Shook et al v. Indian River Transport Co.

Filing 85

MEMORANDUM OF DECISION, FINDINGS OF FACT AND CONCLUSIONS OF LAW signed by Senior Judge William B. Shubb on 2/15/2017 ORDERING that the Court hereby finds in favor of defendants on all claims by all defendants. Each side shall bear its own attorneys' fees. The Clerk of Court is instructed to enter judgment accordingly. (Zignago, K.)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 13 14 15 TODD SHOOK and HERSCHEL BERRINGER, on behalf of himself and others similarly situated, and on behalf of all other “aggrieved” employees, CIV. NO. 1:14-1415 WBS BAM MEMORANDUM OF DECISION, FINDINGS OF FACT AND CONCLUSIONS OF LAW Plaintiffs, 16 17 18 19 v. INDIAN RIVER TRANSPORT CO., a Florida Corporation, Defendants. 20 21 22 ----oo0oo---Plaintiffs, truck drivers formerly employed by Indian 23 River Transport Co. (“Indian River”), brought this action on 24 behalf of themselves and similarly aggrieved employees against 25 Indian River alleging various violations of California law, 26 including 1) Labor Code § 226.7 (failure to provide mandated rest 27 breaks); 2) Labor Code § 226(a) (failure to provide accurate 28 itemized wage statements); 3) Labor Code §§ 2699, et seq. 1 1 (California Private Attorneys General Act (“PAGA”)) (failure to 2 separately compensate for rest breaks and unpaid wages); 4) 3 Business & Professions Code § 17200 (California Unfair 4 Competition Law); 5) Labor Code §§ 201 and 203 (failure to 5 compensate employees for non-driving work before and after 6 employees’ shifts and failure to timely pay compensation and 7 wages to former employees); and 6) Labor Code § 226.2 (failure to 8 provide accurate itemized wage statements and separately 9 compensate for rest and recovery periods and other nonproductive 10 time). 11 violated the California Labor Code by not providing its drivers 12 with rest breaks, not compensating them for rest breaks and other 13 time they were working but not driving, and by providing them 14 with wage statements that did not include all the information 15 required by the Labor Code. 16 The gravamen of their claims is that Indian River After a two-day bench trial and extended closing 17 arguments, the matter was submitted to the court for decision. 18 Having considered the evidence and arguments of counsel, and 19 having read and considered the briefs, the court finds in favor 20 of defendant Indian River on all claims. 21 constitutes the court’s findings of fact and conclusions of law 22 pursuant to Federal Rule of Civil Procedure 52(a). 23 I. 24 This memorandum Findings of Fact 1. Plaintiffs Shook and Berringer and other aggrieved 25 employees are current and former California-resident drivers 26 (“California drivers”) employed by Indian River. 27 28 2. Plaintiff Shook worked for Indian River from May to October 2012 and plaintiff Berringer worked for Indian River 2 1 2 from November 2012 to January 2014. 3. Plaintiffs paid California state income taxes on 3 all their earnings for Indian River. 4 all their Indian River wage statements in California. 5 4. Plaintiffs also received Indian River is a Florida corporation with its 6 headquarters in Winter Haven, Florida. 7 liquid food-grade tank carrier services nationwide, transporting 8 products such as milk and orange juice. 9 5. Indian River offers Indian River’s administrative staff and management 10 are located at Indian River’s headquarters in Winter Haven. 11 headquarters is responsible for payroll and other back office 12 functions, including the issuing of wage statements and the 13 resulting electronic deposits of paychecks, and drivers are hired 14 out of Winter Haven and trained there. 15 also has a tank wash and maintenance facilities. 16 Haven facility provides 24-hour dispatch service, including for 17 drivers in the western United States after hours. 18 6. The The Winter Haven facility The Winter Indian River provides transportation services 19 across the country. 20 weeks away from home, during which they pick up and drop off 21 product between suppliers and recipients that are 1-5 days apart. 22 The area where a driver has his or her residence will normally 23 determine only the beginning and end of the overall trip. 24 a driver who lives in California will usually begin and end his 25 or her overall trip in California but may spend the majority of 26 that time outside California. 27 customers in California. 28 7. Drivers typically spend several days or Indian River has about 25 Although Indian River dispatches most of its 3 Thus, 1 trucks out of it headquarters in Winter Haven, it has facilities 2 in Clovis, New Mexico and in Turlock, California, with 3 dispatchers in both locations. 