp. Decl., Exh. 3 to
21
Deposition of Linda Tang (“Tang Depo.”) at 10-13, 29-
22
31.)
23
firefighters are subject to 7(k) partial overtime
24
exemption, the Policy does not mention 7(k) exemption
25
or the FLSA in describing overtime threshold for police
26
27
28
(Pl. SGD,
While the Policy explicitly provides that
5
Defendant does not dispute the facts relating to
the absence of reference to the 207(k) exemption as it
pertains to police officers. Rather, Defendant objects
to the evidence as irrelevant. (Def. Reply Obj.)
22
1
officers.
2
Exh. 3 to Tang Depo. at 30-31.)
3
documents cited by Defendant as evidencing the election
4
of 207(k) exemption state that police officers are
5
subject to the 207(k) exemption.
6
Resolution No. 02-12, Exh. A to Def. Mot. Appendix at
7
7-8; Mot. MOU, Exh. C to Def. Mot. Appendix at 3.)
(Pl. SGD, ¶ 47; Exh. B to Bolander Decl.,
None of the other
(Pl. SGD, ¶ 48;
8
9
C.
Exclusion of Payments under 29 U.S.C. § 207(e)(2)
10
11
Under the FLSA, employees working overtime must be
12
compensated “at a rate not less than one and one-half
13
times the regular rate at which he is employed.”
14
U.S.C. § 207(a)(1).
15
whether Defendant’s exclusion of payments made pursuant
16
to the Flexible Benefit Plan (“Plan”) from the regular
17
rate calculation, which results in a lower calculation
18
of overtime pay, violates the FLSA.
19
argues that its exclusion of these payments is proper
20
under section 207(e)(2) since the payments are not made
21
as compensation for hours worked, but rather represent
22
fixed payments to employees for opting out of certain
23
benefits provided by Defendant.
29
The main issue before the Court is
Defendant first
(Def. Mot. at 10-13.)
24
25
The employer bears the burden of establishing that
26
a payment is exempt under the FLSA.
27
Works, Inc. v. Wirtz, 383 U.S. 190, 209 (1966).
28
exemptions are to be narrowly construed against . . .
23
Idaho Sheet Metal
“FLSA
1
employers and are to be withheld except as to persons
2
plainly and unmistakably within their terms and
3
spirit.” Klem v. Cnty. Of Santa Clara, Cal., 208 F.3d
4
1085, 1089 (9th Cir. 2000) (internal citations and
5
quotations omitted).
6
1.
7
Ninth Circuit Case Law
8
Defendant argues that payments to employees made in
9
10
lieu of benefits under the Plan are not made as
11
compensation for the hours of employment under the
12
final clause of section 207(e)(2).
13
13.)
14
“regular rate”
(Def. Mot. at 10-
Title 29 U.S.C. § 207(e)(2) excludes from the
15
[P]ayments made for occasional periods when no
16
work is performed due to vacation, holiday,
17
illness, failure of the employer to provide
18
sufficient work, or other similar cause;
19
reasonable payments for traveling expenses, or
20
other expenses, incurred by an employee in the
21
furtherance of his employer’s interests and
22
properly reimbursable by the employer; and
23
other similar payments to an employee which are
24
not made as compensation for his hours of
25
employment . . .
26
29 U.S.C. § 207(e)(2) (emphasis added).
27
Circuit has not addressed whether payments made to
28
employees out of flexible benefit plans must be
24
The Ninth
1
included in an employee’s regular rate for purposes of
2
the FLSA.
3
have addressed whether other payments and benefits are
4
excluded from the regular rate calculation, none has
5
addressed the application of section 207(e)(2) to
6
payments made under flexible benefit plans.
While other district courts in California
7
The Ninth Circuit addressed the issue of whether
8
9
“supplemental payments, designed to bring the wage of a
10
partially disabled worker up to his or her
11
predisability wage level,” should be included in the
12
regular rate of pay used to calculate overtime in Local
13
246 Util. Workers Union of Am. v. S. Cal. Edison Co.,
14
83 F.3d 292, 294 (9th Cir. 1996) (“Local 246”).
15
court held that the employer “must include these
16
supplemental payments in the regular rate used to
17
calculate overtime.”
18
the employer in Local 246 argued that the supplemental
19
payments were not compensation for hours worked since
20
they were not tied to specific working hours.
21
295.
Id. at 296.
The
Like Defendant here,
Id. at
22
23
The Ninth Circuit held that “[t]he key point is
24
that the pay or salary is compensation for work, and
25
the regular rate therefore must be calculated by
26
dividing all compensation paid for a particular week by
27
the number of hours worked in that week.”
28
(citing 29 C.F.R. § 778.109).
Id. at 295
The Court added that “it
25
1
makes no difference whether the supplemental payments
2
are tied to a regular weekly wage or regular hourly
3
wage.”6
Id.
4
5
Following the reasoning in Local 246, the Court
6
finds Defendant’s payments made in lieu of benefits
7
under the Plan constitute compensation for service even
8
if they are not tied to a regular weekly or hourly
9
wage.
Local 246 noted that “pay or salary that is paid
10
by the week or longer period is still counted in
11
calculating the regular hourly rate.” Local 246, 83
12
F.3d at 295 (citing 29 C.F.R. § 778.109).
13
employees electing to receive some or the entire
14
monthly benefit allowance in cash receive two cash
15
payments per month which appear on their paychecks and
16
are subject to federal and state taxes.
17
13, 16; Def. SGD, ¶¶ 13, 16.)
18
receive these payments periodically and the payments
19
are subject to taxes, they are remuneration for work
20
performed and therefore must be included in the regular
21
rate of pay used in calculating overtime.7
22
23
24
Here,
(Pl. SUF, ¶¶
Since the employees
See Retail
6
The Seventh Circuit in Reich v. Interstate Brands
Corp., 57 F.3d 574, 577 (7th Cir. 1995) reiterated that
section 207(e)(2) “cannot possibly exclude every
payment that is not measured by the number of hours
spent at work.” Id. at 577.
