In re Field Asset Services, Inc.

• Court: District Court, N.D. California
• Decided: January 24, 2024
• Docket: 3:13-cv-00057
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 FRED BOWERMAN, et al., Case No. 3:13-cv-00057-WHO

8 Plaintiffs, ORDER ON WAITING TIME CLAIMS 9 v. IN PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT 10 FIELD ASSET SERVICES, INC., et al., Re: Dkt. Nos. 651, 652 Defendants. 11

12 13 BACKGROUND 14 The parties filed cross motions for summary judgment or in the alternative summary 15 adjudication. I issued an order addressing most of the issues raised in those motions, which lays 16 out the background and facts of these cases. (“Prior Order”) [Dkt. No. 691]. This Order assumes 17 familiarity with those facts, which are incorporated here by reference. 18 Based on arguments raised by the parties at the hearing on these motions, I also ordered 19 supplemental briefing relating to the plaintiffs’ waiting time claims and the defendants’ arguments 20 about the “corporate vendor plaintiffs.” [Dkt. No. 686]. The parties filed simultaneous briefs 21 regarding the waiting time claims. Plaintiffs’ Supplemental Brief 1 (“P. Supp. Br.”) [Dkt. No. 22 689]; Defendants’ Supplemental Brief 1 (“D. Supp. Br.”) [Dkt. No. 690]. The defendants also 23 filed a supplemental brief regarding the corporate vendor plaintiffs and the plaintiffs responded. 24 The corporate vendor arguments will be addressed in detail in a subsequent order. 25 LEGAL STANDARD 26 Summary judgment on a claim or defense is appropriate “if the movant shows that there is 27 no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 1 show the absence of a genuine issue of material fact with respect to an essential element of the 2 non-moving party’s claim, or to a defense on which the non-moving party will bear the burden of 3 persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has 4 made this showing, the burden then shifts to the party opposing summary judgment to identify 5 “specific facts showing there is a genuine issue for trial.” Id. The party opposing summary 6 judgment must then present affirmative evidence from which a jury could return a verdict in that 7 party’s favor. Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986). 8 On summary judgment, the court draws all reasonable factual inferences in favor of the 9 non-movant. Id. at 255. In deciding a motion for summary judgment, “[c]redibility 10 determinations, the weighing of the evidence, and the drawing of legitimate inferences from the 11 facts are jury functions, not those of a judge.” Id. However, conclusory and speculative testimony 12 does not raise genuine issues of fact and is insufficient to defeat summary judgment. See 13 Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). 14 “If the nonmovant bears the burden of persuasion on the ultimate issue, the movant may 15 make its required initial showing that there is no genuine dispute of material fact by demonstrating 16 that ‘there is an absence of evidence to support the non-moving party’s case.’” Pac. Gulf Shipping 17 Co. v. Vigorous Shipping & Trading S.A., 992 F.3d 893, 897-98 (9th Cir. 2021) (first citing Fed. 18 R. Civ. Proc. 56(c)(1)(A); and then quoting In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th 19 Cir. 2010)). “The burden of production then shifts to the nonmovant, who must go beyond the 20 pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and 21 admissions on file, designate specific facts showing that there is a genuine issue for trial.” Id. 22 (internal quotation marks omitted) (quoting Celotex Corp., 477 U.S. at 324). “The nonmovant’s 23 burden of production at this point ‘is not a light one’—it ‘must show more than the mere existence 24 of a scintilla of evidence’ or ‘some “metaphysical doubt’ as to the material facts at issue.”’” Id. 25 (quoting Oracle Sec. Litig., 627 F.3d at 387). The nonmoving party “must come forth with 26 evidence from which a jury could reasonably render a verdict in the non-moving party’s favor,” 27 assuming that “all justifiable inferences are . . . drawn in its favor.” Id. (quoting Oracle Sec. 1 DISCUSSION 2 I. WAITING TIME CLAIMS 3 The analysis in this section applies to the waiting time claims for plaintiffs Tim Miller, 4 Tim Purkett, and Gilberto Rodriguez, for whom I previously determined the business-to-business 5 (“B2B”) exception to the ABC test does not apply; the parties agree that each is a sole proprietor 6 not subject to the defendants’ arguments about joint employment. Prior Order 24:2-23. 7 The plaintiffs argue that the ABC test applies to their claims and so summary judgment is 8 warranted for liability for their waiting time claims, with damages to be calculated by the jury. As 9 discussed in the Prior Order, the defendants’ opposition contests that the ABC test applies but 10 does not address their liability for the waiting time penalties if the test does apply. See generally 11 [Dkt. No. 668]. At the hearing, the defendants raised for the first time the argument that the ABC 12 test cannot apply to waiting time penalties because they are not wage order claims. Because the 13 defendants had not previously raised this potentially dispositive argument1 and the plaintiffs did 14 not have a chance to respond, I ordered supplemental briefing, which the parties provided. Now I 15 address the merits of the arguments. 