Ward v. United Airlines, Inc.

• Court: California Supreme Court
• Writing for the Court: Opinion of the Court by KRUGER, J.
• Citation: Ward v. United Airlines, Inc., 9 Cal.5th 732, 466 P.3d 309, 264 Cal.Rptr.3d 1 (Cal. 2020)
• Decision Date: 29 June 2020
• Docket Number: S248702
• Parties: Charles E. WARD et al., Plaintiffs and Appellants, v. UNITED AIRLINES, INC., Defendant and Respondent. Felicia Vidrio et al., Plaintiffs and Appellants, v. United Airlines, Inc., Defendant and Respondent.

9 Cal.5th 732

466 P.3d 309

264 Cal.Rptr.3d 1

Charles E. WARD et al., Plaintiffs and Appellants,

v.UNITED AIRLINES, INC., Defendant and Respondent.

Felicia Vidrio et al., Plaintiffs and Appellants,

v.United Airlines, Inc., Defendant and Respondent.

S248702

Supreme Court of California.

June 29, 2020

Jackson Hanson, Jeffrey C. Jackson, Cardiff By The Sea, Kirk D. Hanson, San Diego; Esner, Chang & Boyer, Stuart B. Esner and Joseph S. Persoff, Los Angeles, for Plaintiffs and Appellants.

Mastagni Holstedt, David E. Mastagni and Isaac S. Stevens, Sacramento, for Dan Goldthorpe, James Donovan, Chris Bennett, James Isherwood and David Vincent as Amici Curiae on behalf of Plaintiffs and Appellants.

O'Melveny & Myers, Robert Siegel, Los Angeles Adam P. Koh Sweeney and Susannah K. Howard, San Francisco, for Defendant and Respondent.

Jones Day, Douglas W. Hall, Shay Dvoretzky and Vivek Suri for Airlines for America as Amicus Curiae on behalf of Defendant and Respondent.

Opinion of the Court by KRUGER, J.

From the air, the borders that divide state from state disappear. But in our federalist system, those borders still matter—even for those who make their living flying the friendly skies. In these consolidated cases and Oman v. Delta Air Lines, Inc. (June 29, 2020, S248726) ––– Cal.5th ––––, 264 Cal.Rptr.3d 1, 466 P.3d 309, we confront questions about how the laws of a single state might apply to employees who perform duties across the country, on behalf of an employer in the business of connecting the world.

Plaintiffs are pilots and flight attendants for a global airline based outside California. Plaintiffs reside in California but perform most of their work in airspace outside California's jurisdiction. They are not paid according to California wage law, but instead according to the terms of a collective bargaining agreement entered under federal law. The United States Court of Appeals for the Ninth Circuit has asked us to decide whether, given these circumstances, the airline is required to provide plaintiffs with wage statements that meet the various requirements of California law.

We conclude that whether plaintiffs are entitled to California-compliant wage statements depends on whether their principal place of work is in California. For pilots, flight attendants, and other interstate transportation workers who do not perform a majority of their work in any one state, this test is satisfied when California serves as their base of work operations, regardless of their place of residence or whether a collective bargaining agreement governs their pay.

I.

The consolidated cases before us arise from three class actions filed against defendant United Airlines, Inc. United is an air carrier that provides service between airports across the country and around the world, including to and from numerous airports in California. United is incorporated in Delaware and headquartered in Illinois, with a substantial administrative presence in Texas. Plaintiff Charles Ward is a pilot for United, while plaintiffs Felicia Vidrio and Paul Bradley are flight attendants. All three are California residents. ( Ward v. United Airlines, Inc. (9th Cir. 2018) 889 F.3d 1068, 1071.)

Ward filed an action in state court on behalf of pilots, while Vidrio and Bradley each filed separate state court actions on behalf of flight attendants. All three flight crew members alleged that United's wage statements fail to provide them all the information required by Labor Code section 226 ( section 226 ), in the format required by that provision. (See § 226, subd. (a).) Specifically, the flight crew members complained that although United issues them at least two wage statements a month, the wage statements do not (1) list a street address for United, instead providing only a post office box, or (2) include the hours worked and all applicable hourly rates that make up employee pay for the pay period, instead listing only the total amounts earned in various pay categories. The crew members sought civil penalties under the Labor Code Private Attorneys General Act of 2004 ( Lab. Code, § 2698 et seq. ) on a representative basis; statutory penalties under section 226, subdivision (e) on a classwide basis; and injunctive relief ( Ward v. United Airlines, Inc. , supra , 889 F.3d at p. 1071 ).