25
In Minizza v. Stone Container Corp. Corrugated
Container Div. East Plant, 842 F.2d 1456 (3rd Cir.
1988), the Third Circuit concluded that two lump sum
payments made pursuant to the terms of a collective
7
26
27
28
(continued . . .)
26
1
Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 193 (4th
2
Cir. 2007) (“Healthcare benefits are a part of the
3
total package of employee compensation an employer
4
gives in consideration for an employee’s services.”).
5
As the Local 246 Court noted, the fact that these
6
payments are not tied to specific hours worked has no
7
bearing on the characterization of the payment as
8
compensation for work.
9
(citing Reich v. Interstate Brands Corp., 57 F.3d 574,
10
577 (7th Cir. 1995), cert. denied, 516 U.S. 1042 (1996)
11
(“Even if payments to employees are not measured by the
12
number of hours spent at work, that fact alone does not
13
qualify them for exclusion under section 207(e)(2).”)).
Local 246, 83 F.3d at 295 n.2
14
15
16
( . . . continued)
17
18
19
20
21
22
23
24
25
26
27
bargaining agreement were excluded from regular rate
calculations under section 207(e)(2) because they “were
nothing more or less than an inducement by the
employers to the employees to ratify the agreement on
the terms proposed by the employers.” Id. at 1457,
1462. The Court finds the Third Circuit decision in
Minizza inapposite to the instant case. Here,
Defendant adopted the Plan for the purpose of providing
benefits to its employees. (Def. SUF, ¶¶ 18, 24; Pl.
SGD, ¶¶ 18, 24.) The cash payments here are taxed as
wages. (Pl. SUF, ¶ 16; Def. SGD, ¶ 16.) Unlike the
lump sum payments in Minizza payable once a year for
two consecutive years, the cash payments made in lieu
of benefits here are made on a bi-weekly basis and
appear on the employees’ paychecks. (Pl. SUF, ¶ 13;
Def. SGD, ¶ 13.)
28
27
1
Defendant argues that payments made in lieu of
2
benefits are analogous to compensation for lunch
3
periods that are excludable under section 207(e)(2).
4
(Def. Mot. at 11-12.)
5
Corp., 370 F.3d 901, 909 (9th Cir. 2004), the Ninth
6
Circuit held that payments for lunch periods were
7
excluded from calculation of the regular rate under
8
section 207(e)(2).
9
parties treated the lunch period as non-working time.
In Ballaris v. Wacher Siltronic
The court recognized that the
10
Ballaris, 370 F.3d at 909.
Therefore, the court held
11
that these payments “constituted an additional benefit
12
for employees and not compensation for hours worked.”
13
Id. at 909.
14
15
The facts in Ballaris are distinguishable from
16
those before the Court.
While the parties in Ballaris
17
agreed that the lunch period constituted non-working
18
time, there is no evidence here that employees receive
19
the benefit payments or cash in lieu of benefits for
20
time spent not working.
21
statutory language of section 207(e)(2) highlights the
22
distinction.
23
regular rate payments that are similar to “payments
24
made for occasional periods when no work is performed
25
due to vacation, holiday, illness, failure of the
26
employer to provide sufficient work . . .”
27
207(e)(2).
28
time off due to illness, lunch periods constitute time
An examination of the
Section 207(e)(2) excludes from the
29 U.S.C. §
Just like vacation periods, holidays, and
28
1
when no work is performed.
2
made in lieu of benefits under the Plan are not
3
analogous to non-working periods enumerated in section
4
207(e)(2) since they are not payments made for a period
5
where no work is performed.8
On the other hand, payments
6
7
Rather, payments made in lieu of benefits are more
8
analogous to the reimbursements at issue in Adoma v.
9
Univ. of Phoenix, Inc., 779 F. Supp. 2d 1126 (E.D. Cal.
10
2011).
At issue in Adoma were tuition benefits paid to
11
employees and their dependents for courses taken at the
12
defendant university and other subsidiary institutions
13
(internal program) and non-subsidiary institutions
14
(external program).
Adoma, 779 F. Supp. 2d at 1128-29.
15
16
17
18
19
20
21
22
23
24
25
26
27
Defendant argues that the payments here are
analogous to buy backs of unused benefits. (Def. Mot.
at 13.) Defendant relies in part on Chavez v. City of
Albuquerque, 630 F.3d 1300 (10th Cir. 2011), where the
Tenth Circuit distinguished between buy backs of
vacation days and sick days and held that while sick
leave buy-backs must be included in the regular rate,
vacation leave buy-backs were excludable under section
207(e)(2). Id. at 1309-1310. In Chavez, the court
focused on the burden or benefit to the employer
resulting from use of sick days and vacation days. Id.
at 1309-1310. Here, by contrast, the burden on
Defendant does not vary depending on employee’s use of
benefits under the Plan since Defendant’s contribution
on behalf of employees is set and fixed on an annual
basis. (Def. SUF, ¶ 19; Pl. SGD, ¶ 19.) Therefore,
the Chavez Court’s reasoning is not instructive on the
issue before the Court.
8
28
29
1
The court held that since “the tuition benefit is not a
2
payment made for a period where no work is performed,”
3
it had to analyze whether the payment is similar to
4
“reasonable payments for traveling expenses, or other
5
expenses, incurred by the employee in the furtherance
6
of his employer’s interests and properly reimbursable
7
to the employer” under section 207(e)(2).
8
discussing the Department of Labor’s regulations and
9
1994 Opinion Letter, the court reasoned that “[o]ne
Id.
After
10
determines whether a payment is compensation for work
11
by considering whether the benefit primarily benefits
12
the employee or the employer.”
13
held that the internal benefit was not excludable from
14
the regular rate of pay since the benefit to the
15
employee outweighed that to the employer.9
Id. at 1137.
The court
Id. at 1138.
16
17
As in Adoma, there is no evidence here that
18
Defendant made cash payments in lieu of benefits for
19
periods where no work is performed.
20
amount an employee may receive back as cash from the
21
Plan is based on the extent of the employee’s
22
utilization of available benefits.
