Skillin v. Rady Children's Hospital-San Diego, D071288

• Decision Date: 06 December 2017
• Docket Number: D071288
• Citation: 18 Cal.App.5th 35,226 Cal.Rptr.3d 505
• Court: California Court of Appeals Court of Appeals
• Parties: David SKILLIN, Plaintiff and Appellant, v. RADY CHILDREN'S HOSPITAL-SAN DIEGO, Defendant and Respondent.

18 Cal.App.5th 35

226 Cal.Rptr.3d 505

David SKILLIN, Plaintiff and Appellant,

v.RADY CHILDREN'S HOSPITAL-SAN DIEGO, Defendant and Respondent.

D071288

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

Filed December 6, 2017

Hayes & Ortega, Dennis J. Hayes and Tracy J. Jones, San Diego, for Plaintiff and Appellant.

Littler Mendelson, Theodore R. Scott and Matthew Bryan Riley, San Diego, for Defendant and Respondent.

DATO, J.

David Skillin brought a Private Attorneys General Act lawsuit against his former employer Rady Children's Hospital of San Diego (Rady) for alleged violations of the California Labor Code. Skillin claimed Rady made unauthorized payroll deductions from his wages, resulting in higher than desired contributions to his retirement plan. ( Lab. Code, §§ 221 – 224.) He also claimed Rady issued inaccurate wage statements by failing to show the amounts deducted for retirement "on written orders of the employee." ( Lab. Code, § 226.)

The trial court granted summary judgment in Rady's favor, concluding Skillin's claims were preempted by the Employee Retirement Income Security Act of 1974 (ERISA). The court found preemption under ERISA section 514(a), which applies to state laws that "relate to any employee benefit plan." ( 29 U.S.C. § 1144(a).) It did not, however, find preemption under ERISA section 514(e), which applies to state laws that "directly or indirectly prohibit or restrict the inclusion in any plan of an automatic contribution arrangement." ( 29 U.S.C. § 1144(e)(1).)¹

We affirm. We need not decide whether Skillin's claims are preempted under subdivision (a) of section 514 because they are plainly preempted under subdivision (e) of that same section.

FACTUAL AND PROCEDURAL BACKGROUND

Skillin worked for Rady as a Cardiovascular Technologist/Anesthesia Technologist from 1997 through December 2014. Rady administers a pension benefit plan that it offers to its employees (the Plan).² Employees make pretax contributions to the Plan through payroll deductions, and Rady offers matching contributions.

At some point Rady created an automatic enrollment program for new hires. Since at least 2009, all new hires have been automatically enrolled in the Plan and signed up to contribute three percent of their pretax earnings through payroll deductions unless they opt out or elect a different percentage. Over time Rady phased out the fixed dollar amount contribution option. Since at least 2010, Plan participants have been permitted to elect contributions only as a percentage of their earnings, not as a fixed dollar amount.

Skillin enrolled in the Plan before 2010 and had opted to contribute a fixed dollar amount of $700 per pay period to his retirement plan. For years, Rady allowed Skillin and other similarly situated employees to make fixed dollar amount contributions to their plans. But in February 2014, Rady converted the fixed dollar amount deduction to a percentage of earnings deduction for those employees. Rady sent these employees the following notice:

"In an effort to help employees save for retirement, a change has been made to the way you elect your contributions to the Rady Children's Hospital 403(b) Plan (the ‘Plan’).

"Previously, you contributed a fixed dollar amount to the Plan each pay period, but effective January 19th, 2014 your contributions were converted to a percentage of your bi-weekly pay. No action was required by you to make this change; your current contribution was converted to a percentage of your pay and was calculated to be as close as possible to your previous dollar amount contribution. The new contribution amount will be on your February 7, 2014 paycheck.

[¶] ... [¶]

"To see how your pre-tax contribution affects your take home pay, please go to the Take Home Pay Calculator tool available in the ‘Library’ section at www.fidelity.com/atwork. Please note: you can change the percentage of your contribution to the Plan at any time by visiting www.fidelity.com/atwork, or speaking with a Fidelity Representative ...."

