The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
ORDER: (1) GRANTING IN PART AND SUMMARY JUDGMENT (Doc. Nos. 21, 22);*fn1 and DENYING IN PART PLAINTIFFS' MOTION FOR PARTIAL (2) GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY ADJUDICATION (Doc. No. 23).
Presently before the Court are the Plaintiffs' Motion for Partial Summary Judgment (Doc. Nos. 21, 22) and Defendants' Motion for Summary Adjudication (Doc. No. 23). For the reasons set forth herein, the Court GRANTS IN PART and DENIES IN PART Plaintiffs' motion, and GRANTS IN PART and DENIES IN PART Defendants' motion.
Former employees of Defendant G.A.T. Airline Ground Support, Inc. ("GAT") bring this action for systematic wage and hour violations in violation of federal and state law. GAT is a corporation headquartered in Alabama, which provides services to airlines, including ground transportation, aircraft maintenance, and cargo operations management. The four named Plaintiffs -- Edwen R. Lopez, Michael Jordan, John Forbes, and Ozell Clark (collectively, "Plaintiffs") - are former ramp agents employed by GAT in California.
On July 2, 2008, Plaintiff Lopez filed a putative class and representative action against GAT in state Superior Court, and on August 21, 2008, he filed a First Amended Complaint. On October 9, 2009, Plaintiff Lopez filed a Second Amended Complaint ("SAC") adding Plaintiffs Jordan, Forbes, and Clark, and adding additional causes of action. The SAC alleges fifteen causes of action for violation of the California Labor Code, the California Private Attorneys General Act, and the Fair Labor Standards Act ("FLSA"), as well as breach of contract. The SAC also added Defendants Jean Raines ("Raines") and James Baggett ("Baggett"), co-owners and board members of GAT. Plaintiffs bring this suit individually and on behalf of a proposed class of GAT employees in California.
Defendants GAT, Raines, and Baggett (collectively, "Defendants") removed the case to this Court. (Doc. No. 1.) On May 10, 2010, the parties filed the instant cross-motions for summary judgment, as well as evidentiary objections.*fn2 Plaintiffs move for summary judgment as to the first, fifth, sixth, ninth, and tenth causes of action, as well as the issue of GAT's failure to provide accurate itemized wage statements (at issue in Plaintiffs' first, third, fifth, seventh and eleventh causes of action). Plaintiffs also move for summary judgment on the fifteenth cause of action on the issue of whether Raines and Baggett are employers under the FLSA. Defendants move for summary judgment of the FLSA claim.
Summary judgment is proper where the pleadings and materials demonstrate "there is no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A material issue of fact is a question a trier of fact must answer to determine the rights of the parties under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
The moving party bears "the initial responsibility of informing the district court of the basis for its motion." Celotex, 477 U.S. at 323. To satisfy this burden, the movant must demonstrate that no genuine issue of material fact exists for trial. Id. at 322. Where the moving party does not have the ultimate burden of persuasion at trial, it may carry its initial burden of production in one of two ways: "The moving party may produce evidence negating an essential element of the nonmoving party's case, or, after suitable discovery, the moving party may show that the nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co., v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000). To withstand a motion for summary judgment, the non-movant must then show that there are genuine factual issues which can only be resolved by the trier of fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736, 738 (9th Cir. 2000). The nonmoving party may not rely on the pleadings alone, but must present specific facts creating a genuine issue of material fact through affidavits, depositions, or answers to interrogatories. Fed R. Civ. P. 56(e); Celotex, 477 U.S. at 324.
The court must review the record as a whole and draw all reasonable inferences in favor of the nonmoving party. Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). However, unsupported conjecture or conclusory statements are insufficient to defeat summary judgment. Id.; Surrell v. Cal. Water Serv. Co., 518 F.3d 1097, 1103 (9th Cir. 2008). Moreover, the court is not required "'to scour the record in search of a genuine issue of triable fact,'" Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.1996) (citations omitted), but rather "may limit its review to the documents submitted for purposes of summary judgment and those parts of the record specifically referenced therein." Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030 (9th Cir. 2001).
PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT
1. First Cause of Action for Failure to Record Meal Periods
Plaintiffs' first cause of action is for failure to record meal periods, in violation of California Industrial Welfare Commission Wage Order No. 9.*fn3 Plaintiffs move for summary judgment on the issue of whether Defendants violated Wage Order No. 9 by failing to record the actual times its employees began and ended each meal period. Wage Order No. 9 provides:
(A) Every employer shall keep accurate information with respect to each employee including the following:
(3) Time records showing when the employee begins and ends each work period. Meal periods, split shift intervals and total daily hours worked shall also be recorded. . . .*fn4
It is undisputed that during the relevant time period GAT did not document the times employees began and ended each meal period.*fn5 Rather, GAT had a system of automatically deducting time from employees' time cards to account for meal periods, unless the employee affirmatively notified GAT that a meal period was not taken. Plaintiffs argue GAT's automatic deduction practice does not constitute an "accurate" recording of meal periods.
The Court is not persuaded that Wage Order No. 9 requires employers to record the actual times that employees begin and end each meal period. Rather, the language of the regulation only appears to require employers to record that a meal break was taken. Notably, Wage Order No. 9 expressly requires employers to record "when the employee begins and ends each work period," but does not specify that meal periods must also be recorded with that level of specificity. Rather, the regulation requires that "[m]eal periods, split shift intervals and total daily hours worked shall also be recorded."
Here, Plaintiffs do not claim Defendants failed to record their meal periods or that Defendants recorded meal periods that were not actually taken. It is undisputed that employees may inform their supervisors of missed meal breaks so that the time is not deducted. Defendants also presented evidence that supervisors monitored employees to ensure meal breaks were actually taken.*fn6
Accordingly, Plaintiff is not entitled to summary judgment as to the first cause of action.
2. Fifth Cause of Action for Failure to Pay Vested Vacation Pay
Plaintiffs' fifth cause of action is for failure to pay employees vested vacation pay upon termination, in violation of Labor Code § 227.3. Section 227.3 provides in relevant part:
Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination.
Cal. Labor Code § 227.3 (emphasis added). The California Supreme Court in Suastez v. Plastic Dress-Up Co., 31 Cal. 3d 774 (1982), addressed the issue of when vacation pay vests. In that case, the court held that because vacation pay is a "form of deferred compensation," a proportionate right to paid vacation pay vests as it is earned. Id. at 779. "Once vested, the right is protected from forfeiture by section 227.3." Id. at 784. "On termination of employment, therefore, the statute requires that an employee be paid in wages for a pro rata share of his vacation pay." Id.
Plaintiffs contend GAT's vacation policy requires employees to forfeit vested vacation pay if they are not employed on the one-year anniversary of their start date, in violation of Section 22.7.3. GAT's Employment Handbook states:
Upon completion of one year of continuous employment, hourly employees will receive 5 days of paid vacation. Employees will continue to receive 5 days of paid vacation annually on their Anniversary Date.
(Declaration of Allison Miceli in Supp. of Pl.'s Mot. for Summ. J. ("Miceli Decl."), Ex. M, Employment Handbook § 6.2.) It is undisputed that, under this policy, if an employee is terminated before their one-year anniversary date, vacation time is not cashed out to them on a pro rata basis. This policy is similar to the one in Suastez, which the California Supreme Court found unlawful. The policy in Suastez stated in relevant part: "VACATIONS: 1 week-First Year . . . Eligibility to be on the employee's anniversary date." Suastez, 31 Cal. 3d at 777 n.2. The Suastez court explained, "[i]f vacation pay 'vests' as it is earned, the company's requirement of employment on an anniversary date cannot prevent the right to pay from vesting." Id. at 781. Similarly, GAT's requirement of employment on the first-year anniversary date cannot prevent the right to vacation pay from vesting. Therefore, GAT employees who were terminated before their first-year anniversary were entitled to be paid a pro rata share of vacation pay upon termination.
Defendants contend GAT's vacation policy is lawful because employers may establish a "probationary period" or "waiting period" during which no vacation vests.*fn7 Defendants cite Owen v. Macy's, Inc., in which the California Court of Appeal held it was permissible for employers to institute a express written "waiting period" policy, which forewarns employees that no vacation is earned during the initial period of employment. 96 Cal. Rptr. 3d 70-76 (Ct. App. 2009). The court in Owen explained this is permissible because, on its face, Section 227.3 permits an employer to offer new employees ...