23
Pl. SGD, ¶ 28.)
24
under section 207(e)(2) only if they are similar to
Rather, the excess
(Def. SUF, ¶ 28;
Therefore, the payments are excludable
25
9
26
27
28
The court in Adoma held that there was
insufficient evidence concerning the external tuition
benefit, and it declined to determine whether the
external benefit primarily benefits the employer or the
employee. Adoma, 779 F. Supp. 2d at 1139.
30
1
payments made for “traveling expenses, or other
2
expenses, incurred by an employee in furtherance of his
3
employer’s interests . . .”
4
is uncontroverted that Defendant adopted the Plan to
5
provide benefits to its employees.
6
24; Pl. SGD, ¶ 18, 24.)
7
Defendant also derives a benefit from the Plan by
8
having healthier employees that are more productive,
9
cash payments to employees clearly benefit them more
29 U.S.C. ¶ 207(e)(2).
It
(Def. SUF, ¶ 18,
Even though one can argue that
10
than their employer.
Accordingly the Court finds,
11
based on the uncontroverted facts, that payments made
12
in lieu of benefits under the Plan are not excludable
13
from the regular rate of pay since they are not similar
14
to the examples enumerated in section 207(e)(2)
15
relating to non-working hours or expenses incurred for
16
the benefit of the employer.
17
18
2.
Policy Considerations
19
20
Defendant argues that public policy favors
21
exclusion of the cash-in-lieu of benefits payments from
22
calculation of the regular rate.
23
Defendant contends that if these cash payments are not
24
excluded, “employers will be less likely to allow
25
employees to receive the surplus as cash in order to
26
avoid an increase in overtime liability and paying more
27
in benefits than intended.”
28
contends that the interpretation deeming the cash
(Id.)
31
(Def. Mot. at 13.)
Thus, Defendant
1
payments exempt from inclusion in the regular rate
2
under section 207(e)(2) is the interpretation that most
3
favors the employees.
(Id.)
4
5
“FLSA exemptions are to be narrowly construed
6
against . . . employers and are to be withheld except
7
as to persons plainly and unmistakably within their
8
terms and spirit.” Klem v. Cnty. Of Santa Clara, Cal.,
9
208 F.3d 1085, 1089 (9th Cir. 2000) (internal citations
10
and quotations omitted).
Thus, the FLSA is construed
11
liberally in favor of employees.
12
Los Angeles, 420 F.3d 981, 988 (9th Cir. 2005).
13
Interpreting section 207(e)(2) to exclude cash payments
14
made in lieu of benefits would favor the employer
15
rather than the employee since it results in a lower
16
calculation of overtime pay.
17
excluding the cash payments from the regular rate
18
calculation benefits the employer who does not have to
19
pay the increased overtime rate.
20
a compelling argument, a narrow construction of the
21
FLSA exemptions compels a finding that cash payments
22
are not excludable under section 207(e)(2).
23
though this interpretation of section 207(e)(2) results
24
in an increase in overtime liability, an increase in
25
costs cannot be the basis for exclusion of cash
26
payments from regular rate calculation.
Cleveland v. City of
On the other hand,
27
28
32
While Defendant makes
Even
1
Narrowly construing the FLSA exemptions and in
2
light of Ninth Circuit precedent, the Court holds that
3
cash payments made in lieu of benefits under the Plan
4
are not excludable under section 207(e)(2) from
5
calculation of the regular rate.
6
7
D.
Exclusion under § 207(e)(4)
8
9
Plaintiffs contend that they are entitled to
10
partial summary judgment on the basis that Defendant’s
11
direct cash payments made in lieu of benefits cannot be
12
excluded from the regular rate under 29 U.S.C. §
13
207(e)(4).
14
contend that the value of all individual Plan
15
contributions must be included in the regular rate
16
since the Plan is not a “bona fide” plan under section
17
207(e)(4).
18
that even if the direct payments are not excludable
19
under section 207(e)(2), the payments are excludable
20
under section 207(e)(4) as interpreted in 29 C.F.R. §
21
778.215.
(Pl. Mot. at 11-15.)
(Pl. Mot. at 18-20.)
Plaintiffs also
Defendant counters
(Def. Mot. at 17-20.)
22
23
24
1.
Exclusion of Direct Cash-in-lieu of Benefits
Payments
25
26
Title 29 U.S.C. § 207(e)(4) excludes from the
27
regular rate of pay “contributions irrevocably made by
28
an employer to a trustee or third person pursuant to a
33
1
bona fide plan for providing old-age, retirement, life,
2
accident, or health insurance or similar benefits for
3
employees.”
4
statutory provisions, courts “first look to the
5
language of the statute to determine whether it has a
6
plain meaning.”
7
569 F.3d 946, 951 (9th Cir. 2009) (citation omitted).
8
Courts should presume that the “legislature says in a
9
statute what it means and means in a statute what it
29 U.S.C. § 207(e)(4).
In construing
Satterfield v. Simon & Schuster, Inc.,
10
says there.”
Id.
(internal citations and quotations
11
omitted).
12
statutory text, and ends there as well if the text is
13
unambiguous.”
14
omitted).
“Thus, [a court’s] inquiry begins with the
Id. (internal citations and quotations
15
16
In Local 246, the court found that “there is no
17
indication that any of the supplemental payments to the
18
employees consisted of contributions made by [the
19
employer] irrevocably to a trust.”
20
at 296.
21
“deals with contributions by the employer, not payments
22
to the employee.”
23
employer failed to show that any part of its
24
supplemental payments to the employees was made
25
irrevocably to a trust, section 207(e)(4) did not deem
26
the supplemental payments excludable from the regular
27
rate calculation.
Local 246, 83 F.3d
The court emphasized that section 207(e)(4)
Id.
The Court held that since the
Id.
28
34
1
Based on the plain language of section 207(e)(4),
2
an employer’s contribution may be excluded from
3
calculation of the regular rate if the employer
4
irrevocably makes the contribution to a trustee or
5
third person.
