Brown et al v. Wal-Mart Store, Inc.MOTION for Judgment on the Pleadings OR, IN THE ALTERNATIVE MOTION TO STAY PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOFN.D. Cal.April 30, 2010LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY DENNIS M. BROWN, Bar No. 126575 dmbrown@littler.com MARLENE S. MURACO, Bar No. 154240 mmuraco@littler.com KARIN M. COGBILL, Bar No. 244606 kcogbill@littler.com LITTLER MENDELSON A Professional Corporation 50 W. San Fernando, 15th Floor San Jose, CA 95113.2303 Telephone: 408.998.4150 Attorneys for Defendant WAL-MART STORES, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION NISHA BROWN and KATHY WILLIAMSON, individually and on behalf of all others similarly situated, Plaintiffs, v. WAL-MART STORES, INC., and DOES 1-50, inclusive, Defendants. Case No. C09-03339-JW DEFENDANT’S NOTICE OF MOTION AND MOTION FOR JUDGMENT ON THE PLEADINGS PURSUANT TO FED. R. CIV. P. 12(C), OR IN THE ALTERNATIVE MOTION TO STAY PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: October 18, 2010 Time: 9:00 a.m. Location: Courtroom 8, 4th Floor Honorable James Ware Case5:09-cv-03339-JW Document31 Filed04/30/10 Page1 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 i MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY TABLE OF CONTENTS Page I. RELEVANT BACKGROUND .....................................................................................2 II. MOTION FOR JUDGMENT ON THE PLEADINGS IS APPROPRIATE............................2 A. PAGA Provides for the Recovery of Civil Penalties In Specific Situations...................3 B. PAGA Applies Only to Provisions of the Labor Code and Wage Order Section 14(A) is Not Incorporated Into Labor Code Section 1198.................................4 C. Alternatively, Even If a Violation of Wage Order 7-2001, Section 14(A) Constitutes a Violation of Labor Code 1198, Plaintiffs Cannot Recover PAGA Penalties Pursuant to Section 2699(f) Since The Wage Order Already Establishes A Penalty For Violation Of Its Terms. ........................................................6 III. ALTERNATIVELY, THE COURT SHOULD STAY THE PRESENT ACTION PENDING RESOLUTION OF THE APPEAL IN THE 99¢ ONLY STORES MATTER.........................8 1. The Only Potential Harm to Plaintiffs From A Stay is a Delay in Collecting Penalties. ...........................................................................................................9 2. Hardship to Wal-Mart Will Result if a Stay is Not Granted. ........................................10 3. Resolution of 99¢ Stores Only Matter Will Simplify Questions of Law, and Necessarily Simplify the Resolution of This Case. .........................................11 IV. CONCLUSION..........................................................................................................12 Case5:09-cv-03339-JW Document31 Filed04/30/10 Page2 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 ii MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY TABLE OF AUTHORITIES CASES Ariz. Elec. Power Coop., Inc. v. Berkely 59 F.3d 988 (9th Cir. 1995) ........................ ............................................................11 Bright v. 99¢ Only Stores, No. BC 415527 (Los Angeles Super. Ct. October 15, 2009)....passim Brinker Restaurant Corp. v. Superior Court 165 Cal.App.4th 25 (2008).......................... ...........................................................11 Caliber Bodyworks, Inc. v. Superior Court 134 Cal.App.4th 365 (2005).....................................................................................4 Cicairos v. Summit Logistics, Inc. 1333 Cal.App.4th 949 (2005) ...................................................................................6 Clinton v. Jones 520 U.S. 681 (1997).................................................................................................8 CMAX, Inc. v. Hall 300 F.2d 265 (9th Cir. 1962) ..............................................................................9, 10 Fuller v. Amerigas Propane, Inc. 2009 U.S. Dist. LEXIS 71413 (N.D. Cal. 2009) ...................................................... 