Herrera v. Zumiez, Inc.

• Decision Date: 19 March 2020
• Docket Number: No. 18-15135,18-15135
• Parties: Alexia HERRERA, Plaintiff-Appellee, v. ZUMIEZ, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

953 F.3d 1063

Alexia HERRERA, Plaintiff-Appellee,

v.ZUMIEZ, INC., Defendant-Appellant.

No. 18-15135

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 4, 2019 San Francisco, California

Filed March 19, 2020

OPINION

PAEZ, Circuit Judge:

California law requires employers to provide partial compensation ("reporting time pay") to retail employees who report for work but are not actually provided work. Alexia Herrera ("Herrera") filed this putative class action alleging that Zumiez, Inc. ("Zumiez") failed to pay employees at its California retail stores reporting time pay for "Call-In" shifts. As alleged, an employee scheduled for a Call-In shift must make herself available to work during the shift and then call her manager thirty minutes to one hour before the shift or, if she works a shift immediately before the Call-In shift, contact her manager at the end of that shift. At that time—either during the call or during the post-shift contact—the manager tells the employee whether she will be required to work during the Call-In shift. If the employee does not work, Zumiez does not pay the employee. Herrera also alleged related claims for failure to pay minimum wages and failure to indemnify expenses for phone calls employees needed to make to comply with the Call-In policy.

Zumiez moved for judgment on the pleadings. The district court denied the motion. This interlocutory appeal followed.

While this appeal was pending, the California Court of Appeal decided Ward v. Tilly's, Inc. , 31 Cal.App.5th 1167, 243 Cal. Rptr. 3d 461 (2019), review denied (May 15, 2019). Ward held that reporting time pay must be paid in a closely analogous situation, an outcome consistent with the district court's denial of Zumiez's motion for judgment on the pleadings here. Because there is no "persuasive data" to convince us that the California Supreme Court would decide otherwise, we follow Ward 's "controlling interpretation of state law" and affirm with respect to the reporting time pay claim. Tomlin v. Boeing Co. , 650 F.2d 1065, 1069 n.7 (9th Cir. 1981) ; see also West v. Am. Tel. & Tel. Co. , 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940). With respect to the other claims, we affirm in part and reverse in part.

I.

Herrera filed a putative class action against Zumiez, a Washington corporation with retail stores in California. We summarize the relevant facts as alleged in Herrera's First Amended Complaint.

From August 2014 through March 2015, Herrera worked as a Sales Associate at a Zumiez retail store in Chico, California.

Zumiez scheduled Herrera and other employees for work according to two scheduling policies. First, Zumiez scheduled employees for "Show-Up" shifts, requiring the employees to report for the scheduled work shift by physically showing up at a Zumiez store.

Second, Zumiez scheduled employees for "Call-In" shifts. If the employee was scheduled for a Show-Up shift immediately before a Call-In shift, the employee had to wait until the end of the Show-Up shift to ask her manager if she would be required to work the scheduled Call-In shift. If the employee was not scheduled to work a Show-Up shift immediately before a Call-In shift, then the employee was required to make a phone call to her manager between thirty minutes and one hour before the scheduled Call-In shift. The employee would then wait for the manager to determine whether the employee would be permitted to work during the scheduled shift. Phone calls for Call-In shifts generally lasted five to fifteen minutes.

Whether she had a shift before the Call-In shift or not, the employee was required to be available to work the Call-In shift. The employee could be subject to discipline for not working Call-In shifts for the same reasons she could be disciplined for not working Show-Up shifts. The employee could not schedule classes or doctor appointments, or work for other employers during the Call-In shift, and she had to make child or elder care arrangements under the assumption she would work. Employees were not paid for Call-In shifts unless they were permitted to work and were not paid for the time they spent on the phone with their managers. Herrera and other employees were scheduled for Call-In shifts three to four times per week; they worked approximately half of these shifts.

Herrera alleged the following causes of action: (1) failure to pay reporting time wages for Call-In shifts; (2) failure to pay minimum wage; (3) failure to keep required records; (4) failure to provide accurate wage statements; (5) failure to pay all earned wages upon separation from employment; (6) failure to indemnify expenses for phone calls made for Call-In shifts; (7 and 8) unfair business practices under California's Unfair Competition Law; and (9) civil penalties pursuant to California's Private Attorneys General Act ("PAGA"). Zumiez moved for judgment on the pleadings on all of Herrera's claims pursuant to Federal Rule of Civil Procedure 12(c).