6
Local 246, it is undisputed that Defendant made all the
7
cash-in-lieu of benefits payments directly to
8
Plaintiffs rather than a trustee or third party.10
9
SUF, ¶¶ 13-14; Def. SGD, ¶¶ 13-14.)
29 U.S.C. § 207(e)(4).
Here, as in
(Pl.
Defendant does not
10
argue that any part of the payment to Plaintiffs
11
consisted of payments Defendant made irrevocably to a
12
trust or third party.
13
207(e)(4) is unambiguous as to the requirement that the
14
contribution be made to a third party or trustee, the
15
Court finds it unnecessary to resort to the Department
Since the language of section
16
17
18
19
20
21
22
23
24
25
26
27
10
Defendant argues that Local 246 is
distinguishable from the present case since the court
found that the contributions in Local 246 were not
excludable under section 207(e)(2). (Def. Opp. at 910.) However, as discussed above, the Court finds that
Defendant’s cash payments are also not excludable under
section 207(e)(2). More importantly, the court’s
discussion of section 207(e)(4) in Local 246 is
independent of its holding regarding the applicability
of section 207(e)(2). See Local 246, 83 F.3d at 29596. Since sections 207(e)(2) and (e)(4) offer
alternative grounds for the exclusion of certain
payments from calculation of the regular rate, and the
court held that the supplemental payments did not
qualify for exclusion under section 207(e)(2), the
Court had to analyze whether the payments can be
excluded pursuant to section 207(e)(4). Contrary to
what Defendant argues, Local 246’s discussion of
section 207(e)(4) is not dicta.
28
35
1
of Labor’s interpretation as to that requirement.11
2
Therefore, Defendant’s cash payments to Plaintiffs made
3
in lieu of benefits are not excluded under the plain
4
language of section 207(e)(4) and must be included in
5
the calculation of the regular rate.
6
7
2.
Exclusion of the Entire Value of the Monthly
Benefits Allowance
8
9
10
Plaintiffs next argue that the entire value of the
11
monthly benefit allowance should be included in the
12
regular rate of pay because Defendant’s Plan does not
13
qualify as a bona fide plan under section 207(e)(4).
14
(Pl. Mot. at 18-21.)
15
the plain meaning of the term, Defendant’s Plan is a
16
bona fide plan, and Defendant’s contributions are
17
exempt under section 207(e)(4).
18
Defendant urges the Court to disregard the language of
19
the Department of Labor’s (“DOL”) interpretive
20
bulletin, 29 C.F.R. § 778.215, and a subsequent DOL
21
opinion letter, dated July 2, 2003 (“2003 Opinion
22
Letter”) because the language of section 207(e) is
23
unambiguous, and these two interpretive documents are
Defendant responds that, under
(Def. Opp. at 8-10.)
24
11
25
26
27
28
Even though the Court does not rely on the
Department of Labor’s interpretation of section
207(e)(4), the Court notes that 29 C.F.R. § 778.215
reiterates the requirement that payments can only be
excluded under section 207(e)(4) if they are made to a
trustee or third person. See 29 C.F.R. §
778.215(a)(4).
36
1
inconsistent with one another.12
2
The Court will first address whether the DOL’s
3
interpretations in section 778.215 and the 2003 Opinion
4
Letter conflict with each other or conflict with the
5
language of section 207(e)(4).
6
address whether Defendant’s contribution into the Plan
7
is excludable under section 207(e)(4).
(Def. Opp. at 10-14.)
The Court will then
8
a.
9
Department of Labor’s Interpretations
10
11
As stated above, section 207(e)(4) excludes from
12
“regular rate” any “contributions irrevocably made by
13
an employer to a trustee or third person pursuant to a
14
bona fide plan for providing old-age, retirement, life,
15
accident, or health insurance or similar benefits for
16
employees.”
17
the statutory language, a payment can only be excluded
18
under subsection (e)(4) if (1) it is made to a trustee
19
or third person, and (2) it is made pursuant to a bona
20
fide plan.
21
a dictionary definition of the term “bona fide” as one
22
that is “1. Made in good faith; without fraud or
23
24
25
26
27
28
29 U.S.C. § 207(e)(4).
See Id.
Therefore, under
Defendant urges the Court to adopt
12
Defendant advances conflicting arguments with
regards to the applicability of 29 C.F.R. § 778.215.
In its Opposition to Plaintiffs’ Motion, Defendant
argues that the Court should not consider section
778.215 since it is not persuasive and conflicts with
the 2003 Opinion Letter. (Def. Opp. at 10-14.) On the
other hand, Defendant relies on section 778.215 in its
Motion for Summary Judgment to argue that its cash
payments made in lieu of benefits are exempt under
section 207(e)(4). (Def. Mot. at 17-20.)
37
1
deceit. 2. Sincere; genuine.”
2
However, it is unclear from the statutory language
3
whether Congress used the term “bona fide” in its
4
ordinary meaning or as a term of art.
5
statutory ambiguity, the Court examines 29 C.F.R. §
6
778.215(a)(5) for guidance.
7
for Human Development, Inc., 233 F.3d 175, 185 (3rd
8
Cir. 2000).
(Def. Opp. at 8.)
In light of the
See Madison v. Resources
9
10
Title 29 C.F.R. § 778.215(a) enumerates certain
11
conditions for the exclusion of an employer’s
12
contribution from the regular rate of pay under section
13
207(e)(4).
Section 778.215(a)(5) provides:
14
[I]f a plan otherwise qualified as a bona fide
15
benefit plan under section 7(e)(4) of the Act,
16
it will still be regarded as a bona fide plan
17
even though it provides, as an incidental part
18
thereof, for the payment to an employee in cash
19
of all or part of the amount standing to his
20
credit . . .(iii) during the course of his
21
employment under circumstances specified in the
22
plan and not inconsistent with the general
23
purposes of the plan to provide the benefits
24
described in section 7(e)(4) of the Act.