4 Turlock facility, and its California drivers live throughout 5 California. 6 Winter Haven facility, provides light maintenance for Indian 7 River trucks and has two dispatchers and only a few other 8 employees. 9 drivers may use and parking spots where drivers can leave their There are no drivers based in the The Turlock facility, which is much smaller than the The Turlock facility also has a small lounge that 10 trucks after hours. Drivers may also send paperwork to Indian 11 River’s headquarters from the Turlock facility, though they were 12 not required to do so and could submit some, if not all, 13 paperwork at commercial truck rest stops across the country. 14 Turlock facility does not have shower facilities or an indoor 15 restroom for drivers, who may use a single portable toilet 16 outside the facility. 17 8. The Indian River hires and employs drivers nationwide, 18 of which there are 600-650 at any time. 19 had approximately 50 drivers at any particular time who were 20 residing in California. 21 based upon freight demands and the location of drivers at the 22 time of demand, not their place of residence. 23 estimates that based on fuel and tax records, Indian River 24 drivers, including those living in California, spend on average 25 15-30% of their time driving in California. 26 9. In 2016, Indian River Indian River drivers are dispatched Defendant While some California drivers spend almost no time 27 in California, others spend nearly half their time in the state 28 in any particular pay period. These figures vary from driver to 4 1 driver and from one week to the next, depending on driver 2 preferences and demand. 3 10. Until September 5, 2016, all Indian River drivers 4 throughout the United States were generally only paid “piece- 5 rate” or per mile driven, at a rate of approximately $.41 per 6 mile. 7 rest breaks or paid for rest breaks at all. 8 not paid for other “nonproductive” time related to their work as 9 drivers, including time spent on pre- and post-trip safety Plaintiffs and other drivers were not separately paid for Plaintiffs were also 10 inspections, fueling, loading and unloading, waiting time before 11 loading and unloading, tank washes, and waiting time before the 12 tank washes. 13 all of its drivers. 14 11. Defendant’s compensation system was the same for Until September 5, 2016, Indian River wage 15 statements identified the dates of each trip during the weekly 16 pay period, and the rate and dollar amount paid for that trip. 17 The wage statements did not list the actual hours worked, whether 18 driving, on duty but not driving, or while on break, though 19 drivers recorded such time on daily logs. 20 also did not list any hourly rates for drivers, with the 21 exception of certain hourly work not at issue in this case. 22 Pls.’ Exs. 1-2.) 23 12. The wage statements (See Indian River drivers were informed of their 24 obligations to comply with federal regulations regarding rest 25 breaks and the penalties that would result from failure to 26 comply. 27 regulations requiring drivers to take a 30-minute, off-duty break 28 within 8 hours of coming on duty, to not exceed more than 11 Specifically, drivers were informed of federal 5 1 hours of driving in a 14-hour period, and to be off-duty for at 2 least 10 hours after 14 hours of work. 3 informed of federal regulations prohibiting working more than 70 4 hours in an 8-day period. 5 30-day and daily logs (prior to the implementation of electronic 6 logs) recording hours driving, hours on-duty but not driving, and 7 hours off-duty. 8 punishments that Indian River would impose for failure to comply 9 with federal regulations. 10 Drivers were also Drivers were also required to maintain Indian River drivers were warned of the (See, e.g., Pls.’ Ex. A-10 (Indian River employee handbook).) 11 13. Defendant did not schedule rest breaks for its 12 drivers, as drivers were permitted and encouraged to take rest 13 breaks for safety and comfort reasons when they wanted. 14 Defendant’s rest break policy was the same for all its drivers, 15 and Indian River drivers understood that they were free to take 16 breaks as desired. 17 14. Indian River did not discourage its drivers from 18 taking rest breaks. 19 testimony of Jeffrey Pilon credible to the extent that he claimed 20 he was punished four times in connection with taking rest breaks. 21 Even assuming Mr. Pilon was punished in connection with his rest 22 breaks as he claimed, those isolated episodes do not establish 23 that Indian River discouraged any other drivers from taking rest 24 breaks, including plaintiffs Shook and Berringer. 