United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S SECOND MOTION FOR
RICHARD SEEBORG, United States District Judge
McDonald's moved for summary judgment on the grounds that
it was not a joint employer of the named plaintiffs. The
order granting in part and denying in part that first summary
judgment motion (“prior order” or
“Order”) found that McDonald's did not
directly or indirectly control the terms of plaintiffs'
employment, nor did McDonald's suffer or permit
plaintiffs to work, or engage in an actual agency
relationship with them. Summary judgment was entered as to
plaintiffs' joint employer and actual agency theories of
liability, leaving as ongoing their ostensible agency theory.
Now, McDonald's argues that ostensible agency is not a
viable predicate on which to impute liability for
plaintiffs' Labor Code claims. On this basis,
McDonald's moves for summary judgment a second time. Upon
consideration of the specific issue presented here,
McDonald's motion is granted. Pursuant to Civil Local
Rule 7-1(b), this motion is suitable for disposition without
oral argument and the hearing set for March 16, 2017 is
prior order evaluated McDonald's joint employer liability
under the analytical framework supplied in Martinez v.
Combs, 49 Cal.4th 35 (2010). In Martinez, the
California Supreme Court found that, under the Labor Code,
the term “employ” has three alternative
definitions: “(a) to exercise control over the wages,
hours or working conditions, or (b) to suffer or permit to
work, or (c) to engage, thereby creating a common law
employment relationship.” Id., at 64. The
prior order considered McDonald's status under all three
tests and determined that McDonald's was not an
“employer” under any applicable test. It
considered and rejected the argument that the franchise
agreement between McDonald's and Haynes, the franchise
owner of the restaurants involved, established a generic
right to control the terms and conditions of plaintiffs'
employment. Nevertheless, it found that, viewing the evidence
in the light most favorable to plaintiffs, a jury could
reasonably find McDonald's to be a joint employer by
virtue of an ostensible agency relationship. In its first
motion for summary judgment, McDonald's did not raise the
question of whether ostensible agency is a valid predicate
for claims under the Labor Code. The prior order thus did not
address the issue presented here.
judgment is proper “if the pleadings and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(c). The purpose of summary
judgment “is to isolate and dispose of factually
unsupported claims or defenses.” Celotex v.
Catrett, 477 U.S. 317, 323-24 (1986). The moving party
“always bears the initial responsibility of informing
the district court of the basis for its motion, and
identifying those portions of the pleadings and admissions on
file, together with the affidavits, if any which it believes
demonstrate the absence of a genuine issue of material
fact.” Id. at 323 (citations and internal
quotation marks omitted). If it meets this burden, the moving
party is then entitled to judgment as a matter of law when
the non-moving party fails to make a sufficient showing on an
essential element of the case with respect to which he or she
bears the burden of proof at trial. Id. at 322-23.
non-moving party “must set forth specific facts showing
that there is a genuine issue for trial.” Fed.R.Civ.P.
56(e). The non-moving party cannot defeat the moving
party's properly supported motion for summary judgment
simply by alleging some factual dispute between the parties.
To preclude the entry of summary judgment, the non-moving
party must bring forth material facts, i.e.,
“facts that might affect the outcome of the suit under
the governing law.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). “Factual disputes
that are irrelevant or unnecessary will not be
counted.” Id. The opposing party “must
do more than simply show that there is some metaphysical
doubt as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio, 475 U.S. 574, 588 (1986).
court must draw all reasonable inferences in favor of the
non-moving party, including questions of credibility and of
the weight to be accorded particular evidence. Masson v.
New Yorker Magazine, Inc., 501 U.S. 496 (1991) (citing
Anderson, 477 U.S. at 255); Matsushita, 475
U.S. at 588 (1986). It is the court's responsibility
“to determine whether the ‘specific facts'
set forth by the nonmoving party, coupled with undisputed
background or contextual facts, are such that a rational or
reasonable jury might return a verdict in its favor based on
that evidence.” T.W. Elec. Serv. v. Pac. Elec.
Contractors, 809 F.2d 626, 631 (9th Cir. 1987).
“[S]ummary judgment will not lie if the dispute about a
material fact is ‘genuine, ' that is, if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson,
477 U.S. at 248. However, “[w]here the record taken as
a whole could not lead a rational trier of fact to find for
the non-moving party, there is no ‘genuine issue for
trial.'” Matsushita, 475 U.S. at 587.
argues that it cannot be held liable for violations of the
California Labor Code because it does not fall within the
statutory definition of an “employer.” For
purposes of Labor Code violations, the Industrial Welfare
Commission's (“IWC”) wage orders
“define the employment relationship, and thus who may
be liable.” Martinez, 49 Cal.4th at 52;
see also Department of Labor Standards Enforcement
(“DLSE”) Op. Ltr. (June 18, 2002) (“The
only definition of the term employer . . . is found . . . in
the various orders of the [IWC] which govern the payment of
wages, hours of work, and working conditions of employees in
every industry and occupation in California.”). IWC
Wage Order 5-2001 provides that to “employ” is to
“engage, suffer, or permit to work, ”
id. § 2(E), and defines an
“employer” as one who “directly or
indirectly, or through an agent or any other person, employs
or exercises control over the wages, hours, or working
conditions of any person.” Id. § 2(H).
The prior order considered these various tests and concluded
McDonald's was not liable under any one.
argue that the wage order permits a finding of liability for
Labor Code violations under an ostensible agency theory
because it includes the phrase “through an
agent.” Id. § 2(H). Read in context,
however, that phrase is explicitly limited. The wage order
restricts the definition of an “employer” to one
who, through an agent, “employs or exercises control
over” the workplace environment. Id. Because
plaintiffs' interpretation would render this added
limitation meaningless, it must be rejected. See Boise
Cascade Corp. v. U.S. E.P.A., 942 F.2d 1427, 1432 (9th
Cir. 1991) (courts must “interpret [a] statut[e] as a
whole, giving effect to each word and making every effort not
to interpret a provision in a manner that renders other
provisions of the same statute inconsistent, meaningless or
superfluous”). As Defendants note, the IWC is presumed
to have drafted its definition of “employer”
against the backdrop of existing law. The principles of
ostensible agency were well-established and codified in
California's civil code when the IWC authored the
definition at issue. Therefore, the IWC's decision to
limit the scope of agency liability in the context of the
Labor Code must be credited.
plaintiffs identify no legal authority in support of their
position. Instead, they rely on the general
principle that ostensible agency is a full form of agency
under California law. They claim that the rules of
principal-agent liability “sweep across the civil law,
” such that “whatever the context, the rule
remains that an agent acting within his ostensible authority
binds his principal.” Pasadena Medi-Ctr. Assocs. v.
Super. Ct.,9 Cal.3d 773, 781 (1973). In
Pasadena, however, the defendants fell within the
scope of the underlying service statute because actual notice
had been provided ...