United removed all three actions to federal court. In the Ward case, the district judge certified a class consisting of pilots who reside in California and pay California income taxes.¹ (Ward v. United Airlines, Inc. (N.D.Cal., Mar. 23, 2016, No. 3:15-cv-02309-WHA) 2016 WL 1161504, 2016 U.S.Dist. Lexis 38896.) A different district judge consolidated the Vidrio and Bradley cases and certified a similarly defined class of California-based flight attendants. (Vidrio v. United Airlines, Inc. (C.D.Cal., Aug. 23, 2016, No. 2:15-cv-07985-PSG-MRW) 2016 U.S.Dist. Lexis 189537.)

In each case, the district court granted summary judgment to United. The district court in Ward held that the geographic reach of California wage and hour law—including section 226—is governed by a " ‘job situs test,’ which considers where an employee ‘principally’ worked." (Ward v. United Airlines, Inc. (N.D.Cal., July 19, 2016, No. 3:15-cv-02309-WHA) 2016 WL 3906077, at p. *3, 2016 U.S.Dist. Lexis 94803, p. *10.) Because it was undisputed that under the district court's test the members of the pilot class did not work principally in California, the court ruled that section 226 did not apply.

Several months later, the district court in Vidrio reached the same conclusion. (Vidrio v. United Airlines, Inc. (C.D.Cal., Mar. 15, 2017, No. 2:15-cv-07985-PSG-MRW) 2017 WL 1034200, 2017 U.S.Dist. Lexis 40609.) The Vidrio court noted that since Ward was decided, other federal courts had also considered whether flight crew members may bring claims under California's wage and hour laws when most of the work is performed outside the state. In some of these cases, the courts had interpreted relevant California precedent to call for a different approach from the "job situs" test applied in Ward ; in determining whether California law applies, these courts had weighed various factors in addition to job situs, including the parties’ states of residence. (Vidrio , at pp. –*5, 2017 U.S.Dist. Lexis 40609 at pp. *12–*13.) The Vidrio court concluded that United would prevail under both the "job situs" test and the wider-ranging multifactor approach, since the Vidrio class members do not work principally in California and "United's ties to California are minimal relative to its overall business ...." (Id. at p. *5, 2017 U.S.Dist. Lexis 40609, at pp. *14–*15.) Absent greater employer ties to California, the court concluded, "[T]he class members’ residency and receipt of wage statements in California is insufficient to obtain the benefits of California wage and hour laws when the work is principally performed outside of the state." (Id. at p. *5, 2017 U.S.Dist. Lexis 40609, at p. *15.)

Both sets of plaintiffs sought review, and the Ninth Circuit consolidated the appeals for purposes of oral argument. After argument, the Ninth Circuit ordered supplemental briefing addressing the Industrial Wage Commission (IWC) wage order regulating the transportation industry, IWC wage order No. 9–2001 (Wage Order No. 9). That wage order extends various protections—including certain wage statement requirements—to transportation workers. But the wage order exempts from its protections employees who have entered into a collective bargaining agreement under and in accordance with the provisions of the Railway Labor Act, a federal statute governing labor relations in the railroad and airline industries. (See Wage Order No. 9, § 1(E); 45 U.S.C. § 151 et seq. ) United pilots and flight attendants are parties to such a collective bargaining agreement.

After briefing was completed, the Ninth Circuit issued an order asking this court to resolve two unsettled questions of California law critical to the resolution of the crew members’ section 226 claims. ( Ward v. United Airlines, Inc. , supra , 889 F.3d at p. 1070.) Those questions, which we have reframed slightly (see Cal. Rules of Court, rule 8.548(f)(5) ), are:

(1) Wage Order No. 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement in accordance with the Railway Labor Act. (See Cal. Code Regs., tit. 8, § 11090, subd. 1(E).) Does the Railway Labor Act exemption in Wage Order No. 9 bar a wage statement claim brought under section 226 by an employee who is covered by a collective bargaining agreement?

(2) Does section 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on his or her wages, but who does not work principally in California or any other state?

II.

Section 226 requires an employer to supply each employee, "semimonthly or at the time of each payment," a written wage statement listing the employer's name and address; identifying the pay period; itemizing the total hours worked, applicable hourly rates, hours worked at each rate, gross and net wages earned, and any deductions taken; and disclosing other prescribed information. ( § 226, subd. (a).) Violations may result in penalties of up to $4,000 for each injured employee, as well as an award of costs and attorney's fees. (Id. , subd. (e)(1).)

The Ninth Circuit's first question is whether, as United argues, the plaintiff crew members fall outside the protections of section 226 because they are parties to a collective bargaining agreement entered in accordance with the Railway Labor Act. United's argument is not based on the language of section 226—which says nothing at all about collective bargaining agreements—but on the language of the transportation industry wage order, Wage Order No. 9.

Wage Order No. 9 is one of 18 wage orders promulgated by the IWC in response to the Legislature's 1913...