Judge David S. Cunningham, Case BC677389 2023-03-10 Tentative Ruling

Moving Party: Carson Wild Wings, LLC (“CWW”), Baldwin Hills Wild Wings, LLC (“BHWW”), Torrance Wild Wings, LLC (“TWW”), Koreatown Wild Wings, LLC (“KWW”), PCF Restaurant Management, LLC (“PCF”) (collectively “Defendants”)

Opposing Party: Jasmin Ortega (“Ortega”) and Julieta Hernandez (“Hernandez”) (collectively “Plaintiffs”)

Defendants’ motion for summary adjudication is denied as to Issue Nos. One through Six.

“Plaintiffs are former CWW employees.” (7/29/22 Ruling Re: Motion for Reconsideration, p. 1.) They filed “‘wage and hour’ class claims” – “meal breaks, rest breaks, overtime wages, reporting time pay, wage statements, and separation pay” – on behalf of “current and former non-exempt, hourly employees of CWW, BHWW, TWW, and KWW.” (Ibid.)

“PCH provides ‘payroll, administration, and human resources consulting’ for CWW, BHWW, TWW, and KWW and is an alleged joint employer[.]” (Ibid.)

On 5/12/22, “[t]he Court certifie[d] ‘meal break’ and ‘rest break’ issue classes to resolve two predominating common legal questions: [1] whether the written meal break policy in the July 2015 employee handbook complied with California law; and [2] whether Defendants’ unwritten rest break policy complied with California law.” (Ibid.) “[T]he class period is 9/26/14 to December 2017[.]” (Id. at p. 10; see also id. at p. 6.)

“The Court also found the Wage Statement Class and the 17200 Class ‘derivative’ and ‘certifie[d]’ them ‘as issue classes to the same extent as the “meal break” and “rest break” issue classes.’” (Id. at p. 2.)

“The Court exclude[d] TWW’s and KWW’s non-exempt, hourly employees from the issue classes because Plaintiffs’ evidence fail[ed] to show that the subject polices applied to them during the class period.” (Ibid.)

“The Court certifie[d] the Overtime Wages Class with respect to the ‘bonus’ theory and the ‘multiple rates’ theory.” (5/12/22 Ruling Re: Motion for Class Certification, p. 1.)

On 7/29/22, the Court denied Plaintiffs’ motion for reconsideration. Plaintiffs “argu[ed] that TWW’s non-exempt, hourly employees should be included in the issue classes because TWW is the new name of the company that employed them when the July 2015 employee handbook applied.” (7/29/22 Ruling Re: Motion for Reconsideration, p. 2.) Defendants disagreed. They claimed the “new or different fact” “‘ha[d] been available since’ 2/26/19 and was included in TWW’s 1/14/20 responses to form interrogatories” such that Plaintiffs failed to show reasonable diligence. (Id. at p. 4.) The Court agreed with Defendants.

ISSUE NO. ONE: Plaintiffs’ cause of action for meal break violations fails as a matter of law because CWW and BHWW’s written meal break policy in the July 2015 employee handbook complied with California law.

ISSUE NO. TWO: Plaintiffs’ cause of action for rest break violations fails as a matter of law because CWW and BHWW’s unwritten rest break policy existed, complied with California law, and was communicated to employees.

ISSUE NO. THREE: Plaintiffs’ cause of action for overtime wages based on the “multiple rates” theory fails as a matter of law because CWW, BHWW, KWW, and TWW properly paid overtime wages with respect to the “multiple rates” theory.

ISSUE NO. FOUR: Plaintiffs’ cause of action for wage statement violations is entirely derivative of Plaintiffs’ other claims and, therefore, fails as a matter of law to the extent it is derivative of Plaintiffs’ meal break, rest break, or overtime wages claims based on the “multiple rates” theory.

ISSUE NO. FIVE: Plaintiffs’ cause of action for waiting time penalties is entirely derivative of Plaintiffs’ other claims and, therefore, fails as a matter of law to the extent it is derivative of Plaintiffs’ meal break, rest break, or overtime wages claims based on the “multiple rates” theory.

ISSUE NO. SIX: Plaintiffs’ cause of action for violation of California’s Unfair Competition Law is entirely derivative of Plaintiffs’ other claims and, therefore, fails as a matter of law to the extent it is derivative of Plaintiffs’ meal break, rest break, or overtime wages claims based on the “multiple rates” theory.

“A motion for summary adjudication asks the court to adjudicate the merits of a particular cause of action, affirmative defense, issue of duty or claim for damages, including a punitive damage request.” (Edmon & Karnow, Cal. Prac. Guide: Civ. Proc. Before Trial (The Rutter Group 2022) ¶ 10:1, emphasis in original.)

A defendant (or cross-defendant) moving for summary [adjudication] must “show” that either:

* one or more elements of the “cause of action … cannot be established”; OR

This means that where plaintiff has the burden of proof at trial by a preponderance of evidence, defendant “must present evidence that would require a reasonable trier of fact not to find any underlying material fact more likely than not—otherwise, he [defendant] would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.” [Citation.]

The import of “more likely than not” in the foregoing quote is that a moving defendant must generally present evidence that, if uncontradicted, “would constitute a preponderance of evidence that an essential element of the plaintiff's case cannot be established … The same is true when a moving defendant seeks to secure dismissal of the complaint based on an affirmative defense.” [Citation.]

. . . Once defendants meet this burden, the burden shifts to plaintiff to prove the existence of a triable issue of fact regarding that element of its cause of action or that defense. If plaintiff is unable to do so, defendants are entitled to judgment as a matter of law. [Citations.]

. . . If defendants fail to meet their burden, their motion must be denied; plaintiff need not make any showing at all. [Citation.]

An employer shall not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.

“Employers need not ‘ensure’ that no work is performed during a meal period. So long as the employer relieves the employee of all duties, the employer is not liable for a meal period premium if the employee chooses to work (unless the employer deters or discourages the employee from taking the meal period).” (Chin, et al., Cal. Prac. Guide: Employment Litigation (The Rutter Group 2022) ¶ 11:829.18, emphasis in original.)

* The meal break policy “provided a 30-to-60 minute break for every four hours of work[,]” exceeding California requirements. (Motion for Summary Adjudication (“MSA”), p. 9.)