9, 10, 11 Hal Roach Studios v. Richard Feiner & Co. 896 F.2d 1542 (9th Cir. 1990) ..................................................................................3 Hamilton v. San Francisco Hilton, Inc. No. 04-431310 (S.F. Super. Ct. Sept. 8, 2005)............................................................7, 8 Hazelwood v. Hazelwood 57 Cal.App.3d 693, (1976).......................................................................................4 In re Kirkland 915 F.2d 1236, 1239 (9th Cir. 1990).............................................................................11 Jensen Family Farms, Inc. v. Monterey Bay Unified Air Pollution Control Dist. 2009 U.S. Dist. LEXIS 70855 (N.D. Cal. 2009) .............................................................3 Landis, 299 U.S. at 254..................................................................................................8 Lew v. Countrywide Finacial Corp. 2009 U.S. Dist. LEXIS 56191 (N.D. Cal. Feb. 24, 2009).................................................11 Lewis v. Tel. Employees Credit Union 87 F.3d 1537 (9th Cir. 1996) ..................................................................................11 Leyva v. Certified Grocers of California, Ltd. 593 F.2d 857 (9th Cir. 1979) ....................................................................................9 Lockyer v. Mirant Corp. 398 F.3d 1098 (9th Cir. 2005) ........................................................................8, 9, 10 McCollough v. Minnesota Lawyers Mutual Insurance Company 2009 U.S. Dist. LEXIS 124555 ....................................................................................10 Nanometics v. Nova Measuring Instruments, Ltd. 2007 U.S. Dist. LEXIS 18785 (2007)...........................................................................10 New. Net, Inc. v. Lavasoft 356 F. Supp. 2d 1090 (C.D. Cal. 2004)....................................................................3 Case5:09-cv-03339-JW Document31 Filed04/30/10 Page3 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY iii . OTHER AUTHORITIES Wage Order 7-2001, Section 14. ...................................................................................5 RULES Federal Rule of Civil Procedure 12 ................................................................................2 CODE SECTION California Labor Code § 1198............................................................................ 2, 5, 6, 8 California Labor Code Section 2699 ......................................................................2, 3, 4 Case5:09-cv-03339-JW Document31 Filed04/30/10 Page4 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY NOTICE OF MOTION AND MOTION TO PLAINTIFFS AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on October 18, 2010, at 9:00 a.m., or as soon thereafter as the matter may be heard in Courtroom 8, 4th Floor of the District Court of the Northern District of California, located at 280 South First Street, San Jose, CA 95113, before the Honorable James Ware, Defendant Wal-Mart Stores, Inc., (hereaft r “Wal-Mart” or “Defendant”) will move for judgment on the pleadings with respect to Plaintiffs’ Complaint pursuant to Federal Rule of Civil Procedure 12(c). In addition, and in the alternative, Defendant moves to stay the present action during the pendency of the appeal in the case of Bright v. 99¢ Only Stores, No. BC 415527 (Los Angeles Super. Ct. October 15, 2009), currently before the Court of Appeal of the State of California, Second Appellate District, Case No. B220016. This Motion is based on this Notice, the Memorandum of Points and Authorities in support thereof, the Declaration of Keith Hanleigh the papers and pleadings on file in this case, and all other evidence and argument as may be presented at he hearing on the motion. Dated: April 26, 2010 /s/ Karin M. Cogbill KARIN M. COGBILL LITTLER MENDELSON A Professional Corporation Attorneys for Defendant WAL-MART STORES, INC. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page5 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 1 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY MEMORANDUM OF POINTS AND AUTHORITIES On its face, Plaintiffs’ Complaint appears simple enough: they allege that while working as Cashiers for Wal-Mart, the Company failed to provide them with seats. They contend that this is a violation of Section 14(A) of California Wage Order 7-2001 because it is their belief that the nature of the work they performed as Cashier reasonably permitted the use of seats. Plaintiffs’ sole cause of action for not being provided with seats is a claim for the recovery of penalties under California’s Private Attorney General Act (PAGA), Cal. Lab. Code § 2698 et seq. Further review of the legal basis asserted for the alleged right to recover penalties under PAGA, however, demonstrates that Plaintiffs cannot state a claim for relief. By its own terms, PAGA does not apply directly to violations of the Wage Order, and even if, as Plaintiffs allege, a violation of Section 14(A) is bootstrapped into PAGA by way of a Labor