25
29 C.F.R. 778.215(a)(5).
The 2003 Opinion Letter
26
provides that a cafeteria plan may qualify as a bona
27
fide benefits plan for purposes of section 7(e)(4) if:
28
“(1) no more than 20% of the employer’s contribution is
38
1
paid out in cash; and (2) the cash is paid under
2
circumstances that are consistent with the plan’s
3
overall primary purpose of providing benefits.” Dep’t
4
of Labor Op. Letter, 2003 WL 23374600, at *3 (July 2,
5
2003).
6
7
Section 778.215(a)(5) is not a formal
8
administrative regulation; rather, it is “an
9
interpretive guideline, issued on the advice of the
10
Solicitor of Labor and authorized by the Secretary, not
11
an official regulation promulgated after notice-and-
12
comment rule making.”
13
(citing 29 C.F.R. § 778.1).13
14
Opinion Letter is an informal agency interpretation.
15
Madison, 233 F.3d at 186.
16
not entitled to deference under Chevron U.S.A., v.
17
Natural Resources Defense Council, Inc., 467 U.S. 837
Madison, 233 F.3d at 185-86
Likewise, the 2003
As such, these documents are
18
19
20
21
22
23
24
25
26
27
13
29 C.F.R. § 778.1 provides:
This part 778 constitutes the official
interpretation of the Department of Labor with respect
to the meaning and application of the maximum hours and
overtime pay requirements contained in section 7 of the
Act. It is the purpose of this bulletin to make
available in one place the interpretations of these
provisions which will guide the Secretary of Labor and
the Administrator in the performance of their duties
under the Act unless and until they are otherwise
directed by authoritative decisions of the courts or
conclude, upon reexamination of an interpretation, that
it is incorrect. These official interpretations are
issued by the Administrator on the advice of the
Solicitor of Labor, as authorized by the Secretary.
28
39
1
(1984).14
2
“entitled to respect” under Skidmore v. Swift, 323 U.S.
3
134 (1944), “but only to the extent they have the
4
‘power to persuade.’”
Rather, the agency interpretations are
Christensen, 529 U.S. at 587.
5
6
In Skidmore, the Court explained:
7
[R]ulings, interpretations and opinions of the
8
Administrator under this Act, while not
9
controlling upon the courts by reason of their
10
authority, do constitute a body of experience
11
and informed judgment to which courts and
12
litigants may properly resort for guidance.
13
The weight of such a judgment in a particular
14
case will depend upon the thoroughness evident
15
in its consideration, the validity of its
16
reasoning, its consistency with earlier and
17
later pronouncements, and all those factors
18
which give it power to persuade, if lacking
19
power to control.
20
Skidmore, 323 U.S. at 140.
21
agency interpretation cannot run contrary to Congress’s
22
intent as reflected in a statute’s plain language and
23
purpose.”
“To be persuasive, an
Madison, 233 F.3d at 187.
24
25
14
26
27
28
In Chevron, the Supreme Court held that a court
“must give effect to an agency’s regulation containing a
reasonable interpretation of an ambiguous statute.”
Christensen v. Harris Cnty., 529 U.S. 576, 586 (2000)
(citing Chevron, 467 U.S. at 842-44).
40
1
In its Motion for Summary Judgment, Defendant
2
contends that its cash-in-lieu of benefits payments
3
“generally satisfy the criteria for exclusion” under
4
section 207(e)(4) and 29 C.F.R. § 778.215.
5
at 18.)
6
administers its own Flexible Benefit Plan should not
7
operate to the City’s detriment.”
(Def. Mot.
Defendant argues that the fact that it “self-
(Def. Mot. at 19.)
8
9
The Court finds 29 C.F.R. § 778.215(a)(5)
10
persuasive.
Section 778.215(a)(5) clarifies that an
11
otherwise bona fide benefit plan under section
12
207(e)(4) remains bona fide even if an employee
13
receives as payment all or a portion of the amount
14
standing to his credit.
15
The language of section 778.215(a)(5) does not run
16
contrary to section 207(e)(4).
17
not read section 778.215(a)(5) to eliminate the
18
requirement of section 207(e)(4) that a contribution
19
must be made to a trustee or third person.
20
778.215(a)(5) only states that a plan can still be
21
considered a bona fide plan even if the employer makes
22
direct cash payments to the employee.
23
778.215(a)(5).
24
for the proposition that those direct cash payments—
25
even if made pursuant to a bona fide plan—may be
26
excludable under section 207(e)(4).
27
778.215 does not eliminate the requirements set forth
28
in section 207(e)(4).
29 C.F.R. § 778.215(a)(5).
However, the Court does
Section
29 C.F.R. §
Section 778.215(a)(5) does not stand
41
Therefore section
1
2
On the other hand, the Court finds the 2003 Opinion
3
Letter unpersuasive and does not resort to it for
4
guidance.
5
Administrator stated that a plan may qualify as a bona
6
fide benefits plan under section 207(e)(4) if “(1) no
7
more than 20% of the employer’s contribution is paid
8
out in cash; and (2) the cash is paid under
9
circumstances that are consistent with the plan’s
In the 2003 Opinion Letter, the
10
overall primary purpose of providing benefits.”
Dep’t
11
of Labor Op. Letter, 2003 WL 23374600, at *3.
12
Defendant argues that the 20% maximum requirement is
13
inconsistent with the language of section 778.215
14
stating that a plan is still a bona fide benefits plan
15
even if the plan provides for the payment to an
16
employee of “all or a part of the amount standing to
17
his credit.”
18
778.215(a)(5) (emphasis added).
19
Under section 778.215(a)(5), a plan allowing an
20
employee to receive up to 100% of the contribution in
21
cash could still be a bona fide plan.
22
778.215(a)(5).
23
ceases to be bona fide one when more than 20% of total
24
plan contributions constitute payments to employees.
25
Dep’t of Labor Op. Letter, 2003 WL 23374600, at *3.
26
Therefore, the 2003 Opinion Letter is not inconsistent
27
with section 778.215.
28
an employee to receive up to 100% of the contribution
(Def. Opp. at 14); 29 C.F.R. §
The Court disagrees.