25 finds the testimony of all other witnesses to be substantially 26 credible. 27 28 15. In that regard, the court does not find the The court Indian River drivers were not specifically informed of California law regarding rest breaks prior to 6 1 September 5, 2016. 2 assert any cause of action based on Indian River’s failure to 3 inform plaintiffs or its California drivers of California law 4 regarding rest breaks. 5 allegation to that effect. 6 7 16. Nor does their Complaint raise any On September 5, 2014, plaintiffs filed the present action against Indian River. 8 9 However, plaintiffs’ Complaint does not 17. On June 27, 2016, Indian River provided written notice to the California Department of Industrial Relations of 10 its intent to make payments to current and former California 11 drivers under California Labor Code § 226.2’s “Safe Harbor” 12 provision. 13 (See Def.’s Ex. F-1.) 18. Indian River modified its compensation and payroll 14 system for California drivers on September 5, 2016 in order to 15 comply with California law. 16 paid per mile from $.41 to $.14 and now compensates its 17 California drivers separately for rest periods and other 18 nonproductive time at $11.00 per hour. 19 compensation structure and payroll system, in order to separately 20 track, account for, and pay for productive and nonproductive 21 time, was a lengthy process. 22 delay in transitioning to this new compensation and payroll 23 system was unreasonable, given the substantial changes to 24 defendant’s payroll structure that had to be implemented during 25 that period of time. 26 19. Indian River reduced the piece-rate The transition to the new The court does not find that the This change in compensation structure was not 27 well-taken by Indian River’s California drivers, with 28 approximately 20% resigning, leaving Indian River with 7 1 approximately 35 California drivers in 2017. 2 20. Since September 5, 2016, Indian River’s rest-break 3 policy specifically informs drivers who live in California of 4 their rights to take breaks under California law, and it now 5 separately pays for rest breaks. 6 21. On December 15, 2016, pursuant to section 226.2’s 7 Safe Harbor provision, Indian River paid its current and former 8 California drivers (including plaintiffs) 4% of their gross wages 9 from July 1, 2012 to December 31, 2015, which totaled 10 approximately $282,000. 11 reduce the amount of the Safe Harbor payment based on the 12 percentage of time its drivers worked outside of California. 13 only drivers who did not receive such payment were drivers for 14 which the payments were returned by the U.S. Mail due to lack of 15 a current address. 16 22. (Def.’s Ex. F.) Indian River did not The Indian River did not make any payments to its 17 drivers for any violations of the California Labor Code’s rest 18 break and wage requirements occurring after January 1, 2016. 19 23. Although plaintiffs’ Complaint was filed as a 20 class action on behalf of all California drivers, plaintiffs did 21 not move for class certification under Federal Rule of Civil 22 Procedure 23. 23 themselves and other California drivers under PAGA, Cal. Labor 24 Code §§ 2698-2699.5, as well as statutory penalties and damages 25 in their individual capacity. 26 II. 27 28 At trial, plaintiffs sought civil penalties for Conclusions of Law A. Work Performed Outside California The California Supreme Court has explained that there 8 1 is a presumption against the extraterritorial application of 2 California law, under which a court should presume the California 3 legislature “did not intend a statute to be operative, with 4 respect to occurrences outside the state, unless such intention 5 is clearly expressed or reasonably to be inferred from the 6 language of the act or from its purpose, subject matter, or 7 history.” 8 (citation and internal punctuation omitted). 9 applies “in full force” to California’s Unfair Competition Law, Sullivan v. Oracle, 51 Cal. 4th 1191, 1207 (2011) This presumption 10 as “[n]either the language of the UCL nor its legislative history 11 provides any basis for concluding the Legislature intended the 12 UCL to operate extraterritorially.” 13 Id. California law is unclear as to exactly what a 14 California resident must show in order to overcome this 15 presumption and invoke the protection of the California Labor 16 Code’s rest break and wage requirements extraterritorially. 