Code violation, the penalties provided by PAGA are not available to Plaintiffs. Since they cannot establish any legal right to the penalties they seek to recover, Plaintiffs’ Complaint is subject to judgment on the pleadings in favor of Wal- Mart. In the alternative, Wal-Mart requests that the Court exercise its judicial discretion and stay this action pending the resolution of the appel of a California state case which is directly on point. In the past year, opposing counsel have filed at least 6 other actions against California retailers to recover PAGA penalties based on the all ged failure to provide seats to certain employees.1 The defendants in several of these cases have raised legal challenges to the viability of the plaintiffs’ claims, with varying results. In Bright v. 99¢ Only Stores, Judge Lavin of the Los Angeles County Superior Court granted the defendant’s demurrer without leave to amend, holding that Section 14 of the Wage Order does not serve the prohibitory function necessary to give rise to a Labor Code section 1198 violation; and furthermore that the plaintiff could not state a claim 1 Defendant understands that counsel for Plaintiffs have also filed the following actions asserting essentially identical claims against varying retailers: Hall v. Rite Aid Corp., No. 37-2009- 00087938-CU-OE-CTL (S.D. Super. Ct. filed April 17, 2009); Currie-White v. Blockbuster, Inc., No. 09-2593 (MMC) (N.D. Cal. Removed June 11, 2009); Bright v. 99¢ Only Stores, No. BC415527 (L.A. Super. Ct. filed June 11, 2009, on appeal before the 2nd Appellate District, Case No. B220016); Harris v. Home Depot USA, Inc., No. BC415774 (L.A. Super. Ct. filed June 15, 2009); Murphy v. Target Corp., No. 09 CV 1436 BEN (NLS) (S.D. Cal. removed to July 2, 2009); Kilby v. CVS Pharmacy, Inc., No. 09-2051 (L CAB) (S.D. Cal. filed Sept. 18, 2009). Case5:09-cv-03339-JW Document31 Filed04/30/10 Page6 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 2. for penalties. Plaintiff Bright filed a notice of appeal with the California Court of Appeal, Second Appellate District. His Opening Brief was filed March 4, 2010. Although not binding on this Court, the Court of Appeal’s decision in 99¢ Only Stores will be the first decision by an appellate court to address the interplay between the relevant wage ordr provision, the Labor Code and the PAGA, an issue that directly bears upon the viability of the claims Plaintiffs are seeking to pursue herein. Accordingly, a discretionary and discrete stay of this matter is appropriate pending the issuance of that decision. I. RELEVANT BACKGROUND Prior to filing their Complaint, Plaintiffs Nisha Brown and Kathy Williamson, worked as Cashiers at Wal-Mart.2 They allege that “in connection with their job as a Cashier, [they] regularly operated a cash register.” Complaint at ¶7. Plaintiffs further allege that “Wal-Mart failed to provide its Cashiers, including plaintiffs, with seats, despite the fact that the nature of cashier work reasonably permits the use of seats,” and that by failing to provide them with seats in accordance with Section 14(A) of the Wage Order, Wal-M rt violated California Labor Code section 1198. Id. at ¶8, 17. Plaintiffs further allege that Wal-Mart’s violation of Section 1198 “gives rise to a private right of action under PAGA” and entitles them to the penalties provided for in California Labor Code Section 2699(f). Id. at ¶18, 20. Plaintiffs seek to represent a class of “all persons who, during the applicable statute of limitations, were mployed by Wal-Mart in the State of California in the position of Cashier, or similar position that regularly involves the operation of a cash register, and were not provided with a seat.” Id. at ¶9. II. MOTION FOR JUDGMENT ON THE PLEADINGS IS APPROPRIATE Federal Rule of Civil Procedure 12(c) provides that any party may move for judgment on the pleadings at any time after the pleadings are closed, but within such time as not to delay the trial. Fed. R. Civ. P. 12(c). The standard applied on Rule 12(c) motions is essentially the same as applied on motions brought pursuant to Federal Rule of Civil Procedure 12(b)(6): judgment on the pleadings is appropriate when even if all material facts in the pleading under attack are true, the 2 Several months after the Complaint was filed, Plaintiff Brown applied for, and was rehired as a part-time Cashier for Wal-Mart. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page7 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 3. moving party is entitled to judgment as a matter of law. Hal Roach Studios v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1990). “When brought by the defendant, a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is a ‘means to challenge the sufficiency of the complaint after an answer has been filed.’” Jensen Family Farms, Inc. v. Monterey Bay Unified Air Pollution Control Dist., 2009 U.S. Dist. LEXIS 70855 (N.D. Cal. 2009) (quoting New. Net, Inc. v. Lavasoft, 356 F. Supp. 2d 1090, 1115 (C.D. Cal. 2004)). A motion for judgment on the pleadings is appropriate in this matter because Plaintiffs have failed to state a claim upon which relief can be granted. A. PAGA Provides for the Recovery of Civil Penalties In Specific Situations The Private Attorneys General Act of 2004 permits aggrieved employees to recover civil penalties in two specific instances. First, an aggrieved employee is permitted to step into the shoes of the Labor Workforce Development Agency (LWDA) and recover those penalties previously attainable by the LWDA as follows: (a) Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3. Labor Code §2699(a). Second, an aggrieved employee can recover penalties for violations of the Labor Code in those instances where no civil penalty was previously provided: (f) For all provision of this code except those for which a civil penalty is specifically provided, there is established a civil penalty for a violation of these provisions, as follows: * * * (2) If at the time of the alleged violation, the p rson employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employer per pay period for each subsequent violation. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page8 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 4. See Labor Code §2699(f). Section 2699(f) creates what are commonly known as “stop gap” or “fall back” penalties. The fixed penalties of Section 2699 are therefore available only when no other penalty has been provided. As such, if a civil penalty is already provided for a particular offense, then the aggrieved employee is limited to the recovry of those penalties and cannot avail himself of the “stop gap” or “fall back” penalties of Section 2699(f). PAGA, therefore, provides for the recovery of penalties only in those situations where penalties were previously recoverable by the LWDA, or where a provision of the Labor Code did not otherwise provide for a penalty: The Legislature adopted [PAGA] in 2003, effective January 1, 2004, to prescribe a civil penalty for existing Labor Code sections for which no civil penalty has otherwise been established and to allow aggrieved employees. . .to bring a civil action to collect civil penalties for Labor Code violations previously only available in enforcement actions initiated by the state’s labor law enforcement agencies. Caliber Bodyworks, Inc. v. Superior Court, 134 Cal.App.4th 365, 374 (2005). B. PAGA Applies Only to Provisions of the Labor Code and Wage Order Section 14(A) is Not Incorporated Into Labor Code Section 1198 By its own terms, PAGA provides an aggrieved employee with the ability to recover civil penalties for violations of the Labor Code only. See Labor Code § 2699(a) (“any provision of this code that provides for a civil penalty...”); § 2699(f) (“For all provision of this code except... established a civil penalty for a violation of these provisions...”) (emphasis added.) The words of a statute must be given their ordinary meaning unless a different meaning is clearly intended. Hazelwood v. Hazelwood, 57 Cal.App.3d 693, 698 (1976). Nowhere in the Labor Code does it state that an employer is required to provide employees with seats. Instead, the basis for Plaintiffs’ claim that they were entitled to seats is Section 14 of Wage Order 7-2001: (A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of ats. (B) When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonably proximity to the work area and employees shall be permitted to use sch eats when it Case5:09-cv-03339-JW Document31 Filed04/30/10 Page9 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 5. does not interfere with the performance of their duties. Wage Order 7-2001, Section 14. Wage Orders are regulations published by the Department of Industrial Relations, and are not sections or provisions of the Labor Code. Therefore, by its express terms, a violation of Section 14 of the Wage Order would not constitute “a violation of these provisions [of the Labor Code]” for which penalties under Section 2699(f) are vailable. In order to circumvent this obvious problem, and find “a violation of these provisions” as required by Section 2699(f), Plaintiffs