Judge: Jon R. Takasugi, Case: BC705546, Date: 2022-12-06 Tentative Ruling

Case Number: BC705546    Hearing Date: December 6, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

            On 5/8/2018, Plaintiff J.K filed suit against Charter Communications, Inc., Charter Communications, LLC, and Frank Hernandez.

            On 11/19/2018, Frank Hernandez filed a cross-complaint for battery.

            On 3/18/2019, J.K filed a cross-complaint Charter Communications, Inc., Charter Communications, LLC, and Frank Hernandez, alleging: (1) indemnity under Labor Code; (2) Indemnity under Corporations Code; (3) declaratory relief; (4) defamation; (5) failure to pay vacation (unused floating holiday) on termination; (6) failure to pay all wages due; (7) Private Attorney General Claim (PAGA); and (8) Business and Professions Code section 17200.

            Now, Defendants and Cross-Defendant Charter Communications, Inc.’s and Charter Communications, LLC (collectively, Defendants) move for summary adjudication of claims 10-16 and cross-claims 5, 6, and 8.

Evidentiary Objections

Plaintiff’s evidentiary objections are all overruled.

Preliminary Matter: Defendants allege Plaintiff improperly circumvented the 20-page limit in his opposition

Plaintiff exceeds the 20-page limit set by Rule 3.1113(d) for summary adjudication responding memorandums, uses 11.5 instead of 12-point font in violation of CRC 2.104, and uses less than 1.5 spacing between lines in circumvention of CRC 2.108.

Discussion

I.                    Claims 10-12

Defendants argue that Plaintiff’s overtime, minimum wage, meal break, and rest break claims (Claims 10-12) fail because these Labor Code provisions do not apply to Plaintiff, an exempt outside salesperson.

Under the California Labor Code and the applicable Industrial Welfare Commission Wage Order, “outside salespersons” are exempt from the Labor Code’s requirements regarding minimum wage, overtime, and meal and rest breaks. (Cal. Code Regs., tit. 8, § 11070; Cal. Lab. Code § 1171; see also e.g., Desmond v. Charter Comm’ns, Inc., 2021 WL 3034021, at *13-14 (S.D. Cal. July 19, 2021) (granting summary judgment in Charter’s favor against DSR on grounds that outside sales exemption defeated plaintiff’s minimum wage, overtime, and break claims where he admitted he spent “majority” of his time in the field); Barnick v. Wyeth, 522 F. Supp. 2d 1257, 1262 (C.D. Cal. 2007) (same). As such, Plaintiff was an exempt outside salesperson if he “customarily and regularly work[ed] more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” Cal. Code Regs., tit. 8, § 11070, subd. 2(J).

In Ramirez v. Yosemite Water Co., Inc. and Duran v. U.S. Bank National Assn., the California Supreme Court detailed how to analyze the outside salesperson exemption. The employer bears the burden of proving that the exemption applies. Duran v. U.S. Bank National Assn. (2014) 59 Cal.4^th 1, 25-26 (citing Ramirez v. Yosemite Water Co., Inc. (1999) 20 Cal.4th 785, 31 794-795). The exemption requires scrutiny of both the job description and an employee's own work habits. Id. The trial court must first determine how the employee actually spends his or her time. Id. Ancillary questions include 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. Id.

      Here, Defendant employer has the burden to show that Plaintiff was an exempt outside salesperson, in support of which Defendant submitted the following evidence:

-          Charter hired Plaintiff for a Direct Sales Representative (“DSR”) position in July 2016. (SS ¶ 1.)

-          Charter’s DSR job description identified the position as a “door-to-door” sales position. (SS ¶ 3.)

-          Charter’s DSR job description stated that a DSR “[t]ypically spends approximately 80% of time in an outside environment with exposure to inclement weather. Minimal time in an office environment.” (SS ¶ 4.)

-          Plaintiff admits his job was to go “door-to-door selling Charter’s products and services” to prospective customers. (SS ¶ 5.)

-          Plaintiff spent the “majority” of his “work time out in the field trying to make sales.” (SS ¶ 6.)

-          Plaintiff typically spent 25–35 out of 40–45 working hours per week in the field trying to make sales. (SS ¶ 7.)

-          Plaintiff would “spend as much time in the field as [he] wanted to spend to make sales.” (SS ¶ 8.)