* “The policy [] recognizes that employees may take ‘lunch and dinner breaks,’ indicating that employees may take two breaks per shift []. On its face, the policy states that if an employee works another four consecutive hours, they would typically be entitled to a meal break[.]” (Ibid.)

* “[T]he policy [] implies that the meal break is off duty.” (Id. at p. 10.) “It recognizes that the employee will not be performing work by informing employees that ‘[b]reaks are scheduled throughout the workday, so as not to disrupt the business processes of the Company.’” (Ibid.) “The breaks would not ‘disrupt’ the business if the employee continued to work.” (Ibid.)

* Defendants were not required to instruct or enforce employees to take meal breaks. (See id. at pp. 11-12.)

* “California [] provides exceptions to meal breaks, including the employee’s right to work through the meal break[.]” (Id. at p. 12.)

Where, as here, time records reveal late, short, or missed meal periods, a presumption of liability of meal period violations arises. Here, not only does Defendants’ policy merely provide for one meal break in shifts over four hours, without any reference to California’s requirements related to the timing of those meals, Defendants have provided no evidence to rebut the presumption that evidence of missed, late, or short meal periods constitute violations. Indeed, no such evidence exists as Defendants’ meal period policies and practices demonstrate that they did not comply with California law.

(Opposition, p. 6, citation omitted; see also id. at p. 7 [“The meal period policies contained in the July 2015 employee handbook did not comply with California law. Specifically, the policy does not advise class members that Defendants must provide them with meal periods before the end of the fifth hour of work. The policy also fails to provide a second meal break at all. . . . Indeed, numerous putative class members’ sworn testimony in Plaintiff Ortega’s wrongful termination and whistleblower case, in which the jury unanimously found that Plaintiff Jasmin Ortega had been illegally fired for reporting wage and hour violations, testified that Defendants BHWW and CWW did not regularly provide meal breaks ‘so as not to disrupt the business process of the Company.’”], emphasis in original; id. at pp. 11-15.)

There is no dispute regarding the meal break policy’s language. The only issue, as framed by the Court in its decision to certify an issue class, was “whether [it] … complied with California law.” Defendants’ moving papers analyzed the written policy considering California’s prevailing meal break statute and case law, demonstrating that it satisfied all three requirements under Donohue: it provided a minimum 30-minute meal break every four hours of an employee’s shift; it relieved employees of all duty; and it did not prevent employees from taking their meal breaks.

Contrast that with Plaintiffs’ opposition, in which they did not present any legal authority challenging Defendants’ position. Instead, Plaintiffs argue that the written meal break policy only provided one break—ignoring the policy’s reference to “lunch and dinner breaks” and the policy’s directive for the breaks to occur for employees “working at least four consecutive hours.” Rather than explain to the Court the legal issue of why the written policy violated California law, Plaintiffs attempted to shift the Court’s attention to the factual issue of whether Defendants followed the lawful written policy. In doing so, Plaintiffs provided purported evidence of missed meal breaks to manufacture a “rebuttable presumption” of liability. But those factual, Plaintiff-specific issues shed no light on the legal adequacy of the written policy.

Because the written meal break policy is lawful on its face, Defendants should be granted summary adjudication on this issue in their favor.

(Reply, p. 1, underlined case name added, emphasis in original; see also id. at pp. 2-5.)

Typically, non-salaried employees working at least four consecutive hours are provided with a meal break of between 30 and 60 minutes. Breaks are scheduled throughout the workday, so as not to disrupt the business processes of the Company. The Company managers determine appropriate length and timing of lunch and dinner breaks per their needs.

(Defendants’ Separate Statement, UMF 4; see also Webb Decl., Ex. 1, p. CWW000058.) The Court sees multiple problems with the plain language. “Typically” means usually or normally as opposed to always (https://www.oxfordlearnersdictionaries.com/us/definition/english/typically); it indicates that the meal break policy is conditional and ununiform. This interpretation is furthered by the fact that “managers determine the appropriate length and timing of breaks” and schedule them ad hoc with a goal of “not [] disrupt[ing] the business process[.]” (Defendants’ Separate Statement, UMF 4; see also Webb Decl., Ex. 1, p. CWW000058.) Also, there is no mention of a second meal break for longer work shifts. The Court finds that the MSA should be denied because, “[o]n its face,” the policy appears “at odds with the Labor Code” (5/12/22 Ruling Re: Motion for Class Certification, p. 5), and, at minimum, the wording is ambiguous.

Defendants’ other evidence fails to change the analysis. In particular, Defendants cite the declaration of Karim Webb, a “member” of PCF. (Webb Decl., ¶ 2; see also Defendants’ Separate Statement, UMFs 6-9.) The declaration provides:

14. All employees were given an orientation at the time of hire, which included informing employees of the company’s policy to provide meal breaks when an employee worked at least 4 hours in a shift. This has taken place since November 2014 for all CWW employees and at least since September 26, 2014 for all BHWW employees. All managers at CWW and BHWW were trained on the provision of meal and rest breaks since at least September 26, 2014.

15. Since at least December 2015, the timekeeping system at the Restaurants has automatically added one additional hour of pay for breaks taken after five hours of work, breaks less than 30 minutes, or missed meal periods, regardless of reason. Before that system, either the employee or the manager had to raise the issue.

16. In practice, how rest breaks were administered is a decision made at each restaurant dependent on the day, each employee, and manager on duty. Like with meal periods, some managers scheduled them in advance, others scheduled them daily either with or without employee input. The manager(s)-in-charge on a given shift, which may be a Shift Lead or an Assistant Manager, is responsible for implementing each Restaurant's meal and rest period polices by supervising and administering meal and rest periods.

(Webb Decl., ¶¶ 14-16.) The declaration lacks foundation because Defendants fail to show that Webb has personal knowledge of the declared facts. Even assuming admissibility, paragraph 14 is vague and fails to establish whether the policy discussed during orientation differed from the problematic written policy and was compliant. Paragraph 15 fails to demonstrate compliance for the whole class period. Paragraph 16 suggests an ad hoc approach to providing meal breaks rather than a uniform policy. Separately and together, the paragraphs are insufficient to meet Defendants’ burden and create triable issues.

