Ward v. United Airlines, Inc.

• Court: District Court, N.D. California
• Decided: August 7, 2022
• Docket: 3:15-cv-02309
• Status: Unknown

Opinion

4 UNITED STATES DISTRICT COURT

6 NORTHERN DISTRICT OF CALIFORNIA 7

8 CHARLES E. WARD and BRUCE RICHARDS, No. C 15-02309 WHA 9 individually, and on behalf of 10 all others similarly situated, Plaintiffs, 11 v. ORDER RE MOTION FOR SUMMARY JUDGMENT 12 UNITED AIRLINES, INC., Defendant. 13

15 INTRODUCTION 16 In this certified class action involving alleged deficiencies on wage statements for 17 airline pilots, plaintiffs move for partial summary judgment and defendant moves for summary 18 judgment. For the reasons expressed herein, this order GRANTS IN PART and DENIES IN PART 19 both motions. 20 21 STATEMENT 22 Plaintiffs Charles E. Ward and Bruce Richards represent a class of current or former 23 pilots employed by defendant United Airlines, a major passenger airline serving destinations all 24 over the world. In April 2015, plaintiff Ward filed this action in the Superior Court of the State 25 of California, County of San Francisco, and United promptly removed the case here pursuant to 26 the Class Action Fairness Act (“CAFA”). Ward claimed that United violated various 27 California Private Attorneys General Act. In March 2016, an order granted Ward’s motion for 1 2 class certification as to two claims for relief (Dkt. No. 44). Thereafter, the parties filed cross- 3 motions for summary judgment (Dkt. Nos. 55, 72). A July 2016 order denied Ward’s motion 4 and granted summary judgment for United, finding that Ward could not bring class claims 5 under California Labor Code Section 226 because the pilots worked primarily outside of 6 California and that the extraterritoriality and dormant commerce clause defenses applied (Dkt. 7 No. 78). 8 Ward appealed to our court of appeals which certified the following questions to the 9 10 California Supreme Court: (1) Does the Railway Labor Act (“RLA”) exemption in Wage 11 Order No. 9, concerning wage statement requirements, bar plaintiffs’ claims; and (2) does 12 California Labor Code Section 226 apply to wage statements provided by an out-of-state 13 employer to an employee who resides in California, receives pay in California, and pays 14 California income tax on her wages, but who does not work principally in California or any 15 other state? Ward v. United Airlines, Inc. (Ward I), 889 F.3d 1068 (9th Cir. 2018). The 16 California Supreme Court responded as follows: 17 18 Section 226 applies to wage statements provided by an employer if the employee’s principal place of work is in 19 California. This test is also satisfied if the employee works a majority of the time in California, or for 20 interstate transportation workers whose work is not primarily performed in any single state, if the worker has 21 his or her base of work operations in California. 22

23 Ward v. United Airlines Inc., 9 Cal. 5th 732, 760–61 (2020). Our court of appeals then 24 reversed summary judgment in favor of United, holding that Section 226 applied to class 25 members in this case if they met the requirements of the “Ward test” established by the 26 California Supreme Court. Ward v. United Airlines, Inc. (Ward II), 986 F.3d 1234, 1245 (9th 27 the Ward test and to determine if United’s wage statements violate Section 226. Ward II, 986 1 2 F.3d at 1245. 3 On remand, an order dated July 29, 2021, granted Ward’s motion to modify the class 4 definition to comply with the Ward test as follows: 5 All pilots employed by United Airlines, Inc., at any time 6 between April 3, 2014, up to the time of the final judgment (the Covered Time Period), who have or had a 7 designated home-base airport in California at any time during the Covered Time Period, and who, at any time 8 during the Covered Time Period, either worked the majority of their time in California or did not work the 9 majority of their time in any one state 10 (Dkt. No. 97). Plaintiff Bruce Richards was added as a named plaintiff in October 2021. 11 Plaintiffs now move for summary judgment as to both claims for relief to the extent they are 12 based on violations of California Labor Code Sections 226(a)(2), (a)(8) and (a)(9). United also 13 14 moves for summary judgment as to both claims on the basis that it complied with all sections of 15 the California Labor Code at issue. 