16 The crux of the defendants’ argument is that the Borello test applies to the plaintiffs’ 17 waiting time claims because they are grounded in the California Labor Code, not any wage order. 18 See D. Supp. Br. The plaintiffs assert that their claims for waiting time are rooted in violations of 19 the wage order such that, under California law, the ABC test applies to the claims. See P. Supp. 20 Br. 21 The plaintiffs’ claims are for violations of California Labor Code sections 201-03, which 22 provide in relevant part: 23 If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.6, 201.8, 201.9, 202, and 205.5, any wages of 24 an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until 25 26 1 In their initial opposition, the defendants failed to cite or discuss any of the cases or arguments 27 that they now rely on as dispositive, including Hill, Garcia, and Gonzales. Despite this failure, I an action therefor is commenced; but the wages shall not continue for more than 30 1 days. 2 Cal. Lab. Code § 203. The plaintiffs’ complaints cite Labor Code sections 201-03 and assert, 3 “Defendants failed to pay all wages, including overtime pay, owed to Plaintiff at the conclusion of 4 his employment, and their failure, as alleged above, was willful.” Purkett v. Field Asset Servs., 5 Case No. 23-cv-01112, Complaint [Dkt. No. 1] ¶ 100; Miller v. Field Asset Servs., Case No. 23- 6 cv-01342, Complaint [Dkt. No. 1] ¶ 100; Rodriguez v. Field Asset Servs., Case No. 23-cv-01346, 7 Complaint [Dkt. No. 1] ¶ 100. 8 In Gonzales v. San Gabriel Transit, Inc., 40 Cal. App. 5th 1131, 1157 (2019), the 9 California Court of Appeal addressed a question left open by Dynamex, which was “whether the 10 ABC test applies to non-wage order related Labor Code claims.” It concluded that the Borello test 11 applies to “Labor Code claims that are not either rooted in one or more wage orders, or predicated 12 on conduct alleged to have violated a wage order,” but that “the ABC test applies to Labor Code 13 claims which are rooted in one or more wage orders, or predicated on conduct alleged to have 14 violated a wage order.” Id. (emphases added). There, the plaintiff sued the putative employer for 15 failure to pay minimum wage, provide meal and rest periods, supply accurate wage statements, 16 and reimburse expenses, each of which allegedly violated provisions of the relevant wage order 17 and the Labor Code. See id. at 1157-58. The court found “close, if not inseparable ties between 18 the[] alleged Labor Code violations and wage order provisions” such that “most of the statutory 19 claims [were] rooted in wage order protections and requirements,” so the ABC test “applied to 20 those claims to resolve the employee vs. independent contractor issues.” Id. at 1158-59. 21 In line with Gonzales and in an opinion letter issued a few months prior, the California 22 Division of Labor Standards and Enforcement (“DLSE”) noted that applying the ABC test “would 23 be appropriate” where waiting time claims “serve[] to enforce the underlying . . . overtime 24 obligations of the wage orders.” Op. Letter from Special Couns. to Cal. Lab. Comm’r, Div. of 25 Lab. Standards Enf’t (May 3, 2019). Though not binding law, the DLSE’s reasoning is persuasive 26 because it noted the differing paths California courts had taken in addressing this question and 27 recommended that courts consider the “statutory purpose” of waiting time penalties to determine 1 Id. 2 Finally and most recently, in Hill v. Walmart, Inc., 32 F.4th 811, 819 (9th Cir. 2022), the 3 Ninth Circuit cited Gonzales, 40 Cal. App. 4th at 1157, for the proposition that for “Labor Code 4 claims that are not either rooted in one or more wage orders, or predicated on conduct alleged to 5 have violated a wage order, the Borello test remains appropriate.” There, the plaintiff modeled in 6 photo shoots and asserted that the defendant failed to pay her immediately at the end of each photo 7 shoot, in violation of her employment rights under Labor Code section 203; her only claims were 8 brought under this statutory section. Id. at 814-15. The Ninth Circuit addressed a slightly 9 different question from the issues in this case—whether the defendant was “foreclosed from 10 raising a good-faith defense based on mistakenly classifying an employee as an independent 11 contractor,” id. at 816—but as relevant here, analyzed which employment test applied to the 12 plaintiff’s claims, id. at 818-19. It determined that the Borello test applied because the plaintiff 13 did not allege that the defendant “violated any wage order.” Id. at 819-20. 14 The defendants now cite Hill for the proposition that the Ninth Circuit held that Borello 15 applies to all section 203 claims, but that is not what the opinion says. Rather, in a case where the 16 plaintiff asserted a single claim for violation of section 203 with no discussion of any wage order 17 whatsoever, the Ninth Circuit applied California case law that applies Borello to claims asserting 18 violations of the Labor Code. It did not hold that Borello never governs section 203 claims in part 19 because that question was not presented. And while the state appellate court in Garcia v. Border 20 Transportation Group, LLC, 28 Cal. App. 5th 558, 571-72 (2018), as modified on denial of reh’g 21 (Nov. 13, 2018), held that the relevant wage order did not encompass waiting time penalties and 22 so applied Borello rather than the ABC test, that case came before the DLSE letter and the 23 Gonzales opinion, both of which clarified the nuanced requirement that courts should look to the 24 basis for the waiting time claims. Indeed, the DLSE letter specifically cited Garcia as one of the 25 cases reaching a contradictory conclusion and noted that the Garcia court limited its holding to the 26 facts of that case because of the lack of counterargument from the parties.2 Op. Letter at 3 (citing 27 1 Garcia, 28 Cal. App. 5th at 571 n.11). Notably, Garcia was one of the first state appellate court 2 cases to wrestle with applying Dynamex. 