GOONEWARDENE v. ADP

Amicus Curiae Brief of Paychex, Inc.

Cal.July 25, 2017

Case No. 8238941 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA SHARMALEE GOONEWARDENE,ANINDIVIDUAL, Plaintiffand Appellant, SUPREME COURT FILED V. JUL 25 201? ADP, LLC; ADP PAYROLL SERVICES,INC.; AD PROCESSING, LLC, Jorge Navarrete Clerk Defendants and Respondents. Deputy ON REVIEW OF A DECISION OF THE CALIFORNIA COURT OF APPEAL, SECOND APPELLATE DISTRICT, DIVISION FOUR, No. B267010 ON APPEAL FROM THE SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES THE HON. WILLIAM BARRY, JUDGE CIVIL CASE No. TC026406 APPLICATION OF PAYCHEX, INC. FOR PERMISSION TO FILE AMICUS CURIAE BRIEF AND PROPOSEDBRIEF IN SUPPORT OF DEFENDANTS, RESPONDENTS AND PETITIONERS FOLEY & LARDNER LLP *Eileen R. Ridley, Bar No. 151735 (email: eridley@foley.com) Yesenia Garcia Perez, Bar No. 264880 (email: ygarciaperez@foley.com) Anthony James Dutra, Bar No. 277706 (email: adutra@foley.com) 555 California Street, Suite 1700 San Francisco, CA 94104 ee Telephone: 415.434.4484; Fax: 415.434.4507 HCCEIVED Attorneysfor Amicus Curiae PAYCHEX,INC. JUL TO 2017ies d CLIK SUPREME COURT 4814-7609-4277.6 Case No. S238941 IN THE SUPREME COURTOF THE STATE OF CALIFORNIA SHARMALEE GOONEWARDENE,AN INDIVIDUAL, Plaintiffand Appellant, V. ADP, LLC; ADP PAYROLL SERVICES,INC.; AD PROCESSING, LLC, Defendants and Respondents. ON REVIEW OF A DECISION OF THE CALIFORNIA COURT OF APPEAL, SECOND APPELLATEDISTRICT, DIVISION Four, No. B267010 ON APPEAL FROM THE SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES THE HON. WILLIAM BARRY, JUDGE CIVIL CASE No. TC026406 APPLICATION OF PAYCHEX, INC. FOR PERMISSION TO FILE AMICUS CURIAE BRIEF AND PROPOSEDBRIEFIN SUPPORT OF DEFENDANTS, RESPONDENTS AND PETITIONERS FOLEY & LARDNER LLP *Eileen R. Ridley, Bar No. 151735 (email: eridley@foley.com) Yesenia Garcia Perez, Bar No. 264880 (email: ygarciaperez@foley.com) Anthony James Dutra, Bar No. 277706 (email: adutra@foley.com) 555 California Street, Suite 1700 San Francisco, CA 94104 Telephone: 415.434.4484; Fax: 415.434.4507 Attorneysfor Amicus Curiae PAYCHEX,INC. 4814-7609-4277.6 TABLE OF CONTENTS Page APPLICATION FOR PERMISSION TO FILE 4M/ICUS CURIAE BRIEF IN SUPPORT OF DEFENDANTS RESPONDENTSANDPETITIONERS. ........cccccccsscccesseccseoceeees 7 STATEMENTOF INTEREST00.0.0... .ccccccsscsseeseesecsceseceseccovseseeesecceseees 7 PROPOSED BRIEF.........cccccssccssccossecessesscssevsscessssesssseecesssvessasveceessece 11 INTRODUCTION.......cccccccssssesesccssecscsssessscssscssssssessessscerasstessesscceee, 11 STATEMENTOF FACTS. .....cccciccecccccssscessessecssesssesestssecessreressssscesse. 12 ARGUMENT.........cccescscsssssccssssssvessseccsssesesscrsssssesstcssssesenseseesestecseesesees 13 I. THE PAYROLL SERVICE PROVIDER INDUSTRYIS HIGHLY CONCENTRATEDIN POPULOUS STATES LIKE CALIFORNIA, IS HIGHLY COMPETITIVE, AND SERVES A VAST NUMBER OF CALIFORNIA EMPLOYERS. ......cceccccssscsscessccsesseesscssevstesssecersusecessecsessecesees. 