Harper, et al. v. Charter Communications, LLC et al
Filing
111
ORDER signed by Senior Judge William B. Shubb on 2/12/2021 DENYING #93 Motion for Summary Judgment as to Sinclair's 1st, 2nd, 3rd, 4th, and 6th Claims for damages, Harper's 1st, 2nd, 3rd, 4th, 6th, and 10th Claims, as well as Plaintiffs' 5th Claim for violations of Cal. Labor Code 204, 221, and 224, 7th Claim, and 8th Claim for violations of 1198.5 and 226. It is further ORDERED that #93 Motion for Summary Judgment is GRANTED as to Sinclair's 1st, 2nd, 3rd, 4th, and 6th Claims for statutory penalties, as well as Plaintiffs' 5th Claim for violations of Cal. Labor Code 2751(b) and 223, and 8th Claim for violations of Cal. Labor Code 432. (Huang, H)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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LIONEL HARPER and DANIEL
SINCLAIR, individually and on
behalf of all others similarly
situated and all aggrieved
employees,
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ORDER RE: DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT OR, IN
THE ALTERNATIVE, SUMMARY
ADJUDICATION
Plaintiffs,
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No. 2:19-cv-00902 WBS DMC
v.
CHARTER COMMUNICATIONS, LLC,
Defendant.
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Plaintiffs Lionel Harper (“Harper”) and Daniel Sinclair
23
(“Sinclair”) brought this putative class action against defendant
24
Charter Communications, LLC (“Charter”) alleging various
25
violations of the California Labor and Business and Professions
26
Code.
27
now moves for summary judgment on all claims or, in the
(See First Am. Compl. (“FAC”) (Docket No. 45).)
28
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Charter
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alternative, summary adjudication.
(See Def.’s Mot. for Summ. J.
2
(“Mot. for Summ. J.”) (Docket No. 93-1).)
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I.
Factual and Procedural Background
4
Plaintiffs were employed by Charter as small/medium
5
sized business Account Executives (“AEs”) at Charter’s Redding,
6
California location.
7
(“Def.’s SUF”) Nos. 1-2 (Docket No. 93-2).)
8
Charter from September 18, 2017 to March 12, 2018, and Sinclair
9
worked for Charter from January 5, 2015 to April 4, 2017.
10
(Def.’s Statement of Undisputed Facts
Harper worked for
(Id.
Nos. 1,2, 31, 33.)
11
Charter is a broadband connectivity company and cable
12
operator serving business and residential customers under the
13
Spectrum brand, among others.
(Decl. of Andrea Benner (“Benner
14
Decl.”) ¶ 3 (Docket No. 94).)
Charter utilizes AEs to sell its
15
phone, internet, and television services directly to small- and
16
medium-sized businesses in an assigned geographic area.
17
SUF No. 4.)
18
(Pls.’ Statement of Disputed Facts (“Pls.’ SDF”) No. 1 (Docket
19
No. 98-2).)
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Charter, Charter expected AEs to participate in a daily sales
21
call with their regional sales manager, prepare sales proposals,
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cold-call potential customers, set up appointments with
23
prospective customers and meet them in person, monitor existing
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sales, go “door-to-door knocking,” and enter data related to
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completed sales into one of several online portals, among other
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tasks.
27
Declaration of Zachary Shine (“Shine Decl.”), Ex. B, Sinclair
28
Deposition (“Sinclair Dep.”) 142:14-19 (Docket No. 95-3); Ex. A,
(Def.’s
Charter classifies its AEs as “exempt” employees.
On a typical day when plaintiffs were employed by
(Benner Decl. ¶¶ 12-13, Ex. A; Def.’s SUF Nos. 4-6;
2
1
Harper Deposition (“Harper Dep.”) 126:5-127:5 (Docket No. 95-1).)
2
AEs were also expected to interface with other departments,
3
including departments that were responsible for installing
4
equipment at the customer’s business or for performing
5
construction on the customer’s property (e.g., to install phone
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lines or cables if the property did not already have them), and
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to be customers’ first point of contact for the services sold up
8
until installation had been completed.
9
Benner Deposition (“Benner Dep.”) 85:21-87:2; 97:14-98:19.)
10
(See Shine Decl., Ex. C,
As salespersons, Charter AEs were eligible to earn
11
commissions based on how many sales they made each month.
12
(Def.’s SUF No. 16.)
13
provided plaintiffs with a copy of Charter’s commission plan or
14
conveyed its terms to the plaintiffs.
15
Def.’s SUF (“Pls.” RSUF”) Nos. 12-16.)
16
The parties dispute whether Charter ever
(See Pls.’ Response to
During his employment with Charter, Sinclair had two
17
managers: Wade Smith and Andrea Benner.
(Sinclair Dep. 47:24-
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51:6.)
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employment.
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in Medford, Oregon, she did not directly supervise either
21
Sinclair or Harper’s day-to-day activities.
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47:24-51:6.)
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Charter required all AEs to meet or exceed certain monthly sales
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goals.
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“corrective action reports” indicating that they were failing to
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meet Charter’s expectations related to the AE position during
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their employment.
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4, 2016, Sinclair took a leave of absence.
Benner was Harper’s manager throughout his entire
(Harper Dep. 79:18-80:23.)
Since Benner was located
(Id.; Sinclair Dep.
Throughout Sinclair and Harper’s employment,
(Def.’s SUF No. 9.)
Both Sinclair and Harper received
(Def.’s SUF Nos. 9-10.)
3
Beginning on August
(Benner Decl. ¶ 31.)
1
Charter terminated Sinclair on April 4, 2017.
2
approximately February 3, 2018, Harper took medical leave.
3
at ¶ 34.)
He remained on leave through his termination on March
4
12, 2018.
(Id.)
5
(Id.)
On
(Id.
On September 14, 2018, Harper filed a written notice
6
with the California Labor and Workforce Development Agency
7
(“LWDA”), alleging that Charter had committed violations of the
8
California Labor Code.
9
(“Soderstrom Decl.”) ¶ 22 (Docket No. 98-5).)
(See Decl. of Jamin Soderstrom
Believing he was
10
subject to an arbitration agreement with Charter, Harper then
11
filed a demand for arbitration with JAMS on November 19, 2018.
12
(Id. at ¶ 23.)
13
determining that none of Harper’s claims were arbitrable.
14
id. ¶ 24.)
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violations of the California Labor Code against Charter in Shasta
16
County Superior Court, on behalf of himself and all similarly
17
situated individuals.
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case to this court on May 17, 2019.
19
December 13, 2019, Harper amended his complaint, adding Sinclair
20
as a named plaintiff pursuant to Rule 15(c).
21
The arbitrator subsequently issued a final award
(See
Harper then filed a complaint alleging the same
(See Docket No. 1-1.)
Charter removed the
(See Docket No. 1.)
On
(See FAC.)
Plaintiffs allege that Charter erroneously categorized
22
them as exempt employees because Charter mistakenly categorized
23
them as “outside salespersons.”
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that, as a result of this misclassification, Charter failed to
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pay them minimum wage in violation of California Labor Code §§
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1182.12, 1194, 1197, and 1194.4 (First Claim), failed to pay
27
overtime wages in violation of California Labor Code §§ 510 and
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1197 (Second Claim), failed to provide meal periods or provide
(FAC ¶ 9.)
4
Plaintiffs claim
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premium wages in lieu thereof in violation of California Labor
2
Code §§ 512 and 226.7 (Third Claim), and failed to provide rest
3
breaks or pay premium wages in lieu thereof in violation of
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California Labor Code § 226.7 (Fourth Claim).
5
FAC.)
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calculated, deducted, and failed to pay commission wages under
7
California Labor Code §§ 204, 221, 223, 224, and 2751 (Fifth
8
Claim), failed to provide accurate wage statements in violation
9
of California Labor Code § 226 (Sixth Claim), failed to pay all
(See generally
Plaintiffs further claim that Charter unlawfully
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wages owed upon termination in violation of California Labor Code
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§ 203 (Seventh Claim), failed to provide timely and complete
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copies of employment records in violation of California Labor
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Code §§ 226, 432, and 1198.5 (Eighth Claim), violated
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California’s Unfair Competition Law (“UCL”) under California
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Business and Professions Code § 17200 (Ninth Claim), and violated
16
the California Private Attorney General Act (“PAGA”), Cal. Labor
17
Code § 2698, et seq. (Tenth Claim).
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II.
Legal Standard
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Summary judgment is proper “if the movant shows that
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there is no genuine dispute as to any material fact and the
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movant is entitled to judgment as a matter of law.”
22
P. 56(a).
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of the suit, and a genuine issue is one that could permit a
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reasonable jury to enter a verdict in the non-moving party’s
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favor.
Fed. R. Civ.
A material fact is one that could affect the outcome
Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986).
26
The party moving for summary judgment bears the initial
27
burden of establishing the absence of a genuine issue of material
28
fact and can satisfy this burden by presenting evidence that
5
1
negates an essential element of the non-moving party’s case.
2
Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
3
Alternatively, the movant can demonstrate that the non-moving
4
party cannot provide evidence to support an essential element
5
upon which it will bear the burden of proof at trial.
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“the case turns on a mixed question of fact and law and the only
7
disputes relate to the legal significance of undisputed facts,
8
the controversy collapses into a question of law suitable to
9
disposition on summary judgment.”
Id.
Where
Thrifty Oil Co. v. Bank of Am.
10
Nat’l Tr. & Sav. Ass’n, 322 F.3d 1039, 1046 (9th Cir. 2003).
11
“Where the record taken as a whole could not lead a rational
12
trier of fact to find for the non-moving party, there is no
13
genuine issue for trial.”
14
Radio Corp., 475 U.S. 574, 587 (1986).
15
the underlying facts must, however, be viewed in the light most
16
favorable to the party opposing the motion.1
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Matsuhita Elec. Indus. Co. v. Zenith
Any inferences drawn from
See id.
Charter makes several evidentiary objections to the
Declaration of Jamin S. Soderstrom and its attachments, the
declaration of Lionel Harper, and the declaration of Daniel
Sinclair on the grounds that the statements by Mr. Soderstrom,
Harper, and Sinclair, as well as their attached exhibits, lack
foundation, are hearsay, are speculative, or are irrelevant.
(See Docket No. 103-1.) Plaintiffs similarly object to portions
of the Declaration of Andrea Benner and its attachments. (See
Docket No. 98-27.) The Ninth Circuit has long held that “to
survive summary judgment, a party does not necessarily have to
produce evidence in a form that would be admissible at trial, as
long as the party satisfies the requirements of Federal Rule of
Civil Procedure 56.” Fraser v. Goodale, 342 F.3d 1032, 1036–37
(9th Cir. 2003.) Moreover, “[a]s a practical matter, the court
finds this entire exercise of considering evidentiary objections
on a motion for summary judgment to be futile and
counterproductive.” Burch v. Regents of University of
California, 433 F.Supp.2d 1110, 1122 (E.D. Cal. 2006) (Shubb,
J.). Accordingly, if Charter or plaintiffs wish to raise these
evidentiary objections, they may do so at trial.
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III. Discussion
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Claims for Failure to Pay Minimum Wage, Failure to Pay
Overtime, Failure to Provide Meal Periods, and Failure
to Provide Rest Periods
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Charter first argues that plaintiffs’ First (Minimum
2
A.
5
Wage), Second (Overtime), Third (Meal Periods), and Fourth (Rest
6
Periods) claims fail as a matter of law because California’s wage
7
and hour laws, including minimum wage and overtime pay
8
requirements, as well as meal and rest period requirements, do
9
not apply to “outside salespersons.”
