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Oscar Bell et al v. H.F. Cox

September 5, 2012

OSCAR BELL ET AL., PLAINTIFFS AND APPELLANTS,
v.
H.F. COX, INC., DEFENDANT AND RESPONDENT.



APPEALS from a judgment and order of the Superior Court of Los Angeles County, Ruth A. Kwan, Judge. (Los Angeles County Super. Ct. No. BC337072)

The opinion of the court was delivered by: Croskey, Acting P. J.

CERTIFIED FOR PUBLICATION

Judgment affirmed in part and reversed in part with directions. Order awarding attorney fees reversed.

Oscar Bell and other truck drivers filed a class action complaint against H.F. Cox, Inc. (Cox), alleging wage and hour violations.*fn1 The trial court summarily adjudicated three counts in favor of Cox, a jury found in favor of Cox on another count and the trial court found that plaintiffs were exempt from federal overtime compensation requirements. Plaintiffs appeal the judgment challenging the order granting summary adjudication, the denial of their motion to exclude witnesses from testifying at trial, the court's finding on the overtime exemption and the jury instructions. Plaintiffs also appeal an order awarding attorney fees to Cox as the prevailing party on certain counts.

We conclude that (1) summary adjudication was proper as to the count for failure to pay promised vacation benefits to current employees but improper as to the count for failure to pay vacation benefits due upon termination of employment; (2) the denial of plaintiffs' motion to exclude witnesses from testifying at trial was proper; (3) the finding that plaintiffs were exempt from federal overtime compensation requirements pursuant to the motor carrier exemption was proper; (4) plaintiffs have shown no instructional error; and (5) the attorney fee award to Cox as the prevailing party must be reversed. We therefore will affirm the judgment in part, reverse the judgment in part and reverse the order awarding attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background

Cox is a trucking company specializing in hauling petroleum products and related products. Plaintiffs are former truck drivers employed by Cox in the State of California.

Cox's drivers haul ethanol from storage tanks at ethanol storage facilities in California, known as hubs, to storage tanks at truck terminals in California, known as tank farms. At the truck terminals, Cox's trucks are loaded with a combination of ethanol from ethanol storage tanks and gasoline from gasoline storage tanks for delivery to gasoline service stations in California. Techron, a gasoline additive used exclusively by Chevron, is transported by truck from storage facilities in California to truck terminals in California and then loaded onto delivery trucks together with gasoline and ethanol in the same manner. Cox's drivers also haul motor oil, known as lube oil, the gasoline additives isooctane and alkylate, and fuel oil from facilities in California to other facilities in California. Cox's drivers also haul products across state lines. Cox maintains that its drivers are exempt from state and federal overtime compensation requirements and does not pay its drivers overtime.

Cox's vacation benefits policy provided that eligible employees earned one or more weeks of paid vacation annually, depending on their length of employment. The policy provided, however, that drivers would be paid only $500 per week (increased in 2005 to $650 per week) during their vacation and that employees would receive no payment for vacation benefits upon the termination of their employment.

2. Complaint

Plaintiffs filed a complaint against Cox in July 2005 and filed a first amended complaint in April 2006 alleging counts for (1) failure to pay overtime compensation due under state law; (2) failure to provide meal periods and rest breaks; (3) failure to pay wages for work performed "off the clock"; (4) failure to pay promised vacation benefits in full; (5) failure to pay vacation benefits due upon termination of employment (Lab. Code, § 227.3); (6) failure to pay overtime, vacation and other compensation due upon termination of employment; and (7) unfair business practices (Bus. & Prof. Code, § 17200).*fn2

Cox removed the action to federal district court. The federal district court determined that it had no subject matter jurisdiction and granted plaintiffs' motion to remand the action to the superior court in October 2005.

3. Class Certification

The trial court granted class certification on plaintiffs' count for failure to pay vacation benefits due upon termination of employment, but denied class certification on the other counts. The court defined the certified class as all truck drivers employed by Cox at any time after July 25, 2001, who were not paid their accrued vacation wages upon the termination of their employment with Cox.*fn3 Plaintiffs petitioned this court for a writ of mandate. We held that the denial of class certification on the counts for failure to pay overtime compensation and failure to pay promised vacation benefits was error and directed the court to grant class certification on those counts. (Bell v. Superior Court (Nov. 21, 2007, B199605) opn. ordered nonpub. Apr. 23, 2008, pp. 30, 34, 36.) We concluded that plaintiffs' count for failure to pay promised vacation benefits was based on the alleged illegality of Cox's policy of paying drivers a flat rate of vacation benefits. (Id. at p. 34.)