-          Plaintiff only went into the office for meetings once per week or every other week or when his supervisor specially requested that he visit the office. (SS ¶ 10.)

-          There were weeks during Plaintiff’s employment when he would not go into the office at all. (SS ¶ 11.)

-          Plaintiff stated that he enjoyed “the flexibility of being in an outside sales position where [he] could pick which hours [he] wanted to work out in the field[.]” (SS ¶ 12.)

Plaintiff argues that Defendants’ outside sales defense fails as a matter of law and thus that Defendants are unable to shift the burden. Plaintiff argues that Defendants have not, and cannot, establish that Plaintiff was selling items away from Defendants’ place of business. To support this claim, rather than disputing that he spent less than 50 percent of his time conducting sales-related activity, Plaintiff instead disputes that its activity qualifies as “selling” and that it conducted that activity “away from Defendants’ place of business.” (Opp. Pg. 12). This argument was rejected in Ramirez, where the court held that the time spent traveling to attempt a sale counted as time spent selling. Ramirez, 20 Cal. 4th at 801. Furthermore, Plaintiff asserts that an employee must be solely commission-paid for the outside sales exemption to apply. None of these assertions are supported by California law, including Ramirez and Duran. The fact that the plaintiff in Ramirez was paid in base salary and commissions did not limit the exemption there and neither should it here, where Plaintiff was also paid a base salary.

The Court disagrees with Plaintiff and finds that Defendants’ evidence supports a reasonable inference that Plaintiff was an exempt outside salesperson, and thus his Claims 10-12 fail as a matter of law. Accordingly, the burden shifts to Plaintiff to disclose a triable issue of material fact.

California takes a purely quantitative approach to analyzing the outside sales exemption, which means that Plaintiff must show evidence that would demonstrate that Plaintiff spent less than 50 percent of his time in sales-related activity. Plaintiff does not go this route. Instead, he attempts to make the legal argument that his activities do not qualify as sales-related activities attempting to reverse well-settled law. By failing to put forth evidence that contradicts Defendants’ evidence, such as evidence that Plaintiff was not engaged in selling activity the majority of the time he was out of the office, Plaintiff fails to create a triable issue of material fact as to whether he was an exempt outside salesperson.

Because the Court already determined that Defendants were able to shift the burden, Plaintiff’s arguments are not enough to create a triable issue of material fact as to whether Plaintiff was an exempt outside salesperson.

Accordingly, the Court grants Defendants’ motion for summary adjudication as to claims 10-12.

II.                 Claims 13-15; Cross-Claim 6

Defendants argue that Plaintiff’s wage statement, record keeping, and waiting time claims fail because they are derivative of Claims 10-12 which fail because Plaintiff cannot show “willful” or “knowing and intentional” violations. Defendants also advance a number of additional grounds, and because no triable issue exists as to claim.

Defendants Assert There is No Triable Issue

As set forth above, the Court concluded that Plaintiff failed to disclose a triable issue of material fact as to Claims 10-12. Thus, to the extent Plaintiff’s claims for inaccurate wage statements, failure to keep records and failure to pay all wages due upon termination are based on Charter’s alleged violation of the Labor Code’s minimum wage, overtime, and meal and rest break requirements, those derivative claims fail along with the underlying claims on which they are based.

Defendants Assert There Were No Willful or Knowing and Intentional Violations

In case the Court ruled otherwise on claims 10-12, Defendant also submitted evidence that claims 13-15 fail because Plaintiff cannot show “willful” or “knowing and intentional” violations. See Lab. Code. § 203 (willful failure required); § 1174.5 (willful failure required); § 226(a) (“knowing and intentional violation” required). The elements of willfulness and a knowing and intentional violation are lacking where, as here, the employer has “put forth legitimate defenses” to the plaintiff’s underlying claims, and there was thus a “good faith dispute as to whether [defendant] owed [plaintiff] any unpaid wages.” Kempf v. Barrett Bus. Servs., Inc., 2007 WL 4167082, at *8 (N.D. Cal. Nov. 20, 2007); Cal. Code Regs., tit. 8 § 13520.)