The district court denied Zumiez's motion as to all claims. First, the district court held that " ‘report for work’ may be accomplished telephonically," so Herrera had stated a reporting time pay claim. The district court did not address liability for reporting time pay where a Call-In shift immediately follows a Show-Up shift. Second, drawing inferences in Herrera's favor, the district court found that the complaint plausibly alleged that employees were subject to their employer's control during phone calls, so Herrera had stated a minimum wage claim. The district court recognized that factual questions remained to determine whether employees were subject to their employer's control during calls. Third, the district court found that Herrera had alleged that Zumiez had constructive knowledge that employees would use cell phones or otherwise incur expenses when making the calls, so Herrera had stated an indemnification claim.

The parties agreed that the claims for failure to keep required records, failure to provide accurate wage statements, failure to pay all earned wages upon separation from employment, unfair business practices, and civil penalties under PAGA (collectively, the "remaining claims") were derivative of the other claims. Accordingly, the district court denied judgment on the pleadings as to those claims as well.

The district court then granted Zumiez's motion to certify its order denying judgment on the pleadings for interlocutory appeal, 28 U.S.C. § 1292(b), noting that the "not otherwise appealable order ... ‘involves a controlling question of law as to which there is substantial ground for difference of opinion,’ " namely "does the wage order require workers to physically come to the workplace in order to report?" Zumiez then filed a petition for permission to appeal, identifying the question sought to be appealed as "[w]hether an employee must physically present himself or herself at the workplace in order to ‘report for work’ and thereby qualify for reporting time pay under California law." We granted the petition and this appeal ensued.

II.

We review de novo an order on a Rule 12(c) motion for judgment on the pleadings. Fleming v. Pickard , 581 F.3d 922, 925 (9th Cir. 2009). We accept all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Id . As under a Rule 12(b)(6) motion to dismiss, a Rule 12(c) motion for judgment on the pleadings is properly granted only when, "taking all the allegations in the pleadings as true, the moving party is entitled to judgment as a matter of law." Heliotrope Gen., Inc. v. Ford Motor Co. , 189 F.3d 971, 978–79 (9th Cir. 1999) (internal citation omitted).

III.

We have diversity jurisdiction pursuant to 28 U.S.C. § 1332 and apply California law. See Klingebiel v. Lockheed Aircraft Corp. , 494 F.2d 345, 346 & n.2 (9th Cir. 1974). In California, wage and hour claims are governed by two sources of authority: provisions of the Labor Code, enacted by the Legislature, and a series of wage orders, adopted by the Industrial Welfare Commission ("IWC"). Troester v. Starbucks Corp. , 5 Cal.5th 829, 235 Cal.Rptr.3d 820, 421 P.3d 1114, 1119 (2018), as modified on denial of reh'g (Aug. 29, 2018). The California Division of Labor Standards Enforcement ("DLSE") is the state agency empowered to enforce the wage orders. Morillion v. Royal Packing Co. , 22 Cal.4th 575, 94 Cal.Rptr.2d 3, 995 P.2d 139, 142 (2000). The California Supreme Court has said "[t]ime and again" that courts should construe the wage orders "to favor the protection of employees." Troester , 235 Cal.Rptr.3d 820, 421 P.3d at 1119 (quoting Augustus v. ABM Sec. Servs., Inc. , 2 Cal.5th 257, 211 Cal.Rptr.3d 634, 385 P.3d 823, 827 (2016) ). Wage Order No. 7-2001 ("Wage Order 7"), which regulates the wages, hours, and working conditions in the mercantile industry, applies here.¹ Cal. Code Regs. tit. 8, § 11070.

A. Reporting Time Pay

Herrera alleges that Zumiez failed to comply with the reporting time pay requirements of Wage Order 7 by denying employees compensation for Call-In shifts when employees made themselves available for work during scheduled shifts, called or contacted Zumiez at an appointed time, and were told they would not be permitted to work. Cal. Code Regs. tit. 8, § 11070(5).

Pursuant to section (5) of Wage Order 7, which is entitled "Reporting Time Pay," "[e]ach workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee's usual or scheduled day's work, the employee shall be paid for half the usual or scheduled day's work" in an amount no less than two hours' wages and no more than four hours' wages. Id . § 11070(5)(A). The parties dispute whether calling one's employer at an appointed time before a scheduled shift constitutes "report[ing] for work" under this provision.²

1. Ward v. Tilly's, Inc.

While this appeal was pending, the California Court of Appeal published Ward v....