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Julian Ramirez Abad As An Individual and On Behalf of All Others Similarly Situated v. Waste Connections

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


March 20, 2013

JULIAN RAMIREZ ABAD AS AN INDIVIDUAL AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
WASTE CONNECTIONS, INC.; WASTE CONNECTIONS OF CALIFORNIA, INC.;
WASTE CONNECTIONS MANAGEMENT SERVICES, INC., DEFENDANTS.

The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

O

ORDER GRANTING PLAINTIFF'S MOTION TO FILE A THIRD AMENDED COMPLAINT [Dkt. No. 29]

Presently before the court is Plaintiff Julian Ramirez Abad's Motion to File a Third Amended Complaint. Having considered the parties' submissions, the court adopts the following order.

I. BACKGROUND

Plaintiff proposes to amend his Complaint by expressly alleging that: (1)"holiday pay" should have been included in the calculation of the regular rate of pay; (2) Defendants had an unlawful meal period policy; (3) Defendants miscalculated meal period premiums because they did not include bonuses; (4)Defendants engaged in unlawful rounding;(5) Defendants inaccurately reported overtime on wage statements. Plaintiff also wishes to add Francisco Amaya as a named Plaintiff; Defendants do not oppose adding Amaya as a named Plaintiff.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 15(a), which governs requests for leave to amend pleadings, provides that the court should "freely give leave when justice so requires." Fed. R. Civ. P. 15(a). Leave to amend should be granted with "extreme liberality" in order "to facilitate decision on the merits, rather than on the pleadings or technicalities." United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). Leave to amend should be freely given unless the opposing party makes a showing of undue delay, bad faith or dilatory motive, futility of amendment, or prejudice. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989); AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 951 (9th Cir. 2006).

III. DISCUSSION

Defendants Waste Connections, Inc., Waste Connections of California, Inc., and Waste Connections Management Services, Inc. (collectively "Waste Connections") oppose the Motion, arguing that Abad's pleadings are "a moving target stemming from counsel's legal fishing expedition." (Opp. at 3, capitalization modified.) Abad responds that this accusation is "a red herring that is entirely without merit." (Reply at 2.) The court will not take the bait. It is hooked on the principle that leave to amend should be granted liberally and finds that Waste Connections' arguments do not fly.

The action is still in its early stages; no depositions have been taken, there is no trial date, and the class certification deadline is in mid-October. Additionally, Abad's new allegations derive from documents produced by Waste Connections in discovery in late December 2012.

A. Holiday Pay

Abad seeks to allege expressly that holiday pay is a form of non-discretionary pay that Defendants allegedly failed to include in the regular rate of pay for overtime purposes. Abad included the phrase "other forms of pay" in the Second Amended Complaint ("SAC"), and he asserts that the phrase comprises holiday pay but seeks to amend because Defendants have apparently refused to provide discovery into their holiday policy. (Reply at 11.)

Waste Connections argues that the claim is futile because holiday pay is statutorily excluded from the regular rate as a matter of law. Under the Fair Labor Standards Act, the regular rate does not include "payments made for occasional periods when no work is performed due to vacation, holiday, illness, . . . ." 29 U.S.C. § 207(e). California uses the federal definition of regular rate pay. See Advanced-Tech Sec. Services, Inc. v. Superior Court, 77 Cal. Rptr. 3d 757, 762 (Ct. App. 2008); RJN Exh. A, Division of Labor Standards Enforcement, Enforcement Policies and Interpretations Manual, 49.1.2.

The court finds that Abad should be able to conduct discovery on holiday pay and make the argument that it should be included in the regular rate. The label "holiday pay" is not dispositive. Hart v. City of Alameda, No. C-07-5845 MMC, 2009 WL 1705612 at *3(N.D. Cal. June 17, 2009)(holding that payments representing the value of a year's holidays but paid over the course of the year, rather than in the period when the holiday occurred, were not payments "due to a holiday"). Abad asserts that Waste Connections' "holiday policy" is not a true holiday policy because it requires that an employee work both the day before and the day after the holiday and therefore functions as an attendance bonus to encourage employees to work through the holidays. (Reply 5-6.) Without making any determination on the merits of this argument, the court finds that Abad has shown that this amendment would not be futile.

Waste Connections also argues that Abad and Amaya do not have standing to pursue such a claim because the holiday policy submitted was the policy from Cold Canyon Landfill, but neither Abad nor Amaya worked at that landfill. Abad, however, submitted a copy of the Holiday Policy in Spanish that he was provided and which has the same requirements as the Cold Canyon Landfill Policy that was attached. (Abad Reply Decl. ¶ 2 & Exh. B.) This is sufficient to confer standing to pursue such a claim.