29 C.F.R. §
Under the 2003 Opinion Letter, a plan
In other words, a plan allowing
42
1
can still be a bona fide plan, so long as the total
2
cash payments to the employees do not exceed 20% of
3
total plan contributions.
4
that the 20% ceiling set forth in the 2003 Opinion
5
Letter does not conflict with the language of section
6
778.215(a)(5).
Therefore, the Court finds
7
8
9
The Court, however, finds the 2003 Opinion Letter
unpersuasive for a different reason.
There, the
10
Administrator adopted the 20% limitation from prior
11
opinion letters.
Dep’t of Labor Op. Letter, 2003 WL
12
23374600, at *2.
According to the Opinion Letter, the
13
20% cap “historically has been applied on an employee-
14
by-employee basis.”
15
any employee to receive more than 20% of the amount
16
standing to his or her credit in cash, the plan would
17
fail to qualify as bona fide.”
18
in the 2003 Opinion Letter adopted the 20% test to
19
apply on a plan-wide basis rather than employee-by-
20
employee basis.
21
interpretation does not run contrary to the language of
22
section 778.215, the historical background on which the
23
interpretation is based proves inconsistent with
24
section 778.215.
25
employee-by-employee basis, the prior opinion letters
26
ran contrary to the language of section 778.215(a)(5),
27
which provides that a plan may still qualify as a bona
28
fide plan even if an employee receives a portion or all
Id.
Id.
Therefore, “if a plan allowed
Id.
The Administrator
While the Administrator’s
By applying the 20% cap on an
43
1
of the contribution as payment.
2
778.215(a)(5).
3
discuss the rationale for adopting the same 20% figure
4
to apply as a limitation on a plan-wide basis.
5
the Administrator simply stated, “[w]e continue to
6
believe that this 20% cap is an appropriate method for
7
assessing whether any cash payments are an incidental
8
part of a bona fide benefits plan under
9
778.215(a)(5)(iii).”
10
WL 23374600, at *2.
11
discuss the reasoning behind the DOL’s historical
12
adoption of the 20% cap in prior opinion letters.
13
Accordingly, under Skidmore, the Court finds the 2003
14
Opinion Letter unpersuasive since the Administrator
15
fails to provide any reasoning for adopting the 20% cap
16
on a plan-wide basis.
29 C.F.R. §
Moreover, the Administrator failed to
Rather,
Dep’t of Labor Op. Letter, 2003
Neither did the Administrator
17
b.
18
Qualification as a Bona Fide Plan
19
20
Plaintiffs argue that since the Plan is not a bona
21
fide plan, the entire value of each Plaintiff’s monthly
22
benefit allowance should be included in the regular
23
rate.
24
Plaintiffs’ argument rests on the premise that
25
Defendant has paid more than 20% of the total Plan
26
Contributions to employees over the last four years.
27
(Id.)
28
adopt the 20% limitation as a test for determining
(Pl. Mot. at 18-21.)
The majority of
However, as stated above, the Court does not
44
1
whether the Plan is a bona fide one since it finds the
2
2003 Opinion Letter unpersuasive.
3
discussed above, since Defendant makes cash payments in
4
lieu of benefits directly to employees, rather than a
5
trustee or third party, the cash payment cannot be
6
excluded under section 207(e)(4).
In addition, as
7
8
Based on the uncontroverted facts, the Court finds
9
that Defendant’s Flexible Benefit Program qualifies as
10
a bona fide plan.
Under section 778.215(a)(2), the
11
primary purpose of the Plan is to provide health
12
insurance benefits to the employees.
13
20, 24; Pl. SGD, ¶¶ 18, 20, 24.)
14
contribution is converted into Cafeteria Plan Benefit
15
Dollars that can be used by the employees to purchase
16
dental and vision insurance.
17
SGD, ¶¶ 20-21.)
18
more additional benefits to purchase under the Plan.
19
(Def. SUF, ¶ 22; Pl. SGD, ¶ 22.)
20
Defendant’s policy that an employee may opt out of
21
enrollment in medical coverage under the Plan only
22
after providing proof of alternative medical coverage
23
demonstrates that the primary purpose of the Plan is to
24
provide health benefits to the employees.
25
23; Pl. SGD, ¶ 23.)
26
majority of contributions into the Plan are used for
27
the purchase of benefits rather than dispensed as
28
direct cash payments.
(Def. SUF, ¶¶ 18,
Defendant’s
(Def. SUF, ¶¶ 20-21; Pl.
The employee may then elect one or
In addition,
(Def. SUF, ¶
Between 2009 and 2012, the
(See Pl. SUF, ¶¶ 20, 22, 24, 26;
45
1
Def. SGD, ¶¶ 20, 22, 24, 26.)
2
for direct cash payment to employees, as discussed
3
above, the Plan may still qualify as a bona fide plan
4
under section 778.215(a)(5).
5
Court finds that Defendant’s Plan is a bona fide plan,
6
and to the extent that Defendant makes these
7
contributions to third parties, the Court finds these
8
contributions excludable under 29 U.S.C. § 207(e)(4).
While the Plan allows
Based on these facts, the
9
10
E.
Statute of Limitations
11
12
Plaintiffs content that since Defendant’s violation
13
was willful, a three-year statute of limitations,
14
rather than the two-year statute of limitations set
15
forth in title 29 U.S.C. § 255(a), applies.
16
at 23-24.)
17
three year statute of limitations applies for causes of
18
action “arising out of a willful violation.”
19
§ 255(a).
20
that employer “either knew or showed reckless disregard
21
for the matter of whether its conduct was prohibited by
22
the statute.”
23
128, 133 (1988).
24
more than negligence, and “a completely good-faith but
25
incorrect assumption that a pay plan complied with the
26
FLSA” does not render a violation willful.
(Pl. Mot.
Title 29 U.S.C. § 255(a) provides that a
29 U.S.C.
An employer willfully violates the FLSA if
McLaughlin v. Richard Shoe Co., 486 U.S.
A finding of willfulness requires
27
28
46
Id. at 135.