17 Sarviss v. Gen. Dynamics Info. Tech., Inc., 663 F. Supp. 2d 883, 18 898-99 (C.D. Cal. 2009) (“There is no ‘clear express[ion]’ of 19 extraterritorial application for California wage and hour 20 laws.”). 21 See Neither the California Supreme Court nor the Ninth 22 Circuit have established a test for determining when the 23 provisions of the California Labor Code might apply to work 24 performed outside the territorial boundaries of the state. 25 courts addressing the question examined factors such as the 26 nature of the work being performed, the amount of work being 27 performed in California, the residence of the employee, the 28 residence of the employer, whether the conduct which gives rise 9 Lower 1 to liability occurred in California, and the employer’s ties to 2 the jurisdiction. 3 15-cv-00131-WHO, 2017 WL 66838, *5-7, --- F. Supp. 3d ---- (N.D. 4 Cal. Jan. 6, 2017); Bernstein v. Virgin Am., Inc., Case No. 15-v- 5 02277-JST, 2017 WL 57307, *7, --- F. Supp. 2d ---- (N.D. Cal. 6 Jan. 5, 2017); Ward v. United Airlines, No. C 15-02309, 2016 WL 7 3906077, *3-5 (N.D. Cal. July 19, 2016); Sarviss, 663 F. Supp. 2d 8 at 900. 9 See Oman v. Delta Air Lines, Inc., Case No. Looking at these factors, the court in Oman v. Delta 10 Air Lines, Inc., 2017 WL 66838, at *5-7, held that 11 extraterritorial application of certain California Labor Code 12 requirements to California-resident flight attendants was not 13 permissible where the flight attendants spent 14% or less of 14 their time in California, the employer was not based in 15 California, and the nature of the work required working in 16 multiple other jurisdictions in a given pay period or day. 17 Similarly, the court in Ward v. United Airlines, 2016 18 WL 3906077, at *3-5, held that the extraterritorial application 19 of California wage statement requirements to California-resident 20 pilots was impermissible where the pilots spent an average of 12% 21 of their total work time in California, notwithstanding the 22 issuance of the wage statements in California. 23 determination, the court focused on where the employee 24 “principally worked,” rejecting plaintiffs’ argument that the 25 pilots’ residency was dispositive.1 26 27 28 1 In making this See also Sarviss, 663 F. The court in Ward, 2016 WL 3906077, at *3-5, did not distinguish between work performed inside California and work performed outside California, given its determination that a certain Labor Code section did not apply at all to employees who 10 1 Supp. 2d at 900 (holding that certain California wage orders did 2 not apply to a California resident because he did not principally 3 work in California). 4 On the other hand, the California Supreme Court has 5 observed that in some circumstances the Legislature has 6 explicitly extended application of its statutes outside the 7 state’s territorial boundaries and may have so intended in other 8 instances. 9 4th 557, 577-78 (1996) (state employment law explicitly governs See Tidewater Marine W., Inc. v. Bradshaw, 14 Cal. 10 employment outside the state’s territorial boundaries in some 11 circumstances, and “[t]he Legislature may have similarly intended 12 extraterritorial enforcement of [Industrial Welfare Commission] 13 wage orders in limited circumstances, such as when California 14 residents working for a California employer travel temporarily 15 outside the state during the course of the normal workday but 16 return to California at the end of the day.”). 17 Specifically, the court noted in Tidewater that 18 employees who reside in California, receive pay in California, 19 and work exclusively or principally in California are “wage 20 earner[s] of California” who presumptively enjoy the protections 21 of the state’s IWC regulations. 22 79; accord Sullivan, 51 Cal. 4th at 1197-1206 (California 23 overtime law applies to all work within its borders, with the 24 possible exception of work by non-resident employees who enter 25 California temporarily during the course of the workday). 26 27 28 Tidewater, 14 Cal. 4th at 578- principally worked outside California. The court assumes, without deciding, that the California Labor Code’s wage and rest break provisions apply to work performed by California residents inside California. 11 1 There is no evidence that plaintiffs in this case 2 worked exclusively or principally in California. 3 as was presented was to the contrary. 4 undisputed evidence that the majority of the drivers’ time 5 working was spent outside California. 6 overall routes usually began or ended in California, the drivers 7 would spend days, weeks, or even months on the road working 8 outside of California. 9 worked principally outside of California. 