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Pellegrino v. Robert Half International

January 28, 2010


Appeal from a judgment of the Superior Court of Orange County, Andrew P. Banks, Judge. Affirmed. (Super. Ct. No. 06CC04518).

The opinion of the court was delivered by: Fybel, J.




Plaintiffs Maria Pellegrino, Nadia Balici, Carolyn Cox, Kelli Maresch, Jennifer McCasland, and James Rossetto (collectively, plaintiffs) sued their former employer, temporary staffing firm Robert Half International, Inc. (RHI), for RHI's alleged failure to comply with Labor Code provisions pertaining to overtime compensation, commissions, meal periods, and itemized wage statements. Plaintiffs also alleged unfair competition claims, under Business and Professions Code section 17200 et seq., which were based on the same alleged Labor Code violations.

RHI asserted two affirmative defenses to plaintiffs' claims. First, RHI contended plaintiffs' claims were barred because a provision, entitled "Limitation on Claims," in their employment agreements shortened the statute of limitations for such claims to six months. Second, RHI argued each plaintiff was exempt from the wage and hour laws based on the administrative exemption.

The trial court determined the limitation on claims provision contained in the employment agreements was unenforceable and granted motions for summary adjudication on that issue accordingly. Plaintiffs' unfair competition claims were tried to the court sitting in equity and began with a trial on the merit of RHI's exemption affirmative defense. The trial court granted plaintiffs' motion for judgment under section 631.8 of the Code of Civil Procedure, having concluded the administrative exemption did not apply to plaintiffs. The parties stipulated as to the amount of damages, penalties, and interest to be awarded each plaintiff; the court entered judgment accordingly.

We affirm. First, the wage and hour laws underlying all of plaintiffs' claims protect unwaivable statutory rights that are supported by strong public policy. The trial court correctly concluded the provision shortening the limitation period violates public policy and is therefore unenforceable.

Second, as authorized by Evidence Code section 320 and Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, the trial court set the order of proof for trial by having the equitable issues tried first to the bench, to be followed by a trial of the legal issues to the jury, to the extent any outstanding issues remained after resolution of the equitable claims. After the court decided that RHI's exemption affirmative defense was without merit and before the remaining equitable issues were resolved by the court, the parties stipulated to all outstanding issues-both equitable and legal-and judgment was entered accordingly. We find no error.

Finally, the trial court did not err by granting plaintiffs' motion for judgment as to RHI's exemption affirmative defense. Substantial evidence showed plaintiffs' duties and responsibilities did not involve work directly related to management policies or general business operations of RHI or RHI's customers, within the meaning of Industrial Welfare Commission wage order No. 4-2001 (IWC Wage Order No. 4-2001), which is set forth in title 8, section 11040 of the California Code of Regulations and applies in this case.


RHI is a staffing company that places temporary employees or "candidates" with its clients. RHI's headquarters in Pleasanton, California, houses, inter alia, its corporate human resources, marketing, and legal departments.

RHI has several divisions which include (1) the Robert Half management resources division which places temporary employees to provide high-level accounting and finance-related services; (2) the Robert Half legal division which places attorneys, paralegals, legal support specialists, and law firm administrators; (3) the creative group division which places temporary employees to provide creative, Web site development, marketing, and advertising services; and (4) the office team division which places administrative staff.

Pellegrino worked for RHI as an account executive in the Robert Half legal division from August 2004 until April 2006. Balici worked for RHI as an account executive in its legal division from September 2004 until May 2005. Cox worked for RHI in its management resources division as an account executive. She worked for RHI from 2000 through May 2005. Cox also served as a division director for some period of time, but spent less than 20 percent of her time on division director responsibilities. Maresch worked for RHI as a staffing manager in the office team division from January 2004 until July 2005. McCasland worked for RHI as an account executive in its management resources division from October 2000 to January 2002, and again from June 2004 until April 2005. One month before she left her employment with RHI, she was promoted to branch manager. Rossetto worked for RHI as an account executive in the creative group division from March 2002 until September 2003.

The duties and responsibilities of an account executive*fn2 involved recruiting, interviewing, and evaluating candidates to be placed as temporary employees; selecting and placing candidates on job orders and assisting clients with their call-in business needs; and new business development. In performing those functions, account executives were expected to follow the "recipe" established by corporate headquarters. Account executives were expected to perform the three major functions of their position on a three-week rotating basis broken down into a "sales week" or marketing week, "desk week," and "recruiting week."

During sales week, account executives were expected to make 125 telephone calls or "connects" with clients, conduct approximately 15 client visits, and attend networking events. During desk week, account executives were expected to handle incoming telephone calls and take job orders from clients. During recruiting week, they were expected to interview 15 to 25 potential candidates to determine whether those candidates might be added to RHI's self-described "inventory" of individuals to be placed. The three-week rotation system could be modified to suit the number of account executives working in a particular division at any given time. Account executives were also required to participate in "white board meetings" at least twice a day, during which they would utilize a white board to list their daily goals and chart their progress in achieving those goals.