(See Mot. for Summ. J. at
10
11-18.)
Charter also argues that Sinclair’s First through Fourth
11
claims are time-barred because he last worked for Charter more
12
than three years before he filed suit.
13
Charter’s statute-of-limitations argument before turning to the
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merits of its argument that Harper and Sinclair were properly
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classified as “outside salespersons.”
The court will address
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1.
Statute of Limitations
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The applicable limitations period for claims for
18
damages under the California Labor Code is three years.
19
Code Civ. P. § 338.
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time-barred because the last day Sinclair actually performed work
21
for Charter was July 16, 2016, but Sinclair did not file suit
22
until December 13, 2019.
23
See Cal.
Charter argues that Sinclair’s claims are
(See Mot. for Summ. J. at 21.)
Plaintiffs argue that, because Sinclair was among the
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putative class members referenced in Harper’s original complaint,
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and Sinclair was added as a party plaintiff pursuant to Rule
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15(c) when plaintiffs filed the First Amended Complaint on
27
December 13, 2019, Sinclair’s claims relate back to Harper’s
28
original pleading.
See In re Syntex Corp. Sec. Litig., 95 F.3d
7
1
922, 935-36 (9th Cir. 1996).
2
“An amendment adding a party plaintiff [under Rule
3
15(c)] relates back to the date of the original pleading only
4
when: (1) the original complaint gave the defendant adequate
5
notice of the claims of the newly proposed plaintiff; (2) the
6
relation back does not unfairly prejudice the defendant; and (3)
7
there is an identity of interests between the original and newly
8
proposed plaintiff.”
9
relates back to the original claim, notice to the opposing party
Id.
“In deciding whether an amendment
10
of the existence and involvement of the new plaintiff is the
11
critical element.”
12
1984).
13
proposed plaintiff's claims often turns on “whether the original
14
complaint clearly stated that the plaintiff sought to represent
15
others.”
16
(S.D. Cal. 2015) (citations omitted).
Avila v. INS, 731 F.2d 616, 620 (9th Cir.
Whether the defendant had adequate notice of the newly
Allen v. Similasan Corp., 96 F. Supp. 3d 1063, 1069
17
The court finds that Harper’s complaint gave defendant
18
adequate notice of Sinclair’s claims because it sought to pursue
19
class claims.
20
adequate notice that the plaintiff seeks claims on behalf of a
21
class, see, e.g., Corns v. Laborers Int'l Union of N. Am., No.
22
09-cv-4403 YGR, 2014 WL 1319363, at *5 (N.D. Cal. Mar. 31, 2014),
23
courts have uniformly found that a class action complaint
24
provides defendants adequate notice of other class members'
25
claims, see, e.g., Lith v. Iheartmedia + Entm't, No. 1:16-cv-066
26
LJO SKO, 2016 WL 4000356, at *6 (E.D. Cal. July 25, 2016).
27
Harper’s complaint unequivocally sought to bring a class action.
28
(See Docket No. 1-1 (commencing action with “Class and PAGA
While an individual complaint may not provide
8
Here,
1
Action Complaint”).)
2
of removal that the putative class included 1083 account
3
executives employed by defendant beginning in November 2014, of
4
which Sinclair was one.
5
Defendant even acknowledged in its notice
(See Docket No. 1 at 11.)
The court also finds that an identity of interests
6
exists between Sinclair and Harper.
For there to be the required
7
identity of interests, Harper and Sinclair must be “similarly
8
situated.”
9
Labor (AFL-CIO) v. INS, 306 F.3d 842, 858 (9th Cir. 2002).
Immigrant Assistance Project of L.A. Cty. Fed'n of
10
Plaintiffs are “similarly situated” when “[t]he circumstances
11
giving rise to the[ir] claims remain[ ] the same [under the
12
amended complaint] as under the original complaint.
13
v. Am. Cyanimid Co., 695 F.2d 382, 384 (9th Cir. 1982).
14
Sinclair and Harper held the same position at Charter, had some
15
of the same supervisors and colleagues, and were subject to the
16
same allegedly unlawful policies and practices.
17
and procedures give rise to the same allegations of violations of
18
the California Labor Code, California’s UCL, and PAGA in both the
19
original and operative complaints.
20
1-1) with FAC (Docket No. 45).)
21
identity of interests between Harper and Sinclair, the relation
22
back of Sinclair’s claims will not prejudice Charter.
23
Bros. v. Am. Cyanimid Co., 695 F.2d 382, 384 (9th Cir. 1982)
24
(holding when new and former plaintiffs “have sufficient identity of
25
interests, relation back of the amendment is not prejudicial to the
26
defendant”); Besig v. Dolphin Boating & Swimming Club, 683 F.2d
27
1271, 1278 (9th Cir. 1982) (holding where the relief sought remains
28
the same “the defendant is not prejudiced because his response to
Raynor Bros.
Here,
These policies
(Compare Compl. (Docket No.
Because the court finds an
9
Raynor
1
the action requires no revision”); Immigrant Assistance, 305 F.3d at
2
858 (“The addition of new plaintiffs who are similarly situated to
3
the original plaintiffs therefore did not cause the INS any
4
prejudice in the present case.”).
5
the operative complaint therefore relate back to Harper’s original
6
complaint, which was filed on May 3, 2019.
7
Sinclair’s claims as alleged in
Plaintiffs further argue that the court should apply
8
principles of equitable tolling to suspend the running of any
9
applicable statutes of limitations after November 19, 2018.
(See
10
Pls.’ Opp’n at 39-46.)
11
events that began over a year before Harper filed his original
12
complaint in Shasta County Superior Court.
13
approximately one month after Harper was terminated by Charter,
14
Harper contacted JAMS, the company listed in an arbitration
15
agreement Charter had signed with Harper, to request non-binding
16
mediation.
17
They base their argument on a series of
On April 19, 2018,
(Harper Decl. ¶ 22.)
Charter refused to participate in mediation with Harper
18
in May 2018.
19
plaintiffs’ counsel a letter attaching a copy of the arbitration
20
agreement Harper had signed, which required arbitration with JAMS.
21
(See Soderstrom Decl. ¶ 19, Ex. 19.)
22
with his contractual obligations to arbitrate, and stated that it
23
would move to compel arbitration is Harper elected to file a
24
complaint in court.
25
of Charter’s alleged violations of the California Labor Code with
26
the California LWDA, then filed an arbitration demand with JAMS on
27
November 19, 2018, in compliance with his arbitration agreement with
28
JAMS.
(Id.)
On July 3, 2018, Charter’s counsel sent
(See id.)
(See id. at ¶¶ 22-23.)
Charter asked Harper to comply
Harper subsequently filed a notice
Because the arbitration agreement
10
1
included a mutual delegation option, Harper’s arbitration demand
2
asked the arbitrator to address several threshold issues before
3
reaching the merits of the claim.
4
demand stated that Harper intended to file the same claims on an
5
individual, class, and representative PAGA basis in court to the
6
extent the arbitrator determined some or all of the claims were not
7
arbitrable.
8
9
(See id.)
Harper’s arbitration
(See id.)
The arbitrator issued a final award on April 25, 2019,
dismissing the arbitration on the grounds that the entire
10
arbitration agreement was null and void and that none of Harper’s
11
claims was arbitrable.
12
complaint shortly thereafter, on May 3, 2019.
13
(See id. at ¶ 24.)
Harper filed his
(See id.)
Plaintiffs argue that equitable tolling is automatic
14
“where exhaustion of an administrative remedy is mandatory prior to
15
filing suit.”
16
Cal. 4th 88, 101 (Cal. 2008).
17
was required to pursue arbitration before filing suit.
18
for Summ. J. at 34; Pls.’ Opp’n at 40.)
19
address the question of whether Harper was required to arbitrate his
20
claims because equitable tolling may still apply “regardless of
21
whether the exhaustion of one remedy is a prerequisite to the
22
pursuit of another.”
23
1974).
24
elements are present: (1) timely notice, (2) lack of prejudice to
25
the defendant, and (3) reasonable and good faith conduct by the
26
plaintiff.
27
Health, 9 Cal. 5th 710, 724 (2020); Elkins, 12 Cal. 3d at 414.
28
Here, Charter had notice of Harper’s allegations and
McDonald v. Antelope Valley Cmty. Coll. Dist., 45
The parties dispute whether Harper
(See Mot.
However, the court need not
Elkins v. Derby, 12 Cal. 3d 410, 414 (Cal.
Equitable tolling applies in such situations when three
See Saint Francis Mem’l Hosp. v. State Dep’t of Pub.
11
1
claims, and of his intent to pursue them on behalf of other
2
employees in California and the Sate, as early as September 14,
3
2018, when Harper filed and mailed the PAGA notice, and certainly by
4
the time Harper filed his demand for arbitration, in which he
5
indicated his intent to pursue his claims in court should the
6
arbitrator determine that some or all of his claims were not
7
arbitrable.
(See Soderstrom Decl. ¶¶ 22-23.)
8
Under the second element, courts’ “core focus” is
9
“whether application of equitable tolling would prevent the
10
defendant from defending a claim on the merits.”
11
Cal. 5th at 728 (citing Addison v. California, 21 Cal. 3d 313, 318
12
(Cal. 1978)).
13
arbitration were the same as his claims filed in court, and that
14
Harper indicated his intention to pursue his claims on behalf of a
15
class, the court does not “see how tolling [the] statute of
16
limitations would undermine the [defendant’s] ability to defend the
17
propriety of the same penalty in superior court.”
18
May 17, 2019, just two weeks after Harper filed his claims in court,
19
Charter had already identified 1,083 putative class members and
20
aggrieved employees who had been employed by Charter in California
21
since November 19, 2014.
22
Saint Francis, 9
Given that Harper’s claims in his demand for
Id.
Indeed, by
(See Docket No.1, at 11.)
Finally, the court finds here that Harper acted
23
reasonably and in good faith.
24
Harper filed his PAGA notice on September 14, 2018, just ten days
25
after receiving his wage statements and some of his personnel
26
records from Charter.
27
his arbitration demand two months later, and filed his suit in
28
Shasta Superior Court shortly after the arbitrator issued a final
See Saint Francis, 9 Cal. 5th at 724.
(See Soderstrom Decl. ¶ 21.)
12
Harper filed
1
award.
2
reasonable under the circumstances” and “subjectively in good faith”
3
as Harper believed himself to be bound to an arbitration agreement
4
with Charter that required arbitration with JAMS and did not
5
unreasonably delay.
(See id. at ¶¶ 23-24.)
6
These actions were each “objectively
See Saint Francis, 9 Cal. 5th at 724.
The court therefore finds that equitable tolling of the
7
statute of limitations applicable to the claims in Charter’s
8
original complaint to November 19, 2018 (the date on which Harper
9
filed his arbitration demand with JAMS) is appropriate.
See id.
10
Because Sinclair’s claims relate back to the claims contained in
11
Harper’s original complaint, the applicable date for determining
12
whether Sinclair complied with the statute of limitations is
13
November 19, 2018.
14
Accordingly, because the applicable statute of
15
limitations for claims for damages under the Labor Code is three
16
years, and Sinclair was still working for Charter on November 19,
17
2015, the court will not grant summary judgment against Sinclair on
18
his First through Fourth claims for damages on the grounds that his
19
claims were not timely filed.
20
he is time-barred from seeking penalties under his first four
21
claims, as the last day he worked for Charter was April 4, 2017, and
22
statutory penalties are subject to a one-year limitations period.
23
See Cal. Code Civ. P. § 340; (Pls.’ Opp’n at 46).
