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Woods v. Vector Marketing Corp.

United States District Court, N.D. California

May 22, 2015

WILLIAM WOODS, et al., Plaintiffs,
v.
VECTOR MARKETING CORPORATION, Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT (Docket No. 147.)

EDWARD M. CHEN, District Judge.

Pending before the Court is a motion for partial summary judgment by Defendant Vector Marketing Corporation ("Vector"). Vector seeks summary judgment as to Plaintiffs' third, fourth, seventh, ninth, and twelfth causes of action.

I. FACTUAL & PROCEDURAL BACKGROUND

This is a putative class and collective action lawsuit involving claims for violation of the federal Fair Labor Standards Act as well as violations of certain wage and hour laws in the states where the initial named Plaintiffs reside - California, Florida, Illinois, Michigan, Minnesota, Missouri, New York, and Ohio.[1] This case is related to the case captioned Harris v. Vector Marketing Corp. C-No. 08-5198, for which the Court granted final approval of settlement in 2012. Vector is a "direct sales" company that sells cutlery and kitchen accessories manufactured by CUTCO Cutlery Corporation. See Docket No. 148, Matheson Decl. ¶ 2. Plaintiffs participated in an initial training program that Vector required its prospective sales representatives to attend. See id. ¶¶ 2-8; Complaint ¶¶ 27-29.

In general, this action alleges that during Vector's training program Plaintiffs were not "trainees" within the meaning of Walling v. Portland Terminal Co., 330 U.S. 148 (1947) and therefore were entitled to wages as employees under federal and state law. The Court denied the Parties' cross-motions for summary judgment as to the Portland Terminal factors and granted Plaintiffs' motion for conditional certification of a collective action under Section 216(b) of the FLSA. See Docket Nos. 112, 145.

Pursuant to the Parties' proposed schedule (Docket No. 134), which the Court adopted (Docket No. 137), Vector has moved for summary judgment on five of the state law causes of action. Vector argues that there is no material dispute of fact as to the third, fourth, seventh, ninth, and twelfth causes of action. These claims arise under California, Florida, Illinois, and Missouri state laws. For the reasons discussed on the record at the hearing, and as supplemented herein, Vector's motion for partial summary judgment is GRANTED in part and DENIED in part.

II. DISCUSSION

A. 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). "[O]n summary judgment the inferences to be drawn from the underlying facts... must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).

Material facts are those "that might affect the outcome of the suit" under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment will not be granted if there is a "genuine" dispute of material fact, "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To show that a reasonable jury could return a verdict for the party bearing the burden of proof, the "mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient." Id. at 252. In a similar vein, a party cannot rest on "mere allegations" in connection with a motion for summary judgment and must support the assertion that a fact cannot be or is genuinely disputed by citation to particular materials in the record. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); see also Fed.R.Civ.P. 56(c).

B. Failure to Provide Wage Statements under Cal. Labor C. § 226 (Third Cause of Action)

Subject to certain exemptions, California Labor Code Section 226(a) requires "every employer" to furnish each employee with timely, accurate, itemized wage statements showing specific identity, wage, rate, pay period, and hour information as enumerated in nine subsections to subdivision (a). Cal. Lab. C. § 226(a). Plaintiffs' third cause of action alleges that Vector violated California Labor Code Section 226 by failing to provide timely and accurate itemized wage statements. Complaint ¶¶ 85-90. Named Plaintiff Woods seeks penalties under California Labor Code Section 226(e) as well as injunctive relief under Section 226 (h). Id. ¶ 90.

Vector has moved for summary judgment on Plaintiff Woods's third cause of action under California Labor Code Section 226. The Court GRANTS summary judgment as to Plaintiff Woods's claim for injunctive relief under California Labor Code Section 226(h). It is undisputed that Woods is no longer affiliated in any way with Vector. Woods has not identified any "real and immediate threat of repeated injury" from Vector's wage statement practices. Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985-86 (9th Cir. 2007). Therefore Woods lacks standing to pursue prospective injunctive relief. Id.

The Court also GRANTS summary judgment as to Plaintiff Woods's claim for penalties under California Labor Code Section 226(e), because it is undisputed that the claim is time-barred. Cal. Civ. Proc. § 340(a); see also Docket No. 154, Opp. at 3.

C. "Good Faith Dispute" Defense

Plaintiffs request to substitute a non-time-barred named Plaintiff as to the Section 226(e) claim. Vector, however, argues that a "good faith dispute" as to whether wages are owed in the first instance prevents a plaintiff from meeting the "knowing and intentional" standard required by Section 226. Vector also moves for summary judgment based on the "good faith dispute" defense with respect to Woods's Section 203 claim.

California Labor Code Section 203 imposes so-called "waiting time" penalties for failure to timely pay wages upon termination of employment, allowing the employee to continue to accrue wages "from the due date thereof" for up to 30 days "until paid or until an action therefor is commenced." Cal. Lab. Code § 203(a). Penalties are assigned where an employer " willfully fails to pay." Id. (emphasis added).

A section of the California Code of Regulations interprets "willfulness" under Section 203. The California Code of Regulations provides:

A willful failure to pay wages within the meaning of Labor Code Section 203 occurs when an employer intentionally fails to pay wages to an employee when those wages are due. However, a good faith dispute that any wages are due will ...

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