Aleksick v. 7-Eleven, Inc.

• Citation: 140 Cal.Rptr.3d 796,12 Cal. Daily Op. Serv. 5061,205 Cal.App.4th 1176,2012 Daily Journal D.A.R. 6014
• Decision Date: 08 May 2012
• Docket Number: No. D059236.,D059236.
• Court: California Court of Appeals
• Parties: Kimberly ALEKSICK, Plaintiff and Appellant, v. 7–ELEVEN, INC., Defendant and Respondent.

12 Cal. Daily Op. Serv. 5061

140 Cal.Rptr.3d 796

2012 Daily Journal D.A.R. 6014

205 Cal.App.4th 1176

Kimberly ALEKSICK, Plaintiff and Appellant,

v.7–ELEVEN, INC., Defendant and Respondent.

No. D059236.

Court of Appeal, Fourth District, Division 1, California.

May 8, 2012.

Sullivan & Christiani, William B. Sullivan, Kevin D. Sullivan, Gavin E. Gruber and Amber H.T. Gardina for Plaintiff and Appellant.

Payne & Fears, Irvine, Eric C. Sohlgren; Welter Law Firm, Eric A. Welter

and Laura B. Chaimowitz for Defendant and Respondent.

McCONNELL, P.J.

Plaintiff Kimberly Aleksick, individually and on behalf of a class of those similarly situated, appeals a judgment following an order granting defendant 7–Eleven Inc.'s (7–Eleven) motion for summary judgment. 7–Eleven provides payroll services to its franchisees. Aleksick contends reversal is required because 7–Eleven's payroll system violates both the “ unlawful” and “unfair” prongs of Business and Professions Code section 17200.¹ Specifically, she asserts that 7–Eleven's practice of converting any partial hour worked in a pay period from minutes to hundredths of an hour sometimes shorts employees of a few seconds of time, and commensurate pay, and thus violates Labor Code wage statutes. She focuses on the following elementary example: 20 minutes is one-third of an hour, and at an hourly rate of $12, pay should be $4. When 7–Eleven converts the 20 minutes to 0.33, however, and multiplies that figure by $12, pay is $3.96. Aleksick challenges 7–Eleven's practice of ignoring numbers more than two places from the decimal point.

We affirm the judgment. Aleksick's complaint does not allege any statutory predicate for her Unfair Competition Law (UCL) claim of unlawfulness, and she did not seek leave to amend. Thus, the principle of forfeiture applies. Moreover, even without forfeiture, she cannot pursue a UCL claim for unlawfulness because the Labor Code wage statutes govern the employee-employer relationship, and undisputed evidence shows 7–Eleven was not the class members' employer. For the same reason, Aleksick cannot pursue her claim of unfairness under the UCL, which is tethered to the public policy in favor of requiring employers to comport with Labor Code wage statutes and promptly and fully pay their employees. The trial court correctly determined 7–Eleven is entitled to judgment as a matter of law.

FACTUAL AND PROCEDURAL BACKGROUND

Michael Tucker owns franchises for two 7–Eleven stores. His relationship with 7–Eleven is governed by a franchise agreement that designates him an independent contractor. He is responsible for overall store operations, including all matters pertaining to employees, such as hiring and firing, setting pay, and scheduling work.

The franchise agreement requires Tucker to use 7–Eleven's weekly payroll processing service for his employees. Hourly employees clock in and out on an “In Store Processor” (ISP). The ISP records time in hours, minutes and seconds, but for purposes of pay, 7–Eleven uses hours and whole minutes; seconds are ignored. For any partial hours, 7–Eleven calculates pay using decimal hours rather than minutes. 7–Eleven converts the total number of hours and minutes worked to a total number of minutes, and divides that figure by 60 to convert the time to hours and hundredths of an hour. 7–Eleven ignores numbers beyond the hundredth place, the second number to the right of the decimal point, a practice the parties refer to as truncation.

In August 2005 Tucker hired Aleksick to work as a clerk in his 7–Eleven stores. Her employment ended in February 2007. She sued 7–Eleven, individually and as a proposed class representative, for violation of the UCL.² The operative fourth amended complaint (complaint) alleges 7–Eleven's payroll method, specifically the practice of truncating decimal hours to the hundredth place, is both unlawful and unfair because it shorts class members of seconds of work time per pay period, and commensurate pay. The complaint prays for restitution and injunctive relief.