24
therefore grant Charter’s request for summary adjudication as to
25
Sinclair’s First, Second, Third, and Fourth Claims for statutory
26
penalties.
As Sinclair acknowledges, however,
The court will
27
2.
Outside Salesperson Exemption
28
Under California law, outside salespersons are exempt
13
1
from overtime, minimum wage, meal period, and rest period
2
requirements.
3
provisions of [the Labor Code's Chapter on Wages, Hours, and
4
Working Conditions] shall apply to and include men, women and
5
minors employed in any occupation, trade, or industry, whether
6
compensation is measured by time, piece, or otherwise, but shall
7
not include any individual employed as an outside salesman . . .
8
.”
9
regulations, an “outside salesperson” is defined as “any person,
California Labor Code § 1171 sets forth that “the
Cal. Lab. Code § 1171 (emphasis added).
Under California
10
18 years of age or over, who customarily and regularly works more
11
than half the working time away from the employer's place of
12
business selling tangible or intangible items or obtaining orders
13
or contracts for products, services or use of facilities.”
14
Code Regs. tit. 8, § 11070.
15
Cal.
Whether someone is an outside salesperson under the
16
California labor laws is a mixed question of law and fact,
17
although it often “turns on a detailed, fact-specific
18
determination.”
19
790 (Cal. 1999).
20
overtime laws is considered to be an affirmative defense, and
21
therefore the employer bears the burden of proving the employee's
22
exemption.”
23
Ramirez v. Yosemite Water Co., 20 Cal. 4th 785,
“[T]he assertion of an exemption from the
Id. (citations omitted).
According to the California Supreme Court, the
24
determination of whether an employee is an “outside salesperson”
25
entails a “quantitative approach, looking to the actual hours
26
spent on sales activity to determine if an employee is primarily
27
a salesperson.”
28
practical inquiries into the actual nature of the requirements of
Id. at 801.
This determination is guided by
14
1
the employee’s job.
2
either “the number of hours that the employer, according to its
3
job description or its estimate, claims the employee should be
4
working in sales,” or “the actual average hours the employee
5
spent on sales activity.”
6
California Supreme Court has explained:
7
Courts may not rely solely on
Id. at 802 (emphasis added).
As the
On the one hand, if hours worked on sales
were determined through an employer's job
description, then the employer could make an
employee exempt from overtime laws solely by
fashioning an idealized job description that
had little basis in reality. On the other
hand, an employee who is supposed to be
engaged in sales activities during most of
his working hours and falls below the 50
percent mark due to his own substandard
performance should not thereby be able to
evade a valid exemption. A trial court, in
determining whether the employee is an
outside salesperson, must steer clear of
these two pitfalls by inquiring into the
realistic requirements of the job. In so
doing, the court should consider, first and
foremost, how the employee actually spends
his or her time. But the trial court should
also consider whether the employee's
practice diverges from the employer's
realistic expectations, whether there was
any concrete expression of employer
displeasure over an employee's substandard
performance, and whether these expressions
were themselves realistic given the actual
overall requirements of the job.
8
9
10
11
12
13
14
15
16
17
18
19
20
21
See id.
Id.
22
“[O]nly time ‘away from the employer’s place of
23
business’ that is spent on sales activity, i.e., ‘selling
24
tangible or intangible items or obtaining orders or contracts for
25
products, services or use of facilities,’ counts towards the 50%
26
mark needed to establish the [outside salesperson] exemption.”
27
Spallino v. Charter Comms. Inc., No. ED CV 17-0982-DOC (SPx),
28
2018 WL 6011541, at *8 (C.D. Cal. June 5, 2018) (quoting 8 Cal.
15
1
Code Regs. § 11070).
Activities performed inside the office do
2
not count toward the exemption even if they are direct sales or
3
sales-related activities.
4
Assn., 59 Cal. 4th 1, 26 (Cal. 2014) (“Unlike the corresponding
5
federal provision, California's wage order definition ‘takes a
6
purely quantitative approach’ and focuses exclusively on whether
7
the employee spends more than half of the workday engaged in
8
sales activities outside the office.” (emphasis added) (quoting
9
Ramirez, 20 Cal. 4th at 797)).
See Duran v. United States Bank Nat’l
California law also does not
10
treat activities that are “incidental” to sales activities as
11
exempt, even if they are performed outside the office.
12
20 Cal. 4th at 796-801.
13
Ramirez,
Here, no party appears to contend that Harper or
14
Sinclair actually spent more than 50% of their time away from the
15
employer’s place of business engaged in sales activities.
16
Def.’s SUF Nos. 10-11; Pls.’ SDF Nos. SDF Nos. 19-22.)
17
Charter argues that plaintiffs were appropriately classified as
18
outside salespersons because, during their employment, Charter
19
expected AEs to “customarily and regularly” spend at least 50% of
20
their time in the field conducting sales activities.
21
Summ. J. at 3; Def.’s SUF No. 4.)
22
less than 50% of their time outside the office participating in
23
sales activities, Charter contends, they were not meeting the
24
realistic requirements of their jobs.
25
802.
26
(See
Rather,
(Mot. for
If plaintiffs were spending
Ramirez, 20 Cal. 4th at
Charter points to several “corrective action reports”
27
that were issued to plaintiffs as evidence that they were not
28
living up to Charter’s expectations for how much time AEs should
16
1
be spending outside the office.
2
However, these corrective action reports were issued based on
3
plaintiffs’ failure to meet rolling average sales targets,
4
without regard to the amount of time plaintiffs’ spent outside
5
the office.
6
these reports instructed plaintiffs to focus on activities that
7
would result in their spending more time outside the office, such
8
as following more leads or knocking on more doors, other
9
directives instructed plaintiffs to focus on activities that had
(See id.)
(See Benner Decl., Ex. I-N.)
While some of the directives contained in
10
to be done in the office, such as sending their manager their
11
daily call form.
12
reports expressly state that plaintiffs were failing to live up
13
to expectations because they were spending too much time in the
14
office.
15
(See id.)
None of the corrective action
(See id.)
Charter also emphasizes that it advertises the AE
16
position as one that will “keep you on the go” and “working door-
17
to-door.”
18
provided to new AEs in December 2016, on a “typical day,” Charter
19
expects AEs to be outside the office from 10:00 a.m. to 3:00
20
p.m., or five hours out of the day.
21
(“December 2016 AE Training Materials”) at 41.)
22
former manager similarly testified that “account executives
23
should spend most of their time in the field.”
24
92:1-8, 103:1-11.)
25
(Benner Decl. ¶ 5.)
According to training materials
(See Benner Decl., Ex. A,
Plaintiffs’
(Benner Dep.
But the training materials Charter cites do not
26
actually specify that Charter expects AEs to be out of the office
27
more than half the day; while the schedule on a “typical day”
28
will have AEs out of the office between 10:00 a.m. and 3 p.m.,
17
1
the schedule does not specify how long a AE’s typical day will
2
last besides saying it will go from “approximately 8:00 a.m.” to
3
“around 5 p.m.”
4
In fact, both Sinclair and Harper testified that they regularly
5
were required to work past 5 p.m. and that, contrary to the
6
training materials emphasized by Charter, they were advised that
7
the best sales results would be achieved if they were out in the
8
field selling from 11:00 a.m. to 2:00 or 3:00 p.m., which would
9
only result in 3-4 hours being spent out of the office selling.
(See December 2016 AE Training Materials at 41.)
10
(See Harper Dep. 146:1-25, 163:1-164:11; Sinclair Dep.
11
100:25-101:19.)
12
reinforce plaintiffs’ testimony, providing testimonials from “the
13
best” AEs and samples schedules that suggest AEs need not spend
14
more than 50% of their time outside the office.
15
Decl., Exs. 10, 11.)
16
97:5-15,
Other training materials produced by Charter
(See Soderstrom
By contrast, another job description produced by
17
Charter for “Direct Sales Reps” reveals that Charter expressly
18
stated that it expected those employees to spend 80% of their
19
time outside the office.
20
Neither of Charter’s “Standards of Performance” for the AE
21
position in December 2015 or August 2017 indicated that Charter
22
expected AEs to spend any particular amount of time outside the
23
office--rather, the expectation simply appears to have been that
24
AEs would complete a certain number of sales each month.
25
Benner Decl., Ex. H; Benner Dep. 37:1-18; Soderstrom Decl., Ex.
26
8.)
27
explain that, contrary to the testimony of their former manager,
28
Benner, no person at Charter, or any document they ever saw at
(See Soderstrom Decl., Ex. 21.)
(See
Plaintiffs have also submitted declarations in which they
18
1
Charter, expected or required them to spend more than 50% of
2
their work hours outside the office selling Charter’s services.
3
(See Harper Decl. ¶¶ 6, 10; Sinclair Decl. ¶¶ 6, 10.)
4
Viewing the evidence in the light most favorable to the
5
non-moving parties, the court finds that genuine issues of
6
material fact exist as to whether Charter actually expected its
7
AEs to spend more than 50% of their time outside the office,
8
engaged in sales or sales-related activities, at the time of
9
plaintiffs’ employment.
10
See Celotex, 477 U.S. at 322–23.
Furthermore, even if Charter did have such an
11
expectation, a genuine issue of fact would exist as to whether
12
such an expectation was reasonable in light of the duties
13
plaintiffs were expected to complete as part of their roles as
14
AEs.
15
courts should “consider, first and foremost, how the employee
16
actually spends his or her time,” they “should also consider
17
whether the employee's practice diverges from the employer's
18
realistic expectations, whether there was any concrete expression
19
of employer displeasure over an employee's substandard
20
performance, and whether these expressions were themselves
21
realistic given the actual overall requirements of the job”
22
(emphasis added)).
23
inherent to plaintiffs’ job required them to be in the office.
24
AEs were required to attend a daily sales call at the start of
25
each day that prevented them from going out into the field.
26
(Harper Dep. 149:9-17; Sinclair Dep. 98:25-99:14; Benner Dep.
27
106:20-110:11.)
28
and an hour, depending on how long the manager let the meeting
See Ramirez, 20 Cal. 4th at 802 (directing that while
The evidence shows that many of the tasks
This call typically lasted between 15 minutes
19
1
run.
2
(See id.)
AEs were also required to spend significant amounts of
3
time “scrubbing” a list of businesses provided to them by Charter
4
to target each month (known as the “leads list”).
5
102:5-104:15; Sinclair Dep. 277:20-278:15.)
6
process required AEs to go through the leads list and determine
7
which businesses were not viable targets, because they had
8
closed, already had Charter service, or were listed at an address
9
that was actually just a vacant lot or building.
(Harper Dep.
The scrubbing
(See id.)
10
Sinclair and Harper both testified that this process required
11
them to work at their desk, because much of it involved
12
researching businesses online, searching Google Maps, looking
13
through Charter databases, or conferring with other AEs.
14
(Id.)
Once AEs had verified that a business listed on the
15
leads list was a valid lead, they had to research the business to
16
determine how many clients it serviced, as well as what phone,
17
internet, or telephone service the business already had, to
18
create a sales proposal tailored to the specific business’ needs.
19
(Harper Dep. 117:14-119:16; Sinclair Dep. 133:2-134:9.)
20
and Sinclair testified that this process also largely required
21
them to be at their desk, and estimated that it could take
22
anywhere from 30 minutes to 3 hours, depending on how complex of
23
a proposal needed to be prepared.
24
Harper
(See id.)
After closing a deal with a client, AEs would have to
25
return to the office to input the order into an online portal.
26
(Harper Dep. 126:5-127:5; Sinclair Dep. 142:14-19.)