Where mandated by “a state law” (including statutes, regulations, standards and orders of the IWC, the Occupational Safety and Health Standards Board and the Division of Occupational Safety and Health), employers must provide rest and recovery periods that “shall be counted as hours worked” and “for which there shall be no deduction from wages.” [Citation.]

In general, employers must provide paid rest periods of a specified minimum duration (generally 10 minutes of rest for every 4 hours worked). For shifts of less than 4 hours, employees are entitled to a 10-minute rest period after 3 1/2 hours. [Citations.]

Rest periods are to be permitted in the middle of the shift “insofar as practicable” [citations]. According to one California opinion, “departure from the preferred schedule is permissible only when the departure (1) will not unduly affect employee welfare and (2) is tailored to alleviate a material burden that would be imposed on the employer by implementing the preferred schedule.” [Citation.]

“An employer who fails to provide compliant rest periods must pay the employee one additional hour of pay at the employee's “regular rate” for each day that a rest period was not provided.” (Id. at ¶ 11:829.9.)

“The fact that the employer lacks formal written policies does not necessarily mean it has a uniform policy or widespread practice of depriving employees of meal or rest breaks or making them work during those breaks.” (Chin, supra, at ¶ 11:1446.2b, emphasis in original; see also Dailey v. Sears, Roebuck & Co. (2013) 214 Cal.App.4^th 974, 1002 [“[T]he absence of a formal written policy explaining salaried managers' rights to meal and rest periods does not necessarily imply the existence of a uniform policy or widespread practice of either depriving these employees of meal and rest periods or requiring them to work during those periods.”].)

Prior to 2017, and including the entire time period covered by the subclass, CWW and BHWW each had a policy and practice of providing non-exempt employees with 10-minute paid rest breaks for every four-hours worked (or major fraction thereof), with the break to occur towards the middle of that time period. Employees were trained on this policy and practice at the time of hire. In 2017, the rest break policy was formally added to CWW and BHWW’s employee handbooks, reflecting what was already in place.

In practice, how rest breaks were administered is a decision made at each restaurant dependent on the day, position, and manager on duty. Like with meal periods, some managers scheduled them in advance, others scheduled them daily either with or without employee input. While employees could record rest breaks in CWW and BHWW’s timekeeping system, it was not required as part of the policy.

Plaintiffs have admitted that they were provided with rest breaks, further underscoring the existence of a policy to provide them to employees. Both plaintiffs were already working for the Buffalo Wild Wings restaurant located at the Carson location when CWW began operation of that restaurant in November 2014. Their main complaint here is not that CWW (their employer) did not have a rest break policy in place at that time. To the contrary, their complaint seems to be that in some instances the policy that existed and that was communicated to Plaintiffs was not followed and they were not provided with the opportunity to take a rest break.

As with their class-wide meal break claims, for Plaintiffs to state a viable class-wide rest break claim, they must establish a uniform policy that violated the California Labor Code. They have not and cannot do so, especially in light of their own testimony to the contrary. Thus, it is indisputable that no such uniform violative policy existed. Summary judgment in Defendants’ favor is warranted on Plaintiffs’ rest break claim and Plaintiffs’ claims under the UCL, and for wage statement violations and waiting time penalties, to the extent they are derivative of the meal break claim as the evidence demonstrates that a compliant policy was in place.

(MSA, pp. 13-14, emphasis in original, citations omitted; see also Reply, pp. 2, 5-7.)

Defendants failed to authorize and permit rest breaks until December 2017. Specifically, Defendants did not inform any employees in writing that they were authorized and permitted to take rest breaks as the 2015 employee handbook fails to mention rest breaks at all. Moreover, Defendants admit that they did not schedule rest breaks for employees, corroborating the non-existent policy and failing to provide employees with no guidance on if or when they were authorized and permitted to take any rest breaks. Instead, employees had to obtain a manager’s permission to take a break, and even then rest breaks, like meal breaks, were only permitted at the company’s convenience. The failure to authorize and permit rest periods was corroborated by putative class members’ sworn testimony in Plaintiff Ortega’s wrongful termination case. And, contrary to Defendants’ mischaracterization of the evidence, Plaintiffs and putative class members have testified that they were never authorized and permitted to take rest breaks while working for Defendants.

Moreover, Defendants have provided only unsubstantiated, conclusory, and speculative evidence that they had any sort of unwritten rest break policy prior to amending the employee handbook in 2017. Indeed, the evidence they rely on does not actually support their claims that the policy existed, or that employees were trained on the policy at the time of hire. Employee testimony, however, reveals that the only policy related to rest breaks prior to 2017 was not to permit employees to take them.

The MSA is denied. It is undisputed that the 2015 Handbook does not contain a written rest break policy. To show that an unwritten policy existed, Defendants cite Plaintiffs’ person most qualified, but the highlighted page – page 50 – concerns meal breaks, not rest breaks. (See Defendants’ Separate Statement, UMFs 18-19; see also Sugg Decl., Ex. 5, p. 50.) Defendants also cite the Webb declaration. (See Webb Decl., ¶ 2; see also Defendants’ Separate Statement, UMFs 18-19.) The declaration states: “Prior to 2017, the Restaurants each had a policy and practice of providing non-exempt employees with 10-minute paid rest breaks for every four-hour shift (or major fraction thereof), with the break to occur towards the middle of that time period and employees are trained on this at the time of hire.” (Webb Decl., ¶ 9.) The statement is inadmissible because, again, the declaration fails to show foundation – e.g., there is no showing that Webb’s purported membership in PCF provides the necessary personal knowledge. Regardless, the declaration appears to contradict itself, stating:

In practice, how rest breaks were administered is a decision made at each restaurant dependent on the day, each employee, and manager on duty. Like with meal periods, some managers scheduled them in advance, others scheduled them daily either with or without employee input. The manager(s)-in-charge on a given shift, which may be a Shift Lead or an Assistant Manager, is responsible for implementing each Restaurant's meal and rest period polices by supervising and administering meal and rest periods.

(Id. at ¶ 16.) The statement suggests a fluctuating, possibly noncompliant approach to rest breaks and raises a triable issue, especially when combined with Plaintiffs’ testimony showing that they and other workers often did not receive breaks. (See, e.g., Plaintiffs’ Response Separate Statement, UMFs 20, 23.)