16 ANALYSIS 17 At all material times, United has assigned routes to pilots according to schedules that 18 roughly equate to calendar months called “bid periods” (so called because pilots could bid for 19 routes, which United assigns according to seniority). In a given bid period, a pilot could work as 20 a “lineholder pilot,” meaning United would assign him or her a predetermined flight schedule, or 21 a “reserve pilot,” meaning he or she would remain on call to fly segments as needed. A 22 collective bargaining agreement between United and the Air Line Pilots Association, established 23 pursuant to the Railway Labor Act, governs the terms and conditions of employment for 24 United’s pilots, including the scheduling procedure and compensation structure. 25 United pays its pilots twice monthly, on the first and the sixteenth day of each month. 26 The collective bargaining agreement set forth three methods for calculating a pilot’s total pay for 27 a bid period: (i) line-pay value, (ii) minimum-pay guarantee, and (iii) protected-time credit 1 (available only to lineholder pilots). A pilot’s total compensation for a bid period would be the 2 largest of the three measures. United calculates the amount of the first payment in a bid period 3 (on the first of the month) based on a formulaic estimate of the total hours it anticipates the pilot 4 will work during the bid period. United calls this first payment a “Flight Advance.” United’s 5 wage statements do not list the estimated hours used to calculate the Flight Advance. The 6 second payment (on the sixteenth of the month) amounts to the difference between the Flight 7 Advance and the total compensation owed to the pilot for that bid period (again, the greater of 8 the three measures identified above) plus certain bonuses (called “add pay”). United also does 9 not list on the wage statements which of the three measures was used to calculate the second 10 payment. 11 As a threshold matter, the parties contest which documents constitute United’s wage 12 statement. Plaintiffs argue that United impermissibly attempts to satisfy the requirements of 13 Section 226(a) through a combination of documents that the pilots must cross-reference in order 14 to determine their pay information — the Pay Advice, Pay Register, and CBA — rather than a 15 single comprehensive document (Dkt. No. 112). United claims that while the Pay Advice and 16 Pay Register may need to be consulted together to assess pay information, the CBA is not part of 17 the wage statement; only that it may be consulted if pilots wish to confirm the accuracy of any 18 pay rates (Dkt. No. 117). This order considers whether United’s wage statements can consist of 19 both the Pay Advice and Pay Register, and if not, which document, if any, constitutes the wage 20 statement for purposes of evaluation under Section 226. 21 Section 226(a) requires that an employer provide their employees “an accurate itemized 22 wage statement in writing” as a “detachable part of the check.” Cal. Lab. Code § 226(a). While 23 United raises the point that Section 226(a) allows for electronic wage statements to be provided 24 “separately” from the paycheck itself, this is only the case if “wages are paid by personal check 25 or cash.” Ibid. It is, therefore, not relevant to this discussion. The wage statement must specify, 26 among other things, gross wages earned, total hours worked, the employer’s name and address, 27 and “all applicable hourly rates in effect during the bid period and the corresponding number of 1 “Section 226 further provides that an employee must be able to ‘promptly and easily determine’ 2 these items of information ‘from the wage statements alone.’” Ward II, 986 F.3d at 1237–38. It 3 said that this means “‘a reasonable person would be able to readily ascertain the information 4 without reference to other documents or information.’” Ibid. While the statute does not 5 explicitly address whether a wage statement can be comprised of multiple separate documents, 6 this order finds, by virtue of the decision from our court of appeals, that United cannot mix and 7 match its Pay Advice and Pay Register into a wage statement to satisfy the requirements of 8 Section 226. This finding also accords with the underlying purpose of the provision as expressed 9 by the California Supreme Court. See Oman v. Delta Airlines, Inc., 9 Cal. 5th 762, 774 (2020); 10 see also Ward, 9 Cal. 5th at 753. 