1
The Court finds that Defendant’s violation of the
2
FLSA was not willful, and therefore, Plaintiffs’ FLSA
3
claim is governed by a two-year statute of limitations.
4
As discussed above, section 207 enumerates alternative
5
grounds for exclusion of payments from calculation of
6
regular rate of pay.
7
the language of section 207(e)(4) clearly makes
8
excludable payments made pursuant to a bona fide plan
9
only if made to a trustee or third parties, the
See 29 U.S.C. § 207(e).
While
10
language of section 207(e)(2) does not afford such a
11
clear interpretation.
12
Circuit has not addressed the issue of whether cash
13
payments made in lieu of benefits is excludable under
14
section 207(e)(2).
15
207(e)(2) is ambiguous and there is no published
16
decision analyzing whether cash payments made in lieu
17
of benefits must be included in regular rate of pay
18
under that subsection, the Court concludes that
19
Defendant’s violation was not willful.
20
Gateway Press, Inc., 13 F.3d 685, 703 (3rd Cir. 1994)
21
(upholding the district court’s conclusion that actions
22
were not willful since the case presented “close
23
questions of law and fact” and “a case of first
24
impression with respect to one of the governing
25
exemptions”).
26
Plaintiffs’ claims are governed by a two-year statute
27
of limitations under 29 U.S.C. § 255(a).
As discussed above, the Ninth
Since the language of section
See Reich v.
Accordingly, the Court holds that
28
47
1
F.
Adoption of Partial Overtime Exemption
2
3
Title 29 U.S.C. § 207(a)(1) provides that the
4
overtime limit is forty hours per week; an employee
5
working in excess of forty hours per week must receive
6
compensation at a rate at least one-and-a-half times
7
the regular rate of pay.
8
Section 207(k) “offers a limited exemption from the
9
overtime limit to public employers of law enforcement
29 U.S.C. § 207(a)(1).
10
personnel or firefighters.”
Adair v. City of Kirkland,
11
185 F.3d 1055, 1059 (9th Cir. 1999) (citing 29 U.S.C. §
12
207(k)).
13
limit slightly and it gives the employer greater
14
flexibility to select the work period over which the
15
overtime limit will be calculated.”
16
C.F.R. § 553.230).
17
the employer selects a seven-day work period, overtime
18
begins to accrue after forty-three hours, and if an
19
employer selects an eight-day work period, overtime
20
begins to accrue after forty-nine hours.”
21
29 C.F.R. § 553.230).
“The ‘7(k) exemption’ increases the overtime
Id. (citing 29
“Under the [DOL] regulations, if
Id. (citing
22
23
There is no dispute that Defendant is eligible for
24
a section 7(k) exemption.
Plaintiffs are employed as
25
full-time police officers by Defendant.
26
1-2; Def. SGD, ¶¶ 1-2.)
27
adopted such an exemption.
28
burden of showing that it qualifies for a section 7(k)
(Pl. SUF, ¶¶
The issue is whether Defendant
“[Defendant] bears the
48
1
exemption.”
2
citations omitted).
3
that it established a 7(k) work period and that the
4
7(k) work period was ‘regularly recurring.’”
5
C.F.R. § 553.224 (“As used in section 7(k), the term
6
‘work period’ refers to any established and regularly
7
recurring period of work . . .”).
8
adopted a Section 7(k) exemption is an ultimate fact
9
that may be decided on summary judgment if the
Adair, 185 F.3d at 1060 (internal
“Generally, the employer must show
Id.; 29
“Whether an employer
10
underlying specific facts are undisputed.”
Farris v.
11
Cnty. Of Riverside, 667 F. Supp. 2d 1151, 1157 (C.D.
12
Cal. 2009); Adair, 185 F.3d at 1060 (“Whether an
13
employer meets this burden is normally a question of
14
fact.”).
15
16
Here, the undisputed underlying facts establish
17
that Defendant adopted a 7(k) work period and that the
18
7(k) period was regularly recurring.
19
utilized a 14-day work period for calculation of
20
overtime for law enforcement personnel since 1994, and
21
the number of hours worked by full-time police
22
department personnel in a bi-weekly period is 80 hours.
23
(Def. SUF, ¶¶ 1, 3-4; Pl. SGD, ¶¶ 1, 3-4.)
24
addition, Article 10 of the 2005-2007 MOU between
25
Defendant and POA defines overtime as “all hours worked
26
over (80) in the two (2) week pay period of employees.”
27
(Def. SUF, ¶ 6; Pl. SGD, ¶ 6.)
28
the language of the 2005-2007 MOU establishes a 14-day
Defendant has
In
The Court finds that
49
1
work period under Section 7(k) since it specifically
2
identifies a two week “pay period” with overtime
3
defined as hours worked over 80 hours per period.
4
Farris, 667 F. Supp. 2d 1151.
5
that definition of overtime in its Salary, Compensation
6
and Benefits Policy Manual.
7
While the overtime language in the 2005-2007 MOU has
8
not been incorporated into subsequent memoranda of
9
understanding, Defendant still maintains the practice
See
Defendant also included
(Def. SUF, ¶ 9; SGD, ¶ 9.)
10
of calculating and paying overtime based on the 80-
11
hour/14-day pay period.
12
¶¶ 8, 10.)
13
a more generous overtime policy than the one set forth
14
in section 207(k) does not negate its adoption of the
15
7(k) exemption.
16
972 F.2d 1145, 1154 (10th Cir. 1992) (“There is no
17
basis for concluding that, once an employer has opted
18
for the subsection (k) framework, the employer may only
19
pay overtime for hours worked beyond the legal maximum
20
permitted at the regular wage.”).
(Def. SUF, ¶¶ 8, 10; Pl. SGD,
In addition, Defendant’s implementation of
See Lamon v. City of Shawnee, Kan.,
21
22
Defendant’s scheduling and recording practices also
23
support the finding that Defendant established a 7(k)
24
work period that is regularly recurring.
25
assigns certain police officers to a 3/12 schedule
26
under which each employee was assigned three 12-hour
27
shifts one week and four 12-hour shifts in the other,
28
resulting a total of 84 working hours.