13 Il. GOONEWARDENE WILL EXPOSE PAYROLL SERVICE PROVIDERS TO CRUSHING FINANCIAL BURDENS ASSOCIATED WITH DEFENDING WAGE AND HOUR LAWSUITS. ....cccccccccccsscscsecsceceestecesecess 16 A. Goonewardene Exposes Payroll Service Providers To Staggering Defense Costs For Wage And Hour Violations Without Providing Any Added Benefit TO EMplOyees, 00... escssesssssesesesssscssscsssnseseeseeesassvacerseees 18 B. Goonewardene Exposes Payroll Service Providers To Staggering Damages Claims For Wage And Hour Violations Without Providing Any Added Benefit To Employees.........ccccccsssssesssesseesesecssscssvereeces 21 Il. GOONEWARDENE WILL DISTORT THE ECONOMICS OF PAYROLL SERVICES AND WILL ADVERSELY IMPACT THE PAYROLL SERVICE PROVIDER INDUSTRY AND COUNTLESS 2 4814-7609-4277.6 TABLE OF CONTENTS(cont'd) Page CALIFORNIA EMPLOYERS WHO RELY ON THESE SERVICES. ......cecssccsssssssssccessvsecesessssssssersesssssererseesssssecteccesescs 23 A. The Pricing of Payroll Provider Services Will Increase To Reflect The AddedLitigation Risks Potentially Making Such Services Cost-Prohibitive To California Employer........ccccsesessssssessscsssseeetserseen 24 1. Price Increases For Payroll Provider Services Will Adversely Impact Small California Employers......cccsecessesssssssesceseceseas 28 B. Employers’ Loss Of Access To Payroll Provider Services Will Result In Less Compliance And Weakened Protections For Workers. w.......ccceseseesessees 29 IV. PAYROLL SERVICE PROVIDERS SHOULD NOT BE FORCED TO INCUR THE MASSIVELITIGATION RISKS AND COSTS IMPOSED BY GOONEWARDENE.,wiecssssecsesessstsesessssvevsvsesesssssseecesevsrevavsvassteass 32 A. — Goonewardene Improperly Extends Liability To Payroll Service Providers For Employers’ Non- Delegable Wage Obligations. .........cccccccceesseeseseesees, 33 B. Federal And State Laws Regulating The Payment Of Wages Provide Ample Avenues For Employees To Seek Relief For Wage Disputes........0..ccessesseeseees 38 Vi CONCLUSIONwcccccccecssssceescscsescscssesvevevevsesacsauvausssseesseses 39 CERTIFICATE OF COMPLIANCE WITH CRC8.520(C) TYPE-VOLUME LIMITATION.......cccccccssssssececseseescstsssceees 4] CERTIFICATE OF SERVICE.......ccccsccssscsssssssssssscsssssevsecsesarsvseseueeses 42 3 4814-7609-4277.6 TABLE OF AUTHORITIES Page(s) Cases Alexander v. FedEx Ground Packaging System, Inc. (N.D. Cal. Sept. 11, 2015) Case No. 3:05-CV-38- EMC... secsesessessesssssssesesscssesesecaessesscessesscssssscesesscssvacvassaeeuvacatenes 21, 22 Baldwin v. Trailer Inns, Inc. (9th Cir. 2001) 266 F.3d 1104... csessscsessscssescssssesssscssssseseees 36 Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal. App. 4th 365... ccccsscssssessscecsstessesvsrsesssesssveres 20 Estrada v. FedEx Ground Package System Inc. (2007) 154 Cal. App. 4th 1 oeccessssssssscssssesvsssesessesesrecsverscseacs 37 Futrell v. Payday California, Inc. (2010) 190 Cal. App. 4th 1419cccsscsecscrsecsessessssceeees 20, 22 Laffitte v. Robert HalfInt’l, Inc. (2016) 1 Cal. Sth 480, 487.ccsesssssssscscsessssvscsssecssacsrsvarsessevees 18 Martinez v. Combs (2010) 49 Cal. 4th 35.cecescssescssssssssessscscrevececsesssacsearscareevans 33 Reno y. Baird (1998) 18 Cal. 4th 640.cccesesesssscsssscsescscesseevsvesssseessseavesees 16 