Under both federal and state law, overtime pay is generally due to all nonexempt employees for all hours worked over 40 hours per week, at the rate of one and one-half times the employee's regular rate of pay. [Citations.]

Under California law, overtime pay at the rate of one and one-half times the employee's regular rate of pay is also due to all nonexempt employees for all hours worked over eight hours per day up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day in a workweek. In addition, double the employee's regular rate of pay is due for all hours worked in excess of 12 hours in any workday, and for all hours worked in excess of eight hours on the seventh consecutive day of work in any workweek. [Citations.]

“To determine the amount of overtime compensation owing, multiply the number of hours worked by the applicable rate for overtime work.” (Id. at ¶ 11:900.) “The overtime rate is at least one-and-a-half times the employee's ‘regular rate’ of pay [citations].” (Id. at ¶ 11:901.) “The ‘regular rate’ includes ‘all remuneration for employment’ paid to or on behalf of the employee, except matters specifically excluded [citation].” (Id. at ¶ 11:902.)

The Court certified the Overtime Wages Class of all current and former employees of Defendants in the State of California who received multiple hourly rates for work performed during the same pay period from [9/26/14] to [5/12/22]. The “multiple rates” theory is based on an employee working two or more different types of jobs that have different rates of pay during a single week, resulting in overtime having to be paid at that weighted average of those rates.

Plaintiffs’ multiple rates theory fails because use of a “rate in effect” method is proper and, contrary to Plaintiffs’ assertions, the law does not mandate use of “weighted average.” To be clear, California does not mandate the use of either rate in effect or weighted average methods for paying overtime where employees work multiple rates. Arguments that weighted average applies necessarily rely on the DLSE Manual, which requires the use of the weighted average method. However, there is no question that statements in the DLSE Manual are not binding.

In addition, those working for multiple rates of pay had an understanding that they would be paid overtime at the rate in effect prior to taking on the work paid at multiple rates. The rate-in-effect method is fair and neutral because, with that method, the employee’s wage statement reflects the hours worked and associated rates of pay, whereas the weighted average method requires the employee to conduct a series of mathematical calculations to determine whether his or her compensation was accurate. In other words, the rate in effect method is simpler. Moreover, use of the rate in effect method resulted in many subclass members being paid more than they would have had the weighted average method been applied, as they received overtime at a higher rate than the average for those shifts where they worked at a higher rate. Indeed, use of the rate in effect method results in the greatest overall compensation to dual rate employees.

Finally, the multiple rate issue does not actually vindicate the rights of most employees. No real benefit would be realized by applying the weighted average method and many members of the class would be found to have been overpaid.

(MSA, pp. 14-15, citations and footnote omitted; see also id. at p. 3 [“California law does not require averaging as the only method that may be used. Defendants’ use of the rate in effect complies with legal requirements and is not in violation of the law.”]; Reply, pp. 7-8 [“claiming the controlling authority of Alvarado[1] does not force employers to employ the weighted average method. It only forces employers to ensure that employees receive at least their regular rate of pay.”], underlined case name added, citation omitted.)

[E]mployees who worked as Wings-Certified Trainers (“WCTs”), trainer employees for Defendants, were entitled to a shift premium of a dollar more per shift in which they worked as WCTs. But despite these additional wages, Defendants paid overtime to employees at the base rate of pay earned during a shift multiplied by 1.5, rather than at the weighted average regular rate of pay that an employee earned based all rates of pay. As a result, Defendants did not pay employees who worked as WCTs all overtime wages owed. On at least three separate occasions, Plaintiff Ortega worked overtime during weeks when she was paid at two different rates during a workweek but was only paid overtime at the lowest base hourly rate of $10.50. Plaintiffs’ expert identified 288 employees that had overtime compensation paid below 1.5 times the weighted average regular rate of pay.

Similarly, Defendants use the same IT system for the payment of overtime wages as they do for the payment of premium wages for missed meal breaks to its employees. Defendants also failed to pay meal premiums to their employees at the regular rate of pay. Plaintiff Ortega was paid meal period penalties during the same weeks that she received multiple rates of pay only at the base hourly rate of pay for the shift she was working, i.e at the lower server pay if she was working as a server.

(Opposition, p. 9, citations omitted; see also id. at pp. 6-7 [“[D]espite this Court’s holding that the current state of the law requires employers to utilize the weighted average method of calculating overtime wages, Defendants assert that the weighted average is not currently recognized in California. Defendants provide no authority to support this position, nor do they produce any evidence disputing the fact that they did, in fact, apply the weighted average method of calculating the regular rate of pay.”]; id. at pp. 17-20 [“Defendants did not pay the weighted average of the underlying hourly pay rates when paying overtime or meal period premiums in a workweek in which employees were paid at multiple rates of pay, such as when WCTs earned a dollar more per hour for each shift they trained employees. Indeed, Plaintiffs’ expert identified that employees were underpaid for overtime compensation due to Defendants’ failure to utilize the weighted average method of calculating the regular rate of pay in 2.3% of the pay periods analyzed. On three separate occasions, Plaintiff Ortega worked overtime during workweeks in which she was paid at two different rates but was only paid overtime at the lowest base hourly rate of $10.50. Moreover, Plaintiff Ortega was paid meal period penalties during the same workweeks that she received multiple rates of pay only at the base hourly rate of pay for the shift she was working, i.e at the lower server pay if she was working as a server. Because Defendants failed to utilize the weighted average method of calculating the regular rate of pay as required by law, failed to produce any evidence to the contrary, and failed to introduce any evidence to support their theory that the “many members of the class would be found to have been overpaid[,]” Defendants’ motion must be denied.”], citations omitted.)

The Court finds that the MSA should be denied for the reasons stated in the 3/10/23 tentative ruling regarding Plaintiffs’ MSA. (See 3/10/23 Tentative Ruling Re: Plaintiffs’ Motion for Summary Adjudication, pp. 3-7.) Bottom line, Defendants fail to cite authority allowing them to use rate in effect in place of weighted average, and their discussion of Alvarado is unavailing. Weighted average governs.[2]

The preceding analysis applies here. Since the direct causes of action survive, the MSA should be denied as to the derivative causes of action.

