Calop Bus. Sys., Inc. v. City of L. A.

• Citation: 984 F.Supp.2d 981
• Decision Date: 30 October 2013
• Docket Number: Case No. CV 12–07542 MMM (RZx).
• Parties: CALOP BUSINESS SYSTEMS, INC., Plaintiff, v. CITY OF LOS ANGELES, and Does 1–10, Defendants.
• Court: U.S. District Court — Central District of California

984 F.Supp.2d 981

CALOP BUSINESS SYSTEMS, INC., Plaintiff,

v.CITY OF LOS ANGELES, and Does 1–10, Defendants.

Case No. CV 12–07542 MMM (RZx).

United States District Court, C.D. California.

Oct. 30, 2013.

Juan Hong, Law Offices of Juan Hong, Irvine, CA, for Plaintiff.

Jennifer T. Taggart, Jeffrey Z.B. Springer, Demetriou Del Guercio Springer and Francis, Oscar R. Winslow, Los Angeles City Attorney's Office, Los Angeles, CA, for Defendants.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; DENYING PLAINTIFF'S MOTION FOR RULE 11 SANCTIONS

MARGARET M. MORROW, District Judge.

Calop Business Systems, Inc. (“Calop”) filed this action against the City of Los Angeles (“COLA”) and certain fictitious defendants on September 4, 2012.¹ The complaint alleged a claim for violation of the Due Process Clause of the Fourteenth Amendment of the United States Constitution under 42 U.S.C. § 1983, and for violation of Article 1, Section 7 of the California Constitution; as well as claims for violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1144(a); the Airline Deregulation Act (“the Deregulation Act”), 49 U.S.C. § 41713(b)(1); the Railway Labor Act (“the RLA”), 45 U.S.C. § 151 et seq.; and California Labor Code §§ 90.5(a), 223, and 2810.² On July 16, 2013, COLA filed a motion for summary judgment,³ which Calop opposed.⁴ On July 25, 2013, Calop filed a motion for sanctions under 28 U.S.C. § 1927,⁵ which COLA opposed.⁶

I. FACTUAL BACKGROUND

A. The Living Wage Ordinance

Calop asserts that Los Angeles City Ordinance Number 171,547, the Living Wage Ordinance (“LWO”), which is codified in §§ 10.37 et seq. of the Los Angeles Administrative Code, and took effect on May 5, 1997, is invalid.⁷ The LWO requires employers who do contract or subcontract work for the City to pay their employees a minimum living wage, the amount of which depends on whether the employer also provides health benefits. L.A.Admin.Code, § 10.37.2(a). The legislative findings that supported enactment of the LWO state:

“Experience indicates that procurement by contract of services has all too often resulted in the payment by service contractors to their employees of wages at or slightly above the minimum required by federal and state minimum wage laws. Such minimal compensation tends to inhibit the quantity and quality of services rendered by such employees to the City and to the public. Underpaying employees in this way fosters high turnover, absenteeism, and lackluster performance. Conversely, adequate compensation promotes amelioration of these undesirable conditions. Through this article the City intends to require service contractors to provide a minimum level of compensation that will improve the level of services rendered to and for the City.

The inadequate compensation typically paid today also fails to provide service employees with resources sufficient to afford life in Los Angeles. It is unacceptable that contracting decisions involving the expenditure of City funds should foster conditions placing a burden on limited social services. The City, as a principal provider of social support services, has an interest in promoting an employment environment that protects such limited resources. In requiring the payment of a higher minimum level of compensation, this article benefits that interest.” Id., § 10.37.

Only certain employers are bound by the LWO. Among these are airport employers and subcontractors of airport employers who perform work on contracts subject to the LWO. Id., §§ 10.37.1(b), (g), (j), (n).

The LWO requires that airport employers and subcontractors pay their employees “ten dollars and thirty cents ($10.30) per hour with health benefits or, if health benefits are not provided, then fourteen dollars and eighty cents ($14.80) per hour.” ⁸Id., § 10.37.2(a). Airport employers who provide health benefits must pay at least $4.50 per hour to the health benefit plan. Id., § 10.37.3(a). Airport employers can therefore choose one of two options under the LWO: they can pay their employees at least $14.80 per hour without providing health benefits or they can pay $10.30 per hour and contribute $4.50 per hour to a health benefit plan. Regardless of the option they choose, airport employers' out-of-pocket expense is $14.80 per hour. The LWO also requires that employers provide at least twelve compensated days off per year for sick leave, vacation, or personal necessity at the employee's request, and, if that time is exhausted, an additional ten days per year of uncompensated time for sick leave to deal with an illness of the employee or a member of the employee's immediate family. Id., § 10.37.2(b). The LWO has a supersession clause providing that “[p]arties subject to [the ordinance] may by collective bargaining agreement provide that such agreement shall supersede the requirements of this article.” Id., § 10.37.12.