Each account executive was expected to consider the clients and candidates he or she worked with as his or her "book of business" although the "book" ultimately belonged to RHI; an account executive was also expected to assist his or her teammates. Account executives worked as a team in trying to locate candidates when there was a need for a specific skill set. They did not set policy for RHI and were expected to operate within the policy guidelines that were provided to them.

Account executives were evaluated based on how well they met sales production minimum requirements and the number of hours that were billed to clients for services provided by candidates. A direct sale involved placing a candidate with a client. Account executives did not usually make recommendations to a client regarding how to staff projects. The account executive's job was to fill the orders as they came in.

After placing a candidate, account executives had no role in supervising the candidate in his or her performance of services for the client. If a client desired to terminate a candidate's services, the client would inform the account executive and the account executive would relay the message to the candidate and attempt to provide a replacement candidate. Account executives did not have the authority to hire or fire other account executives and did not supervise administrative support staff in the offices.

RHI's supervising manager's guide refers to RHI as "a sales-driven organization where delivering sales results is an important part of our culture. We take pride in being highly skilled and well-trained sales professionals. Our goal as sales professionals must be to develop long-lasting client relationships versus short-term transactional business."


I. Pleadings

Plaintiffs initiated their lawsuit against RHI in March 2006. In the first amended complaint, plaintiffs alleged RHI (1) failed to pay overtime compensation in violation of Labor Code sections 510, subdivision (a), 1194, 201, 202, and 203; (2) failed to provide proper meal and rest breaks in violation of Labor Code sections 512 and 226.7 and IWC Wage Order No. 4-2001; (3) failed to maintain and submit itemized wage statements in violation of Labor Code section 226; and (4) engaged in unfair competition in violation of Business and Professions Code section 17200 based on the above referenced Labor Code sections. (All further statutory references are to the Labor Code unless otherwise specified.) Cox, McCasland, and Pellegrino alleged additional claims against RHI for nonpayment of commissions and unfair competition for such nonpayment (Bus. & Prof. Code, § 17200 et seq.). The first amended complaint alleged plaintiffs were employed by RHI as account executives, branch managers, and/or division directors. That complaint further alleged they regularly worked more than eight hours per day and/or 40 hours per week, but were not paid overtime wages or commissions and were not provided meal and rest periods or itemized statements of wages.

RHI filed an answer to the first amended complaint, which contained a general denial and alleged several affirmative defenses. RHI's eighth affirmative defense alleged all of plaintiffs' claims were barred "by a contractual agreement between Plaintiffs and Defendant to limit the time period within which any claims against Defendant may be filed." RHI also alleged, as its sixth affirmative defense, that plaintiffs were exempt from overtime compensation requirements under the Labor Code and IWC Wage Order No. 4-2001*fn3 because they "were employed in an administrative, executive, professional, and/or relevant sales capacity within the meaning of the applicable wage order(s)."

II. Motions for Summary Judgment and Summary Adjudication

RHI filed motions for summary judgment against plaintiffs. As to each plaintiff except Pellegrino, RHI argued the alleged claims were barred because each plaintiff failed to file his or her lawsuit within six months of the termination of employment as required by the employment agreement each signed.*fn4 RHI's motions were also brought on the ground that plaintiffs' wage and hour claims and unfair competition claims failed because plaintiffs were exempt from the laws underlying their claims.

Each plaintiff (except Pellegrino) filed a motion for summary adjudication on the ground the provision of his or her employment agreement shortening the applicable statutes of limitations was unlawful, and all plaintiffs moved for summary adjudication on the ground RHI's exemption affirmative defense failed because they did not meet the requirements for any exemption as a matter of law.

The trial court denied each of RHI's motions for summary judgment. Citing Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107 (Martinez), the court concluded the employment agreements' provision shortening the applicable statute of limitations for plaintiffs' claims to six months was void and unenforceable because it violated public policy, violated section 219's prohibition against private agreements contravening statutory remedies, and was unconscionable. The trial court, therefore, granted McCasland's, Balici's, Cox's, Rossetto's, and Maresch's motions for summary adjudication as to that issue, but otherwise denied plaintiffs' motions on the ground a triable issue of material fact existed as to whether they were exempt employees.

III. Trial and Motion for Judgment on the Exemption Affirmative Defense

Before trial, the court bifurcated plaintiffs' unfair competition claims and ordered that such equitable claims first be tried to the court without a jury. As agreed to by RHI's counsel, the court bifurcated the exemption affirmative defense and tried that issue first. After 17 days of trial, and at the close of RHI's case-in-chief on the exemption affirmative defense, plaintiffs moved for judgment under Code of Civil Procedure section 631.8, arguing they performed a production or sales role in RHI's day-to-day business, but did not have an impact on RHI's policies or general business operations and therefore could not be exempt administrative employees.