[1] Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5^th 542.

[2] Defendants assert that some class members “received a net benefit from the rate-in-effect method.” (Reply, p. 8.) The assertion does not apply to the entire class or the entire class period and, thus, is inadequate.

Moving Party: Jasmin Ortega (“Ortega”) and Julieta Hernandez (“Hernandez”) (collectively “Plaintiffs”)

Opposing Party: Carson Wild Wings, LLC (“CWW”), Baldwin Hills Wild Wings, LLC (“BHWW”), Torrance Wild Wings, LLC (“TWW”), Koreatown Wild Wings, LLC (“KWW”), PCF Restaurant Management, LLC (“PCF”) (collectively “Defendants”)

Issue No. 1: The Court agrees with Plaintiffs that weighted average governs; however, the motion for summary adjudication (“MSA”) fails to dispose of the entire overtime cause of action. Unless the parties agree to decide Issue No. 1 pursuant to Code of Civil Procedure section 437c(t), the Court intends to deny the MSA for failure to shift the burden.

“PCH provides ‘payroll, administration, and human resources consulting’ for CWW, BHWW, TWW, and KWW and is an alleged joint employer[.]” (Ibid.)

“The Court certifie[d] the Overtime Wages Class with respect to the ‘bonus’ theory and the ‘multiple rates’ theory.” (5/12/22 Ruling Re: Motion for Class Certification, p. 1.)

* “ISSUE NO. 1: There is no triable issue of material fact as to Plaintiffs’ claim that Defendants failed to properly calculate overtime wages for the overtime wages class because Defendants did not use the weighted average method of calculating overtime wages” (Notice of MSA, p. 3, emphasis in original);

* ISSUE NO. 2: There is no triable issue of material fact as to Plaintiffs’ claim that Defendants denied meal break class member meal periods because the July 2015 Employee Handbook does not include a compliant meal break policy and analysis of class member time records created an unrebutted presumption that class members were denied meal periods” (ibid., emphasis in original);

* “ISSUE NO. 3: There is no triable issue of material fact as to Plaintiffs’ claim that Defendants failed to authorize and provide rest break class members rest periods because Defendants did not have a policy, procedure, or practice in place to authorize and permit class members to take rest breaks” (ibid., emphasis in original); and

* “ISSUE NO. 4: There is no triable issue of material fact as to Plaintiffs’ claim that Defendants failed to provide adequate and complete wage statements to wage statement class members because the wage statements failed to separately list out any meal period premiums or additional credited hour of work.” (Ibid., emphasis in original.)

When a plaintiff moves for summary judgment/adjudication, “the burden is to produce admissible evidence of each element of a ‘cause of action’ entitling him or her to judgment.” (Edmon & Karnow, Cal. Prac. Guide: Civ. Proc. Before Trial (The Rutter Group 2022) ¶ 10:233.) “This means that plaintiffs who bear the burden of proof at trial by a preponderance of evidence must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not.” (Ibid., emphasis in original.) “[O]therwise, he would not be entitled to judgment as a matter of law.” (Ibid., emphasis in original.) “At that point, the burden shifts to defendant (or cross-defendant) ‘to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’” (Ibid.)

(Chin, et al., Cal. Prac. Guide: Employment Litigation (The Rutter Group 2022) ¶ 11:794.)

[E]mployees who worked as Wings-Certified Trainers (“WCTs”), trainer employees for Defendants, were entitled to a shift premium of a dollar more per shift in which they worked as WCTs. Additionally, employees would receive bonuses in addition to their normal wages. But despite these additional wages, Defendants paid overtime to employees at the base rate of pay earned during a shift multiplied by 1.5, rather than at the regular rate of pay that an employee earned based on their average rate of pay including all rates of pay and bonuses multiplied by 1.5. As a result, Defendants did not pay employees who worked as WCTs all overtime wages owed. On at least three separate occasions, Plaintiff Ortega worked overtime during weeks when she was paid at two different rates during a workweek but was only paid overtime at the lowest base hourly rate of $10.50. Plaintiffs’ expert identified 288 employees that had overtime compensation paid below 1.5 times the weighted average regular rate of pay.

(MSA, p. 7, citations omitted; see also id. at 10-13 [“Defendants did not pay the weighted average of the underlying hourly pay rates when paying overtime or meal period premiums in a workweek in which employees were paid at multiple rates of pay, such as when WCTs earned a dollar more per hour for each shift they trained employees. Indeed, Plaintiffs’ expert identified that employees were underpaid for overtime compensation due to Defendants’ failure to utilize the weighted average method of calculating the regular rate of pay in 2.3% of the pay periods analyzed. On three separate occasions, Plaintiff Ortega worked overtime during workweeks in which she was paid at two different rates but was only paid overtime at the lowest base hourly rate of $10.50. Moreover, Plaintiff Ortega was paid meal period penalties during the same workweeks that she received multiple rates of pay only at the base hourly rate of pay for the shift she was working, i.e at the lower server pay if she was working as a server. Because Defendants failed to utilize the weighted average method of calculating the regular rate of pay as required by law, summary adjudication is appropriate for all workweeks in which employees worked overtime and were paid multiple rates of pay.”], citations omitted.)

Plaintiffs’ overtime cause of action is based upon the false premise that Defendants were not allowed to calculate overtime when multiple rates of pay were present using the “rate-in-effect” method, arguing instead that the “weighted average” method is required. But the law imposes no such requirement. Moreover, the rate-in-effect method was more beneficial to employees in many instances.

(Opposition, p. 2; see also id. at pp. 4-6 [“Defendants applied the entirely acceptable “rate-in-effect” method, under which they paid overtime to those working multiple rates of pay at 1.5x the rate of pay in effect at the time the overtime was worked. Those working for multiple rates of pay had an understanding that they would be paid overtime at the rate in effect prior to taking on the work paid at multiple rates. Plaintiffs assert that Defendants were required to apply the “weighted average method,” where an employee who worked multiple rates of pay would have their regular rate of pay determined by an average of those multiple rates, as opposed to the rate-in-effect method. However, this was not the method agreed upon prior to employees taking on the work at multiple rates, and the law does not require an employer to use the weighted average method in determining regular rates of pay. Nor is there law finding that the rate-in-effect method is improper. . . . [¶] In addition, the rate-in-effect method is fair and neutral because, with that method, the employee’s wage statement reflects the hours worked and associated rates of pay, whereas the weighted average method requires the employee to conduct a series of mathematical calculations to determine whether his or her compensation was accurate. In other words, the rate in effect method is simpler. Moreover, use of the rate in effect method resulted in many subclass members being paid more than they would have had the weighted average method been applied, as they received overtime at a higher rate than the average for those shifts where they worked at a higher rate.”], citations omitted.)