S.G. Borello & Sons, Inc. v. Dep’t ofIndus. Relations (1980) 48 Cal.3d 341 350-351 vo cccscssssssscsscscscestsststsesesseess 36, 37 Statutes 29 ULS.C. §§ 201 @t. SOQ. cececccccccsesscsessessscssssstststessucssreacacsens 17, 33, 38 29 U.S.C. § 202(a) (BD) ec cccscssssssesescssssssssscrcsssssenesseaeaseasssatsvacsverevenes 33 Cal. Lab. Code § 90.5(a)...cccccssssssssssssssesesssesestsssssssssvscsssssisssaceseceeees 33 Cal. Lab. Code §§ 201 et. S€q..cccccccccsscssssscsessssssesesecssescecersvacseeees 33, 38 4814-7609-42776 TABLE OF AUTHORITIES(cont’d) Page Cal. Lab. Code § 204 .cccccccssssssssssscsssssesssssssssssscssessesssssasesesessseeees 17 Cal. Lab. Code § 218.5 .ociccccscsssssssssssssecesssestsssssessscsscsvssssereseseeseees 19 Cal. Lab. Code § 226 oo. icescssssesssesescssssecssevsvsrstecssessevevsvaressesees 17, 38 Cal. Lab. Code § 226(e)......cccccccssssesssstscessssessecsssesssssessesssaseesecseseces 19 Cal. Lab. Code § 226(h) 0... cccssesssssssssssssssssrssesersesrssseessssearssssscsneseees 19 Cal. Lab. Code § 233(€)....cccccscsssscsssscsssscecesssrsvsvscsecsusecsesseevevececesseces 19 Cal. Lab. Code § 510 vcccsccsscssesessscssscessssescsvsccssesasesceesess 17, 26, 38 Cal. Lab. Code § 512 wu. iicesssesessssessssscsesesvscsesestecseteatvasscsen 17, 26, 38 Cal. Lab. Code § 515 vccccccssssscsssscscssessesesesssssstssecsssevscisareveceseeses 26 Cal. Lab. Code § 515(a).....ccssssssssssssessssessestssssversrsesssssassearsavavarcesees 35 Cal. Lab. Code § 1182.12 oicecscssessscssssssscssstsssseseessesscsrssvscecsvevers 17 Cal. Lab. Code § 1194. icccccccscscssssssessscsssescsscsssssssesssvavsevseeeseces 19 Cal. Lab. Code § 2699(g) ...cccccccssssccsssessesssrsesessesessesssststssessseeseces 19 California Labor Code wi... ccecscsesessscecceseceee 12, 17, 18, 19, 20, 22, 38 Fair Labor Standards Act.....ccccsscssssssssssssesesssvsesersvsvsssssssssessesesscevenes 35 Federal Labor Standards Act .......cccccsssssssssssesssnssvsvscscesescsesesessvevsveesees 17 Court Rules Rule 8.520(f) of the California Rules of Court..c.ccccccccccccccesesseccsesececes. 7 Rule 8.520(f)(4) of the California Rules of Court.c.ccccccccccccscsccsececccecee. 7 Other Authorities Anne Saunders, Paychex Expecting More Strong Growth, Rochester Business Journal, October 14, 2016 ....ccccccscscocecocececeeses 30 4814-7609-4277.6 5 TABLE OF AUTHORITIES(cont’d) Page Hoover’s Inc., Payroll Services First Research Custom Report (2017) .eccscccsscestsetsesesseessessseessssssens 13, 14, 15, 16, 25, 29, 31 Norton Rose Fullbright, 2016 Litigation Trends Annual Survey (Sept. 2016)... .cscesccssccssesesecsssessecssscsecsecssessvsscsevsesnreesaeeeseas 17 Paychex, Inc. Form 10-K (May31, 2016) at 2....ccceccceeeeeeneesees 7,8 Paychex, Inc. Reports Fourth Quarter And Fiscal 2017 Results, Paychex Press Release (June 28, 2017)..c.c:cscccseeeeaees 28 Seyfarth Shaw LLP, /3th Annual Workplace Class Action Litigation REPOPE ..iccccssccsssessssvsesecsesscessssccevscesectevseeenseees 18, 21 2017 U.S, Industry & Market Outlook (Oct. 2016) ....cccce. 