The trial court granted plaintiffs' motion. Although the court discussed the merits of the motion, the court made clear that its comments did not constitute a statement of decision. The court further stated that if it chose to add anything to its reasoning, the court would wait until it had a proposed statement of decision that the court could "supplement or modify or change." The record does not contain a statement of decision and does not show that any party had requested one.*fn5

IV. Stipulation for Judgment As to Damages, Penalties, and Interest

On February 4, 2008, five days after plaintiffs' motion for judgment on the exemption defense was granted, the parties entered into the following stipulation regarding the remaining issues in the litigation:

"WHEREAS the Orange County Superior Court, the Honorable Andrew P. Banks presiding, on January 29, 2008 granted plaintiffs' motion for judgment under Code of Civil Procedure section 631.8 on Defendant Robert Half International, Inc.'s exemption affirmative defense;

"WHEREAS it is stipulated and agreed that, each plaintiff shall be deemed to have established his or her prima facie case on each claim, specifically but without limitation that at some point during their respective employments, plaintiffs each worked more than 8 hours/day and/or 40 hours/week, were not paid overtime for those hours, on occasion did not take meal and/or rest breaks, and did not have their hours of work reported on their pay stub;

"WHEREAS the parties have agreed on the amounts of damages, penalties and interest that are at issue with respect to each plaintiff in this matter;

"WHERAS the parties have set forth those amounts below and agree that the respective amounts shall be awarded to the respective plaintiffs in the judgment to be entered in plaintiffs' favor upon the court's previously referenced order and the facts to which the parties have stipulated herein;

"WHEREAS defendant reserves its right to appeal the court's ruling granting plaintiffs' motion for judgment and the judgment to be entered by the Court on it, on any and all grounds except the amounts of recovery reflected below and the stipulated facts set forth in the second recital, above;

"WHEREAS plaintiffs and their counsel reserve their rights to submit or move for an award of costs and/attorneys fees pursuant to applicable post judgment procedures;

"IT IS HEREBY STPULATED AND AGREED by the parties hereto, through their attorneys of record, that the amounts of damages, interest, and penalties at issue in this matter for each of the respective plaintiffs are as follows:

"PlaintiffOvertime Wages and Premium Pay, Inclusive of Prejudgment Interest, and Pay Stub Violation and Waiting Time PenaltiesUnpaid BonusesTotals "Nadia Balici$28,556.14-0-$28,556.14 "Carolyn Cox$305,701.03$8,750.00$314,451.03 "Kelli Maresch$61,114.18-0-$61,114.18 "Jennifer McCasland$76,215.40$6,562.50$82,777.90 "Maria Pellegrino$63,259.68$2,187.50$65,447.18 "James Rossetto$62,653.58-0-$62,653.58 "TOTALS:$597,500.00$17,500.00$615,000.00

"The totals are included above to assure accuracy of the parties' agreement."

V. Judgment and Appeal

Judgment was entered, which stated in pertinent part: "The court bifurcated the plaintiffs' claims under California Business and Professions Code section 17200 and ordered they be tried first to the court sitting without a jury. The court bifurcated the exemption affirmative defense for all plaintiffs and tried the issues presented by that defense without a jury. The court ordered the defense to proceed first because it had the burden of proof on the defense. [¶] The court having ruled against defendant on the exemption affirmative defense, and the parties having stipulated to the elements of plaintiffs' prima facie case and the amounts of plaintiffs' damages and other monetary relief, the court has determined there is nothing further for it or for a jury to determine, and upon (a) the facts stipulated by the parties through their counsel, and (b) the court's order granting plaintiffs' motion for judgment." The trial court ordered judgment in favor of plaintiffs in the amounts set forth in the stipulation.

RHI appealed.


I. The Limitation on Claims Provision in the Plaintiffs' Employment Agreements Is Unenforceable

RHI argues the trial court erred by denying its motions for summary judgment, and granting Balici's, Cox's, Maresch's, McCasland's, and Rossetto's motions for summary adjudication on the ground the limitation on claims provision contained in plaintiffs' employment agreements was unenforceable. As we will explain, the trial court did not err because plaintiffs' claims were based on unwaivable and fundamental statutory rights, and the provision drastically shortening to six months the time in which an employee might vindicate such rights violates section 219 and public policy, and is thus unenforceable.

A. Standard of Review

We review orders granting summary judgment or summary adjudication de novo. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767; Village Nurseries v. Greenbaum (2002) 101 Cal.App.4th 26, 35.) A motion for summary judgment or summary adjudication is properly granted if the moving papers establish there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. ...

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