There is absolutely no question of material fact that Defendants CWW, BHWW, KWW, and TWW did not use the weighted average method of calculating overtime for employees working multiple rates of pay. Defendants’ only argument is that the rate-in-effect method was properly used. However, this contention is contrary to this Court’s interpretation of California law and Defendants have cited to no binding decision that condones the use of the rate-in-effect method of calculating the regular rate of pay.

Instead, the California Supreme Court has held that because the “regular rate of pay” is an hourly rate that includes all regular compensation in that workweek or pay period, when an employee works at two or more different rates of pay, all the underlying rates of pay must be included in the “regular rate of pay” calculation. “Not all employees earn at a fixed pay rate throughout a pay period, and therefore regular rate of pay is a weighted average reflecting work done at varying times, under varying circumstances, and at varying rates.” “Thus, it is often the case that overtime worked during a low-paying shift is compensated based on an overtime pay rate that reflects, as part of a weighted average, higher pay rates earned during higher paying shifts.”

Despite these numerous courts holding that California recognizes the regular rate of pay, Defendants have offered no authority to support their position that the “rate in effect” method of pay is acceptable in California, because there is no citable authority so holding. Indeed, the Court rejected these same arguments when considering Plaintiffs’ Motion for Class Certification, noting that they track the decision of Levanoff v. Dragas, 65 Cal.App.5th 1079 (2021), which “was ordered to not be published, so it cannot be cited or relied on.” The Court went on to hold that the “[w]eighted average is the requirement in place currently[.]”

(Reply, pp. 4-5, emphasis in original, underlined case name added, citations omitted.)

Since Defendants concede that they used rate in effect (see, e.g., Defendants’ Response Separate Statement, Additional Material Fact (“AMF”), 1), the legal issue boils down to whether rate in effect is allowed.

Where an employee in a single workweek works at two or more different types of jobs that have different rates of pay, his or her “regular rate” for that week is the weighted average of such rates. I.e., the employee's total compensation during the workweek from all such rates is divided by the total number of hours worked at all jobs. [Citations.]

At the certification stage, this Court quoted the Rutter Guide and rejected Defendants’ dependence on rate in effect, noting that Defendants’ authority – Levanoff – “was ordered to not be published” and “cannot be . . . relied on.” (5/12/22 Ruling Re: Motion for Class Certification, p. 13.)

Here, Defendants cite zero authority permitting rate in effect. In fact, the only authority they cite is a 1992 Division of Labor Standards Enforcement (“DLSE”) opinion letter that appears to endorse weighted average. (See Opposition, p. 4 [hyperlinking 5/14/92 DLSE Opinion Letter].)

Plaintiffs cite Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5^th 542, which cites Labor Code section 246(l)(1) and section 49.2.5 of the DLSE Manual, stating that “regular rate of pay is a weighted average reflecting work done at varying times, under varying circumstances, and at varying rates.” (Alvarado, supra, 4 Cal.5^th at 569, emphasis in original.)

Defendants contend the statement is dicta because the California Supreme Court did not “decide whether the weighted average method must be used over the rate-in-effect method.” (Opposition, p. 5.)

The Court disagrees. The justices considered “how an employee's overtime pay rate should be calculated when the employee has earned a flat sum bonus during a single pay period.” (Alvarado, supra, 4 Cal.5^th at 549.) While the issue was different than the issue here, the important point is that the Supreme Court made the statement in response to a defense argument that mischaracterized the meaning of regular rate of pay:

It might be argued that defendant's attendance bonus is different from other types of flat sum compensation because the bonus rewards only weekend work. According to this reasoning, overtime work done on a weekday (i.e., Monday through Friday) should not increase the size of the attendance bonus, because the bonus has no relation to weekday work. This argument, however, misunderstands what regular rate of pay is. Not all employees earn at a fixed pay rate throughout a pay period, and therefore regular rate of pay is a weighted average reflecting work done at varying times, under varying circumstances, and at varying rates. [Citations.] Thus, it is often the case that overtime worked during a low-paying shift is compensated based on an overtime pay rate that reflects, as part of a weighted average, higher pay rates earned during higher-paying shifts.

(Id. at 569, italics in original, bolding added.) Clearly, the Supreme Court included the statement to emphasize weighted average’s place in regular rate of pay’s definition.[1]

General Atomics v. Superior Court (2021) 64 Cal.App.5^th 987 supports this conclusion. The decision quotes Alvarado and the DLSE manual with approval, stating that, “[w]here two rates of pay are paid during a workweek, the California method for determining the regular rate of pay for calculating overtime in that workweek mirrors the federal method, based upon the weighted average of all hourly rates paid.” (General Atomics, supra, 64 Cal.App.5^th at 996, emphasis added.)

Based on these authorities, and because Defendants fail to cite authority authorizing rate in effect, the Court finds that weighted average governs.

Nevertheless, it is unclear whether the MSA can be granted. The Court granted the parties’ stipulation under Code of Civil Procedure section 437c(t) to summarily adjudicate certain “legal issues that do not completely dispose of a cause of action” (Plaintiffs’ Separate Statement, Undisputed Material Fact (“UMF”) 2), but this is not one of them. (See Plaintiffs’ Compendium of Evidence, Ex. B, p. 1 [agreeing under section 437c(t) to summarily adjudicate “1. Whether the written meal break policy in the July 2015 employee handbook complied with California law; and 2. Whether the unwritten rest break policy complied with California law”]; see also id. at Ex. C, p. 1 [approving the 8/5/22 Joint [Proposed] Trial Setting Order].) Unless the parties agree at the 3/10/23 hearing to decide this issue pursuant to section 437c(t), the Court intends to deny the MSA because Plaintiffs fail to dispose of the entire overtime cause of action. (See, e.g., Plaintiffs’ Separate Statement, UMF 21 [stating that Plaintiffs’ expert identified 288 employees who were underpaid overtime wages but failing to identify the employees and to show actual harm/damages]; see also Defendants’ Response Separate Statement, UMF 21 [disputing UMF 21 and asserting that “Plaintiffs . . . fail to note instances where employees received more compensation than the weighted average would provide” and to exclude “employees who signed arbitration agreements”].)