27
estimated that the input process would take 30 minutes to an
28
hour.
(See id.)
Harper
The evidence shows that AEs were then expected
20
1
to be involved with an account up until service had been
2
completely installed at the client’s business.
3
127:16-131:13; Sinclair Dep. 275:5-7; Benner Dep. 91:11-100:13.)
4
While other departments were in charge of the actual installation
5
and any construction that had to occur at the customer’s business
6
and/or property (e.g., installing cable or phone lines), AEs were
7
expected to be the first point of contact would have to consult
8
with these other departments to troubleshoot issues
9
expected to field calls from customers who viewed them as a point
10
of contact for Charter.
11
(Harper Dep.
and would be
(Id.)
According to Harper, AEs would frequently have to work
12
out logistical issues with customers regarding work that other
13
departments were tasked with doing, like scheduling installs or
14
required construction, all of which would be done from the
15
office.
16
expected to be the “main point of contact” with post-sale
17
customers during the installation process and “remain available
18
to the customer throughout the installation process”).)
19
Sinclair also testified that up until the day after an install
20
was completed, AEs were expected to field calls from clients
21
experiencing issues and investigate what their issue was so that
22
the AE could refer the issue to the proper Charter department.
23
(Sinclair Dep. 144:1-145:6.)
24
Harper testified that they spent 70% and approximately 60-65% of
25
their time at their desks, respectively.
26
16; Harper Dep. 235:19-254:12.)
27
28
(Id.; Benner Dep. 91:11-100:13 (explaining that AEs were
Based on these tasks, Sinclair and
(Sinclair Dep. 47:10-
Ultimately, the determination of whether Harper and
Sinclair can appropriately be classified as “outside
21
1
salespersons” who are exempt from California wage and hour laws
2
is a fact-intensive question.
3
Given the conflicting testimonial and documentary evidence as to
4
Charter’s expectations regarding how many hours plaintiffs should
5
have spent outside the office, plaintiffs’ testimony regarding
6
the demands of their job and why they spent a majority of their
7
time at the office, and viewing the facts in the light most
8
favorable to plaintiffs as the non-moving parties, a reasonable
9
juror could find that plaintiffs did not qualify as “outside
See Ramirez, 20 Cal. 4th at 790.
10
salespersons.”
11
summary judgment as to plaintiff’s wage and hour claims because
12
there was a disputed issue of fact as to whether Time Warner
13
Cable Account Executive was an “outside salesperson”); T.W. Elec.
14
Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631
15
(9th Cir. 1987) (“If the nonmoving party produces direct evidence
16
of a material fact, the court may not assess the credibility of
17
this evidence nor weigh against it any conflicting evidence
18
presented by the moving party.”).
19
See Spallino, 2018 WL 6011541, at *9 (denying
Accordingly, there is a disputed issue of material fact
20
underlying whether plaintiffs were protected by California's
21
minimum wage, overtime pay, meal period, and rest period
22
requirements.
23
summary judgment as to plaintiffs’ First through Fourth Claims
24
(except for Sinclair’s First through Fourth Claims for penalties,
25
as discussed above).2
26
27
28
The court will therefore deny Charter’s motion for
Plaintiffs present an alternative argument that, even
if the court were to find that Charter had properly classified
AEs as outside salespersons after they had completed their
initial training, the court should consider AEs’ training weeks
22
2
1
2
B.
Commission-Based Claims
Plaintiffs’ Fifth Claim alleges that Charter unlawfully
3
calculated, deducted, and paid commission wages in violation of
4
California Labor Code §§ 2751(b), 204, 221, 223, and 224.
5
FAC ¶¶ 42-48.)
6
Sinclair’s commission-based claims are time-barred based on the
7
Labor Code’s three-year statute of limitations.
8
Summ. J. at 25.)
9
finds this argument to be without merit.
10
(See
As a threshold matter, Charter again argues that
(See Mot. for
For the reasons discussed above, the court
Charter also raises several substantive arguments as to
11
why summary adjudication is appropriate as to each alleged
12
statutory violation in the operative complaint. The court will
13
address each of Charter’s arguments in turn:
14
1.
California Labor Code § 2751(b)
15
California Labor Code § 2751(b) states that, where an
16
employee is paid commissions, “the employer shall give a signed
17
copy of the [commission plan] to every employee who is a party
18
thereto and shall obtain a signed receipt for the contract from
19
each employee.”
20
plaintiffs’ claim fails as a matter of law because § 2751(b) no
21
longer provides a private right of action.
22
J. at 22.)
23
provided that ‘[a]ny employer who does not employ an employee
Cal. Labor Code § 2751(b).
Charter argues that
(See Mot. for Summ.
“Prior to January 2012, California Labor Code § 2752
24
25
26
27
28
separately and find that, at the least, Charter had misclassified
plaintiffs during training. (See Pls.’ Opp’n at 12-15.) Because
the court finds that genuine issues of material fact exist as to
whether AEs were properly classified as outside salespersons
throughout their entire employment, it need not consider
plaintiffs’ training weeks separately from their non-training
weeks.
23
1
pursuant to a written contract as required by Section 2751 shall
2
be liable to the employee in a civil action for triple damages.’”
3
Swafford v. Int’l Bus. Machines Corp., 383 F. Supp. 3d 916, 934
4
(N.D. Cal. 2019).
5
Section 2751 in 2011, it repealed Section 2752.”
6
Bus. Machines Corp., No. C 18-06783 WHA, 2019 WL 1516692 (N.D.
7
Cal. Apr. 7, 2019) (citing Stats. 2011, ch. 556, § 3).
8
district courts interpreting § 2751(b) have concluded that the
9
California’s repeal of § 2752 removed any private right of action
But “[w]hen the California Legislature amended
Beard v. Int’l
Other
10
under the statute.
See id.; Swafford, 383 F. Supp. 3d at 934.
11
This court agrees with those courts, and finds that plaintiffs
12
have no private right of action under § 2751.
13
therefore grant Charter’s motion for summary adjudication as to
14
plaintiffs’ claim that Charter violated Labor Code § 2751(b).
The court will
15
However, while § 2751 does not provide plaintiffs with
16
a private right of action, the court will still assess whether a
17
genuine dispute of material fact exists, as a violation of
18
§ 2751(b) may still form the basis of Harper’s PAGA claim and
19
serve as a predicate violation for plaintiffs’ claims under the
20
UCL, as discussed below.
21
No. C 18-06783 WHA, 2020 WL 1812171, at *9-10 (N.D. Cal. Apr. 9,
22
2020) (denying employer summary judgment on UCL claim predicated
23
on violation of Section 2751); Keenan v. Cox Commc’ns Cal., LLC,
24
No. 18-cv-129-MMA (LL), 2019 WL 3288939, at *9 (S.D. Cal. July
25
22, 2019) (stating that monetary relief for violations of § 2751
26
is only available in the form of civil penalties under PAGA)
27
(overruled on other grounds).
28
See Beard v. Int’l Bus. Machines Corp.,
Charter argues that it complied with § 2751(b) by
24
1
providing plaintiffs with their commission plans through an
2
online portal known as “Synygy” and by requiring them to check a
3
box acknowledging receipt shortly after they were hired.
4
Mot. for Summ. J. at 23.)
5
presents documents related to a Synygy training course that it
6
asserts plaintiffs took upon being hired by Charter, as well as
7
statements contained in Benner’s declaration.
8
¶¶ 17, 20-23, Ex. G.)
9
training documents state that, in the course of the training, new
10
AEs were required to review their commission plan and check a box
11
acknowledging that they had read and understood it, and that they
12
agreed to comply with its terms.
13
the only way new AEs could “clear” the acknowledgment page and
14
gain access to compensation information in the Synygy portal was
15
to click the acknowledge button.
16
that another Charter employee has searched Synygy’s
17
acknowledgement data and found that Harper electronically
18
acknowledged receipt of his commission plan on September 29,
19
2017, at 2:36 p.m.
20
(See
In support of its argument, Charter
(See Benner Decl.
Both Benner’s declaration and the Synygy
(See id.)
(See id.)
According to Benner,
Benner also states
(See id.)
Plaintiffs dispute that they ever completed the Synygy
21
training described in the training documents and by Benner.
(See
22
Harper Decl. ¶ 19; Sinclair Decl. ¶ 17; Soderstrom Decl., Ex.
23
15.)
24
it was presented to them, and a transcript of the training titles
25
Harper completed during his training does not mention any
26
training related to the Synygy portal.
27
plaintiff recognized the commission plans Charter asserts they
28
reviewed and signed, either.
Neither plaintiff recognized the Synygy training guide when
(See id.)
Neither
(Sinclair Dep. 75:9-76:17; Harper
25
1
Dep. 84:9-86:16.)
2
were never presented with copies of the commission plans;
3
instead, the only knowledge they had of Charter’s commission
4
plans came from conversations they had with others in the office
5
or, in Sinclair’s case, from a one-page summary provided to him
6
by a Charter employee.
7
86:21-87:22.)
8
9
Both Harper and Sinclair testified that they
(Sinclair Dep. 77:9-78:5; Harper Dep.
The only evidence that either plaintiff signed or
acknowledged receipt of their commission plans comes from
10
Benner’s statement that AEs had to acknowledge receipt
11
electronically before they could access the Synygy portal to view
12
their compensation information, and her statement that Charter is
13
in possession of data showing Harper electronically acknowledged
14
receipt of his commission plan.
15
However, both plaintiffs state in their declarations that there
16
were multiple ways AEs could view and keep track of their
17
commissions besides logging into Synygy, including other online
18
portals, via email from their managers, phone discussions, sales
19
meetings, and on their wage statements.
20
Harper Decl. ¶ 15; Sinclair Decl. ¶ 13.)
21
produced the data showing electronic acknowledgement to which
22
Benner refers, or any commission plans signed by either
23
plaintiff.
24
Benner Decl., Ex. F.)
25
evidence the court can rely on that conclusively shows that
26
plaintiffs knowingly agreed to Charter’s commission plan,
27
acknowledged receipt of the plan, or were provided with a signed
28
copy of the plan, and the testimony and declarations of the
(See Benner Decl. ¶¶ 17, 20-23.)
(See Pls.’ SDF 28;
And Charter has not
(See (See Pls.’ SDF 30-34; Soderstrom Decl. ¶ 4;
In other words, there is no documentary
26
1
parties are in direct conflict.
The court therefore finds that a
2
genuine issue of material fact exists as to whether Charter
3
failed to provide plaintiffs with signed copies of their
4
commission plans or failed to obtain a signed receipt from each
5
plaintiff in violation of § 2751.
6
23.
See Celotex, 477 U.S. at 322–
7
3.
8
Plaintiffs claim that Charter violated California Labor
9
California Labor Code § 204
Code § 204 by adopting an unlawful monthly commission pay period
10
and paying earned commissions late.
11
at 25.)
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(See FAC ¶¶ 46; Pls.’ Opp’n
Section 204 states in pertinent part:
All wages . . . earned by any person in any
employment are due and payable twice during
each calendar month, on days designated in
advance by the employer as the regular
paydays. Labor performed between the 1st
and 15th days, inclusive, of any calendar
month shall be paid for between the 16th and
the 26th day of the month during which the
labor was performed, and labor performed
between the 16th and the last day,
inclusive, of any calendar month, shall be
paid for between the 1st and 10th day of the
following month.
Cal. Labor Code § 204(a).
“In other words, all earned wages,
including commissions, must be paid no less frequently than
semimonthly.”
Peabody v. Time Warner Cable, Inc., 59 Cal. 4th
662, 668 (Cal. 2014) (emphasis in original).