“The settled meaning of ‘willful’... is that an employer has intentionally failed or refused to perform an act which was required to be done.” (Barnhill v. Robert Saunders & Co. (1981) 125 Cal.App.3d 1, 7–8 []; Davis v. Morris (1940) 37 Cal.App.2d 269, 274 [].) ‘[T]he employer's refusal to pay need not be based on a deliberate evil purpose to defraud workmen of wages which the employer knows to be due.’ (Barnhill, supra, 125 Cal.App.3d at p. 7 []; Davis v. Morris, supra, 37 Cal.App.2d at p. 274 [].)” (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1201.)

To support his argument that Defendants’ actions were willful and knowing, Plaintiff asserts that Defendants knew Plaintiff was not outside sales exempt and that the underpayment and delay in payment by Defendants could not have been a good faith error. Plaintiff in the opposition asserts that Defendants makes conclusory statements in alleging that they made an honest oversight in not paying Plaintiff his full wages immediately at the end of his pay period on May 10, 2017. However, Defendants put forth evidence showing that Defendants did not pay Plaintiff the full amount of the wages on the termination date yet quickly remedied it within two days. This demonstrates, through specific facts, that Defendants simply made a mistake. Therefore, Defendants satisfy their burden and the burden shifts to Plaintiff to show a triable issue of material fact.

However, Plaintiff puts forth no evidence to demonstrate this action was more than a simple mistake.  These assertions are insufficient because they are not the type of specific facts necessary to overcome summary adjudication.

Defendants Assert that the Causes of Action Fail on the Merits

Finally, Defendants submitted evidence that the causes of action fail on the merits.

As for the wage statement claim, Defendants argue that the claim is barred by a one-year statute of limitations. “[I]temized wage statement violations” are “undisputedly governed by a one-year statute of limitations.” (Murphy v. Kenneth Cole Productions (2007) 40 Cal. 4th 1094, 1118. n.16. Plaintiff filed his lawsuit on May 8, 2018; thus, this claim is barred for any purported issue prior to May 8, 2017 (a few days before Plaintiff’s termination).

Plaintiff argues that there is no SOL time bar because discretionary penalties are subject to a three-year SOL pursuant to Jensen v. BMW of N Amer. (1995) 35 Cal.App.4th 112, 133. Further, Bus. & Prof. Code, § 17202, 17208 extend the time to enforce a penalty to four years. As to Lab. Code, § 1174(d), Plaintiff may use Bus. & Prof. Code; and Lab. Code Private Attorney Gen. Act, to enforce such statute.

As for the section 203 claim, this claim is based on floating holiday time, sick/vacation time, and commissions. As set forth above, California law does not require that floating holidays be paid out upon termination, and Defendants submitted evidence that they pay Plaintiff for his unused floating holiday time, thus overcompensating Plaintiff by at least $178.24 for amounts he was never owed. (SS ¶ 43.) As for sick/vacation time, Defendants also submitted evidence that they initially paid Plaintiff through May 11; (2) paid him for all of his accrued vacation hours and sick time at his salaried rate on that date; and (3) paid him an additional $808.39 for such time two days later on May 13 when Charter realized it had not paid out Plaintiff’s vacation and sick time at his PTO rate. (SS ¶¶ 34–43.) Finally, as for commissions, Defendants submitted evidence that pursuant to the Parties’ commission agreement, Plaintiff was only entitled to commissions after certain requirements were met, including completion of the dispute and reconciliation process during which, among other things, a customer could rescind an order, or another DSR could claim entitlement to sales, etc. (SS ¶¶ 20–30.) This process takes approximately one month to complete. (SS ¶ 31.) More specifically, for Plaintiff’s final commissions, the commission period ran from March 22, 2017 to April 21, 2017, with the payment for any earned commissions being due on May 25 per the parties’ agreement. (SSUF ¶¶ 32, 46.) In keeping with same, Defendants timely paid Plaintiff his final commissions on May 25, 2017, after Defendants finished its reconciliation process and the commissions became capable of final calculation. (SS ¶¶ 44–45.) Notably, Plaintiff admits this was proper, as he testified that Charter “had to resolve all the [commission] disputes to determine what the final commissions were,” and the “regular pay date for this commission cycle” was “May 25th.” (SS ¶ 46.)

Finally, as for the failure to keep records, Defendant argues that Plaintiff’s “§ 1174(d) claim fails as a matter of law because it does not provide for a private cause of action.” Dawson v. HITO Carbon Composites, Inc., 2017 WL 7806618, *7 (C.D. Cal. Jan. 20, 2017) (granting motion to dismiss without leave to amend on this basis; collecting cases).

