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Michael E. Taylor, Kenneth B. Young v. Waddell & Reed Inc.

February 1, 2013

MICHAEL E. TAYLOR, KENNETH B. YOUNG, AND BRIAN JAEGER, INDIVIDUALS, ON BEHALF OF THEMSELVES INDIVIDUALLY AND ON
BEHALF OF OTHERS SIMILARLY SITUATED,
PLAINTIFFS,
v.
WADDELL & REED INC., A DELAWARE CORPORATION, AND DOES 1 THROUGH 10 INCLUSIVE,
DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AS TO PLAINTIFF JAEGER

[Doc. No. 172]

Presently before the Court is Defendant Waddell & Reed Inc.'s ("W&R") Motion for Summary Judgment as to Plaintiff Brian Jaeger. (Doc. No. 172.) On August 20, 2012, the Court granted W&R's previous motions for summary judgment as to Plaintiffs Michael E. Taylor and Kenneth B. Young. (Doc. No. 167.) Thus, Jaeger is the sole remaining Plaintiff in this action. For the reasons set forth below, the Court GRANTS W&R's motion for summary judgment as to Jaeger's claims.*fn1

Subject Matter Jurisdiction

As noted above, despite their inclusion in the operative Second Amended Complaint ("SAC"), the Court granted Defendants summary judgment as to Taylor and Young on August 20, 2012. (Doc. No. 167.) In the same order, the Court granted Plaintiffs' counsel thirty days to file a revised SAC containing Jaeger's claims. (Id. at 10-11.) On September 12, 2012, counsel filed the SAC which added Jaeger as a Plaintiff, but failed to remove Young and Taylor. (Doc. No. 170.) Insomuch as the Court previously granted summary judgment with regard to Young and Taylor on the same claims reasserted on their behalf in the SAC, these claims have already been ruled upon and the Court will not readdress them here. Accordingly, the Court limits its consideration to those claims pled on behalf of Jaeger as the sole remaining Plaintiff.

The SAC contends that the Court has subject matter jurisdiction based upon Taylor and Young's federal Fair Labor Standards Act ("FLSA") claims. (Doc. No. 170 at 5, ¶ 11.) This becomes problematic as the Court granted Defendants' summary judgment as to Taylor and Young's FLSA claims, and Taylor and Young are no longer plaintiffs in this action. (Doc. No. 137.) Jaeger, while referenced at various times throughout the SAC, is not included within the FLSA allegations.*fn2 As a result, Jaeger's state law claims are the only remaining causes of action, and there is no longer an independent basis for finding subject matter jurisdiction. Nevertheless, supplemental jurisdiction may exist over state-law claims that are so related to the federal-law claims that they form part of the same case or controversy. Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (citations omitted). In situations such as this one, a "district court's decision whether to exercise that jurisdiction after dismissing every claim over which it had original jurisdiction is purely discretionary." Id. In the interest of judicial economy and having previously addressed similar issues with regard to Taylor and Young, the Court finds it appropriate to exercise supplemental jurisdiction over Jaeger's state-law claims. Accordingly, the Court will now turn to the merits of W&R's motion.

Background

This matter is a proposed wage and hour collective action brought by former W&R financial advisors ("Advisors"). (SAC, Doc. No. 170 at ¶ 1.) Jaeger seeks to represent a class of Advisors who allege they were incorrectly classified as independent contractors when, in fact, they were employees. . at ¶¶ 3, 5.)

W&R sells financial products, which are distributed through a sales force of Advisors. (Id. at ¶ 2.) When Advisors begin working for W&R, they are required to sign a "Professional Career Agreement" ("PCA"). (Id. at ¶ 35.) The PCA provides the basic terms governing the association with W&R Inc. and Waddell & Reed Affiliates ("W&R Affiliates"). (Id.) The PCA classifies Advisors as independent contractors and provides for payment on a commission-only basis. (Id. at ¶ 35, 100, 104.) Specifically, the PCA states: "At all times you shall act as an independent contractor, and nothing in this agreement shall be construed to create or to impose conditions that create the relationship of employer and employee between you and W&R." (PCA, Doc. No. 1 at 40, ¶ 8.) With regard to the independent contractor relationship, the PCA specifically states, "Subject to the responsibilities and limitations stated in this Agreement, you shall be free to use W&R office facilities and to exercise your own judgment as to the persons whom you solicit and the time, place and manner of solicitation." (Id. at 40, ¶ 7.) In accordance with the PCA's terms, Advisors did not receive a salary or hourly wage and were not paid overtime. (SAC, Doc. No. 170 at ¶¶ 102-104.)

Plaintiffs Taylor and Young filed suit on December 28, 2009, alleging nine causes of action for violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 206-207, the California Labor Code, and California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et. seq. (Doc. No. 1.) On April 28, 2010, Taylor and Young filed a First Amended Complaint ("FAC"). (Doc. No. 21.) W&R previously filed motions for partial summary judgment as to Taylor and Young's FLSA claims. (Doc. No. 91 and 92.) On January 3, 2012, the Court granted W&R's motions, finding that the FLSA claims failed because Taylor and Young fell under the FLSA's "outside salesperson" exemption. (Doc. No. 137.) The Court simultaneously denied as moot Plaintiffs' motion for conditional class certification since it involved only the FLSA claims. (Doc. No. 137.) Plaintiffs filed a motion to amend on March 12, 2012. (Doc. No. 142.) W&R subsequently filed a motions for summary judgment as to Young, (Doc. No. 149), and Taylor, (Doc. No. 150), on June 21, 2012. On August 20, 2012, the Court granted W&R's motions for summary judgment as the remainder of Taylor and Young's claims. (Doc. No. 167.) The Court also granted Plaintiffs' counsel leave to file a SAC adding Jaeger's claims within thirty days. (Id.)

On September 12, 2012, counsel filed a SAC properly adding Jaeger as Plaintiff. (Doc. No. 170.) In the SAC, Jaeger alleges the following state law claims: (1) Failure to Pay Timely Wages and Fringe Benefits During Employment and Upon Separation of Employment in violation of California Labor Code §§ 201, 202, 203, 204, 218.5, 218.6; (2) Failure to Pay MinimumWages in violation of California Labor Code §§ 1182.12, 1194, 1194.2, 1197, and Wage Order No. 4-2001 § 4(A); (3) Failure to Pay Overtime Compensation in violation of California Labor Code §§ 510, 1194, and Wage Order No. 4-2001 § 3(A); (4) Failure to Provide Meal Periods in violation of California Labor Code §§ 226.7 and 512 and Wage Order No. 4-2001 § 11(A); (5) Failure to Reimburse Losses and Expenditures Incurred in violation of California Labor Code § 2802; (6) Violations of California Labor Code § 226 for Failure to Provide Itemized Wage Statements; (7) Remedies for Violations of the California Unfair Business Practices § 17200 et seq.; (8)Violation of Attorneys General Act, Labor Code § 2698 et seq. (Id.) W&R now moves for summary judgment as to Jaeger's claims. (Doc. No. 172.)

Legal Standard

Under Rule 56 of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict for a non-moving party. Miller v. Glenn Miller Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the nonmoving party's claim, or to a defense on which the nonmoving party will bear the burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos., Inc., 210 F. 3d 1099, 1102 (9th Cir. 2000). When the nonmoving party would bear the burden of proof at trial, the moving party may satisfy its burden on summary judgment by simply pointing out to the Court an ...


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