Richardson v. Sunset Science Park Credit Union

• Court: U.S. Court of Appeals — Ninth Circuit
• Writing for the Court: Graber
• Citation: Richardson v. Sunset Science Park Credit Union, 268 F.3d 654 (9th Cir. 2001)
• Decision Date: 11 September 2001
• Docket Number: PLAINTIFF-APPELLANT,No. 00-35342,DEFENDANT-APPELLEE,00-35342
• Parties: (9th Cir. 2001) TRINA RICHARDSON,, v. SUNSET SCIENCE PARK CREDIT UNION, A FEDERALLY CHARTERED CREDIT UNION, Submitted:

Page 654

268 F.3d 654 (9th Cir. 2001)

TRINA RICHARDSON, PLAINTIFF-APPELLANT, v. SUNSET SCIENCE PARK CREDIT UNION, A FEDERALLY CHARTERED CREDIT UNION, DEFENDANT-APPELLEE.

No. 00-35342

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Submitted: September 11, 2001^*

Filed: October 5, 2001

Jacqueline L. Koch, Koch & Deering, Portland, Oregon, for the plaintiff-appellant.

Karen E. Saul, Farleigh, Wada & Witt, P.C., Portland, Oregon, for the defendant-appellee.

Appeal from the United States District Court for the District of Oregon; Helen J. Frye, District Judge, Presiding. D.C. No. CV-98-01556-FR

Before: Thompson, Tashima, and Graber, Circuit Judges.

Graber, Circuit Judge:

Plaintiff Trina Richardson contends on appeal that the district court incorrectly computed the amount of penalty wages owed to her, under state law, by Defendant Sunset Science Park Credit Union and incorrectly determined that she was not entitled to statutory damages under state law because of Defendant's unlawful deduction from her paycheck. We affirm in part and reverse in part.

FACTUAL AND PROCEDURAL BACKGROUND

Defendant employed Plaintiff as a loan officer from August 13, 1995, through October 16, 1998. On September 25, 1998, Plaintiff gave Defendant two weeks' notice that she intended to quit her job and that her final day of work would be October 9. Plaintiff and Defendant's manager later agreed that Plaintiff would work through October 16, 1998.

By the terms of her employment, Plaintiff was entitled to "flexible time off" (FTO) as an employment benefit. Defendant expected employees to use their FTO allowance for "vacation, illness or injury . . . or personal emergencies." According to the employment manual, each employee who worked more than 90 days earned an FTO allowance on each anniversary date. Employees were required to use two weeks' FTO during the year following the award. FTO benefits could not be carried forward past an employee's anniversary date; however, if an employee had FTO remaining at his or her next anniversary date, the manual provided that the employee would be compensated at a rate of 50 percent of his or her regular hourly rate for each remaining FTO hour. The manual was silent as to how, or if, an employee was entitled to compensation for FTO hours at the time an employee ended employment.

As of October 16, 1998, Plaintiff was entitled to 23 hours of FTO. Defendant's manager told Plaintiff that she would be compensated for her FTO hours but did not specify a rate of compensation.

On October 30, 1998, 14 days after Plaintiff ended her employment, Defendant issued a check to Plaintiff to compensate her for her work on October 16, 1998, and her 23 FTO hours.¹ According to the"Earnings Statement" attached to the check, Defendant paid Plaintiff at 100 percent of her regular hourly rate for each FTO hour. Defendant deducted $68.83 from Plaintiff's gross pay to cover the cost of office supplies that Defendant's manager believed that Plaintiff had taken. Plaintiff had not authorized that deduction.

Plaintiff then initiated this action under the federal Fair Labor Standards Act and Oregon's wage and hour laws. She alleged four claims for relief: (1) that Defendant failed to compensate her for all overtime hours in violation of 29 U.S.C. § 207; (2) that Defendant failed to compensate her for all overtime hours in violation of Oregon Revised Statute ("ORS") 653.261; (3) that Defendant withheld $68.83 from her final paycheck without Plaintiff's consent or authorization, in violation of ORS 652.610(3), and that Plaintiff was entitled to a statutory remedy under ORS 652.615; and (4) that Defendant failed to pay Plaintiff her wages when due, in violation of ORS 652.140 and 652.150.

Plaintiff filed a motion for summary judgment. The district court granted the motion with respect to liability on Plaintiff's fourth claim for relief.² The rest of the case was tried to the court, which found for Defendant on the two overtime claims.³ As to the remainder of the case, the court found (1) that Plaintiff was entitled to be compensated for her remaining FTO hours at a rate of 50 percent of her regular hourly rate; (2) that Plaintiff was fully compensated on October 30, 1998; (3) that Defendant overpaid Plaintiff by an amount of $142.60; and (4) that Defendant violated ORS 652.615 when it deducted the $68.83 from Plaintiff's paycheck without her consent.

