435 F.Supp.2d 1042 (C.D.Cal. 2006), CV 04-1498, Wang v. Chinese Daily News, Inc.

Docket Nº:CV 04-1498CBM(JWJX).
Citation:435 F.Supp.2d 1042
Party Name:Lynne WANG, Yu Fang Ines Kai, and Hui Jung Pao, on behalf of themselves and all others similarly situated, Plaintiffs, v. CHINESE DAILY NEWS, INC., and Does 1-10, et al., Defendants.
Case Date:June 07, 2006
Court:United States District Courts, 9th Circuit, Central District of California

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435 F.Supp.2d 1042 (C.D.Cal. 2006)

Lynne WANG, Yu Fang Ines Kai, and Hui Jung Pao, on behalf of themselves and all others similarly situated, Plaintiffs,


CHINESE DAILY NEWS, INC., and Does 1-10, et al., Defendants.

No. CV 04-1498CBM(JWJX).

United States District Court, C.D. California, Western Division.

June 7, 2006

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Della Bahan, Peter Bibring, Bahan & Associates, Pasadena, CA, for Plaintiffs.

Steven D. Atkinson, Mark T. Palin, Scott K. Dauscher, Atkinson, Andelson, Loya, Ruud & Romo, Cerritos, CA, for Defendants.



The matters before the Court, the Honorable Consuelo B. Marshall, Judge, presiding, are cross motions for summary judgment filed by the parties.


This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.


Plaintiffs allege multiple labor violations by Defendants, pursuant to the Fair Labor Standards Act ("FLSA"), the California Labor Code, and the California Business and Professions Code § 17200 et seq. On January 20, 2005, the Court issued an amended order granting Plaintiffs' motion for class certification pursuant to Fed.R.Civ.P. 23(b)(2) and directing that notice and an opportunity to opt out be given to class members consistent with Rule 23(c)(2)(B). 1 Jan. 20, 2005 Order at 13:4-16:12.

On January 17, 2006, the parties filed cross-motions for summary judgment. Both parties seek summary judgment on the following issues: (1) Defendant Chinese Daily News' ("CDN") vacation "buy

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back" policy, (2) the validity of wage statements issued by CDN, and (3) CDN reporters' entitlement to overtime. Additionally, Plaintiffs seek summary judgment on the issue of how overtime pay is calculated for CDN employees and Defendants seek summary judgment on additional issues implicating the availability of overtime and whether meal and rest breaks have been provided to the employees.


Summary judgment against a party is appropriate when "the pleadings, depositions, answers to interrogatories, 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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the nonmoving party will have the burden of proof at trial, the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case. See id. If the moving party meets its initial burden, the nonmoving party must then set forth, by affidavit or as otherwise provided in Rule 56, "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence and draws all inferences in the light most favorable to the nonmoving party. T.W. Elec. Svc., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir.1987). The evidence presented by the parties must be admissible. Fed.R.Civ.P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Thornhill Pub. Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir.1979).


I. Issues for Which Both Parties Seek Summary Judgment

A. Whether CDN's Vacation Buy Back Policy Violates the Law

Plaintiffs allege that CDN's vacation buy back policy violates California state law. It is undisputed that CDN gives their employees vacation leave. CDN's policy provides that, during their first year, employees are entitled to 6 days of vacation. Decl. of Irene Chen in Supp. of Defs.' Mot. for Summ. J. ("Chen Decl."), Ex. B ("Vacation Policy"). For each additional year of employment employees accrue an additional day of vacation (e.g., year 2, 7 days of vacation, year 3, eight days of vacation, up to 16 years and 21 days of vacation). Id. CDN's purported vacation policy further states that "the unused vacation days each year can be carried forward to the following year." Id. However, the vacation policy also states that "the accumulated vacation days cannot exceed 30 days. Money shall be paid for unused vacation days exceeding 30 days at $ 64 per day." Id.