Skillin was informed by email that Rady would be deducting 18 percent from his wages per pay period going forward. Less than a week later he responded, inquiring whether he could continue with a fixed-dollar deduction. Shortly thereafter he received another email from the human resources department stating that his contribution level should have been set at 11 percent and asking if he wanted that percentage deducted from his next paycheck instead. There is no indication Skillin responded. On February 7, 2014, Rady deducted $1351.21 from his wages, totaling 18 percent of his earnings. Rady continued to deduct 18 percent of his wages from subsequent paychecks, consistently exceeding the $700 amount that Skillin had expressly authorized. Skillin's wage statements noted the total amount deducted from his wages for retirement each pay period.

In March 2014 Skillin sued Rady on behalf of himself and other similarly situated employees who were automatically switched from the fixed dollar amount contribution option. He asserted two causes of action under the California Labor Code. First, he alleged that Rady violated sections 221 to 224 of the Labor Code when it made deductions from his wages without written authorization. He also alleged Rady violated section 226 of the Labor Code when it issued wage statements that did not itemize the portion of wage deductions that were made pursuant to his written authorization (the wage statement claim). Rady tried to remove the case to federal court, but it was remanded because it was not completely preempted under ERISA. ( 29 U.S.C. § 1132(a).)³

Back in state court, Rady moved for summary judgment, or in the alternative for summary adjudication. ( Code Civ. Proc., § 437c, subds. (a) & (f).) It urged the court to find all of Skillin's claims preempted under ERISA sections 514(a) and 514(e) and grant summary adjudication on the wage statement claim. Skillin did not dispute the facts in Rady's separate statement but urged the court to follow a federal district court opinion, Albin v. Qwest Communs. Corp. (D. Or. 2002) 194 F.Supp.2d 1138 ( Albin ), to find no preemption.

The court granted summary judgment in Rady's favor, concluding Skillin's claims were preempted under section 514(a). Finding Albin unpersuasive, the court relied instead on Department of Labor opinion letters submitted by Rady. The court rejected section 514(e) preemption, reasoning that the authorization for deductions required under state law did not prohibit or restrict Rady from including an automatic contribution arrangement in the Plan. Because it granted the motion based on section 514(a) preemption, the court found it unnecessary to address the merits of the wage statement claim. It nonetheless found that no violation occurred because Skillin's wage statements itemized deductions made toward the Plan, and the Labor Code did not require Rady to separately delineate the amount deducted pursuant to written authorization.

DISCUSSION

Skillin's complaint included two causes of action. The first alleged that Rady violated Labor Code sections 221 to 224 by deducting unauthorized amounts from his paychecks to fund the plan. Those provisions make it "unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee." ( Lab. Code, § 221.) If a wage agreement is reached through collective bargaining, it is unlawful for the employer to withhold wages, except "when a deduction to cover health and welfare or pension plan contributions is expressly authorized by a collective bargaining or wage agreement." ( Lab. Code, §§ 222, 224.) Likewise, an employer may not "secretly pay a lower wage while purporting to pay the wage designated by [the applicable] statute or contract." ( Lab. Code, § 223.)

The second cause of action, the wage statement claim, alleged that Rady violated Labor Code section 226, subdivision (a), which requires employers to provide each employee "an accurate itemized statement in writing showing (1) gross wages earned, ... (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, [and] (5) net wages earned." Skillin alleged that by not itemizing authorized deductions, Rady's wage statements inaccurately reflected the net pay he should have received but for the unauthorized deductions.

Skillin challenges the court's decision granting summary judgment in Rady's favor. He argues his claims are not preempted under section 514(a) because they do not challenge Rady's administration of the Plan. According to Skillin, to decide his state law claims it is immaterial where Rady directed his wage deductions or how it administered his retirement plan. And even if preemption applies, Skillin contends the wage statement claim should survive. Skillin agrees with the trial court's ruling in only one respect: he urges us to affirm the court's determination that section 514(e) preemption does not apply. In turn, Rady urges us to affirm summary judgment and further find preemption under section 514(e).

The purpose of summary judgment is to "cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." ( Aguilar v. Atlantic Richfield Co . (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493.) Summary judgment is proper if there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. ( Code Civ. Proc., § 437c, subd. (c).) We review the grant of summary judgment independently, "considering all of the evidence the parties offered in connection with the motion (except that which the trial court properly excluded) and the uncontradicted inferences the evidence reasonably supports." ( Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476, 110 Cal.Rptr.2d 370, 28 P.3d 116.) Because we review "the ruling, not the rationale," we may...