Fowler Packing Co. v. Lanier
| Docket Number | 1:16-cv-00106-DAD-SAB |
| Decision Date | 25 May 2023 |
| Parties | FOWLER PACKING COMPANY, INC., Plaintiff, v. DAVID M. LANIER, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (DOC. NOS. 62, 64)
This case is before this court following the Ninth Circuit's decision and order of remand issued on December 20, 2016 and its mandate issued on March 28, 2017. (Doc. Nos. 42, 49); Fowler Packing Co., Inc., et al. v. Lanier, et al. 844 F.3d 809 (9th Cir. 2016). Following remand, defendants filed a motion for summary judgment. (Doc. No. 64.) Plaintiff Fowler Packing Company, Inc. (“Fowler”) also moved for summary judgment in its favor. (Doc. No 62.)[1] Oppositions and replies were filed in connection with the cross-motions, as was an amicus brief on behalf of the class of certified workers in two actions that were then pending before this court. (Doc. Nos. 65, 66, 67, 71, 73, 74.) A hearing on the pending motions was held on November 21, 2017. (Doc. No. 76.) Attorneys David Schwarz and Michael Harbour appeared on behalf of plaintiffs, and California Deputy Attorney Generals Mark Beckington and Thomas Patton appeared on behalf of defendants. Attorney Mario Martinez, counsel for amici curiae, also appeared at that hearing. As will be addressed in more detail below, this court held a further hearing on the pending motions on May 22, 2023. (Doc. No. 108.) For the reasons explained below, the court will deny defendants' motion for summary judgment in its entirety and grant plaintiff Fowler's motion for summary judgment in part.
With their cross-motions for summary judgment, the parties submitted a joint statement of stipulated facts in lieu of separate statements of undisputed facts. (Doc. No 62-2.)[2] The facts summarized below are largely derived from the parties' joint statement of stipulated facts as well as additional facts the court has considered as noted.
This case concerns California legislation addressing the piece-rate compensation of employees. Piece-rate compensation involves a method of calculating compensation based on the type and number of tasks completed rather than by the number of hours worked. See Gonzalez v. Downtown LA Motors, LP, 215 Cal.App.4th 36, 41 (2013) (); Bluford v. Safeway Stores, Inc., 216 Cal.App.4th 864, 867 (2013) (describing how an employer compensated truck drivers based on miles driven and specific tasks performed).
In 2002, the California Industrial Welfare Commission promulgated Wage Order No. 4, which provided that “[e]very employer shall pay to each employee, on the established payday for the period involved, not less than the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise.” Cal. Code Regs. tit. 8, § 11040(4)(B). In the piece-rate compensation context, it is not immediately apparent that an employee, who is paid on a per-task basis, is being compensated in accordance with minimum wage laws, which requires payment on a per-hour basis. Prior to the decisions issued in 2013 by the California Court of Appeal in Gonzalez and Bluford, some employers implemented a practice of adhering to a “minimum wage floor” by multiplying the number of hours worked by the applicable minimum wage. If an employee's compensation under a piece-rate compensation system did not exceed the minimum wage floor over a particular period of time, her compensation would be supplemented by the employer up to the minimum wage floor. See Gonzalez, 215 Cal.App.4th at 41-42.
As noted above, in the spring of 2013, California appellate courts issued two decisions concerning the application of California's minimum wage laws to piece-rate compensation for nonproductive time. In these two decisions, Gonzalez and Bluford, the state appellate court held that employees who are paid on a piece-rate basis are entitled to separate hourly compensation for rest breaks and nonproductive time, including time spent waiting for tasks, attending meetings and trainings, or performing other work for an employer. Additionally, the decisions held that employers who compensated employees on a piece-rate basis faced, at a minimum, potential liability for paying employees less than the minimum wage, producing an incorrect wage stub, and failing to provide paid rest breaks. Such violations also were found to trigger a statutory penalty, creating substantial potential liability for employers paying their employees on a piece-rate basis.