[T]here is no triable issue of material fact as to Plaintiffs’ claim that Defendants denied meal break class member meal periods because the July 2015 Employee Handbook does not include a compliant meal break policy and analysis of class member time records created an unrebutted presumption that class members were denied meal periods. Moreover, Defendant did not record breaks until July of 2015, and issued no penalties until 2016 despite there being records of violations such as short meal periods.

(MSA, p. 5; see also id. at pp. 7-8 [“The meal period policies contained in the July 2015 employee handbook did not comply with California law. Specifically, the policy does not advise class members that Defendants must provide them with meal periods before the end of the fifth hour of work. The policy also fails to provide a second meal break at all. . . . Indeed, numerous putative class members’ sworn testimony in Plaintiff Ortega’s wrongful termination and whistleblower case, in which the jury unanimously found that Plaintiff Jasmin Ortega had been illegally fired for reporting wage and hour violations, testified that Defendants BHWW and CWW did not regularly provide meal breaks ‘so as not to disrupt the business process of the Company.’”], emphasis in original; id. at pp. 12-13.)

* The meal break policy “provided a 30-to-60 minute break for every four hours of work[,]” exceeding California requirements. (Opposition, p. 7.)

* Plaintiffs’ evidence fails to support the Donohue v. AMN Services, LLC (2021) 11 Cal.5^th 58 presumption. (See id. at pp. 7-8.)

* The person most qualified (“PMQ”) testimony “explaining that employees may not have been clocking out for their breaks during that time” “shows that employees were being paid for their meal breaks, which Defendants had the right to do, and failure to record breaks does not equal a failure to take breaks.” (Id. at p. 8.)

Defendants’ own time and payroll records create a presumption that Plaintiffs and class members were denied their meal breaks and/or premium payments pursuant to Donohue. The presumption of liability is strongly corroborated by Defendants’ own unlawful policy that only permits meal breaks at Defendants’ convenience, and only allows for one meal period in a shift over four hours. Indeed, putative class members’ sworn testimony in Plaintiff Ortega’s wrongful termination and whistleblower case corroborated that Defendants BHWW and CWW did not regularly provide meal breaks “so as not to disrupt the business process of the Company.”

(Plaintiffs’ Separate Statement, UMF 27; see also Plaintiffs’ Compendium of Evidence, Ex. I, p. CWW000058.) “On its face,” the policy is “at odds with the Labor Code[.]” (5/12/22 Ruling Re: Motion for Class Certification, p. 5.)

On balance, though, the MSA is denied because Plaintiffs’ other evidence fails to shift the burden:

* “[T]he class period is 9/26/14 to December 2017[.]” (5/12/22 Ruling Re: Motion for Class Certification, p. 10; see also id. at p. 6.)

* Plaintiffs’ evidence from Ortega’s wrongful termination trial concerns Ortega’s and one coworker’s experiences at CWW. (See Plaintiffs’ Separate Statement, UMFs 28-34; see also Plaintiffs’ Compendium of Evidence, Exs. J, K, L.) The evidence is particular to Ortega’s individual claims and does not show that all class members suffered meal break violations at either CWW or BHWW for the duration of the class period.

* Plaintiffs’ evidence regarding Ortega’s work shifts is inadequate for the same reasons. (See Plaintiffs’ Separate Statement, UMFs 38-43; see also Plaintiffs’ Compendium of Evidence, Exs. H, O, R, S, T.)

* Plaintiffs assert that “Defendants’ time records produce one report showing when an employee worked paid time and another showing when the employee was clocked out for breaks.” (Plaintiffs’ Separate Statement, UMF 35.) The cited evidence relates specifically to Ortega’s clock-in and clock-out records and brake reports. (See Plaintiffs’ Compendium of Evidence, Ex. M, pp. 58-60.) It is not class-wide evidence.

* Plaintiffs claim Defendants lack “break reports . . . from September 2014 through [7/6/15] for any class members, only the paid time reports for this time period.” (Plaintiffs’ Separate Statement, UMF 36.) The claim is disputed (see Defendants’ Response Separate Statement, UMF 36 [stating that Ortega’s and Hernandez’s payroll reports and CWW time records reflect recorded breaks in the November 2014 though 7/6/15 time period]), and, regardless, it is unestablished. Plaintiffs merely cite a few payroll records, not testimony confirming that break reports do not exist. (See Plaintiffs’ Separate Statement, UMF 36; see also Plaintiffs’ Compendium of Evidence, Exs. O, P, Q.) The records fail to cover the whole class period; thus, even assuming they give rise to a Donohue presumption, the presumption only applies to a portion of the class period at best.

* Plaintiffs claim the PMQ “testified that all meal breaks should have been contained in the reports and the only reason there were no records of breaks being taken prior to [7/6/15] was that the employees ‘weren’t clocking out properly for their breaks, so that’s why it was not recorded on the punch time.’” (Plaintiffs’ Separate Statement, UMF 37.) The claim is disputed and overstated. (See Defendants’ Response Separate Statement, UMF 37.) The attorney asked the PMQ about Ortega’s break records and whether they show that Ortega took breaks; he did not ask about the entire class. (See Plaintiffs’ Compendium of Evidence, Ex. M, pp. 59-63.) And, to repeat, even if Plaintiffs were entitled to a Donohue presumption, it would be limited to part of the class period.

* Plaintiffs state that, “in all records produced for [] class members, no meal break premiums were paid until [1/6/16] despite the fact that time records reveal violative meals.” (Plaintiffs’ Separate Statement, UMF 44.) As proof, they cite two sample class payroll reports. (See Plaintiffs’ Compendium of Evidence, Exs. Q, R.) The showing fails because (1) Plaintiffs fail to “provide [] information on sampling method[,]” (2) the records do not address the full class period – e.g., they do not show what happened from September 2014 through December 2015, (3) they “do not confirm whether any employee took a meal period[,]” and (4) “they only confirm that a meal period was not recorded.” (Defendants’ Separate Statement, UMF 44.)