50
Defendant
(Def. SUF, ¶
1
13, Pl. SGD, ¶ 13.)
2
implemented, Defendant credited each employee with 4
3
hours of compensatory time off in each payroll period
4
to compensate for the 84 hours.
5
SGD, ¶ 14.)
6
employees assigned to a 3/12 schedule would be credited
7
with four hours of compensatory time at time and a half
8
for the four hours worked over 80 during each work
9
period.
When that schedule was first
(Def. SUF, ¶ 14; Pl.
Subsequently, pursuant to the MOU,
(SUF, ¶ 15; Pl. SGD, ¶ 15.)
Therefore,
10
Defendant’s adoption of a 3/12 schedule demonstrates
11
that Defendant adopted a regularly recurring 14-day
12
work period that is used to calculate overtime hours
13
worked.
14
period that coincides with the 14-day work period for
15
law enforcement personnel.
16
11.)
17
hours worked on a bi-weekly, 14-day “Time and
18
Attendance Reports” which indicate that they cover a
19
two-week, 14-day work period, evidencing a work period
20
that is regularly recurring.
21
¶ 12.)
22
Defendant adopted a 14-day work period that was
23
regularly recurring.
In addition, Defendant uses a 14-day payroll
(Def. SUF, ¶ 11; Pl. SGD, ¶
Defendant requires Plaintiffs to record their
(Def. SUF, ¶ 12; Pl. SGD,
The Court finds that these facts show that
24
25
Plaintiffs argue that Defendant has not presented
26
any evidence that it elected and implemented a 7(k)
27
exemption since none of the documents cited by
28
Defendant make any mention of the 7(k) exemption’s
51
1
application to police officers.
2
Plaintiffs contend there is evidence to show that
3
Defendant elected not to adopt the 7(k) exemption with
4
respect to police officers since Defendant explicitly
5
adopted a 7(k) exemption for firefighters in other
6
portions of the Compensation Manual.
7
disagrees.
(Pl. Opp. at 23.)
(Id.)
The Court
8
9
In Adair, the Ninth Circuit held that the employer
10
“established a 7(k) exemption when it specified the
11
work period in the [collective bargaining agreement]
12
and when it actually followed this period in practice.”
13
Adair, 185 F.3d at 1061.
14
agreement language stated, “for purposes of complying
15
with the Fair Labor Standards Act, the Patrol Division
16
work period shall be eight days and the Detective
17
Division seven days.”
18
that the employer met its burden since it
19
“affirmatively adopted a work period . . . and it
20
followed that period in practice.”
21
Plaintiffs argue that Adair is distinguishable from the
22
facts here since Defendant did not provide any evidence
23
showing that it adopted a work period for purposes of
24
complying with the FLSA.
25
it is true that Defendant does not expressly mention
26
the FLSA in its documents relating to wages of law
27
enforcement personnel, that fact alone is not
28
dispositive of the issue.
The collective bargaining
Id. at 1060.
The court held
Id. at 1062.
(Pl. Opp. at 23-24.)
52
While
1
2
As the court in Farris noted, “[a] public
3
pronouncement requirement is absent from Adair.”
4
Farris, 667 F. Supp. 2d at 1158.
5
Philadelphia, 864 F. Supp. 466, 476 (E.D. Pa. 1994),
6
the court held that while the “‘establishment’ of a
7
7(k) work period may be manifested by an appropriate
8
public declaration of intent to adopt a work period of
9
between 7 and 28 days . . . a public employer may
10
establish a 7(k) work period even without making a
11
public declaration, so long as its employees actually
12
work a regularly recurring cycle of between 7 and 28
13
days.”
14
section 207(k) focuses on “the establishment of the
15
schedule rather than the exemption.”
16
San Diego, 2007 WL 4146696, at *12 (S.D. Cal. Nov. 9,
17
2007).
18
that it was adopting a section 7(k) exemption with
19
respect to law enforcement personnel, the undisputed
20
facts, as discussed above, demonstrate that Defendant
21
has adopted a 7(k) work period that is regularly
22
recurring.
23
mentioned the 7(k) exemption for firefighters and
24
failed to make such a reference for law enforcement
25
personnel does not change the result.
26
WL 4146696, at *12 (“There is no suggestion in the
27
language of Section 7(k) that an employer must
28
affirmatively invoke the exemption.”).
In McGrath v. City of
McGrath, 864 F. Supp. at 476.
Therefore,
Abbe v. City of
Here, while Defendant did not explicitly state
The fact that Defendant explicitly
53
See Abbe, 2007
As a result,
1
there is no triable issue of fact as to whether
2
Defendant established a 7(k) exemption.
3
Defendant is liable to Plaintiffs for FLSA overtime
4
only to the extent that Plaintiffs worked in excess of
5
86 hours in a 14-day work period.
6
553.230.
Accordingly,
See 29 C.F.R. §
7
8
G.
Liquidated Damages Award
9
Before the Court decides the issue of liquidated
10
11
damages, the Court directs the parties to submit
12
further briefing addressing the issue.
13
file a supplemental brief on the issue of liquidated
14
damages, due by September 18, 2013.
15
an opposition by September 25, 2013.
16
liquidated damages will stand submitted as of September
17
25, 2013.
18
19
20
/
/
/
21
22
23
24
25
26
27
28
54
Plaintiffs may
Defendant may file
The issue of
1
CONCLUSION
2
3
4
5
6
7
8
9
10
For the reasons set forth above, the Court GRANTS
Defendant’s Motion for Partial Summary Judgment and
GRANTS IN PART Plaintiffs’ Motion for Partial Summary
Judgment.
The Court directs the parties to submit
further briefing addressing the issue of liquidated
damages.
Plaintiffs may file a supplemental brief on
the issue, due by September 18, 2013.
Defendant may
file an opposition by September 25, 2013.
11
12
13
14
Dated:
8/29/13
____________________________
Jesus G. Bernal
15
16
United States District Judge
17
18
19
20
21
22
23
24
25
26
27
28
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