On or about August 28, 2014, a draft of proposed legislation (the “Draft Legislation”) was circulated to certain members of the California Legislature with the intention of addressing the Gonzalez and Bluford decisions. Stakeholders and legislators were concerned regarding the impact of the decisions on employers, given the significant potential liability that application of those decisions could impose upon them and the increase in litigation that immediately followed those appellate court decisions. Therefore, the drafters of the proposed legislation included a safe harbor provision, namely an affirmative defense that could be asserted in certain circumstances, with the intent to provide an option for California businesses facing unanticipated and significant potential liability arising from the application of those two then-recent decisions.
The Draft Legislation sought to address, among other things, whether the affirmative defense provisions would be applicable to any pending litigation, and what limitations should be established. The resulting draft thus provided that the affirmative defense provisions would not apply to:
(1) Damages and penalties previously awarded in an order or judgment that was final and not subject to further appeal as of January 1, 2015. (2) Any claims based on the failure to provide rest and recovery periods or pay for nonproductive time that were asserted in an action filed prior to July 1, 2013. (3) Any claims for unpaid wages, damages, and penalties that accrue after January 1, 2015.
The Draft Legislation did not include the specific date exclusion that was subsequently included in the enacted legislation in Labor Code § 226.2(g)(2)(A), or the fictitious worker claim exclusion subsequently included in § 226.2(g)(5). However, according to the parties stipulated facts in this case, the Draft Legislation was never finalized into bill format and was never introduced in the California Legislature. (Doc. No. 62-2 at 7, ¶ 21.)
The following year, Assembly Bill 1513 (“AB 1513”) was introduced in the California Legislature on or about March 5, 2015. The initial version of AB 1513 did not mention piece-rate compensation and instead, proposed merely to repeal obsolete workers' compensation study requirements.
On or about August 27, 2015, AB 1513 was amended to address piece-rate compensation and related issues. In doing so, the drafters of AB 1513 sought to address, among other things, the scope of the affirmative defense provisions and whether those provisions would be applicable to any pending litigation, along with any corresponding limitations such as cut-off dates that should be established. The need to address these issues existed for reasons independent of the United Farm Workers (“UFW”) and any position that union may have taken. (Doc. No. 62-2 at ¶ 23.) In resolving these issues, the drafters of AB 1513 included a number of limitations to the affirmative defense which were codified in Labor Code § 226.2(g).
The amended version of AB 1513 was a product of confidential discussions with groups including the California Labor and Workforce Development Agency, labor unions, and employer groups. On September 30, 2015, the Sacramento Bee reported that the author of AB 1513, Assembly Member Das Williams, stated that the exceptions to the affirmative defense provisions were necessary to maintain the support of labor and that “there has to be a cutoff at some point, and no matter what the cutoff point is, somebody's going to be left out.” (Id. at ¶ 27.)
The provisions of AB 1513 were codified at California Labor Code § 226.2 and became effective on January 1, 2016 and remained in effect only until January 1, 2021 when that section was automatically repealed. Specifically, the version of § 226.2 in effect between January 1, 2016 and December 31, 2020 was automatically repealed under § 226.2(k), which provided: “This section shall remain in effect only until January 1, 2021, and as of that date is repealed.” Cal. Lab. Code § 226.2(k), repealed January 1, 2021.[3]
Section 226.2 includes two primary provisions. First, subdivision (a) provides that employees compensated on a piece-rate basis must be compensated for rest and recovery periods and other nonproductive time separate from any piece-rate compensation. In addition, it establishes certain wage statement requirements as well as a methodology for calculating wages for these employees.
Subdivision (b) of § 226.2 provides that employers may assert an affirmative defense to any claim for recovery of wages damages, and penalties “based solely on the employer's failure to timely pay the employee the compensation due for rest and recovery periods and other nonproductive time,” so long as the employer complies with certain requirements by December...
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