Charter argues that summary judgment is appropriate
because its commission plan complies with § 204.
Summ. J. at 24.)
(See Mot. for
According to Charter, AEs earn commissions on a
monthly basis, once they have met several criteria set out in
Charter’s commission plan.
(See Benner Decl. ¶¶ 17, 19, Exs. D,
27
1
F.)
2
Department of Labor Standards Enforcement (“DLSE”)--the
3
California agency empowered to enforce California's labor laws,
4
including wage orders--have recognized that “[c]omission programs
5
which calculate the amount owed once a month (or less often) are
6
common.”
7
Chavez v. Time Warner Cable, LLC, 728 F. App’x 645, 648 (9th Cir.
8
2018) (“such agreements are permitted under California law and do
9
not offend § 204”).
10
Charter contends that numerous courts and the California
DLSE Opn. Letter No 2202.12.09-2 (2002); see also
Plaintiff argues that Charter improperly conflates the
11
determination of when a commission is earned with the
12
determination of when an earned commission is required to be
13
paid.
14
the right to payment; that is, when all of the legal conditions
15
precedent have been met. Such conditions precedent are a matter
16
of contract between the employer and employee, subject to various
17
limitations imposed by common law or statute.”
18
Inc., 142 Cal. App. 4th 1313, 1335, (1st Dist. 2006) (quoting
19
DLSE Opn. Letter No. 1999.01.09, p.2).
20
numerous courts interpreting § 204 have concluded that a
21
commission plan that determines how much an employee has earned
22
in commission once per month does not violate § 204, see Peabody,
23
59 Cal. 4th at 668, once the determination that an employee has
24
earned commissions has been made, that employee must be paid
25
during the next pay period.
26
“A commission is ‘earned’ when the employee has perfected
Koehl v. Verio,
While the DLSE and
See id.
Plaintiffs contend that, while they “earned” their
27
commissions at the conclusion of each “commission month,” which
28
began on the 22nd of each month and ended on the 21st of the next
28
1
month, the evidence shows that Charter did not pay plaintiffs
2
until the second semimonthly pay period after the 22nd.
3
Pls.’ SDF 23-26; Benner Decl. ¶¶ 17, 19, Exs. D, F, Q, R; Benner
4
Dep. at 39:11-24.)
5
(See
Charter argues that its payments were nonetheless
6
timely.
Although the commission month ended on the 21st of each
7
calendar month, Charter states that AEs did not “earn”
8
commissions until Charter had reviewed and verified any sales
9
pursuant to the terms of its commission plan.
(See Benner Decl.,
10
Ex. D at CHA/HAR 145, Ex. F at CHA/HAR 2468); Chavez v. Time
11
Warner Cable Co. LLC, No. CV 12-05291-RGK (RZx), 2013 WL
12
12080302, at *4 (C.D. Cal. Feb. 20, 2013) (holding that employer
13
had complied with § 204 by paying commissions on a monthly basis
14
after taking a reasonable period of time to verify sales
15
resulting in payment) (reversed on other grounds).
16
Charter does not provide any evidence in support of its
17
assertion that it conducted additional verification of
18
plaintiffs’ sales after the 21st of each month, or that this
19
verification process lasted until the next calendar month such
20
that payment during the second semimonthly pay period would be
21
timely.
22
exists as to whether plaintiffs knowingly agreed to the terms of
23
Charter’s commission plan, the court cannot conclude as a matter
24
of law that Sinclair and Harper only “earned” their commissions
25
upon the completion of the conditions laid out in the commission
26
plans provided by Charter.
27
(“A commission is ‘earned’ when the employee has perfected the
28
right to payment; that is, when all of the legal conditions
Moreover, because a genuine dispute of material fact
See Koehl, 142 Cal. App. 4th at 1335
29
1
precedent have been met. Such conditions precedent are a matter
2
of contract between the employer and employee . . . .”).
3
For similar reasons, the court cannot conclude, as
4
Charter argues, that Harper’s commission-based claims must fail
5
because he never “earned” any commissions throughout the duration
6
of his employment with Charter under the terms of his commission
7
plan.
8
number of monthly sales set out in the commission plan to “earn”
9
any commissions.
Charter contends that Harper never completed the requisite
But undisputed evidence shows that Harper was
10
paid $420 in commissions on January 19, 2018.
11
Ex. Q at CHA/HAR 57.)
12
13
14
(See Benner Decl.,
The court will therefore deny Charter’s motion for
summary judgment as to plaintiffs’ claim for violations of § 204.
4.
15
California Labor Code §§ 221, 223, 224
Plaintiffs claim that Charter violated California
16
Labor Code §§ 221, 223, and 224 by “unlawfully deducting,
17
reducing, clawing back, or otherwise reconciling commissions owed
18
to plaintiffs.”
19
20
(FAC ¶ 47.)
a.
Sections 221 and 224
California Labor Code §§ 221 and 224 protect employees
21
against unlawful deductions of their earned wages.
22
“It shall be unlawful for any employer to collect or receive from
23
an employee any part of wages theretofore paid by said employer
24
to said employee.”
25
that an employee “expressly authorize[s] in writing,” but forbids
26
deductions that amount to a “rebate or deduction from the
27
standard wage . . . pursuant to wage agreement or statute.”
28
Under § 221,
Section 224 authorizes certain deductions
“[A]n employee's ‘wages’ or ‘earnings’ [under § 221]
30
1
are the amount the employer has offered or promised to pay, or
2
has paid pursuant to such an offer or promise, as compensation
3
for that employee's labor.”
4
3:09-cv-03683, 2010 WL 4698490, at *5 (N.D. Cal. Nov. 4, 2010)
5
(quoting Prachasaisoradej v. Ralphs Grocery Co., 42 Cal. 4th 217,
6
228 (Cal. 2007)).
7
California Labor Code § 221, but as the court noted in Kemp, “the
8
right of a salesperson or any other person to a commission
9
depends on the terms of the contract for compensation.”
Kemp v. Int'l Bus. Machs. Corp., No.
Commissions can qualify as wages under
Id.
10
(citations omitted); see also Swafford, 383 F. Supp. 3d at 934.
11
Accordingly, a California Labor Code § 221 claim requires “some
12
showing that [the plaintiff] is contractually entitled to the
13
commissions he claims to have been denied.”
14
Supp. 3d at 934.
15
Swafford, 383 F.
Here, the parties dispute the number of earned
16
commissions to which Harper was entitled in December 2017, and
17
whether Charter fully paid him pursuant to the terms of his
18
commission plan.
19
Harper presents evidence of emails he sent to his manager in
20
January 2018 indicating that Charter had not provided him with
21
commissions for nine installs he completed in December.
22
Harper Decl., Ex. 2.)
23
entitled to any commissions in December, because he failed to
24
sell the threshold level of fifteen “Primary Service Units”
25
(“PSUs”) required under the terms of his commission plan to
26
“earn” commissions.
27
argues that, even if Harper had been entitled to commissions for
28
December, he only completed seven PSUs, for which he was fully
(See Pls.’ Opp’n at 27; Def.’s Reply at 30.)
(See
Charter argues that Harper was not
(See Benner Decl., Ex. D.)
31
Further, Charter
1
paid in January 2018.
2
(showing Harper was paid $420 in commissions, at a rate of $60
3
per PSU x 7 PSUs.)
4
(See Benner Decl., Ex. Q at CHA-HAR 57
Because the court has found that a disputed issue of
5
material fact exists as to whether Harper knowingly agreed to the
6
terms of the commission plan to which Charter refers, the court
7
cannot rule as a matter of law that Harper failed to “earn” any
8
commissions in December 2017 because he did not sell fifteen
9
PSUs.
See Kemp, 2010 WL 4698490, at *5 (“the right of a
10
salesperson or any other person to a commission depends on the
11
terms of the contract for compensation”).
12
that he earned and was entitled to commissions for nine installs
13
he completed in December, Charter argues that it properly paid
14
him only for seven.
15
material fact as to whether Charter unlawfully failed to pay
16
Harper commission wages it had promised to pay pursuant to the
17
agreement.
18
While Harper contends
There is therefore a disputed issue of
See id.
Sinclair argues that Charter failed to pay him a
19
commission for multiple sales he worked on that were ultimately
20
transferred to a national sales AE before they were finalized.
21
(See Sinclair Decl. ¶ 19; Sinclair Dep. 224:3-21.)
22
counters that, under the terms of Sinclair’s commission plan, a
23
service had to be installed before a commission on that sale
24
could be “earned.”
25
F.)
26
before they were completed, Charter contends that Sinclair did
27
not “earn” the commissions to which he believes he is entitled.
28
(See id.)
Charter
(See Def.’s Reply at 31; Benner Decl., Ex.
Since Sinclair did not perform every step of the sales
32
1
Again, a disputed issue of fact exists as to whether
2
Sinclair knowingly agreed to the terms of the commission plan to
3
which Charter refers.
4
matter of law that Sinclair did not earn commissions for the
5
sales at issue based on the terms of the commission plan which
6
Charter argues applied at the time.
7
as to whether Sinclair was entitled to commissions for sales in
8
which he performed some, but not all, of the requisite work, the
9
court concludes that a disputed issue of material fact exists as
The court therefore cannot rule as a
Because the parties disagree
10
to whether Sinclair “earned” commission wages for those sales,
11
and, therefore, whether Charter failed to pay Sinclair commission
12
wages it had promised him as part of the commission plan.
13
Kemp,, No. 2010 WL 4698490, at *5.
14
Charter’s motion for summary judgment as to plaintiffs’ Fifth
15
Claim for violations of California Labor Code §§ 221 and 224.
16
17
b.
See
The court will therefore deny
Section 223
“Section 223 prohibits the secret payment of a lower
18
wage while purporting to pay the wage required by statute or
19
contract.”
20
1136 (N.D. Cal. 2011).
21
Johnson v. Hewlett-Packard Co., 809 F. Supp. 2d 1114,
The text of section 223 does not support the existence
22
of a private right of action because it does not set forth an
23
entitlement to a wage or provide a penalty.
24
Business Systems, Inc. v. City of Los Angeles, 984 F. Supp. 981,
25
1015 (C.D. Cal. 2013).
26
judgment in favor of Charter as to plaintiffs’ Fifth Claim for
27
violation of California Labor Code § 223.
28
See id.; Calop
The court will therefore grant summary
However, while § 223 does not provide plaintiffs with a
33
1
private right of action, the court will still assess whether a
2
genuine dispute of material fact exists, as a violation of § 223
3
(like a violation of § 2751(b)) may still form the basis of
4
Harper’s PAGA claim and serve as a predicate violation for
5
plaintiffs’ claims under the UCL discussed below.
6
As described above, both Harper and Sinclair have
7
provided evidence sufficient evidence to create a disputed issue
8
of material fact as to whether Charter paid them a lower
9
commission wage than that to which they were entitled as part of
10
their commission plans, while purporting to pay them the proper
11
wage.
12
therefore exists as to whether Charter violated the terms of
13
California Labor Code § 223.
14
15
See Johnson, 809 F. Supp. 2d at 1136.
C.
A genuine of fact
Plaintiffs’ Wage Statement Claims
California Labor Code § 226 requires that employers
16
furnish their employees with accurate itemized statements in
17
writing, showing gross wages earned, total hours worked, all
18
deductions, net wages earned, all applicable hourly rates and the
19
corresponding number of hours worked at each hourly rate, and the
20
inclusive dates of all pay periods.