The Los Angeles Bureau of Contract Administration is responsible for investigating employee complaints of noncompliance with the LWO. Id., §§ 10.37.1(h), 10.37.6. If the bureau “determine[s] that an employer has violated this article, [it must] issue a written notice to the employer that the violation is to be corrected within ten (10) days.” Id., § 10.37.6(d). If the employer does not demonstrate within that ten-day period that it has cured the violation, the bureau may request that the awarding contract authority declare a material breach of the service contract, request that the city council debar the employer from receiving future City contracts, or request that the City Attorney bring a civil action against the employer. Id.

B. Facts Underlying the Parties' Dispute

Calop is a California corporation that offers security and passenger services subcontract work to several airlines operating at the Tom Bradley International Terminal (“TB Terminal”) at Los Angeles International Airport (“LAX”). ⁹ These include Asiana Airlines, Singapore Airlines, EVA Air, Air Tahiti Nui, China Eastern, China Southern, Japan Airlines, Phillippine Airlines, Quantas Airways, Thai Airways, and Cathay Pacific.¹⁰ Calop subcontracts with the carriers to provide employees who guard warehouses, screen the cargo warehouse, guard aircraft, and serve as passenger service security agents, baggage handling agents, “TUB operation agents,” and catering screener agents.¹¹ Calop is thus a subcontractor to an airport employer, and is bound by the LWO.

On February 1, 2010, Calop entered into an Agreement of Wage and Healthcare Package with the Service Employees International Union (“SEIU”).¹² The agreement provided that new employees would be paid $9.00 per hour from July 1, 2010 to November 30, 2012.¹³ On June 17, 2010, Calop received a letter from the Equal Enforcement Opportunity (“EEO”) Enforcement Section of the Los Angeles Bureau of Contract Administration stating that it had “received a complaint regarding the payment of [a] living wage to [Calop's] employees.” The Bureau asked that Calop submit various documents so that it could verify Calop's compliance with the LWO.¹⁴ On August 24, 2010, the EEO Enforcement Section sent a second letter reporting its finding that Calop needed to make “corrective retroactive payments to several employees for underpayment of the Living Wage rate” between January 19 and February 1, 2010—the date its collective bargaining agreement with the SEIU became effective. ¹⁵ The letter asked that Calop calculate the amount it owed employees and issue back wages to those employees within ten days of its receipt of the letter.¹⁶ On October 21, 2010, the EEO Enforcement Section sent Calop a final letter, noting that it had previously “determined that Cal[o]p was not in compliance with the LWO from the period of January 19, 2010 to February 1, 2010 [because] Calop was paying wages of $11.55 per hour and not providing health benefits,” but that Calop had recognized its non-compliance and paid back wages to its employees. As a consequence, the letter stated, the EEO Enforcement Section had “determined that Cal[o]p [was] in compliance [for] the period in question.” ¹⁷

II. DISCUSSION

A. The Parties' Request for Judicial Notice

COLA requests that the court take judicial notice of four documents that are relevant to its motion: (1) The LWO, Los Angeles City Ordinance Number 171,547, (2) the LWO, as codified in §§ 10.37 et seq. of the Los Angeles Administrative Code; (3) Los Angeles City Ordinance Number 180,877, which, as mentioned, raised the minimum wage mandated by the LWO to its current level; and (4) a February 26, 2010 letter from John L. Reamer Jr., Director, Bureau of Contract Administration, to Ms. Gina Marie Lindsey.¹⁸ Calop asks that the court take judicial notice of five documents: (1) Frequently Asked Questions about the LWO; (2) a June 17, 2010 letter from Sophy Teng, EEO Enforcement Section, to Connie Chong; (3) an August 24, 2010 letter from Helmut Peindl, EEO Enforcement Section, to Connie Chong; (4) an October 21, 2010 letter from Sophy Tzeng, EEO Enforcement Section, to Connie Chong; and (5) Los Angeles Municipal Code § 104.110.¹⁹ Both requests are unopposed.

In deciding a motion for summary judgment, the court may consider evidence that can be judicially noticed under Rule 201 of the Federal Rules of Evidence. Under Rule 201, courts can take judicial notice of facts that are not subject to reasonable dispute, either because they are “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned.” Fed. R.Evid. 201; see Zavala v. Wal Mart Stores Inc., 691 F.3d 527, 546 (3d Cir.2012) (taking judicial notice of the fact that commercial buildings have emergency exits as a “matter of common knowledge” in affirming a grant of summary judgment); American Alternative Ins. Corp. v. Hudson Specialty Ins. Co., 938 F.Supp.2d 908, 911 n. 1 (C.D.Cal.2013) (taking...