11 The California Supreme Court’s descriptions of wage statements governed by Section 12 226(a) provide guidance on this topic. Oman described the wage statement as a “single 13 comprehensive statement of pay.” 9 Cal. 5th 762, 774 (2020). Similarly, in Ward, it described 14 the legislature’s “desire for a single statement documenting employee pay.” Ward, 9 Cal. 5th at 15 753. This order agrees with the court in Vidrio v. United Airlines which held that United’s Pay 16 Advice cannot be combined with the separate Pay Register available online to constitute a 17 unified wage statement. 2022 WL 1599918 at *5 (C.D. Cal. 2022) (Judge Philip Gutierrez). 18 United’s wage statement must be a single document provided as a detachable part of an 19 employee’s check. 20 In accordance with the above conclusion, this order finds the Pay Advice to be United’s 21 wage statement for the purposes of evaluation under Section 226(a) because it is the only 22 document that accompanies pilots’ paychecks twice monthly. 23 1. Plaintiffs’ PAGA Claims 24 To succeed on a PAGA claim for recovery of civil penalties for a violation of Section 25 226, plaintiffs need only establish a violation of its provisions and need not demonstrate the two 26 additional elements of a claim for statutory penalties under Section 226(e): (1) that an employee 27 suffered injury as a result of the violation and (2) that the employer’s failure to comply with 1 Cal. App. 5th 667, 670 (2018). Having established that United’s Pay Advice constitutes its wage 2 statement, this order now considers whether it is in violation of Section 226(a)(2), (a)(8), or 3 (a)(9). i. Total Hours Worked, Applicable Hourly Rates and Hours Worked at Each Rate 4

5 Sections 226(a)(2) and (a)(9) collectively require wage statements to include “total hours 6 worked by the employee” and “all applicable hourly rates in effect during the bid period and the 7 corresponding number of hours worked at each hourly rate by the employee.” Cal. Lab. Code §§ 8 226(a)(2), (a)(9). Plaintiffs claim that United violated Sections 226(a)(2) and (a)(9) because its 9 Pay Advice does not list the total hours worked by the pilots, the applicable hourly rates paid, 10 nor the number of hours worked at each corresponding hourly rate. United does not contend that 11 12 the Pay Advice contains this information. Rather, it argues that the information required by 13 these provisions are fundamentally incompatible with how pilots were and are paid. And, when 14 pilots are arguably paid based on hours worked, United argues information contained in the 15 online Pay Register satisfies and even exceeds the requirements of the statute. 16 Does the Pay Advice include the information required by Sections 226(a)(2) and (a)(9)? 17 On their face, United’s wage statements do not include total hours worked, or the proper hourly 18 rates and corresponding numbers of hours worked at each rate (Dkt. No. 112-1). United 19 20 contends that it has not listed these items because doing so would create unnecessary confusion 21 for pilots seeking to confirm the accuracy of their pay. United argues that both the California 22 Supreme Court and Judge Laurel Beeler of our Northern District of California have concluded 23 that the way pilots are paid is perfectly lawful under California law. See Oman, 9 Cal. 5th at 24 788–789; see also Ward v. United Airlines, 2021 WL 6427868, at *7 (N.D. Cal. Dec. 21, 2021) 25 (Judge Laurel Beeler). It therefore maintains that it would be illogical to recognize that United’s 26 27 pay scheme complies with California law, but also require it to list certain items on its wage from compliance with Section 226(a). This order acknowledges the complexities of United’s 1 2 pay scheme, but does not agree that this difficulty justifies noncompliance. We consider 3 United’s arguments in turn. 4 First, United relies on Soto v. Motel 6 Operating L.P., 4 Cal. App. 5th 385, 391 (2016), to 5 argue that Section 226(a) is not concerned with prescribing specific information that must be 6 listed on a wage statement, but rather concerned that employers issue wage statements that 7 accurately reflect employees pay. But Soto only held that an employer need not include a 8 vacation benefit in a wage statement unless and until that benefit was required to be paid. It did 9 10 not hold, as United suggests, that the employer could excuse itself from adhering to the 11 requirements of Section 226(a). Id. at 393. Soto explained that while it must “construe wage 12 statutes broadly in favor of employees,” it was not free to “rewrite [the] applicable legislation to 13 include a nonexistent requirement” or read an exception into the provision. Soto, 4 Cal. App. 5th 14 at 393 (cleaned up). But United essentially asks this order to excuse