rely on Labor Code Section 1198, which provides in its entir ty, that: The maximum hours of work and the standard conditions f labor fixed by the commission shall be the maximum hours of work and the standard conditions of labor for employees. The employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful. California Labor Code § 1198. Notably absent from the language of Section 1198 is any mention of “seats” or “chairs” or a requirement to provide such items to employees. Therefore, in order to bring Defendant’s alleged violation of Section 14(A) of the Wage Order within the confines of PAGA, Plaintiffs have bootstrapped it into a violation of Section 1198, and thus claim entitlement to the penalties provided by Section 2699(f). Plaintiffs’ reasoning is only valid if Section 1198 does in fact incorporate the entire Wage Order, including section 14(A) -- which it does not. Section 1198 makes it unlawful for an employer to employ any “employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order.” There is no dispute therefore that Section 1198 incorporates and covers those portions of the Wage Order that set or regulate working hours or that affirmatively prohibit certain working conditions. The Wage Order’s seat provision, however, does not prohibit anything. “Rather, Section 14(A) [of the Wage Order] states that ‘employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.’” Bright v. 99¢ Only Stores, No. BC415527 (L.A. Super. Ct. October 15, 2009.) (emphasis added.)3 Since Section 14(A) creates a reasonableness standard for 3 See Ruling on Defendant’s Demurrer attached as Exhibit A to Request for Judicial Notice. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page10 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 6. the provision of seats, depending on the nature of work performed, it “does not serve the prohibitory function necessary to give rise to a [Labor Code] Section 1198 violation.” Bright, at 2. And, absent a violation of a Labor Code provision, Plaintiffs cannot state a claim for PAGA penalties. C. Alternatively, Even If a Violation of Wage Order 7-2001, Section 14(A) Constitutes a Violation of Labor Code 1198, Plaintiffs Cannot Recover PAGA Penalties Pursuant to Section 2699(f) Since The Wage Order Already Establishes A Penalty For Violation Of Its Terms. In order to bootstrap their claim for failing to provide suitable seats under Section 14(A) into a violation of Labor Code section 1198, Plaintiffs will have to advocate for a broad interpretation of Section 1198. If, as Plaintiffs allege, Wal-Mart’s failure to provide “suitable seats” is a prohibited condition of labor within the meaning of Section 1198, then the penalties established by Wage Order 7-2001 apply and there is thu no basis for imposing the penalties that are created by Section 2966(f) in instances when no pre-existing civil penalty exists. Section 20 of Wage Order 7-2001 establishes a civilpenalty for violations of “the provisions of this order,” which by its terms includes violations of Section 14(A). Specifically, Section 20 of the Wage Order states: (A) In addition to any other civil penalties provide by law, any employer or any other person acting on behalf of the employer who violates, or causes to be violated, the provisions of this order, shall be subject to the civil penalty of: (1) Initial Violation: - $50 for each underpaid employee for each pay period during which the employee was underpaid in addition to the amount which is sufficient to recover unpaid wages. (2) Subsequent Violations: -- $100 for each underpaid employee for each pay period during which the employee was underpaid in addition to the amount which is sufficient to recover unpaid wages. Wage Order 7-2001, Section 20. As noted by the 99¢ Only Stores court, “when a wage order uses the phrase ‘this order’ or ‘this wage order,’ the wage order is referring to itself in the entirety.” Bright, at 2 (citing Cicairos v. Summit Logistics, Inc., 1333 Cal.App.4th 949, 959 (2005)). Thus, under the basic rules of statutory construction, the penalties established by Section 20 apply to the entire Wage Order, including violations of Section 14. Id. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page11 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 7. Plaintiffs are not however, seeking to recover the penalties provided in Section 20 of the Wage Order, but instead seek to recover the civil penalties provided by Section 2699(f). The fundamental flaw in Plaintiffs’ case is that Section 2699(f) penalties are only available to an aggrieved employee when no other civil penalty has been established for the alleged statutory violation. See Labor Code §2699(f) (“For all provision of this code except those for which a civil penalty is specifically provided, there is established a civil penalty for a violati n of these provisions...”) Here, because Section 20 of the Wage Order establishes a civil penalty for violating all provisions of the Wage Order, including Section 14, Plaintiffs are automatically foreclosed from recovering the civil penalties created by Section 2699(f). Contrary to what Plaintiffs may argue, the language of Section 20 which provides that its enumerated penalties are “in addition to any other civil penalties provided by law” does not open the door for Plaintiffs to recover the penalties provided by Section 2699(f). By its express terms, Section 2699(f) only comes into play when another penalty is not provided for. Therefore, although an employee could potentially recover penalties under Section 20 for a Wage Order violation, and also perhaps recover additional civil penalties provided by specific sections of the Labor Code, it does not follow that Section 2699(f) penalties are recoverable for a violation of Wage Order Section 14. Section 2699(f) only creates a civil penalty when no civil penalty has otherwise been provided. Therefore, since Section 20 establishes a civil penalty for all violations of the Wage Order, the penalties created by Section 2699(f) are not applicable and do not qualify as “[an]other civil penalt[y] provided by law.” In addition to the 99¢ Only Stores case, another California Superior Court’s decision in a very similar matter is instructive. In Hamilton v. San Francisco Hilton, Inc., No. 04-431310 (S.F. Super. Ct. Sept. 8, 2005),4 the plaintiff brought suit against her employer, San Francisco Hilton, alleging that it failed to provide seats to the employees who worked at the registration desk. Similar to the Plaintiffs herein, the plaintiff in Hamilton argued that because Labor Code section 1198 does not itself contain a civil penalty provision, the fallback penalties of section 2699(f) must apply. Like 4 See Order Granting San Francisco Hilton Inc.’s Motion for Summary Judgment, or in the Alternative Summary Adjudication attached as Exhibit B to Request for Judicial Notice. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page12 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 8. the court in 99¢ Only Stores, the Hamilton court rejected this logic: [Section 1198] does not mention seats, either. In fact, seats are not mentioned at all in the Labor Code. The [Wage] Order is the only place where seats are mentioned. Without the [Wage] Order, there is no alleged seat violation. The only way Plaintiff can bring her claim concerning seats—never mentioned in Labor Code §1198—is to incorporate the entire [Wage] Order. That Order unmistakably contains a civil penalty provision. Id. at 4. “Accordingly, the Private Attorneys General Act’s stop-gap penalties do not apply because a civil penalty, which by virtue of §1198 has been incorporated into the Labor Code, is specified in the [Wage] Order.” Id. (citing Labor Code §1198.) “Assuming any seat violation, Plaintiff is entitled to a civil penalty only if she satisfies the requirements of [Wage] Order §20.” Id. Here, because Plaintiffs do not seek to recover the penalti s provided for by Section 20, their claim fails. III. ALTERNATIVELY, THE COURT SHOULD STAY THE PRESENT AC TION PENDING RESOLUTION OF THE APPEAL IN THE 99¢ ONLY STORES MATTER. In the alternative, Wal-Mart requests that the court stay the present action for the duration of the appeal in the 99¢ Only Stores matter. Appellant Bright (plaintiff in the 99¢ Only Stores case) filed a Notice of Appeal on October 28, 2009, and filed her Opening Brief on March 4, 2010. The appellate court recently granted to the parties an extension to finishing briefing the matter such that Respondent 99¢ Stores Only, must file its brief on or before May 2, 2010 and Appellant Bright’s reply brief, if any, must be filed on or before June 18, 2010. Thus, barring any further extensions, the 99¢ Stores Only appeal will be fully briefed within two months time. Oral argument and the court’s decision should follow within a reasonable period of time thereafter. A district court “has broad discretion to stay proceedings as an incident to its power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706-707 (1997) (citations omitted); Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005). “The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis, 