10 Such evidence It is apparent from the While California drivers’ In other words, the California drivers Courts have also given substantial weight to the fact 11 that the employer is based in California or receives subsidies or 12 other benefits for its California-related work in determining 13 whether its California employees are covered by California laws 14 while working outside the state. 15 Virgin America, Inc., 2017 WL 57307, at *4-8, the court in the 16 Northern District held that extraterritorial application of the 17 California Labor Code to California-resident flight attendants 18 who spent about 25% of their time in California was permissible 19 where the employer was based in California, had its headquarters 20 in California, and had received substantial state subsidies to 21 train its flight attendants; 88-99% of the employer’s flights 22 each day either departed or arrived in a California airport; and 23 the wrongful conduct, e.g., the issuance and application of 24 compensation policies, emanated from California. 25 For example, in Bernstein v. In the present case, in contrast, defendant was neither 26 based nor had its headquarters in California. 27 was presented, again, was to the contrary. It appears from the 28 undisputed evidence adduced at trial that Indian River was 12 Such evidence as 1 headquartered in Florida, sent drivers payments from that 2 headquarters, and had most of its facilities at that 3 headquarters. 4 break policies were developed and applied at Indian River’s 5 headquarters in Florida and it trained new employees in Florida. 6 Indian River’s compensation structure and rest Plaintiffs talk about the Turlock facility as if it 7 were somehow defendant’s headquarters. The evidence at trial 8 could not have been more to the contrary. 9 from the evidence about that facility was that it employed only What the court learned 10 two dispatchers, performed only minor maintenance, and had a 11 small lounge and space for parking trucks. 12 involved the facility, as loading and unloading occurred at the 13 customer’s businesses. 14 shower facilities for drivers. 15 was provided. 16 paperwork to Indian River from the Turlock facility, they were 17 not required to do so and could submit some, if not all, 18 paperwork at commercial truck rest stops across the country. 19 Apparently, no routes The facility had no permanent bathroom or Only a single outdoor porta potty Finally, while drivers could submit their Thus, because plaintiffs did not work exclusively or 20 principally in California, and defendant was not based or 21 headquartered in California, this case is unlike either Tidewater 22 or Bernstein, and the court must look to the other factors 23 considered by other courts to determine whether plaintiffs have 24 met their burden of overcoming the presumption against 25 extraterritorial application of the California laws in this case. 26 Plaintiffs did establish that they were residents of 27 California, received their wages and wage statements in 28 California, and paid their taxes to the State of California. 13 1 What is clear to the court from the case law, however, is that 2 the mere residency of the plaintiffs in California is 3 insufficient in itself to entitle them to the benefits of the 4 California wage and hour provisions while they are working 5 outside the state. 6 (noting that the focus on situs of employment as opposed to 7 residence of the employee is consistent with the decisions of 8 California state courts); Ward, 2016 WL 3906077, at *3-5 (same). 9 The California drivers’ receipt of wages and wage statements in See, e.g., Sarviss, 663 F. Supp. 2d at 900 10 California is simply a consequence of the drivers’ California 11 residency if their wage statements are mailed to their mailing 12 addresses in California. 13 of California income taxes, which has never been discussed as a 14 relevant factor in any authority cited to the court, is also a 15 result of the drivers’ California residency. 16 Similarly, California drivers’ payment Beyond showing their California residency, plaintiffs 17 have shown very little in their attempt to overcome the 18 presumption against extraterritorial application of the 19 California laws relating to wages and rest breaks to them while 20 working outside of California. 21 performed, truck driving, adds nothing to the analysis. 22 conduct which gave rise to the alleged liability was Indian 23 River’s practice with regard to wages and rest breaks, which can 24 best be inferred to have been devised and implemented in Indian 25 River’s corporate offices in Florida. 