Taken together, Defendants’ evidence and case law supports a reasonable inference that Plaintiff’s Claims 13-15 and Cross-Claim 6 fail as a matter of law. Accordingly, the burdens shifts to Plaintiff to disclose a triable issue of material fact.

Plaintiff argues that Defendants did not pay Plaintiff for sick time at the regular rate or commission at various times during his employment and that they were owed at termination. Thus, Plaintiff alleges that Defendants have not established that they accurately and properly paid Plaintiff all commissions earned through May 10, 2017, or while Plaintiff was eligible for disability. Plaintiff further argues that the inference from non-production of these and other records should be that they are harmful to Defendants pursuant to Evid. Code, §412. However, as stated above these are not the type of specific facts necessary to overcome summary adjudication. Accordingly, claims 13-15 and cross-claim 6 fail.

III.              Cross-Claim 5

Defendants argue that Plaintiff’s Labor Code section 227.3 claim fails for failure to pay floating holidays fails because Plaintiff’s claim is based on an incorrect understanding of the Labor Code.

Plaintiff claims that floating holiday time is “akin to vacation time” under Labor Code § 227.3, and thus, he should have been paid for his unused floating holidays at termination, but was not. Defendant argues that floating holidays are not “vacation” time and thus need not be paid out upon termination. In support, Defendant cites a number of cases of unreported federal cases, but also Paton v. Advanced Micro Devices, Inc. (2011) 197 Cal. App. 4th 1505, 1518. There, the Court held that “[v]action is [] different from paid time off that is conditioned upon the occurrence of a specific event or granted for a particular purpose. For example, some employers give paid time off for state or federal holidays. The right to this type of time off does not vest with day-to-day employment; it vests upon the occurrence of the holiday.”

Even setting aside this issue, Defendant also submitted evidence that Defendants actually did pay him for eight hours of accrued but unused floating holiday times, thus overcompensating Plaintiff for amounts he was not owed. (SS ¶ 43.)

            Defendant’s case law supports a conclusion that Plaintiff was not owed compensation for floating holidays. Moreover, Defendant’s evidence supports a reasonable inference that he was, in fact, paid for floating holidays regardless of whether he was owed that amount. Accordingly, the burden shifts to Plaintiff to disclose alternative case law or a triable issue of material fact.’

Plaintiff alleges that Defendants informed Plaintiff that he would receive 2 floating holidays in 2017 and 4 more on Jan. 1, 2017 but that he only used one of six floating holidays. However, Plaintiff does not put forth specific facts showing that he was not paid for accrued but unused floating holiday times, as Defendants’ evidence demonstrated. Therefore, Plaintiff does not meet his burden of showing a triable issue of material fact.

Accordingly, Plaintiff’s cross-claim 5 is fails on summary adjudication.

IV.              Claim 16; Cross-Claim 8

Defendants argue that Plaintiff’s UCL claim fails because it is derivative of Plaintiff’s failing Labor Code claim. See, e.g., Taylor v. Fin. Casualty & Surety, Inc. (2021) 67 Cal. App. 5th 966, 1005 (2021) (affirming grant of summary judgment on UCL claim where underlying Labor Code theories fail; collecting cases); Barnick, 522 F. Supp. 2d at 1261 (on similar outside salesperson exemption claims, granting summary judgment for employer on UCL claim where underlying predicate claims failed).

Plaintiff does nothing to rebut this. Therefore, Plaintiff’s claim 16 and cross-claim 8 fail.

      V.        Plaintiff’s New Claims

Plaintiff asserts new claims in his opposition that were not previously asserted in the complaint or cross-complaint, namely 1) that he is owed unpaid commissions for fiscal month May 2017 and 2) that Defendants violated Labor Code § 246. Because these claims were not asserted in Plaintiff’s operative complaint, they extend beyond the parameters of the Court on summary adjudication, which are limited by the complaint. Accordingly, the Court will not consider Plaintiff’s new claims.

Conclusion

Defendants brought this motion for summary adjudication as to claims 10-16 and cross-claims 5, 6, and 8. Defendants met their burden of showing Plaintiff does not create a triable issue of material fact. In turn, Plaintiff was not able to meet his burden to demonstrate otherwise. Accordingly, the Court grants Defendants motion for summary adjudication in its entirety.