Additionally, Waste Connections argues that Abad delayed too long in adding his holiday policy claim. Abad responds that its SAC encompasses the holiday pay claim in its "non-discretionary incentive compensation" discovery request and that it chose to move to add the claim only after unsuccessfully requesting discovery from Waste Connections. The court finds that there was no undue delay in Abad's request.

Waste Connections argues, finally, that allowing this amendment would be prejudicial because it will result in additional discovery requests. However, it has not provided any authority or offered any rationale to support the notion that the burden of additional discovery alone is sufficient prejudice to preclude amendment.

The court therefore GRANTS Abad leave to amend the SAC to add a claim for holiday pay.

B. Meal Period Policy Claim

Abad's new meal period policy claim seeks to allege that Waste Connections has a facially unlawful meal period policy. The claim would allege that the meal period is unlawful because it states that employees are entitled to a meal period "approximately between their 4th and 6th hours worked." (Haines Decl. ¶ 23, Exh. T, Proposed TAC ¶ 34, quoting Defendant's Meal Policy, found at Haines Decl. ¶ 18, Exh. O.) This is allegedly in violation of California law which requires that a meal period be provided "no later than the end of an employee's fifth hour of work." Brinker Rest. Corp. v. Superior Court, 53 Cal. 4th 1004, 1041 (2012).

Abad and Waste Connections disagree on how to interpret the meal policy language. Waste Connections asserts that the policy is facially lawful because it "refers to the time approximately after the fourth hour and before the sixth hour." (Opp. at 18.) It compares the language to making an appointment to meet "between" 8 a.m. and 10 a.m. and asserts that one would not expect to meet after 10 a.m. Thus, it argues, the time "between" the fourth and sixth hours is approximately the fifth hour. On this interpretation, the meal policy appears to be lawful.

Abad argues that the policy is facially unlawful because it allows meal periods to be commenced after the fifth hour. He distinguishes the meal policy language ("between the 4th and 6th hours worked") from Defendants' analogy primarily based on the "hours worked" language, which suggests that the sixth hour can have been worked and that the meal period can be taking during that sixth hour. This would allow for a meal period subsequent to the fifth hour and would be unlawful.

Waste Connections asserts that this ambiguity is corrected by the Time Keeping Policy which states that the "meal period must start before you have completed five hours of work." (Martin Decl. ¶ 4, Exh. A.) The court finds that this iteration of the policy is not ambiguous and is facially lawful, but that the Meal Break document is ambiguous and potentially facially unlawful. Determining which document governed meal periods and how the policy was interpreted is a matter for another stage of the case. Regardless, Abad has at this stage convinced the court that the amendment is not futile.

Waste Connections further asserts that Abad has delayed in raising the unlawful meal period policy allegations, claiming that he "knew or should have known whether he had late meal periods and why those late meal periods occurred, if at all." (Opp. at 19.) Abad points out that he has always made claims regarding meal period violations (SAC ¶¶ 32-37), and that this document was provided in discovery on December 27, 2012. The court finds that there was not undue delay in raising the allegations.

The court GRANTS Abad leave to amend the SAC to include additional meal period allegations.

C. Meal Period Miscalculation Allegations

Abad proposes new allegations that meal period premiums were miscalculated because they were not paid at the regular rate. Waste Connections argues that Abad and Amaya lack standing to make this claim because they were never owed or paid a meal period premium, as documented on their time records. (Martin Decl. ¶ 5.) However, even if time records indicate that they were not paid a meal period premium, it may still have been owed to them if the records were erroneous. The court agrees with Abad that "the allegation that Defendants failed to pay meal period premiums at the correct rate of pay for meal periods that were not provided is simply part and parcel of Plaintiff's already existing meal period claim." (Reply at 15.)

Waste Connections also argues that Abad failed to excuse his delay in seeking to include this allegation. Based on the Declaration of Paul K. Haines, one of Abad's attorneys, it appears that Abad was attempting to negotiate a stipulation on this issue since at least early December.*fn1 (Haines Decl. ¶ , Exh. I.) Furthermore, Defendants have pointed to no prejudice from such amendment. The court therefore GRANTS Abad leave to amend the SAC to add this claim.