it from complying with the 15 statutory commands of Sections 226(a)(2) and (a)(9) because it employs a complex, bargained- 16 for pay-scheme. United’s contention that the statutory purpose of Section 226 described in Soto 17 18 “can only be accomplished by a wage statement that captures the complexities and nuances of 19 [its] applicable pay scheme” is rejected. United’s wage statements fail to provide sufficient 20 information to even begin to reflect the complexities of its pay scheme. United’s Pay Advice 21 does not list the hours used to calculate the Flight Advance nor the applicable hourly rate used. 22 Furthermore, the hours worked, and corresponding hourly rates have not been provided in any 23 detail on the wage statements given to pilots with their second paycheck of the month — not 24 25 even to reflect the credit hour system which United claims to be more reflective of the way its 26 pilots are actually paid. Moreover, although the pilot’s second paycheck of the month is paid 27 under one of three possible pay scenarios (e.g., line-pay value, minimum-pay guarantee, or to calculate the pilot’s wages. It's not clear how such barebones wage statements could possibly 1 2 better serve Section 226’s purpose than including the information prescribed by the provision. 3 Second, United explains that compliance with the statutory provisions would require it to 4 impermissibly place form over substance and relies on a false understanding of the holding from 5 Wilson v. SkyWest Airlines, Inc., 2021 WL 2913656, at *3 (N.D. Cal. 2021) (Judge Vince 6 Chhabria). Wilson addressed a similar alleged violation in flight attendants’ wage statements but 7 did not actually reach this specific issue on the merits. While Wilson did state that SkyWest’s 8 credit hour metric on its wage statements was more closely tied to the flight attendant’s 9 10 compensation and may have better served Section 226(a)’s purpose, it did not reach the question 11 of whether it was a permissible wage statement under the provision. See id. at *2. It instead 12 narrowly granted United’s motion for summary judgment on the grounds that its violations were 13 not “knowing and intentional” under Section 226(e)(1). Cal. Lab. Code § 226(e)(1). It, 14 therefore, offers no real guidance on the topic at issue here. 15 Third, United claims that when its pilots are arguably paid based on hours worked, the 16 combined Pay Advice and Pay Register, and sometimes the Pay Register alone, provide all the 17 18 information required by Sections 226(a)(2) and (a)(9). It explains that the Pay Register lists the 19 amount of time a pilot spent flying that bid period and the pilot’s base hourly rate. United 20 asserts that pilots must only do “simple math” to arrive at their total hours worked (Dkt. No. 21 115 at 9). Having found that the Pay Register is not a part of United’s wage statement, this 22 argument fails. Even if, however, the Pay Register could be combined with the Pay Advice to 23 make a single wage statement, the two documents together still do not provide pilots with the 24 25 information required by Section 226(a). Even in combination, the documents do not list total 26 hours worked, applicable hourly rates nor the corresponding number of hours worked at each 27 rate. United’s wage statement does not allow pilots to determine which of any number of potentially applicable hourly rates is applied to the hours worked or credited for work 1 2 completed in the bid period. 3 Fourth, to the extent United reasserts its RLA preemption argument, it is denied. This 4 issue was addressed by our court of appeals which held that plaintiffs’ claims were not 5 preempted by the RLA because (1) they are not grounded in the CBAs and (2) their resolution 6 would not require interpreting the CBAs. Ward II, 986 F.3d at 1244. It specifically stated that 7 “no interpretation of the CBAs will be required to resolve plaintiffs’ claims” but rather that “a 8 court will simply need to examine the wage statements plaintiffs received from [United] to 9 10 determine if the statements comply with the requirements of § 226.” Ibid. This order must 11 obey our appellate court. 12 Accordingly, plaintiffs have met their burden of demonstrating that United violated 13 Sections 226(a)(2) and (a)(9). United has failed to raise a genuine dispute that its wage 14 statements include the information required under the statute or demonstrate that it should be 15 exempt from the requirements. As such, plaintiffs’ motion for summary judgment based on 16 17 violations of Sections 226(a)(2) and (a)(9) is GRANTED and United’s motion for summary 18 judgment is DENIED. 