26 The nature of the work being The Plaintiffs point to evidence that Indian River has 27 about 25 customers in California, and the drivers sometimes 28 completed paperwork in and/or sent paperwork to Indian River from 14 1 California. 2 establish how much business Indian River conducts in California 3 or nationally, the court cannot draw any significance from the 4 fact of those 25 customers. 5 turned in the hard copies of their paperwork at the Turlock 6 facility, but the court gathered from the evidence that the 7 electronic submission, which they could submit from stations in 8 various parts of the country, was the significant transmittal. 9 However, because the evidence at trial did not The drivers may have sometimes From the evidence adduced at trial, the court concludes 10 that the presumption against extraterritorial application of 11 California’s wage and rest break laws to Indian River’s 12 California drivers’ work outside California is not overcome. 13 Thus, California’s wage and rest break laws do not apply to 14 Indian River’s drivers’ work performed outside California, and 15 Indian River is entitled to judgment on all of plaintiffs’ causes 16 of action with respect to work performed outside California. 17 B. 18 Work Performed in California Assuming the California Labor Code’s wage and rest 19 break provisions apply to work performed in California by Indian 20 River’s California drivers,2 plaintiffs have not met their burden 21 of establishing when any Labor Code violations occurred or what 22 the resulting penalties or damages should be. 23 claims, with respect to work performed in California, fail due to Thus, plaintiffs’ 24 2 25 26 27 28 While the California Supreme Court has specifically stated that California overtime law applies to all work within its borders, with the possible exception of work by non-resident employees who enter California temporarily during the course of the workday, Sullivan, 51 Cal. 4th at 1197-1206, it has not addressed whether the California Labor Code’s rest break and wage requirements apply to all work within its borders. 15 1 2 lack of sufficient proof. Prior to trial, the parties were directed to submit 3 proposed findings of fact and conclusions of law and a proposed 4 form of judgment. 5 effort to calculate or even estimate of the number of violations 6 or amount of penalties or damages. 7 plaintiffs assumed and argued that California law applied to all 8 work performed by all California drivers, regardless of the 9 location, and assumed that damages and penalties could be Plaintiffs’ submissions, however, made no At trial, counsel for 10 determined simply by estimating the amounts of time spent on 11 various categories of nonproductive work per pay period and 12 looking to the number of pay periods worked by each employee. 13 However, it appears from the evidence that California 14 drivers spent most and sometimes all of their time in a given pay 15 period outside of California. 16 regarding total nonproductive time in a given pay period and the 17 total number of pay periods without reference to where that time 18 was spent are of no assistance to the court. Thus, plaintiffs’ estimates 19 It would be reasonable to assume that plaintiffs spent 20 some time working in California during the relevant time period. 21 But it is not for the court to speculate on how many, if any, 22 uncompensated rest breaks or other breaks occurred while they 23 were in California. 24 by competent evidence, such as the percentage of work, number of 25 pay periods, or number of hours performed inside California. 26 Plaintiffs made no effort to do so at trial. 27 court is unable on its own to reconstruct that information from 28 the evidence before it. It was plaintiffs’ burden to establish that 16 Try as it may, the 1 At trial, the pay stubs for plaintiffs Shook and 2 Berringer were introduced, which show the total miles driven by 3 the drivers and the beginning and end points of the routes 4 driven. 5 determine what how much time plaintiffs spent in California 6 during a given pay period. 7 be determined through a combination of the drivers’ daily logs 8 and pay stubs, mileage charts, and an online map service, the 9 testimony and exhibits introduced at trial leave the court Such information is insufficient to allow the court to While perhaps such information could 10 without any feasible method of calculating the proper penalties 11 and damages as to Shook and Berringer, much less all other 12 California drivers, for whom pay stubs and daily logs were not 13 introduced at trial. 