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Klune v. Ashley Furniture Industries, Inc.

United States District Court, C.D. California

April 3, 2015

Bozena Klune
v.
Ashley Furniture Industries, Inc., et al.

CIVIL MINUTES - GENERAL Proceedings: IN CHAMBERS - COURT ORDER

PERCY ANDERSON, District Judge.

Before the Court is a Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment filed by defendants Ashley Furniture Industries, Inc. ("Ashley"), Stoneledge Furniture, LLC ("Stoneledge"), and Jagath Daswatta ("Daswatta") (collectively "Defendants"). (Docket No. 58.) Plaintiff Bozena Klune ("Plaintiff") has filed an Opposition (Docket No. 61), to which Defendants have filed a Reply (Docket No. 67).

I. Background

Defendants are a furniture company, its parent company, and Plaintiff's former supervisor. Plaintiff is a former furniture salesperson. Plaintiff was employed by Defendants from approximately August 29, 2011 to May 18, 2013. She was allegedly paid a base rate of $12.01 per hour as a draw against her commission schedule. In effect, Plaintiff was guaranteed a minimum hourly wage that was expected to be covered by sales commissions; but, in the event that commissions did not cover the guaranteed minimum hourly wage, Defendants would pay the difference as an advance against future commissions. Plaintiff did not receive overtime pay.

On April 21, 2014, Plaintiff filed individual claims and class claims in Los Angeles Superior Court. (Docket No. 1, Ex. A.) The claims included: (1) violations of Cal. Labor Code §§ 96(d), 98.6, 232, 232.5, and 1102.5(c) (individual); (2) wrongful termination in violation of public policy or statute (individual); (3) harassment based on age, sex, national origin/ancestry, medical conditions, and actual and perceived physical disabilities (individual); (4) discrimination and retaliation based on age, sex, national origin/ancestry, medical conditions, and actual and perceived physical disabilities (individual); (5) failure to accommodate (individual); (6) failure to engage in interactive process (individual); (7) failure to prevent discrimination and harassment (individual); (8) breach of contract (individual); (9) estoppel (individual); (10) negligent misrepresentation (individual); (11) assault and battery (individual); (12) defamation (individual); (13) failure to pay statutorily mandated overtime wages (individual/class); (14) failure to provide adequate meal periods or proper compensation in lieu thereof (individual/class); (15) failure to provide rest periods or proper compensation in lieu thereof (individual/class); (16) failure to indemnify and reimburse expenditures and/or losses (individual/class); (17) waiting time penalties (individual/class); (18) failure to keep accurate payroll records (individual/class); (19) failure to furnish accurate itemized wage statements (individual/class); (20) unlawful, unfair, and fraudulent activity (representative/class); and (21) Cal. Labor Code Private Attorney General Act (individual/representative).

The case was removed to this Court on May 23, 2014. On September 18, 2014, this Court declined to exercise supplemental jurisdiction over Plaintiff's purely individual claims (i.e. Plaintiff's claims 1-12) and remanded these claims to state court. (Docket No. 39.) On October 27, 2014, the Court granted a Motion to Strike Plaintiff's Class Allegations because Plaintiff failed to timely move for class certification. (Docket No. 49.)

Defendants now move for summary judgment on each of Plaintiff's remaining claims.

II. Legal Standard

Summary judgment is proper where "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). The moving party has the burden of demonstrating the absence of a genuine issue of material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). "[T]he burden on the moving party may be discharged by showing' - that is, pointing out to the district court - that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986); see also Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990). The moving party must affirmatively show the absence of such evidence in the record, either by deposition testimony, the inadequacy of documentary evidence, or by any other form of admissible evidence. See Celotex, 477 U.S. at 322. The moving party has no burden to negate or disprove matters on which the opponent will have the burden of proof at trial. See id. at 325.

As required on a motion for summary judgment, the facts are construed "in the light most favor-able to the party opposing the motion." See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). However, the nonmoving party's allegation that factual disputes persist between the parties will not automatically defeat an otherwise properly supported motion for summary judgment. See Fed.R.Civ.P. 56(c). A "mere scintilla' of evidence will be insufficient to defeat a properly supported motion for summary judgment; instead, the non-moving party must introduce some significant probative evidence tending to support the complaint.'" Fazio v. City & County of San Francisco, 125 F.3d 1328, 1331 (9th Cir. 1997) (quoting Anderson, 477 U.S. at 249, 252). Otherwise, summary judgment shall be entered.

III. Analysis

A. Failure to Pay Overtime

Defendants argue that Plaintiff is not entitled to overtime pay because she was properly classified as an exempt commissioned salesperson. Defendants argue that, based on California Industrial Wage Order ("IWC") 7-2001 and Keyes Motors, Inc. v. Div. of Labor Standards Enforcement, 197 Cal.App.3d 557, 561-63 (Cal.App. 1987), four elements determine whether an employee is a commissioned salesperson not entitled to overtime. These are (1) that the employee's principal function must be selling a product or service; (2) that the employee's compensation for sales of the product or service must be a percentage of the price of the product or service; (3) that the employee's earnings must exceed one and one-half times the minimum wage; and (4) that more than one-half of the employee's earnings must represent commissions.