299 U.S. at 254. The Ninth Circuit has held that in determining whether a stay of a pending proceeding Case5:09-cv-03339-JW Document31 Filed04/30/10 Page13 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 9. is appropriate based upon the existence of other similar proceedings, a district court must weigh “the competing interest which will be affected by the granting or refusal to grant a stay...” Lockyer, 398 F.3d at 1110 (citations omitted). The competing interests to be considered are (1) the possible damage that may result from the granting of a stay; (2) the hardship that the party seeking the stay may suffer by being required to go forward; and (3) the orderly course of justice measured by considering whether issues will be simplified or complicated, proof, and questions of law which could be expected to result for a stay. Id.; CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). A stay may be the most efficient and fairest course wh n there are “independent proceedings which bear upon the case.” Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 863 (9th Cir. 1979). And, although a stay should not be indefinite in nature, a stay that has an estimated duration of less than a year, is reasonable. See Fuller v. Amerigas Propane, Inc., 2009 U.S. Dist. LEXIS 71413 (N.D. Cal. 2009). As discussed below, Wal-Mart s tisfies its burden of establishing that a stay of this action is warranted. Clinton, 520 U.S. at 708. 1. The Only Potential Harm to Plaintiffs From A Stay is a Delay in Collecting Penalties. As discussed above, Plaintiffs’ sole cause of action is for PAGA penalties. Setting aside the attorney’s fees sought by their counsel, Plaintiff’s prayer requests only the penalties as fixed by Labor Code § 2699(f). Pursuant to Section 2699(f) Plaintiffs seek penalties in the amount of $100 for the first pay period and $200 for each subsequent pay period in which Defendant failed to provide them with seats. Plaintiff Williamson is a former employee, and thus the amount of penalties she seeks to recover are fixed. Plaintiff Williamson was employed from March 1, 2008 to August 6, 2008, but was only employed for only 4 pay eriods from June 11, 2008 to August 6, 2008 (applying a one year statute of limitations based on the date Plaintiffs filed their Complaint). Declaration of Keith Hanleigh, ¶2. The fixed amount of damages sought by Plaintiff Williamson is thus $700.00. During the applicable time period, Plaintiff Brown (who was a former employee when the Complaint was filed, and was later rehired) has worked for a total of only 16 pay periods, for a maximum penalty amount of $3,100.00. Id. ¶3, 4. Pursuant to PAGA, if Plaintiffs recover any penalties, they are only permitted to retain 25% for themselves, as the other 75% must be distributed Case5:09-cv-03339-JW Document31 Filed04/30/10 Page14 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 10. to the California Labor Workforce Development Agency (“LWDA”). See Cal. Labor Code §2699 (j). Therefore, at the end of the day, the total take home penalties available to Plaintiffs to date is $950.00. This amount will only increase as to Plaintiff Brown by a net $50.00 (25% of $200) for every subsequent pay period she remains employed as a C hier. Since Plaintiffs only seek penalties they do not allege any harm or damage from Defendant’s actions, nor do they seek injunctive or declaratory relief. Therefore, at worst, a stay would result only in a possible delay in monetary recovery. See McCollough v. Minnesota Lawyers Mutual Insurance Company, 2009 U.S. Dist. LEXIS 124555 (recommended stay in part because action sought solely monetary damages and contained no allegation of continuing harm) (citing Lockyer, 398 F.3d at 1110 (citing CMAX, 300 F.2d at 268-69)). Additionally, mere delay without more, does not demonstrate undue prejudice. Se Nanometics v. Nova Measuring Instruments, Ltd., 2007 U.S. Dist. LEXIS 18785 (2007). 