19 ii. Employer’s Address 20 Plaintiffs claim that United violated Section 226(a)(8) by listing a post office box (“P.O. 21 Box”) on its wage statements rather than a physical address. United contends that neither the 22 plain text of Section 226(a)(8) nor the other sources of interpretation plaintiffs point to indicate 23 that the term “address” refers only to a physical address. United cites two California district 24 25 court decisions that have concluded that listing a postal box does comply with Section 226(a)(8). 26 It is undisputed that for the period relevant to plaintiffs’ claims, United listed a Houston, 27 Texas, postal box address rather than a physical address on the Pay Advice it issued to pilot class Section 226(a)(8) requires employers to furnish wage statements to their employees that 1 2 show “the name and address of the legal entity that is the employer.” Cal. Lab. Code § 3 226(a)(8). While Section 226(a) does not explicitly define the scope of the term “address,” three 4 judges in the Central District of California have now unanimously concluded that “use of a P.O. 5 Box address properly fulfill[s] the requirements of section 226(a)(8).” Davidson v. O’Reilly 6 Auto Enters., LLC, 2017 WL 8288042, at *3 (C.D. Cal. 2017) (Judge R. Gary Klausner); accord 7 Johnson v. Winco Foods, LLC, 2021 WL 71435, at *5 (C.D. Cal 2021) (Judge David Carter); 8 accord Vidrio v. United Airlines, Inc., 2022 WL 1599918 (C.D. Cal May 6, 2022) (Judge Philip 9 10 Gutierrez). This order agrees. 11 Plaintiffs point to a separate provision of the California Labor Code, an exemplar wage 12 statement provided by the Division of Labor Standards Enforcement’s website, and the 13 legislative history of Section 226 to support its interpretation that the term “address” in Section 14 226(a)(8) requires an employer to list a physical address. These arguments are flawed. 15 For one, when interpreting statutory text, courts should fist consider the plain language of 16 the statute and assign the ordinary meaning to any relevant undefined terms. Lawson v. FMR 17 18 LLC, 571 U.S. 429, 440 (2014); accord United States v. Johnson, 680 F.3d 1140, 11444 (9th Cir. 19 2012) (stating that “if the plain meaning of the statute is unambiguous, that meaning is 20 controlling…” (citation omitted)). Black’s Law Dictionary defines the term “address” as “[t]he 21 place where mail or other communication is sent.” Address, Black’s Law Dictionary (11th ed. 22 2019). This order agrees with the conclusion reached in Davidson that this definition “clearly 23 includes a P.O. Box.” 2017 WL 8288042, at *3. Moreover, if the legislature intended to require 24 25 a street address, as opposed to a mailing address to comply with Section 226(a)(8) it likely would 26 have done so as it did for the separate Labor Code provision plaintiffs cite. See Cal. Lab. Code § 27 2810.5; see also Johnson, 680 F.3d at 1144 (stating “[w]here Congress includes particular presumed that Congress intentionally and purposely in the disparate inclusion or exclusion” 1 2 (cleaned up). 3 Because the meaning of the term “address” in Section 226(a)(8) is unambiguous, this 4 order will not consider other methods of statutory interpretation. See Davidson, 2017 WL 5 8288042, at *3 (citing the proposition from Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254 that 6 “[w]hen the words of a statute are unambiguous, then… [the] “judicial inquiry is complete.”) 7 Thus, plaintiffs’ motion for summary judgement is DENIED and United’s motion for 8 summary judgment on plaintiffs’ PAGA claim based on violations of Section 226(a)(8) is 9 10 GRANTED. 11 2. Plaintiffs’ Class Claims Under Section 226(e) 12 To succeed on their Section 226(e) claim for recovery of statutory penalties, plaintiffs 13 must establish (i) a violation of Section 226(a); (ii) a resulting injury, and (iii) that the violation 14 was “knowing and intentional.” Willner v. Manpower Inc., 35 F. Supp. 3d 1116, 1128 (N.D. 15 Cal. 2014) (Judge Jon S. Tigar) (quoting Cal. Lab. Code § 226(e)(1)). These elements are 16 considered in turn. 17 18 i. Violation of Section 226(a) 19 Plaintiffs claim they have established the first element of their Section 226(e) claims by 20 proving that United violated Sections 226(a)(2), (a)(8) and (a)(9) for purposes of their PAGA 21 claim. As explained above, plaintiffs have established that United violated Sections 226(a)(2) 22 and (a)(9) by failing to meet the statutory requirements. Because of this, plaintiffs satisfy 23 element (i) of Section 226(e)’s requirements by showing two violations of Section 226(a). 