21
“An employee suffering injury as a result of a knowing and
22
intentional failure by an employer to comply with subdivision (a)
23
is entitled to recover the greater of all actual damages or
24
[statutory penalties] and is entitled to an award of costs and
25
reasonable attorney's fees.”
26
a number of violations of § 226 in their complaint, some of which
27
are derivative of their misclassification-based claims and their
28
commission-based claims, and some of which are independent.
Cal. Labor Code § 226(a).
Id. § 226(e)(1).
34
Plaintiffs allege
(See
1
FAC ¶¶ 49-54.)
2
1.
3
4
Whether Plaintiffs’ Derivative Wage Statement
Claims Must Fail
Charter first argues that plaintiffs’ derivative wage
5
statement claims must fail because the minimum wage, overtime,
6
and meal and rest period claims from which they derive also fail.
7
However, as discussed above, the court has found that genuine
8
disputes of material fact remain as to plaintiffs’ minimum wage,
9
overtime, and meal and rest period claims.
Summary judgment in
10
favor of Charter is therefore not warranted solely on this
11
ground.
12
2.
13
14
Whether the Statute of Limitations Bars
Plaintiffs’ Claims
Charter further argues that plaintiffs’ wage statement
15
claims are time-barred.
16
of limitations--one year for penalties, and three years for
17
damages.”
18
WHA, 2014 WL 1340762, at *2 (N.D. Cal. 2014).
19
that, because Harper last worked for Charter in January 2018 and
20
Sinclair last worked for Charter in July 2016, but Harper did not
21
file his complaint until May 3, 2019, and Sinclair did not join
22
the suit via the FAC until December 13, 2019, plaintiffs did not
23
successfully assert their claims within the one-year limitations
24
period for penalties, and to the extent that Sinclair has made
25
out a claim for damages under the statute, he did not timely file
26
within the three-year limitations period.
27
at 26; Docket Nos. 1, 45.)
28
Section 226 “has two applicable statutes
Sarkisov v. StoneMor Partners, L.P., No. C 13-04834
Charter contends
(See Mot. for Summ. J.
As discussed above, in Section III.A.1., the relevant
35
1
date for determining whether plaintiffs timely filed their claims
2
is November 19, 2018.
3
Harper’s last day, and less than three years from Sinclair’s last
4
day, Charter’s argument that Harper’s wage statement claim for
5
penalties or Sinclair’s claim for damages is time-barred fails.
6
However, the court will grant summary judgment in favor of
7
Charter as to Sinclair’s claim for penalties.
3.
8
9
10
Since that date is less than a year from
Whether Plaintiffs’ Claims Fail to Establish an
Actual Injury or a Knowing and Intentional
Violation
Next, Charter contends that plaintiffs’ claim under
11
§ 226 fails as a matter of law because plaintiffs “cannot offer
12
admissible evidence of actual damages.”
13
at 27.)
14
fails because plaintiffs cannot show that their injury occurred
15
as a result of a “knowing and intentional” violation of § 226(e),
16
as required under the statute, because Charter had a “good faith
17
belief” that their wage statements were in compliance given their
18
belief that plaintiffs were properly classified as outside
19
salespersons.
(See Mot. for Summ. J.
Charter also argues in its reply that plaintiffs’ claim
(See Def.’s Reply at 16.)
20
However, an employer’s showing that it acted under a
21
good-faith belief that its employees were outside salespersons
22
when issuing their wage statements is not sufficient to require
23
that the employees’ § 226(e) claim must fail as a matter of law.
24
See Novoa v. Charter Commc’ns, LLC, 100 F. Supp. 3d 1013, 1028
25
(E.D. Cal. 2015) (Ishii, J.) (“no court has granted summary
26
judgment to an employer, finding that it acted in good faith when
27
it violated Section 226(a); such a determination is generally a
28
question for the factfinder to resolve at trial” (collecting
36
1
cases) (internal quotation marks omitted)); Garnett v. ADT LLC,
2
139 F. Supp. 3d 1121, 1133 (E.D. Cal. 2015) (Shubb, J.) (“To the
3
extent that some district courts have found that an employer can
4
lack the necessary knowledge and intent if it had a good faith
5
belief that its employee was exempt from section 226, this court
6
disagrees.”).
7
intentional” requirement by showing that his employer knowingly
8
omitted information from his wage statements--he need not show
9
that the employer knew that it was violating § 226’s statutory
An employee may establish § 226’s “knowing and
10
requirements.
11
issue of fact therefore remains as to whether Charter knowingly
12
omitted information from plaintiffs’ wage statements in violation
13
of § 226.
14
See Novoa, 100 F. Supp. 3d at 1028.
A disputed
Plaintiffs have also submitted sufficient evidence that
15
they suffered a cognizable “injury” sufficient to show actual
16
damages.
17
“all actual damages” recoverable under § 226(e)(1) because
18
“[f]ailure to provide complete and accurate itemized paystubs
19
could have made the alleged under-reporting of wages more
20
difficult to detect and confront.”
21
*2; Arredondo v. Delano Farms Co, 301 F.R.D. 493, 547 (E.D. Cal.
22
2014) (Seng, J.).
23
premium, and commission wages, and assert that Charter’s failure
24
to accurately itemize their total hours worked, their regular and
25
overtime hours worked, the premium wages they were owed for meal
26
periods and rest breaks not provided and the proper hourly rate
27
for such premium wages, the commission wages they were owed, and
28
the pay period for which they should have been paid made it more
Courts have recognized that lost wages are a form of
Sarkisov, 2014 WL 1340762, at
Here, plaintiffs seek lost minimum, overtime,
37
1
difficult for plaintiffs to determine from their wage statements
2
the amount they should have been paid each pay period.
3
¶ 54, Prayer for Relief ¶¶ C-D; Harper Decl. ¶ 16; Sinclair Decl.
4
¶ 14.); Tennison v. Hub Grp. Trucking, Inc., No. LA CV20-05076
5
JAK (SPx), 2020 WL 7714702, at *11 (C.D. Cal. Dec. 28, 2020)
6
(“While there must be some injury in order to recover damages
7
[under Section 226(e)], a very modest showing will suffice.”].
8
genuine dispute of material fact therefore exists as to whether
9
plaintiffs suffered a cognizable injury sufficient to recover
10
11
12
13
(See FAC
A
actual damages under § 226.
4.
Whether Charter’s Wage Statements Complied with
§ 226
Finally, Charter argues that summary judgment of
14
plaintiffs’ wage statement claim is appropriate because Charter’s
15
wage statements complied with the requirements of § 226.
16
FAC, plaintiffs allege that Charter’s wage statements were
17
deficient in the following ways:
18
19
20
21
22
23
24
25
26
27
28
(a) prior to 2018, wage statements did not
include the inclusive dates of the relevant
pay period and only included the end date;
(b) prior to 2018, commission wages were
included on a wage statement that was
separate from the regular wage statement and
the commission wages were not attributed to
and paid for the pay periods in which they
were earned; (c) prior to 2017 Charter did
not accurately keep track of and include on
wage statements the total hours worked by
Outside Salesperson Class members; (d) wage
statements never reflected any premium wages
being paid to Plaintiffs and Outside
Salesperson Class members for meal periods
or rest breaks that were not provided or
that were late, shortened, missed, or onduty, both during training weeks and after
training weeks; and (e) Plaintiffs’ final
several wage statements failed to accurately
record the time worked, wages due, and
38
In the
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
inclusive dates of the applicable pay
periods, and failed to pay any waiting time
penalties.
(FAC ¶ 52.)
Charter contests each of these allegations.
Charter
first asserts that all of plaintiffs’ wage statements--with the
exception of Sinclair’s wage statements from 2015--included the
inclusive dates of the relevant pay period.
J. at 27.)
(See Mot. for Summ.
Charter argues that Sinclair’s 2015 wage statements,
though admittedly violative, cannot form the basis of a valid
§ 226 claim because wage statement claims are governed by a oneyear statute of limitations, and Sinclair did not file the FAC
until December 2019.
However, plaintiffs have produced evidence showing that
the “Pay Begin Date” and “Pay End Date” on several of Harper’s
wage statements were not accurate with respect to the applicable
22nd-to-21st “commission month” for earning commissions.
(See
Benner Decl., Ex. Q, at CHA/HAR 52 (listing begin date as
10/20/17 and end date as 11/02/17), CHA/HAR 54 (listing begin
date as November 17, 2017 and end date as 11/30/17), CHA/HAR 57
(listing begin date as 12/15/17 and end date as 12/21/17).)
As
for Sinclair’s claim, the court finds that it is not barred as to
violations that occurred on or after November 19, 2015, given
that Sinclair is seeking actual damages and thus the three-year
statute of limitations applies, and plaintiffs have submitted
evidence showing that Sinclair’s December 31, 2016 wage statement
is missing a “Period Beginning” date.
at CHA/HAR 404.)
(See Benner Decl., Ex. R,
The court therefore finds that genuine disputes
28
39
1
of material fact exist as to plaintiffs’ claim for wage statement
2
violations based on Charter’s failure to provide inclusive dates
3
of the relevant pay period.
4
Charter next argues that it is “not aware of any
5
requirement that commission payments be included on the same wage
6
statement as Plaintiffs’ biweekly wages.”
7
at 27.)
8
employees with accurate and complete information required by the
9
statute so that employees may “promptly and easily determine from
10
the wage statement alone . . . [t]he amount of the gross wages or
11
net wages paid to the employee during the pay period.”
12
Labor Code §§ 226(e)(1), (e)(2)(b)(i).
13
(See Mot. for Summ. J.
Labor Code § 226(e) requires employers to furnish
Cal.
Both plaintiffs state in their declarations that they
14
were not able to promptly and easily determine from their wage
15
statements the total gross and net wages they were paid for a pay
16
period that included payment of both salary and commission wages.
17
(See Harper Decl. ¶ 16; Sinclair Decl. ¶ 14.)
18
understandable given that the beginning and end dates listed on
19
Charter’s commission wage statements do not correspond with
20
Charter’s 22nd-to-22st “commission month,” and that the
21
commission statements list two different pay periods, one of
22
which does not correspond with the pay period listed on the
23
salary statement.
24
(listing “Begin Dates” of 10/20/17 and 11/03/17, and “End Dates”
25
of 11/02/17 and 11/16/17), CHA/HAR 53-54 (listing “Begin Dates”
26
of 11/17/17 and 12/01/17, and “End Dates” of 11/30/17 and
27
12/14/17), CHA/HAR 56-57 (listing “Begin Dates” of 12/15/17,
28
12/29/17 and 1/10/18, and “End Dates” of 12/21/17, 1/10/18, and
That is
(See Benner Decl., Ex. Q, at CHA/HAR 51-52
40
1
1/11/18).)
2
as to whether Charter’s practice of splitting wages between two
3
wage statements that covered the same pay period violated § 226.
4
There is therefore a genuine dispute of material fact
Finally, Charter argues that plaintiffs’ claims fail to
5
the extent they are based on allegations that, prior to 2017,
6
Charter’s wage statements did not include total hours worked.
7
(See Mot. for Summ. J. at 27-28.)
8
Charter did not hire Harper until September 2017, this claim
9
fails as to Harper to the extent it is based on allegations
The court agrees that, because
10
regarding wage statements prior to 2017.
11
63:9, 78:16-79:1).
12
of § 226 (see FAC ¶ 52) for which the court has found that
13
genuine disputes of material fact exist.
14
discussed above, Harper has presented evidence sufficient to
15
create an issue of material fact that Charter’s wage statements
16
did not include accurate “Pay Begin” or “Pay End” dates, and that
17
Charter’s practice of splitting his wage statements into separate
18
statements for salary and commission prevented him from promptly
19
and easily determining how much he had earned during a specific
20
pay period from the statement alone.