2. Hardship to Wal-Mart Will Result if a Stay is Not Granted. The legal issues in this case concerning Plaintiffs’ ability to state a claim for recovery of PAGA penalties based on a violation of Section 14 of the Wage Order are the same legal issues currently be addressed by the California Appellate Court in 99¢ Stores Only. Proceeding forward with this action prior to the resolution of the appeal in 99¢ Stores Only will cause a hardship since the parties will be conducting pointless discovery that may well be moot following a holding in 99¢ Stores Only. See Fuller, 2009 U.S. Dist. LEXIS 62884, *3 (N.D. Cal. August, 3, 2009) (court granted stay pending resolution of Brinker appeal). The vast majority of the discovery at issue in this case is directed at Wal-Mart’s production of information, documents and witnesses. In fact, Plaintiffs’ 30(b)(6) deposition notice to Wal-Mart equested that a witness be produced for deposition concerning 31 individual topics. Additionally, Plaintiffs have indicated a desire to notice at least two individual depositions, with more expected. Plaintiffs have also recently filed a motion to compel the disclosure of the names, addresses and phone numbers of every employee who worked in a California Wal-Mart store since June 2008 as aCashier. If a stay is not granted, Wal-Mart will continue to spend a significant amount of time and resources defending an action that may soon be determined by a California appellate court to Case5:09-cv-03339-JW Document31 Filed04/30/10 Page15 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 11. have no legal basis. Furthermore, the private and confidential information of at least 10,000 individuals may unnecessarily be ordered disclosed. Even though, as discussed below, the appellate decision in the 99¢ Stores Only matter does not have conclusive binding effect on this Court, it may still offer some guidance as to the precise legal issues raised by this case. Requiring Wal-Mart to proceed in defending an action that the California appellate court may affirm has no legal merit, creates a substantial and unnecessary hardship. 3. Resolution of 99¢ Stores Only Matter Will Simplify Questions of Law, and Necessarily Simplify the Resolution of This Case. This case involves significant questions of California law. “When interpreting state law, federal courts are bound by decisions of the sate’s highest court.” Ariz. Elec. Power Coop., Inc. v. Berkely, 59 F.3d 988, 991 (9th Cir. 1995). “In the absence of such a decision, a federal court must predict how the highest state court would decide th issue using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance.” In re Kirkland, 915 F.2d 1236, 1239 (9th Cir. 1990). And, “where th re is no convincing evidence that the state supreme court would decide differently, ‘a federal court is obligated to following the decisions of the state’s intermediate appellate courts.’” Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996) (quoting Kirkland, 915 F.2d at 1239). As with the numerous stays which were granted pending the outcome of Brinker Restaurant Corp. v. Superior Court, 165 Cal.App.4th 25 (2008), currently on appeal before the California Supreme Court, a stay in this action is appropriate. Judge Conti noted in Lew v. Countrywide Finacial Corp., 2009 U.S. Dist. LEXIS 56191 (N.D. Cal. Feb. 24, 2009) that speculation by the District Court regarding the proper legal standard is unnecessary. And, although not before the California Supreme Court as Brinker was, the appellate court’s decision in 99¢ Stores Only will nevertheless provide guidance to this Court, and ssist the Court in predicting how the California Supreme Court would decide the legal issue . Furthermore, if a clear legal standard is established by the appellate decision in 99¢ Stores Only it will “enable the parties to conduct efficient discovery, which will simply the issues and proof present in this matter.” Fuller, 2009 U.S. Dist. LEXIS 62884, *3. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page16 of 17 LITTLE R ME NDE LSO N A PR O F E S S ION A L C O RP O R AT IO N 50 W. Sa n F ernando, 15th F loor Sa n Jose , C A 95113.2303 408.998.4150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Firmwide:95051508.1 015602.6736 MOTION FOR JUDGMENT ON THE PLEADINGS, OR IN THE ALTERNATIVE MOTION TO STAY 12. Since Wal-Mart has established that a stay pending the resolution of the 99¢ Only Stores will not harm or prejudice Plaintiffs, but will assi t in preventing unnecessary hardship to Wal-Mart, and will assist in the resolution of the legal issues in this case, a stay of this action is appropriate. IV. CONCLUSION Judgment in favor of Defendant Wal-Mart is appropriate because Plaintiffs cannot establish any legal basis for recovering penalties pursuant to Labor Code §2699(f). In the alternative, if this Court is not inclined to grant Wal-Mart’s motion for judgment on the pleadings, this action should be stayed pending the resolution by the California Appellate Court in the 99¢ Only Stores matter. Dated: April 30, 2010 /s/ Karin M. Cogbill KARIN M. COGBILL LITTLER MENDELSON A Professional Corporation Attorneys for Defendant WAL-MART STORES, INC. Case5:09-cv-03339-JW Document31 Filed04/30/10 Page17 of 17