24 25 Plaintiffs failed to establish that United violated Section 226(a)(8) by listing a postal box on its 26 wage statements, so this does not count as a statutory violation. 27 ii. Injury 1 2 Plaintiffs argue that they established the second element of the Section 226(e) claim by 3 showing that United did not list the information required by Section 226(a) on its wage 4 statements. They claim pilots could not easily retrieve the information by combing through 5 other documents provided by United. Defendant makes no showing to dispute that plaintiffs 6 satisfy the injury element of their claim. 7 An employee is deemed to have suffered injury for purposes of Section 226(e) if “the 8 employee cannot promptly and easily determine from the wage statement alone” the 9 10 information required by Sections 226(a)(2) and (a)(9). Cal. Lab. Code § 226(e)(2)(B). 11 “‘[P]romptly and easily determine’ means a reasonable person would be able to readily 12 ascertain the information without reference to other documents or information.” Cal. Lab. 13 Code § 226(e)(2)(C). 14 Here, as discussed, United’s wage statements do not show the total hours worked, 15 applicable hourly rates nor the number of hours worked at each rate. As such, pilots cannot 16 promptly and easily determine the relevant information from the wage statements alone. 17 18 United may not require its employees to refer to documents outside of the four corners of the 19 wage statement to determine information required by Sections 226(a)(2) and (a)(9). Plaintiffs 20 have thus established the injury element on their class claim. 21 iii. Knowing and Intentional 22 The parties disagree as to whether any violation by United was “knowing and 23 intentional” within the meaning of Section 226(e). Plaintiffs argue that they need not prove 24 25 that United willfully violated the requirements of Section 226(a), only that United was aware 26 of and/or intended the format of the wage statements as they were provided to the pilots (Dkt. 27 No. 112). United argues that no “knowing and intentional” violation could have occurred on our prior order which held that the statute did not apply to United’s pilots wage statements 1 2 (Dkt. No. 116). 3 This order joins a number of district courts that have held wage statement claims under 4 Section 226(e) require plaintiffs to show a willful violation. See, e.g., Arroyo v. Int’l Paper 5 Co., 2020 WL 887771 at *12 (N.D. Cal. Feb. 24, 2020) (Judge Beth Labson Freeman); Wilson, 6 2021 WL 2913656 at *3. United did rely on our prior order that held Section 226 did not apply 7 to the pilots’ wage statements and plaintiffs’ claims were barred by the RLA. Our court of 8 appeals, however, remanded that order on February 2, 2021. See Ward II, 986 F.3d at 1245. 9 10 Accordingly, until the court of appeals decision, United’s violations were not knowing and 11 intentional. But, from February 2, 2021, and onward, United was on sufficient notice that 12 Section 226 applied and its pilots’ wage statements were insufficient. United’s continued 13 noncompliance became, at that point, knowing and intentional for the purposes of Section 14 226(e). At the hearing, United argued that if we found that it’s actions were not “knowing and 15 intentional,” we must also find there was no violation under PAGA. This is not so. As 16 explained above, PAGA does not require the additional elements of injury and “knowing and 17 18 intentional” action. It is suffice under PAGA that there has been a violation under 226(a), 19 which we find in this case. 20 CONCLUSION 21 For the reasons explained herein, the findings are as follows: 22 1. Plaintiffs have established their PAGA claim by demonstrating that United violated 23 Sections 226(a)(2) and (a)(9). A hearing on damages calculations shall be provided to 24 25 the parties at a later date. 26 2. As of February 2, 2021, plaintiffs have established their class claim under Section 226(e). 27 Plaintiffs are now ordered to SHOW CAUSE as to why the class should not be subdivided, 1 statements from February 2, 2021, onwards. Counsel for plaintiffs shall please submit briefing 9 || on this topic no later than THURSDAY, AUGUST 18TH AT NOON. 3 IT IS SO ORDERED. 4 Dated: August 7, 2022. 6 7 A ee 8 (A= ALSUP UNITED STATES DISTRICT 9 JUDGE 10 11 12

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