D. Rounding Claim

Abad moves to add allegations that he was not paid for all hours worked due to purported rounding. Waste Connections argues that Abad has failed to state a claim with this allegation because rounding is lawful under California law. See See's Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889, 901 (2012). However, it is only lawful for "employers to use a rounding policy for recording and compensating employee time as long as the employer's rounding policy does not consistently result in a failure to pay employees for time worked." Id. at 901 (internal citation, alterations, and quotation marks omitted). Because Abad asserts that rounding is used only to shave time off, and not to add time, he has stated a claim for rounding of the unlawful variety.

Waste Connections also argues that Abad delayed in making this allegation. However, since Abad was provided his time records on December 27, 2012, (see Haines Decl. ¶ 18), and since this was the only way he would know that his hours were being rounded, the court finds that there was no undue delay.

The court GRANTS Abad leave to add this allegation.

E. Bonus Overtime on Wage Statements Allegations

Abad seeks to add new allegations to his Complaint related to Waste Connections' alleged failure to provide wage statements when it paid overtime on bonuses. Abad concedes that he does not have standing to pursue this claim. (Mot. at 3.) Waste Connections does not object to the addition of Amaya as a named plaintiff, and the parties agree that Amaya has standing to make these claims. The parties disagree on the date for the statute of limitations. Defendants argue that the amendment date should set the time period for this claim, whereas Abad argues that Amaya's claims should relate back to the filing date of the original Complaint (May 10, 2012) or at least to January 15, 2013, since the parties stipulated that Amaya's PAGA claims would be tolled from that date until March 28, 2013.

Under Ninth Circuit law, "[a]n amendment adding a party plaintiff relates back to the date of the original pleading only when: 1) the original complaint gave the defendant adequate notice of the claims of the newly proposed plaintiff; 2) the relation back does not unfairly prejudice the defendant; and 3) there is an identity of interests between the original and newly proposed plaintiff." Immigrant Assistance Project of L.A. Cnty. Fed'n of Labor (AFL-CIO) v. INS, 306 F.3d 842, 857 (9th Cir. 2002)(quoting Rosenbaum v. Syntex Corp., 95 F.3d 922, 935 (9th Cir. 1996)).

1. Notice

Waste Connections argues that it did not have adequate notice of the proposed claim in the original Complaint. The court disagrees. The original Complaint put Waste Connections on notice of Abad's allegations that it failed to indicate overtime pay on wage statements in a lawful manner. (See, e.g., Compl. ¶ 45 (alleging that Defendants "failed to furnish [Abad] and members of the WAGE STATEMENT CLASS with accurate and complete wage statements regarding, among other things, their regular rates of pay, rates of overtime pay, number of hours worked at each corresponding rate of pay, total gross wages earned, and total net wages earned in violation of Labor Code § 226").) Amaya now alleges that Defendants issued "payments for wages denominated as 'BONUS OT' and other similar payments, which purportedly represent overtime wages paid on a bonus, for which the wage statements they received failed to reflect the hours for which the overtime was intended to compensate or the applicable rates of pay." (Mot. at 9.) The original claims put Defendants on notice as to the alleged deficiency of their wage statements with respect to overtime payments and thus gave them adequate notice of Amaya's similar claim.

2. Prejudice

Waste Connections has not demonstrated prejudice and does not object to the addition of Amaya.

3. Identity of Interests

Because Amaya is a member of the class represented by Abad, there is an identity of interests. Waste Connections has not argued otherwise.

The court therefore GRANTS leave to amend and finds that this allegation should relate back to the filing date of the original Complaint (May 10, 2012).

F. Statute of Limitations

Waste Connections argues that these claims do not relate back because they are new, distinct theories of which Waste Connections received no notice in the original Complaint. "An amendment to a pleading relates back to the date of the original pleading when: . . . the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out -- or attempted to be set out - in the original pleading." Fed. R. Civ. P. 15(c)(1)(B). Here, Abad is not adding new claims, but instead adding factual allegations and theories of liability in support of the claims he already pled. Waste Connections asserts that it did not have notice of the amendments in the original Complaint and that therefore they do not relate back, but some of the claims, such as the holiday pay claims, are arguably implicit in the original claims, and in any case appear to arise out of the "conduct, transaction, or occurrence" set out in the original Complaint. While claims regarding holiday pay, rounding, or overtime on bonus are factually distinct from the original allegations, they arise from the same core of allegations as the original pleadings, namely, the alleged failure of Defendants to pay employees their due. The court finds that the amendments relate back to the original Complaint and should have the same statute of limitations as the original allegations.

IV. CONCLUSION

For the reasons stated above, the court GRANTS the Motion. Abad shall file an amended Complaint within fourteen days of this order.

IT IS SO ORDERED.


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