Defendants failed to authorize and permit rest breaks until December 2017. Specifically, Defendants did not inform any employees in writing that they were authorized and permitted to take rest breaks as the 2015 employee handbook fails to mention rest breaks at all. Moreover, Defendants admit that they did not schedule rest breaks for employees, providing employees with no guidance on if or when they were authorized and permitted to take any rest breaks. Instead, employees had to obtain a manager’s permission to take a break, and even then rest breaks, like meal breaks, were only permitted at the company’s convenience. The failure to authorize and permit rest periods was corroborated by putative class members’ sworn testimony in Plaintiff Ortega’s wrongful termination case. Moreover, Defendants have provided no evidence that they had any sort of rest break policy, either written or unwritten, prior to amending the employee handbook in 2017. Therefore, summary adjudication is appropriate.

Defendants claim they “had a policy outside of the July 2015 Handbook, [] employees were trained on that policy, and [] employees followed that policy (including Plaintiffs).” (Opposition, pp. 2-3; see also id. at pp. 9-10 [“Prior to 2017 and including the entire time period covered by the rest break subclass, CWW and BHWW had a rest break policy and practice of providing non-exempt employees with 10-minute paid rest breaks for every four hours worked, or major fraction thereof, with the break to occur in the middle of that time period. Employees were trained on this policy at practice at their time of hire. In 2017, this rest break policy was formally added to the CWW and BHWW employee handbooks, reflecting what was already in place. [¶] Plaintiffs misconstrue testimony by CWW’s person most knowledgeable in arguing that CWW did not schedule rest breaks and that employees had to obtain a manager’s permission to take any break. In context, that testimony explained that it was each manager’s discretion as to how to schedule and ensure that employees were provided with the opportunity to take rest breaks. This testimony does not reflect a policy where CWW would refuse to authorize breaks. Rather, each manager ensured that employees were provided the opportunity to take breaks. And how each manager approached handling that task was up to that manager. The individuation of how rest breaks were administered according to CWW’s Labor Code-compliant policy further warrants denial of Plaintiffs’ Motion for their inability to establish a uniform violative policy and practice. [¶] Plaintiffs then cite their own testimony that they were unable to take breaks. However, this testimony still does not support the existence of a uniform policy or practice that violated the law. Instead, it supports that Plaintiffs’ complaints regarding rest breaks are individualized as, in some but not all instances, the policy that existed and that was communicated to Plaintiffs was not followed. This negates any finding that an unlawful policy or practice was in place. The trial testimony of other witnesses that Plaintiffs cite in support of the Motion regarding rest breaks is consistent—no witness confirms a policy that prohibited rest breaks, but rather a code-compliant policy that may not have been followed by some managers in some instances.”], emphasis in original, citations omitted.)

The evidence Plaintiffs cite only pertains to CWW (see Plaintiffs’ Separate Statement, UMFs 45-56), so the MSA is denied as to BHWW.

The MSA is denied as to CWW because the burden is unshifted. It is undisputed that the 2015 Handbook does not contain a written rest break policy, but Plaintiffs’ burden requires more. To show more, Plaintiffs cite the same PMQ testimony that the Court found inconclusive during certification. The PMQ testified:

A If they work between three and six hours, they get a ten-minute. Six and ten hours, they get a second ten-minute, and more, they get a third.

Q Were these rest breaks, are they supposed to be on or off the clock? Let me strike that and rephrase that.

Q No. Who – how are they told – how were the employees informed to take their rest breaks, or where they?

Q Supervisors and managers would – would tell them – the employee to take rest breaks, but they wouldn’t be scheduled anywhere?

(Plaintiffs’ Compendium of Evidence, Ex. D, p. 65.) The scope is the problem. “What is the time period? The present? Post-November 2017? The testimony” is insufficient to shift the burden “because it fails to reference pre-November 2017.” (5/12/22 Ruling Re: Motion for Class Certification, p. 10.)

Labor Code section 226 requires wage statements to contain the following information:

[*] employer's name and address (and the name and address of the legal entity that secured the services of the employer if the employer is a farm labor contractor);

[*] employee's name and the last four digits of the employee's Social Security number;

[*] the applicable hourly rate and total hours worked for nonexempt employees (for employees paid on a piece rate basis, the applicable piece rate and units earned);

[*] if the employer is a temporary services employer, the rate of pay and total hours worked for each temporary services assignment.

Throughout the entire class period, Defendants have failed to separately list out any meal period premiums or “that additional credited hour of work” on the wage statements issued to employees. Instead, the wage statements only list “regular hours” and “overtime hours.” Thus, under Naranjo,[2] Defendants are liable for inaccurate and incomplete wage statements and summary adjudication should be granted.

Plaintiffs only cite two months of payroll records pertaining solely to Ortega to support their Motion on this claim. Such evidence falls far short of establishing a uniform practice of failing to itemize meal period premiums. Plaintiffs lack any evidence to support a finding that such practice took place on behalf of all Defendants across the entire class period. Therefore, Plaintiffs’ Motion as to the itemization of meal period premiums must be denied.

The only evidence before the Court related to the derivative claims supports that the wage statements are inaccurate and incomplete. While Defendants posit that the evidence is for a limited portion of the class period, they do not dispute that the wage statements were improper at any time during the class period, nor do they present any evidence showing that the wage statements actually reflected all wages earned and all hours worked. The only evidence before the Court shows that Defendants have violated the law with respect to the wage statements. Thus, summary adjudication is proper.

The Court agrees with Defendants. The MSA is denied as to all Defendants for failure to shift the burden because Plaintiffs’ cited evidence amounts to two months of CWW payroll records. (See Plaintiffs’ Separate Statement, UMFs 58-59; see also Plaintiffs’ Compendium of Evidence, Exs. G, H.) The documents do not relate to any other Defendant and fail to cover the entire class period.

[1] Justice Ming Chin wrote Alvarado and the Rutter Guide statement. They are consistent with each other in recognizing the applicability of weighted average to regular rate of pay.

[2] Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5^th 93.