21
not grant summary adjudication as to Harper’s Sixth Claim for
22
violations of § 226.
23
(See Harper Dep. 62:19-
However, Harper has alleged other violations
For instance, as
The court will therefore
The court disagrees with Charter’s argument that this
24
claim also fails as to Sinclair.
Charter contends that,
25
effective January 1, 2017, the California Legislature clarified
26
that employers were not required to show hours worked for exempt
27
positions, including outside salespersons, when it amended § 226
28
by adding subjection (j).
Notwithstanding the fact that Charter
41
1
fails to provide any authority indicating the California
2
Legislature intended subsection (j) to apply retroactively, the
3
text of subsection (j) indicates that it only applies when the
4
employee is exempt from the payment of minimum wage and overtime
5
under the “exemption for outside salesperson provided in any
6
applicable order of the Industrial Welfare Commission.”
7
Labor Code § 226(j)(2)(B).
8
fact exists as to whether Sinclair was properly classified as an
9
outside salesperson, the court finds that a genuine dispute of
Cal.
Because a genuine dispute of material
10
material fact exists as to whether Charter’s wage statements
11
violated § 226 by failing to include total hours worked prior to
12
2017.
13
The court will therefore deny summary judgment as to
14
Harper’s Sixth Claim, and grant summary judgment in favor of
15
Charter as to Sinclair’s Sixth Claim for penalties.
16
D.
17
Plaintiffs’ Waiting Time Penalty Claims
Plaintiffs’ seventh claim alleges that they are
18
entitled to waiting time penalties under California Labor Code
19
§ 203.
20
willfully fails to pay, without abatement or reduction, in
21
accordance with Section[] 201 . . . any wages of an employee who
22
is discharged or who quits, the wages of the employee shall
23
continue as a penalty from the due date thereof at the same rate
24
until paid or until an action therefor is commenced,” up to 30
25
days.
26
were owed premium wages pursuant to Labor Code § 226.7 because
27
Charter failed to provide them with compliant meal and rest
28
breaks, and that they were owed commission wages because Charter
(FAC ¶¶ 55-58.)
Under Labor Code § 203, if “an employer
Cal. Labor Code § 203(a).
42
Plaintiffs allege that they
1
failed to correctly pay all commission wages that were earned and
2
payable.
3
plaintiffs upon their termination, plaintiffs argue they are
4
entitled to waiting time penalties under Labor Code § 203.
5
id.)
6
(FAC ¶ 57.)
Because Charter did not pay these wages to
(See
The parties agree that plaintiffs’ waiting time
7
penalties claim is entirely derivative of their
8
misclassification-based and commission-based wage claims.
9
Mot. for Summ. J. at 28; Pls.’ Opp’n at 31.)
(See
Because the court
10
has found that genuine issues of material fact exist as to
11
plaintiffs’ underlying misclassification-based and commission-
12
based wage claims, the court will not grant summary judgment in
13
favor of Charter solely on this ground.
14
at 28.)
15
(See Mot. for Summ. J.
Charter further argues that meal and rest period claims
16
cannot form the basis of a waiting time penalties claim because
17
Labor Code § 226.7 meal and rest break premiums do not constitute
18
“wages earned” for the purposes of Labor Code § 203.
19
for Summ. J. at 28.)
20
fails to provide an employee with a legally compliant meal or
21
rest period is required to pay the employee “one additional hour
22
of pay at the employee's regular rate of compensation for each
23
workday that the meal or rest...period is not provided.”
24
Labor Code § 226.7(c).
25
payments constitute wages or penalties for the purposes of a
26
waiting time penalties claim has divided district courts in
27
California.
28
AWI BAM, 2015 WL 1137151, at *5 (E.D. Cal. Mar. 12, 2015)
(See Mot.
Under California law, an employer that
Cal.
The question of whether these ordered
See Finder v. Leprino Foods Co., No. 1:13-cv-2059
43
1
(acknowledging “[t]here is no clear answer” from conflicting
2
decisions of the district courts of California).
3
This division among courts stems from two seemingly
4
contradictory decisions by the California Supreme Court: Murphy
5
v. Kenneth Cole Productions, 40 Cal. 4th 1094 (Cal. 2007), and
6
Kirby v. Immoos Fire Protection, Inc., 53 Cal. 4th 1244, 1257
7
(Cal. 2012).
8
§ 226.7 payments for purposes of determining the applicable
9
limitations period for a claim under the statute.
In Murphy, the court considered the nature of
Murphy, 40
10
Cal. 4th at 1110.
11
history, and purpose of § 226.7, Murphy concluded that “the
12
‘additional hour of pay’ is a premium wage intended to compensate
13
employees, not a penalty.”
14
held that, for purposes of awarding attorneys’ fees for the
15
nonpayment of wages, “a section 226.7 claim is not an action
16
brought for nonpayment of wages; it is an action brought for non-
17
provision of meal or rest breaks.”
18
After examining the language, legislative
Id. at 1114.
Kirby, by contrast,
Kirby, 53 Cal. 4th at 1257.
The Kirby court explained that its decision was “not at
19
odds with our decision in Murphy.”
20
explained, Murphy determined that the remedy for a § 226.7
21
violation is a wage, while Kirby determined that the legal
22
violation triggering that remedy is the failure to provide a meal
23
or rest period, not the nonpayment of wages.
24
Kirby was concerned with characterizing the nature of the § 226.7
25
claim itself, whereas Murphy focused on the nature and
26
characterization of the relief for that claim, the court held in
27
Finder that that Murphy was the more directly relevant precedent
28
and, therefore, that failure to pay premium wages under § 226.7
44
See id.
Instead, the court
See id.
Because
1
may form the basis for a waiting time penalties claim.
2
Finder, 2015 WL 1137151, at *8.
3
See
Charter contends that a recent California Court of
4
Appeals decision, Naranjo v. Spectrum Security Servs., Inc., 40
5
Cal. App. 5th 444, 474 (2d Dist. 2019), should take precedence
6
over the interpretation of § 226.7 offered in Finder.
7
for Summ. J. at 29; Def.’s Reply (“Reply”) at 20 (Docket No.
8
103).)
9
§ 226.7 are not wages for the employee’s labor, work, or service,
(See Mot.
There, the court expressly held that premiums under
10
but rather a penalty for the employer’s recalcitrance.
11
Naranjo, 40 Cal. App. 5th at 473.
12
failure, however willful, to pay section 226.7 statutory remedies
13
does not trigger section 203’s derivative penalty provisions for
14
untimely wage payments.”
15
See
“Read this way, an employer's
Id. at 473−74.
However, as Judge Ishii recently pointed out in Bates
16
v. Leprino Foods Co., No. 2:20-cv-00700 AWI BAM, 2020 WL 6392562
17
(E.D. Cal. Nov. 2, 2020), the California Supreme Court is
18
currently reviewing Naranjo and, thus, Naranjo “has no binding or
19
precedential effect, and may be cited for potentially persuasive
20
value only.”
21
8.1115(e)(1)).
22
the court in Bates found no reason to deviate from Finder and
23
held that § 226.7 premiums are wages for the purposes of a
24
waiting time penalties claim under § 203.
Bates, 2020 WL 6392562, at *5 (quoting Cal. R. Ct.
In light of Naranjo’s non-precedential effect,
25
This court agrees with Judge Ishii’s analyses in Finder
26
and Bates that, under California Supreme Court precedent, § 226.7
27
premiums are wages for purposes of §203 waiting time penalties
28
claims.
Because the only contrary California precedent, Naranjo,
45
1
lacks precedential value, the court will deny summary judgment as
2
to plaintiffs’ Seventh Claim for waiting time penalties based on
3
Charter’s failure to pay § 226.7 premiums.
4
E.
5
6
Plaintiffs’ Untimely Production of Employment Records
Claims
Plaintiffs’ Eighth Claim alleges that Charter failed to
7
timely produce copies of their “personnel file[s], including all
8
wage statements, instruments [they] signed or acknowledged
9
concerning [their] employment, and other records concerning
10
[their] obtaining and holding of employment . . . .”
11
63.)
12
First, § 226(b) gives current and former employees a right to
13
inspect or copy their employment records, and permits an employer
14
to take “reasonable steps” to ensure the identity of a current or
15
former employee.
16
requires that the employer comply with a § 226(b) request as soon
17
as practicable, but no later than 21 calendar days from the date
18
of the request.
19
(FAC ¶¶ 61,
Plaintiffs rely on three California Labor Code provisions.
Cal. Labor Code §§ 226(b).
Section 226(c)
Id. at § 226(c).
Second, § 1198.5 provides that “[e]very current and
20
former employee . . . has the right to inspect and receive a copy
21
of the personnel records that the employer maintains relating to
22
the employee's performance or to any grievance concerning the
23
employee.”
24
contents of the personnel records available for inspection at a
25
reasonable time, but no later than 30 days from the request.
26
Section 1198.5 also permits an employer to take “reasonable
27
steps” to verify the identity of a current or former employee or
28
his or her authorized representative.
Cal. Labor Code § 1198.5.
46
The employer must make the
Id. at § 1198.5(e).
Id.
1
Finally, under § 432, “[i]f an employee ... signs any instrument
2
relating to the obtaining or holding of employment, he shall be
3
given a copy of the instrument upon request.”
4
Code § 432.
5
See Cal. Labor
On June 5, 2018, plaintiffs’ counsel prepared and sent
6
a letter via email to Charter’s in-house counsel requesting
7
Harper’s wage statements, personnel file records, and other
8
employment records.
9
counsel attached an authorization for the release of employment
(See Soderstrom Decl. ¶ 19.)
Plaintiffs’
10
records signed by Harper using “DocuSign.”
11
Decl. ¶ 23.)
12
and letter to plaintiffs’ counsel advising him that it was
13
Charter’s position that his request for Harper’s wage statements
14
under § 226(b) was not valid, and that Harper would have to make
15
the request himself before Charter would produce the records.
16
(See Shine Decl. ¶ 7, Ex. F.)
17
plaintiffs’ and Charter’s counsel, on July 18, 2018, Charter’s
18
counsel agreed to produce the documents requested by plaintiffs’
19
counsel within a week.
20
(See id.; Harper
On July 3, 2018, counsel for Charter sent an email
After further discussion between
(See id. at ¶ 8.)
However, on July 23, 2018, Charter’s in-house counsel
21
received an email directly from Harper, who stated that he did
22
not currently have representation.
23
day, counsel for Charter reached out to plaintiffs’ counsel to
24
confirm that he was indeed representing Harper.
25
Plaintiffs’ counsel sent Charter’s counsel a redacted version of
26
his attorney-client agreement with Harper two weeks later, on
27
August 13, 2018, and Harper emailed Charter’s counsel directly on
28
August 29, 2018 to confirm representation. (See id. at ¶ 10-11.)
47
(See id. at ¶ 9.)
The next
(See id.)
1
Six days later, on September 4, 2018, Charter provided
2
plaintiffs’ counsel with copies of his wage statements and
3
documents from his personnel file.
4
Decl. ¶ 21.)
5
was deficient under § 1198.5 because it omitted certain documents
6
related to Harper’s employment, including corrective action
7
reports.
8
9
(See id. at ¶ 11; Soderstrom
Plaintiffs’ counsel asserts that this production
(See Soderstrom Decl. ¶ 21.)
Plaintiffs’ counsel prepared and sent a similar letter
requesting that Charter produce Sinclair’s wage statements,
10
personnel file records, and other employment records on October
11
2, 2019.