Under California law, when a contract provides for paid vacation time, vested vacation time is to be paid to an employee as wages at his or her final rate. Cal. Labor Code § 227.3. The California Supreme Court has held that a proportionate right to a paid vacation "vests" as the labor is rendered. Suastez v. Plastic Dress-Up Co., 31 Cal.3d 774, 784, 183 Cal.Rptr. 846, 647 P.2d 122 (1982). However,

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California appellate courts have also held that a "no additional accrual" policy is permitted under California law. "If the employment agreement precludes an employee from accruing more vacation time after accumulating a specified amount of unused vacation time (a 'no additional accrual' policy), the employee does not forfeit vested vacation pay." Boothby v. Atlas Mechanical, 6 Cal.App.4th 1595, 1601-02, 8 Cal.Rptr.2d 600 (1992).

CDN purchases the "unused vacation days" at $ 64 per day regardless of the hourly rate earned by the employee. 2 The critical question then, is whether the "unused vacation days" being purchased are already vested or accrued (in which case the law requires CDN to purchase them at the employees' actual daily wage) or whether they are not vested because CDN's vacation policy precludes employees from accruing more than a specified amount of vacation time. Boothby, 6 Cal.App.4th at 1601-02, 8 Cal.Rptr.2d 600.

CDN's vacation policy initially appears to foreclose Plaintiffs' claim as it clearly states that "accumulated vacation days cannot exceed 30 days." However, Plaintiffs provide undisputed evidence that employees are allowed to "accumulate" far in excess of the purported 30-day cap and that Defendants themselves construe excess vacation days as "accrued." Indeed, Defendants' own labor consultant, Larry Wong, testified in some detail about the policy. Wong testified that employees often "accrue" many vacation days, giving the example of an employee who had accrued 65 days. Dep. of Larry Wong at 505:13-24. Wong testified that CDN policy is to tell employees that CDN will purchase any vacation employees have in excess of 30 days that the employees have "been carrying over all these years ..." Id. at 505:19-24. Wong also testified about the forms used by CDN to track vacation repurchased from employees. Those forms establish that employees routinely carried over as much as 50, 60 or 70 days of unpaid vacation time. See, e.g., Decl. of Peter Bibring in Opp. to Defs' Mot. for Summ. J. ("Bibring Decl. in Opp."), Ex. E (2002 and 2003 CDN Vacation Reports); Chen Decl., Ex. C.

Indeed, in one document discussed during Wong's deposition, all seven employees listed were shown to have more than 50 days of vacation. Bibring Decl. in Opp., Ex. E (2002 Vacation Report). In another document, two of the twenty-two employees listed accumulated more than 70 days vacation, another three accumulated more than 60 days, and seven other employees more than 50 days. Id. (2003 Vacation Report). 3 More significantly, Defendants

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rely on document titled the "CDN Vacation Buy-out Sheet" to "buy" unused vacation days. Chen Decl., Exs. E, G, I. The buy-out sheet describes the vacation time Defendants are purchasing as "unused accrued vacation days." Id. (emphasis added). Their own administrative documents establish that the vacation days purchased are considered, by Defendants themselves, to be accrued vacation time.

Additionally, Chen, a CDN Accounting Department employee, submitted a declaration in support of Defendants' motion in which she testified that she was very familiar with CDN's vacation policies and was charged with tracking CDN employee's vacation. Chen Decl. ¶ 2. However, at her deposition, Chen testified that she was not sure when the vacation policy was created or whether it had even been distributed to employees. Dep. of Irene Chen at 95:5-96:14.

In light of CDN's actual practice, Defendants' reliance on the language contained in its vacation policy does not create a genuine issue preventing the grant of summary judgment for several reasons. See, e.g., Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ("The mere existence of a scintilla of evidence ... will be insufficient; there must be evidence on which a jury could reasonably find for the opposing party."). 4 First, Defendants' actual practice, established by undisputed evidence, contradicts the purported policy to cap accumulation at thirty days. Second, Defendants have not established that CDN's employees have been given notice of the vacation policy. Third, Defendants' own documents, submitted in support of their motion, establish that CDN considered the vacation time it was purchasing to have been "accrued." Pursuant to Cal. Labor Code § 227.3 and Suastez, Defendants' "buy back" of unused, but accrued, vacation days should have been computed by reference to the employee's regular rate of pay...

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