14 An examination of the evidence also does not give the 15 court the tools necessary to determine defendants’ potential 16 liability. 17 miles driven by all Indian River drivers in each state in a 18 particular quarter. 19 allow the court to determine what percentage of time, number of 20 pay periods, or number of hours Indian River’s California drivers 21 spent working in California overall, much less in any particular 22 pay period. 23 chart due to its failure to show how much time drivers spent in 24 California. 25 Defendant introduced charts showing the number of (See Def.’s Ex. D.) Such charts do not Indeed, plaintiff’s counsel himself criticized the Accordingly, plaintiffs’ claims for violations 26 occurring within the state of California fail due to their 27 failure to meet their burden of establishing the extent of any 28 violations by Indian River as well as the proper penalties or 17 1 damages for such violations. 2 judgment on all of plaintiffs’ claims with respect to all work 3 performed inside California. 4 C. Defendants are thus entitled to Safe Harbor 5 Even assuming the California Labor Code’s provisions 6 applied extraterritorially or that plaintiffs met their burden of 7 proof to establish the extent of any violations and accompanying 8 penalties or damages, the court concludes that California’s Safe 9 Harbor provision in Labor Code § 226.2 bars plaintiffs’ claims. 10 California Labor Code § 226.2(b) provides that if an 11 employer pays its current and former piece-rate employees 4% of 12 their gross wages between July 1, 2012 and December 31, 2015 13 (“the Safe Harbor period”), the employer will have an affirmative 14 defense: 15 20 to any claim or cause of action for recovery of wages, damages, liquidated damages, statutory penalties, or civil penalties, including liquidated damages pursuant to Section 1194.2, statutory penalties pursuant to Section 203, premium pay pursuant to Section 226.7, and actual damages or liquidated damages pursuant to subdivision (e) of Section 226, based solely on the employer’s failure to timely pay the employee the compensation due for rest and recovery periods and other nonproductive time for time periods prior to and including December 31, 2015. 21 See Fowler Packing Co. v. Lanier, 844 F.3d 809, 811-12 (9th Cir. 22 2016) (discussing section 226.2’s Safe Harbor provision). 16 17 18 19 23 Here, Indian River properly notified the California 24 Department of Industrial Relations of its election to make Safe 25 Harbor payments to its current and former employees on June 27, 26 2016. 27 employees’ gross wages to its current former employees, including 28 plaintiffs, for the period between July 1, 2012 and December 31, Indian River also paid 4% of its current and former 18 1 2015 complied with California Labor Code § 226(b). 2 defendant has fully complied with California Labor Code § 3 226(b)’s requirements. 4 1. 5 Even where an employer complies with Labor Code § 6 226.2(b)’s notice and payment requirements, the Safe Harbor 7 defense does not apply to claims exempted under certain “carve- 8 outs” provided in section 226.2(g). 9 13. Thus, Carve-out See Fowler, 844 F.3d at 812- One such carve-out, section 226.2(g)(3), provides that the 10 Safe Harbor defense shall not apply to “[c]laims that employees 11 were not advised of their right to take rest or recovery breaks, 12 that rest and recovery breaks were not made available, or that 13 employees were discouraged or otherwise prevented from taking 14 such breaks.” 15 defendant’s Safe Harbor defense because plaintiffs claimed they 16 were not informed of their right to take rest breaks under 17 California law, were not provided rest breaks, and were 18 discouraged from taking rest breaks. Here, plaintiffs contend that this carve-out bars 19 However, plaintiffs’ Complaint asserts no claim based 20 on Indian River’s failure to advise California drivers of their 21 right to take rest or recovery breaks under California law. 22 Rather, the Complaint refers to Indian River’s alleged failure to 23 authorize and permit drivers to take rest breaks and failure to 24 separately pay for such breaks, without any mention of a failure 25 to inform drivers of such rights. 26 34-37, 46, 56 (Docket No. 4).) 27 out for claims that an employer failed to inform its employees of 28 their right to take breaks under California law does not apply (See, e.g., Compl. ¶¶ 4-6, 21, Thus, section 226.2(g)(3)’s carve 19 1 and does not bar Indian River’s Safe Harbor defense. 2 The court assumes that section 226.2(g)(3)’s carve-out 3 applies to plaintiffs’ claim that Indian River failed to provide 4 rest breaks and prevented or discouraged such breaks. 