12
of Sinclair’s wage statements and personnel file records on
13
October 17, 2019.
14
asserts that Charter’s production as to Sinclair was deficient
15
under § 1198.5 because it omitted numerous wage statements and
16
corrective action reports.
17
(See Soderstrom Decl. ¶ 25.)
(See id. at ¶ 26.)
Charter produced copies
Plaintiffs’ counsel also
(See id.)
To begin with, the court agrees with Charter that
18
summary adjudication as to § 432 is appropriate.
19
§§ 226(c) and 1198.5 expressly include ‘former employees,’ the
20
plain language of § 432 limits applicability to ‘employees or
21
applicant[s],’ omitting any reference to former employees.”
22
Harris v. Best Buy Stores, L.P., No. 15-cv-00657-HSG, 2016 WL
23
4073327, at *10 (N.D. Cal. Aug. 1, 2016) (quoting Cal. Labor
24
Codes §§ 226(c), 432, 1198.5); see also Arizona Elec. Power Co-
25
op., Inc. v. United States, 816 F.2d 1366, 1375 (9th Cir. 1987)
26
(“When Congress includes a specific term in one section of a
27
statute but omits it in another section of the same Act, it
28
should not be implied where it is excluded.”); Briggs v. Eden
48
“While
1
Council for Hope & Opportunity, 19 Cal. 4th 1106, 1117 (1999)
2
(“Where different words or phrases are used in the same
3
connection in different parts of a statute, it is presumed the
4
Legislature intended a different meaning.”).
5
do not dispute that their requests for records were made after
6
they were no longer employees, § 432 cannot apply here.
7
Because plaintiffs
With respect to § 1198.5, the court declines to
8
interpret the term “personnel records” in the narrow fashion
9
urged by Charter.
Plaintiffs argue that, in response to their
10
requests, Charter failed to include corrective action reports,
11
letters related to their termination, and commission plan
12
documents and receipts in its production.
13
authority, Charter argues that “personnel records” are “not so
14
expansively defined in § 1198.5 or case law.”
15
the case law indicates that § 1198.5 “intends a broad definition
16
of ‘personnel file’ to preclude employers from assigning
17
documents to files having some other name, and then refusing
18
access to the documents on the ground that they are not contained
19
in the ‘personnel file.’”
20
Superior Court, 59 Cal. App. 4th 110, 124 (2d Dist. 1997).
21
Common sense also dictates that at least some of the documents
22
omitted by Charter, such as corrective action reports, fall
23
within the plain text of the statute, as they are “personnel
24
records . . . relating to the employee's performance or to any
25
grievance concerning the employee.”
26
The court will therefore deny Charter’s motion for summary
27
adjudication of plaintiffs’ claim under § 1198.5.
28
Without citing to any
To the contrary,
Wellpoint Health Networks, Inc. v.
Cal. Labor Code § 1198.5.
Finally, as to § 226(b), the court again declines to
49
1
adopt the narrow interpretation of the statute put forward by
2
Charter.
3
former employees--and not their representatives--to inspect or
4
receive a copy of their own wage statements.
5
counsel sent Charter a request for plaintiffs’ wage statements
6
under § 226 (not plaintiffs themselves), Charter argues that
7
plaintiffs’ claim under § 226 fails as a matter of law.
8
9
Charter argues that § 226(b) only authorizes current or
Because plaintiffs’
Charter points out that, in contrast to § 1198.5, § 226
does not explicitly state that an employee’s representative may
10
submit a request to inspect records.
11
§ 1198.5 (“Upon a written request from a current or former
12
employee, or his or her representative, the employer shall also
13
provide a copy of the personnel records.”) with Cal. Labor Code
14
§ 226(b) (“An employer . . . shall afford current and former
15
employees the right to inspect or receive a copy of records
16
pertaining to their employment, upon reasonable request to the
17
employer.”).
18
where a court has held that a request made by a current or former
19
employee’s representative is insufficient as a matter of law
20
under § 226(b).
21
the employee’s request is that it be “reasonable.”
22
finds that, here, a genuine issue of material fact exists as to
23
whether plaintiffs’ requests to inspect and receive copies of
24
their wage statements pursuant to § 226(b) were reasonable, given
25
that they were signed by counsel and accompanied by an executed
26
authorization signed by plaintiffs electronically.
27
Decl., Ex. E.)
28
Compare Cal. Labor Code
However, Charter does not cite to a single case
Section 226(b)’s only requirement pertaining to
The court
(See Shine
The court also finds that genuine issue of material
50
1
fact exists as to whether the timing of Charter’s production of
2
Harper’s wage statements fully satisfied § 226(b).
3
shows that Charter did not produce Harper’s wage statements for
4
91 days after receiving Harper’s request.
5
¶¶ 18-21, Ex. 18.)
6
occurred as a result of “reasonable steps” taken by Charter to
7
verify Harper’s identity and whether he was represented by
8
counsel, Charter did not initiate any efforts to verify Harper’s
9
identity or that of his counsel until after the 21-day deadline
The evidence
(See Soderstrom Decl.
While Charter contends that this delay
10
set out in § 226 had already passed.
(See id.); Cal. Labor Code
11
§ 226(c).
12
response was not timely and that the steps that it took to verify
13
Harper’s identity and whether he was represented by counsel were
14
not reasonable under the statute.
A reasonable jury could therefore find that Charter’s
15
As to Sinclair’s claim under § 226, plaintiffs have
16
submitted evidence showing Charter’s production of Sinclair’s
17
wage statements was incomplete and omitted at least 17 wage
18
statements.
19
R.)
20
whether Charter fully satisfied its obligations to Sinclair under
21
§ 226(a).
22
judgment because there was a factual dispute over whether
23
employer had “fully satisfied” its § 226 obligations).
24
(See Soderstrom Decl. ¶¶ 25-26; Benner Decl., Ex.
There is therefore a genuine dispute of material fact as to
See Harris, 2016 WL 4073327, at *11 (denying summary
The court will therefore deny Charter’s motion for
25
summary judgment as to plaintiffs’ Eighth Claim for violations of
26
California Labor Code §§ 226 and 1198.5.
27
however, grant summary adjudication in favor of Charter as to
28
plaintiffs’ claim for violation of California Labor Code § 432.
51
The court will,
1
F.
2
Plaintiffs’ Claims under the UCL
Plaintiffs’ Ninth Claim alleges that Charter has
3
committed acts of unfair competition, as defined by the
4
California Business and Professions Code § 17200, by violating
5
various provisions of the California Labor Code.
6
Charter’s only argument in support of summary judgment is that
7
plaintiffs’ UCL claim is derivative of their First through Fifth
8
Claims.
9
Because the court has found that a genuine dispute of material
10
fact exists as to plaintiff’s underlying California Labor Code
11
claims, the court will not grant Charter’s motion for summary
12
adjudication as to plaintiffs’ UCL claim.
13
Purolator Air Filtration Prods., 23 Cal. 4th 163, 178-79 (Cal.
14
2000) (holding unpaid wages are recoverable as restitution under
15
the UCL).
16
17
G.
(FAC ¶¶ 65-73.)
(See Mot. for Summ. J. at 32; Pls.’ Opp’n at 37.)
See Cortez v.
Harper’s PAGA Claim
PAGA authorizes employees to recover civil penalties
18
for violations of the California Labor Code “as the proxy or
19
agent of the state’s labor law enforcement agencies.”
20
Reins Int’l Cal., Inc., 9 Cal. 5th 73, 82 (Cal. 2020) (emphasis
21
and citations omitted).
22
person “who was employed by the alleged violator and against whom
23
one or more of the alleged violations was committed” may serve as
24
the state’s representative in a PAGA action.
25
Labor Code § 2699(c)).
26
Kim v.
Only an “aggrieved employee,” or a
Id. (quoting Cal.
Only Harper has brought claims under PAGA.
(See FAC
27
¶¶ 74-75.)
Charter first argues that summary judgment as to
28
Harper’s PAGA claim is appropriate because Harper cannot show
52
1
that Charter committed violations of any underlying substantive
2
provisions of the California Labor Code.
3
court has found that disputed issues of material fact exist as to
4
Harper’s claims under other substantive provisions of the
5
California Labor Code, as discussed above, a disputed issue of
6
material fact also exists as to whether Harper is an aggrieved
7
employee under PAGA.
8
9
However, because the
Charter next argues that Harper’s PAGA claim is timebarred.
A plaintiff must file a PAGA action within one year of
10
the alleged underlying Labor Code violation.
11
§ 340(a); Esparza v. Safeway, Inc., 36 Cal. App. 5th 42, 59 (2d
12
Dist. 2019).
13
PAGA lawsuit is tolled for the sixty-five day notice period.
14
Thus, as a practical matter, the statute of limitations for the
15
filing of the LWDA letter is one year, and the statute of
16
limitations for the filing of the PAGA lawsuit is one year and
17
sixty five days (or 430 days total).
18
LLC, 2018 WL 2047807 at *13 (N.D. Cal. May 2, 2018).
19
of limitations begins to run when a cause of action accrues,
20
meaning when the cause of action is complete with all of its
21
elements.
22
Cal. Code Civ. P.
The statute of limitations for the filing of the
Bush v. Vaco Tech. Servs.,
The statute
Esparza, 36 Cal. App. 5th at 59.
Charter contends that, because Harper was on an unpaid
23
leave of absence from February 3, 2018 through the end of his
24
employment, Harper last performed work for Charter on January 30,
25
2018.
26
file a timely PAGA action based on an alleged minimum wage,
27
overtime, meal period, rest period, or wage statement violation,
28
Harper would have had to file his complaint no later than April
(See Benner Decl. ¶¶ 34-36, Exs. O-Q.)
53
Thus, in order to
1
5, 2019 (430 days after January 30, 2018).
2
J. at 33.)
3
Charter argues that Harper failed to timely file his PAGA claim
4
within the applicable statute of limitations and, as a result,
5
the court should dismiss his PAGA claim. (See id.)
6
(See Mot. for Summ.
Because Harper filed his complaint on May 3, 2019,
However, as discussed above, in Section III.A.1, the
7
statute of limitations governing the claims in Harper’s original
8
complaint--including his PAGA claim--may be equitably tolled to
9
November 19, 2018.
Charter’s argument that Harper failed to
10
comply with the statute of limitations is therefore without
11
merit.
12
13
Accordingly, the court will deny Charter’s motion for
summary judgment as to Harper’s PAGA claim.
14
IT IS THEREFORE ORDERED that defendant’s motion for
15
summary judgment or, in the alternative, summary adjudication
16
(Docket No. 93-1) be, and the same thereby is, DENIED as to
17
Sinclair’s First, Second, Third,, Fourth, and Sixth Claims for
18
damages, Harper’s First, Second, Third, Fourth, Sixth, and Tenth
19
Claims, as well as Plaintiffs’ Fifth Claim for violations of Cal.
20
Labor Code § 204, 221, and 224, Seventh Claim, and Eighth Claim
21
for violations of §§ 1198.5 and 226.
22
IT IS FURTHER ORDERED that defendant’s motion for
23
summary judgment or, in the alternative, summary adjudication
24
(Docket No. 93-1) be, and the same hereby is, GRANTED as to
25
Sinclair’s First, Second, Third, Fourth, and Sixth Claims for
26
statutory penalties, as well as Plaintiffs’ Fifth Claim for
27
violations of Cal. Labor Code §§ 2751(b) and 223, and Eighth
28
Claim for violations of Cal. Labor Code § 432.
54
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Dated:
February 12, 2021
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