To avoid protracted litigation over certification issues, the parties stipulated to certification of the following class: “All individuals who received employment compensation at any time between April 16, 2003, and (Date of class certification) based on an hourly rate multiplied by the total hours worked in a work week whose compensation was processed by the 7–Eleven payroll system and involved the application of the practice of truncating the total hours worked in a work week to two decimal places and who worked for a 7–Eleven franchisee in California who had signed a Store Franchise agreement with 7–Eleven.” (Italics omitted.)

Aleksick moved for summary adjudication. She sought findings that 7–Eleven “had a duty to refrain from committing unfair business practices,” and that it breached the duty.³ 7–Eleven moved for summary judgment, or in the alternative, summary adjudication. 7–Eleven argued it is not subject to a UCL claim because the complaint alleges no statutory predicate, as a payroll services provider 7–Eleven was not the employer of Aleksick or other class members, and the alleged injury “is insufficient to support the claim.”

In support of its motion, 7–Eleven submitted evidence that Tucker, not 7–Eleven, was Aleksick's employer. 7–Eleven also submitted the expert declaration of an economist and statistician, Dwight Steward, Ph.D., on the issue of damages. The declaration states Dr. Steward reviewed the timesheets and earnings statements of 158 randomly drawn 7–Eleven employees for a total of 1,072 pay periods. Disregarding salaried employees, who are not members of the class, Dr. Steward found that 348 of the pay periods were subjected to truncation by 7–Eleven. In 336 of those pay periods, Dr. Steward calculated “there was no difference between the employee's pay based on the non-truncated hours and the employee's pay based on the truncated hours.”

As to the remaining 12 pay periods reviewed, which involved eight employees, Dr. Steward attached a table to his declaration to show the potential damages. His declaration states: “As the table shows in column 9, the largest discrepancy for any employee or pay period was 0.0067 hours or about 24 seconds of lost time for the entire week of work. The majority of pay periods that were affected by 7–Eleven's truncation policy potentially lost 12 seconds of time per week of work. The average amount per pay period that was affected by the 7–Eleven truncation policy was $0.04 per week.” The declaration also states the table shows that “[c]ollectively, for the 12 pay periods that were affected by truncation, there is a total potential loss of 2.60 minutes of work time or a total wage loss of $0.48.”

Aleksick did not present any expert evidence. She submitted timecards and earnings statements for herself and a few other employees. Most of the copies of earnings statements in the clerk's transcript, however, are too dark to decipher. The timecards show the time an employee clocked in and out each day, and 7–Eleven's conversion of the hours and minutes to hours and decimal hours. Aleksick claimed the timecards show the class members were shorted on their time, but she did not present mathematical calculations required to support the showing. Thus, without performing the math itself, the trial court could not ascertain whether the timecards support Aleksick's claim.

After a hearing, the court granted 7–Eleven's motion for summary judgment and denied Aleksick's motion for summary adjudication. The court did not address 7–Eleven's arguments the UCL is inapplicable because the complaint does not allege any statutory predicate for it, and 7–Eleven is not the class members' employer.

The court held “the practice of calculating employee pay based upon the decimal system, rather than using a fractional system, is inherently reasonable, and does not constitute a violation of [the UCL].” The court also held the practice of “truncating the decimal point after the second digit once a week is inherently reasonable,” and does not violate the UCL. The court explained “the plaintiff class will never be able to prove harm from this,” because the law “requires that all wages be paid in the context of ... the human ability to measure and the human ability to deal with the world.” The court noted the “[m]aximum value of [the third] decimal is .009. By my calculation, simple enough, .009 applied to an hour results in a little over 30 seconds.”

Further, the court determined there was no unfair business practice because the potential for error in 7–Eleven's truncation practice was less than the potential for error in the input data—the recording of time in whole minutes twice per work shift. For instance, an employee clocking in at 7:00:59 and clocking out at 7:25:01 would be paid for 25 minutes of work rather than the 24 minutes and two seconds actually worked.

DISCUSSION

IStandard of Review

“The standard of review of an order granting summary judgment is well established. Our review is de novo. [Citation.] We independently review the entire record, except as to evidence to which objections were timely made and sustained, in the same manner as the trial court. [Citation.] First, we review the issues framed by the operative pleadings to determine the scope of material issues. We then determine if the moving party has discharged its initial movant's burden of production. If we determine the moving party made the requisite prima facie showing of the nonexistence of a triable issue of fact, we then review the opposing party's submissions to determine if a material triable issue exists. [Citations.] ‘In performing our de novo review, we must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [his or] her evidentiary submission while strictly scrutinizing [defendant's] own showing, and resolving any evidentiary doubts or ambiguities in plaintiff's...