5 the court finds no credible evidence that Indian River failed to 6 provide rest breaks or sought to discourage or prevent drivers 7 from taking such breaks. 8 credible the testimony of multiple witnesses that drivers were 9 encouraged to take breaks at any time and as frequently as However, As discussed above, the court finds 10 necessary and that drivers did so. The court also finds credible 11 the testimony of multiple witnesses that drivers were not 12 discouraged or prevented from taking breaks. 13 Shook and Berringer did not testify that they were prevented or 14 discouraged from taking breaks. 15 out for claims that claims that rest and recovery breaks were not 16 made available, or that employees were discouraged or otherwise 17 prevented from taking such breaks, does not apply due to lack of 18 sufficient proof and does not bar Indian River’s Safe Harbor 19 defense. Indeed, plaintiffs Thus, section 226(g)(3)’s carve- 20 2. Scope of Safe Harbor 21 Section 226.2’s Safe Harbor provision bars all of 22 plaintiffs’ claims based on conduct during the Safe Harbor 23 period, as the affirmative defense applies broadly to any claim 24 for recovery of wages, damages, statutory penalties, civil 25 penalties, and premium pay, including claims based on the failure 26 to pay drivers for nonproductive time under section 226.2(a)(1); 27 failure to provide a proper itemized wage statement under 28 sections 226(a) and 226.2(a)(2); waiting time penalties under 20 1 section 203; and penalties under PAGA.3 2 entitled to judgment on all of plaintiffs’ claims with respect to 3 all work performed during the Safe Harbor period. Thus, defendants are 4 3. Post Safe-Harbor Period 5 Because Indian River changed its compensation policy 6 and wage statements to comply with California law on September 5, 7 2016, any liability could only be based on conduct from January 8 1, 2016 to September 4, 2016. 9 during which there could be violations relating to the non- Thus there are only 36 pay periods 10 payment of nonproductive time, and to the non-payment of rest- 11 break time, which would include any derivative claims for 12 statutory or civil penalties. 13 employed by Indian River after the Safe Harbor period and thus 14 cannot personally recover penalties or damages for the post-Safe 15 Harbor period. 16 However, plaintiffs were not Nor can plaintiffs recover on behalf of other employees 17 for the post-Safe Harbor period. 18 were extinguished by their receipt of the Safe Harbor payments 19 and they were not employed after the Safe Harbor period. 20 they are not “aggrieved employees” under PAGA, at least with 21 respect to the post-Safe Harbor period. 22 23 24 25 26 27 28 3 Shook’s and Berringer’s claims Thus, See Cal. Labor Code § The text of Labor Code § 226.2 specifically references “civil penalties,” i.e., penalties that may be collected only by the Labor Commissioner or by an aggrieved employee acting as a private attorney general under PAGA. See Caliber Bodyworks, Inc. v. Superior Court, 134 Cal. App. 4th 365, 377-78 (2d Dist. 2005). Moreover, section 226.2(f) specifically provides that one who has paid back wages through the Safe Harbor will void “[a]ny notice to the Labor and Workforce Development Agency on or before December 31, 2015, pursuant to paragraph (1) of subdivision (a) of Section 2699.3, alleging violations based upon failure to properly compensate employees for rest and recovery periods.” 21 1 2699(a), (i); Wassink v. Affiliated Comput. Servs., Inc., Case 2 No. 8:11-cv-00554-CJC(MLGx), 2011 WL 130377358, at *3 (C.D. Cal. 3 Dec. 21, 2011) (plaintiff must be an “aggrieved employee” to 4 bring a representative PAGA action); accord Thomas v. Home Depot 5 USA, Inc., 527 F. Supp. 2d 1003, 1009 (N.D. Cal. 2007) (plaintiff 6 could not assert PAGA claim in representative capacity as the 7 statute of limitations had run with respect to his individual 8 PAGA claim). 9 The court accordingly finds that Indian River is 10 entitled to judgment on all of plaintiffs’ causes of action based 11 on Indian River’s Safe Harbor defense. 12 III. Conclusion 13 For all the foregoing reasons, THE COURT HEREBY FINDS 14 in favor of defendants on all claims by all defendants.4 15 side shall bear its own attorneys’ fees. 16 instructed to enter judgment accordingly. 17 18 Each The Clerk of Court is IT IS SO ORDERED. Dated: February 15, 2017 19 20 21 22 23 24 25 26 27 28 4 Because the court finds in favor of defendant for the reasons above, the court does not address defendant’s other arguments raised in its defense. 22

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