3 Here, the plaintiffs’ claims for waiting time penalties arise from and are rooted in the wage 4 orders because the plaintiffs bring their claims “to enforce payment of [their] wages due.” Id.; 5 Gonzales, 40 Cal. App. 5th at 1158-59.3 The statutory purpose of the waiting time claims is to 6 ensure prompt payment of wages; here they rise or fall on the overtime claims and would not exist 7 but for those claims. And while the defendants argue that the plaintiffs did not cite the wage 8 orders specifically within the waiting time penalties cause of action, the court in Gonzales was 9 unpersuaded by similar arguments, instead looking to the “general allegation” at the opening of 10 the complaint asserting that the defendants violated Labor Code and wage order protections. 40 11 Cal. App. 5th at 1157; see also Purkett Compl. ¶ 3 (alleging, in the opening of the complaint, that 12 the defendants violated Labor Code and wage order protections); Miller Compl. ¶ 3 (same); 13 Rodriguez Compl. ¶ 3 (same). And here, the complaints specifically note that the waiting time 14 penalties are grounded in the overtime claims. See Purkett Compl. ¶ 100; Miller Compl. ¶ 100; 15 Rodriguez Compl. ¶ 100. That is more than enough to allege that the waiting time claims are 16 rooted in and seek to vindicate rights provided by the wage order. 17 Accordingly, the ABC test applies to the waiting time penalty claims of the sole proprietor 18 that Borello applied to the waiting time claims and the plaintiff moved for reconsideration after the 19 publication of Gonzales, arguing there was a change in controlling law. Id. at *2. The court denied the motion for reconsideration because, as a nonbinding state appellate court decision, 20 Gonzales was not binding authority that could serve as a proper basis to grant reconsideration. Id. at *3. Though the remainder of the order was arguably dicta, I note that its reliance on Garcia to 21 decline application of the ABC test did not analyze whether the claims were rooted in the wage orders such that the claims served to enforce provisions of the wage orders. See id. at *2-3. Here, 22 I follow the reasoning of the DLSE Opinion Letter, which persuasively recommends such an approach. 23 For similar reasons, Salter v. Quality Carriers, Inc., No. CV 20-479-JFW(JPRX), 2021 WL 5049054, at *7 (C.D. Cal. Oct. 27, 2021), is not persuasive. That case cited Henry in declining to 24 apply the ABC test to waiting time claims, emphasizing that the plaintiff’s claims were broader than those contemplated by Gonzales because he argued they were “related” to—not “rooted in” 25 or “served to enforce”—the wage orders. See id. at *7-8. The plaintiffs here make different arguments. 26

3 In the absence of any binding authority from the California Supreme Court, and without any 27 reason to believe that the state’s highest court would hold differently from the appellate court in 1 plaintiffs: here, Miller, Purkett, and Rodriguez. For the same reasons provided in the prior order, 2 and because the Ninth Circuit in Bowerman v. Field Asset Services, Inc., 60 F.4th 459, 477 (9th 3 Cir. 2023), explained that summary judgment is proper for sole proprietor plaintiffs under prong 4 B, here summary judgment is granted to these plaintiffs for these claims. See also Prior Order 5 24:2-23. They were employees as a matter of law and the jury will decide the amount in damages. 6 |) IL JOINT EMPLOYMENT CLAIMS 7 I will issue a more comprehensive written order on the arguments about the corporate 8 || vendor plaintiffs in the near future. For the parties’ reference as they prepare for trial, this is a 9 very brief synopsis of what that Order will hold. 10 After considering the parties’ arguments at the hearing as well as their supplemental briefs, 11 the corporate vendor plaintiffs’ misclassification claims will survive summary judgment and will 12 || not be deemed joint employment claims. The protections provided by the claims are different, the 5 13 || case law neither precludes the plaintiffs from bringing such claims nor requires them to bring them 14 as joint employment claims, the Ninth Circuit did not instruct otherwise, and the business-to- 3 15 || business exception provides an avenue for the defendants’ arguments and defenses against 16 || liability. Given the arguments, the first order on summary judgment will be amended so that the 3 17 || jury will decide whether the business-to-business exception applies to the claims of Bush, Cherrin, 18 and Cohick, and then whether they were employees of FAS. 19 CONCLUSION 20 For those reasons, summary judgment is GRANTED as to liability for the waiting time 21 claims of Miller, Purkett, and Rodriguez. A subsequent order will deny the defendants’ motion 22 || for summary judgment and summary adjudication. 23 IT IS SO ORDERED. 24 Dated: January 24, 2024 25 : \f 26 ® illiam H. Orrick United States District Judge 28