4. Summary Adjudication

Cox filed a motion for summary judgment or summary adjudication in August 2008. The trial court granted summary adjudication of the first count for failure to pay overtime compensation, fourth count for failure to pay promised vacation benefits and fifth count for failure to pay vacation benefits due upon termination of employment, and otherwise denied the motion. The court concluded that the counts for failure to pay promised vacation benefits and failure to pay vacation benefits due upon termination were preempted by the Employee Retirement Income Security Act (ERISA) (29 U.S.C. § 1001 et seq.). The court also found with respect to the count for failure to pay promised vacation benefits that Cox's vacation benefits policy was legal in any event.

5. Motion to Exclude Witnesses from Testifying at Trial

Plaintiffs filed a motion on April 17, 2009, to exclude from testifying at trial witnesses who were not identified in Cox's interrogatory responses. The trial was scheduled to commence on April 20, 2009. The witnesses were individual representatives of third party shippers whom Cox intended to call to testify at trial regarding the interstate nature of its business. After the trial date was continued, Cox agreed to cooperate in arranging for depositions of the witnesses provided that the depositions took place close to their homes at a time convenient for the witnesses and that the depositions would be limited to the subject of the witnesses' expected trial testimony. Plaintiffs declined the offer.

Plaintiffs filed another motion on June 8, 2009, to exclude from testifying at trial witnesses who were not identified in Cox's interrogatory responses. The trial was scheduled to commence on June 23, 2009. Plaintiffs argued that Cox had willfully failed to disclose the names of the witnesses in response to discovery requests directly calling for such information and that the failure to identify the witnesses had impeded plaintiffs' trial preparation. Citing Thoren v. Johnston & Washer (1972) 29 Cal.App.3d 270, plaintiffs argued that the exclusion of the witnesses from testifying at trial was appropriate as an evidence sanction to prevent Cox from profiting from its misconduct.

Cox argued in opposition that it had identified the third party shippers in its interrogatory responses and that plaintiffs never moved to compel further responses to identify individual representatives of the shippers or took any other measures to discover the individual witnesses' names. Cox also argued that it did not know the names of the individual witnesses at the time of its discovery responses and that it neither willfully withheld those names nor willfully violated any order to disclose such information. The trial court apparently denied the motion.

6. Trial, Statement of Decision and Judgment

A non-jury trial on the unfair business practices count commenced in July 2009. The unfair business practices count was based on alleged violations of the Federal Labor Standards Act (FLSA) (29 U.S.C. § 207(a)(1)) regarding payment of overtime compensation. The non-jury trial was limited to Cox's affirmative defense that all of its employees were exempt from overtime compensation pursuant to the motor carrier exemption. After several days of testimony, the jury phase of trial began.

A jury trial on the count for failure to provide meal periods and rest breaks commenced in August 2009. Plaintiffs proposed 14 special instructions, and Cox proposed three special instructions. The trial court rejected all of the proposed special instructions and gave its own special instructions on meal periods and rest breaks. The jury returned a verdict in August 2009 finding that Cox did not fail to provide any of the named plaintiffs either a meal period or a rest break.

The trial court issued a statement of decision in September 2010 with respect to the bench trial portion of the case. The court found that Cox's intrastate transport of ethanol, Techron, lube oil for Exxon, isooctane and fuel oil was part of the continuous movement of those products in interstate commerce. It also found that Cox transported products across state lines and that such interstate transport was more than de minimis. The court found that Cox assigned drivers to interstate deliveries indiscriminately and that all of its drivers could reasonably expect to be assigned to an interstate delivery. The court also stated that the Department of Transportation had licensed and regulated Cox and that both the Department of Transportation and Department of Labor had determined that Cox's drivers were exempt from the FLSA's overtime compensation requirements. The court concluded that these circumstances and the fact that Cox had consistently solicited interstate work supported the conclusion that Cox ...


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