On Plaintiff's claim for unlawful deduction under ORS 652.615, the court held that, although Defendant had violated the statute, Plaintiff was not entitled to the statutory damages of $200 because Defendant's overpayment of Plaintiff for the FTO hours more than offset the unlawful deduction. On Plaintiff's claim for penalty wages under ORS 652.150, the court found that Plaintiff was fully paid on October 30, 1998, and that she was entitled to eight days of penalty wages.

This timely appeal ensued.

STANDARD OF REVIEW

We review the district court's findings of fact for clear error and its conclusions of law de novo. Barner v. City of Novato, 17 F.3d 1256, 1258 (9th Cir. 1994).

FTO HOURS

The district court found that, under the terms in Defendant's employment manual, Plaintiff was entitled to compensation for her remaining FTO hours at a rate of 50 percent of her regular hourly rate. That finding is not clearly erroneous.

[1] The manual provides: "Any remaining FTO balance over and above two weeks on the last day prior to your anniversary date will be paid out at 50 percent of your current hourly rate of pay." Defendant's manager testified that it was standard practice to reimburse employees for FTO hours at the 50 percent rate. Thus, although the manual does not address specifically the rate at which an employee will be compensated for excess FTO hours upon termination of employment, it is reasonable to conclude that, to the extent the manual authorizes compensation for those hours at all, it is at a rate of 50 percent. Nothing in the manual or in the testimony suggests that a terminated employee would fare better in this respect than a current employee.

Plaintiff argues that, under Sabin v. Willamette-Western Corp., 557 P.2d 1344 (Or. 1976), Defendant is required to compensate her for unused FTO at 100 percent of her regular hourly rate. Sabin is materially distinguishable. In Sabin, the court held that the plaintiff was entitled to be compensated at his regular salary for vacation time that remained when his employment ended, despite the defendant's policy of not compensating for such time. Id. at 1346-47. The court reasoned that the defendant had never informed the plaintiff of its policy and that the evidence supported the conclusion that the plaintiff reasonably expected to be compensated for vacation time. Id. at 1347.

By contrast, in this case, Plaintiff knew -indeed, had been told in writing --that Defendant's policy was to compensate employees for unused FTO time but only at a rate of 50 percent of their current hourly rate. Plaintiff never received any information to suggest that Defendant would pay more than that rate for unused FTO time. On this record, Plaintiff could not reasonably have expected compensation at a higher rate.

In short, the record supports the district court's finding that Plaintiff was entitled to be compensated for her 23 FTO hours at 50 percent of her regular hourly rate.

STATUTORY DAMAGES

The district court held, and the parties do not dispute on appeal, that Defendant violated ORS 652.610⁴ when it deducted $68.83 from Plaintiff's final paycheck. What Plaintiff contests is the district court's legal conclusion that she is not entitled to a statutory penalty under ORS 652.615 for that violation.

As an initial matter, Defendant asserts that Plaintiff did not preserve this issue for appeal because, in deciding it, the district court adopted the recommendation of the magistrate judge and Plaintiff had not objected to the magistrate judge's findings and recommendations. Defendant is incorrect. "It is well-settled law in this circuit that `failure to file objections [to a magistrate judge's findings] does not waive the right to appeal the district court's conclusions of law.' " Lisenbee v. Henry, 166 F.3d 997, 998 n.2 (9th Cir.) (quoting Britt v. Simi Valley Unified Sch. Dist., 708 F.2d 452, 454 (9th Cir. 1983)), cert. denied, 528 U.S. 829 (1999). The district court's conclusion that ORS 652.615 does not permit Plaintiff to recover a penalty for Defendant's unlawful deduction because of an unrelated overpayment is a conclusion of law, and thus appealable, despite Plaintiff's failure to object to it.

ORS 652.615 provides:

There is hereby created a private cause of action for a violation of ORS 652.610(3) for actual damages or $200, whichever is greater. In any such action the court may award to the prevailing party, in addition to costs and disbursements, reasonable attorney fees.

Contrary to the district court's conclusion, by providing for a minimum award of $200 the text of the statute makes it clear that the only prerequisite for relief is that a plaintiff have suffered a violation of ORS 652.610(3). Once a plaintiff has established that violation, the plaintiff is entitled to a minimum of $200, whether or not actual damages are shown. ORS 652.615; see also Allen v. Jackson County, 7 P.3d 739, 760 (Or. Ct. App. 2000) (Edmonds, J., concurring) (stating that, when it enacted ORS 652.615, "the legislature contemplated that there will be instances in which deductions are made by employers in violation of ORS 652.610(3), but will result in no wages owing when due. In those instances, the employee's sole remedy will be under ORS 652.610(3) and ORS 652.615.").

Two Oregon Court of Appeals cases further support the conclusion that Defendant cannot escape the statutory penalty under ORS 652.615 on a theory that the overpayment of FTO benefits offsets the unlawful deduction. In both Stanich v. Precision Body & Paint, Inc., 950 P.2d 328 ...