Plaintiff argues that Defendants misstate the relevant standard. Plaintiff suggests that, in addition to the factors listed above, Defendants must establish (1) that for each hour worked within each workweek, pay must exceed one and one-half times the minimum wage and (2) that none of the minimum pay was recovered from commissions earned in future workweeks. In support of these elements, Plaintiff cites to the 2002 Division of Labor Standards Enforcement Policies and Interpretations Manual ("DLSE Manual").[1]

The first element is consistent with the third element identified by Defendants, above. The second element rests upon a misinterpretation of the DLSE Manual and relevant case law. The DLSE Manual provides, in relevant part, that a commissioned salesperson's guaranteed draw "can be recovered only from commission earned in that workweek and not from commissions earned in future workweeks. This is so because every workweek must stand alone for purposes of minimum wage and overtime computation." DLSE Manual § 50.6.4.1. Plaintiff also points to the California Supreme Court's holding that "an employer may not attribute commission wages paid in one pay period to other pay periods in order to satisfy California's compensation requirements." Peabody v. Time Warner Cable, Inc., 59 Cal.4th 662, 671 (Cal. 2014). These authorities do not support Plaintiff's argument. Instead, they address whether commissions may be "allocated" to weeks in which they are not paid in order to classify a salesperson as exempt. Thus, in Peabody, "most of [the plaintiff's] paychecks included only hourly wages and were for less than" one and one-half times the minimum wage, and the defendant argued that "that commissions should be reassigned from the biweekly pay periods in which they were paid to earlier pay periods." 59 Cal.4th at 666. Similarly, the DLSE Manual's emphasis that "every workweek must stand alone for purposes of minimum wage and overtime compensation" clarifies that an exempt salesperson's actual weekly pay must exceed one and one-half times the minimum wage, as opposed to averaging out on a biweekly or monthly basis. The authorities are silent whether or not wages paid to satisfy this requirement may be deducted from commissions in excess of one and one-half times the minimum wage in subsequent weeks.[2] Accordingly, the Court will analyze this claim based on the elements identified by Defendants. Because there is no genuine dispute that Plaintiff's principal function was selling furniture and that more than one-half of her earnings represented commissions based on the price of the furniture that she sold, this analysis is focused on whether Plaintiff's pay exceeded one and one-half times the minimum wage.

Plaintiff argues that she was not paid one and one-half times the minimum wage for each hour worked because Defendants failed to pay anything for (1) "short clock out" rest periods, (2) work that Plaintiff was authorized to do after clocking out for lunch, (3) work that Plaintiff was authorized to do after clocking out for the day, (4) work that Defendants knew Plaintiff did outside of store hours, and (5) fractions of minutes that were "rounded down" from Plaintiff's recorded clock-punch data. Plaintiff also argues that the guaranteed draw does not comport with California compensation requirements because it was allegedly subject to repayment at the end of employment.

1. Defendants were not required to compensate Plaintiff for "short clock out" breaks

Section 12 of IWC 7-2001 prescribes that "[a]uthorized rest period time shall be counted as hours worked for which there shall be no deduction from wages." There is no evidence that Plaintiff was authorized to take extra, off-the-clock breaks.[3]

2. There is a genuine issue whether Plaintiff worked after clocking out at lunch and at the end of her workday

Plaintiff argues that her time and date stamped invoices for sales made after clocking out for lunch and at the end of her workday give rise to a genuine issue whether she worked off-the-clock hours with Defendants' authorization. See, e.g., Declaration of Bozena Klune ("Klune Decl.") ¶¶ 24-25, Exs. R-S.[4] Defendants argue that Plaintiff testified that she recorded her time accurately (see Deposition of Bozena Klune ("Klune Depo.") at 76:14-16, 173:1-5) and cannot now create an issue of fact by offering conflicting testimony. See Cleveland v. Policy Mgmt. Systems Corp., 526 U.S. 795, 806 (1999). Plaintiff's deposition testimony that she recorded her time accurately, in the sense that she did not "falsify" time records, does not necessarily conflict with her declaration testimony. Viewing this evidence in the light most favorable to Plaintiff, the Court cannot rule out an interpretation of her deposition testimony according to which she was merely testifying that she did not exaggerate her time. Moreover, Plaintiff's deposition testimony was immediately followed, in one instance, by a line of questioning regarding "which particular days... you would punch out for lunch and then continue[] to help a customer, " suggesting that, in context, accurately recording one's time did not preclude off-the-clock hours. (Klune Depo. at 173:6-8.)

Neither party makes any effort to link Plaintiff's alleged off-the-clock hours to her actual pay. Plaintiff's off-the-clock hours are only relevant to show that she was not paid one and one-half times the minimum wage in any given week when her total pay and total hours for that week are known. The Court declines to speculate about the meanings of various acronyms and abbreviations included in payroll data submitted by the parties. Defendants have failed to demonstrate the absence of a genuine ...


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