13, 14, 27 United States Securities and Exchange Commission, Form 10-K, Paychex, Inc. (May 31, 2016) ou... ceccessseeeeeeeeee 7, 14 Wage Order 4 § 1(A)(1) oc eecccecsessessssescssessccssvsecescesevscessasesseenseeaevaes 26 4814-7609-4277.6 APPLICATION FOR PERMISSION TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF DEFENDANTS RESPONDENTS AND PETITIONERS Pursuant to Rule 8.520(f) of the California Rules of Court, Paychex, Inc. (“Amicus” and/or “Paychex”) respectfully requests leave to appear as amicus curiae andfile this proposed briefin support of Defendants, Respondents, and Petitioners, ADP LLCet al, Pursuant to Rule 8.520(f)(4), no party’s counsel authored this brief in wholeor in part; no party or party’s counsel contributed moneythat was intended to fund the preparation or submissionofthis brief; and no other person other than amicus curiae, its members, or its counsel contributed money that was intendedto fund the preparation or submission ofthis brief. STATEMENT OF INTEREST Paychex, Inc., founded in 1979,is a provider ofpayroll processing and employee benefit services. (Paychex, Inc. Form 10-K (May 31, 2016) at 2.)' Paychex provides a variety of services and products thatallow its clients to meet their diverse payroll processing needs. /d. Paychex serves a diverse base of small-to-medium-sized ' United States Securities and Exchange Commission, Form 10- K, Paychex, Inc. (May 31, 2016), https://www.sec.gov/Archives/edgar/data/72353 1/000072353 1160000 46/payx-20160531x10k.htm 4814-7609-4277.6 Gt a N R P O L A R , t i o clients operating in a broad range of industries throughout the United States, including California. Jd. Paychex uses service agreements and arrangements with clients that are generally terminable bytheclient at any timeor upona relatively short notice. (/d. at 6.) Paychex currently serves approximately 605,000 payroll processing clients throughout the United States. (/d. at 2.) The average client size within its existing client base is approximately 17 employees. (/d. at 6.) The market for payroll processing services is highly competitive and fragmented. Paychex competes directly with national, regional, local and online payroll service providers. (Jd. at 6.) Competition in the payroll service providerindustry is primarily based onservice responsiveness, product quality and reputation, ease of use, accessibility of technology, breadth of service products, and price. Jd. The highly competitive nature of the industry, and the typical ease with which clients are able to terminate service agreements, results in increased competition among providers to be innovative andflexible in tailoring products and services to meet the clients’ diverse needs. Ifthe client is unhappy with the payroll service provider, it can easily contract with a different provider. Furthermore, if the client incursliability to its employees resulting from a payroll 4814-7609-4277.6 service provider’s error, the service contract determines the employer’s recourse against the payroll service provider. Paychexhasan interest in this proceeding because the decision in Sharmalee Goonewardene v. ADP LLCet. al., (“Goonewardene’”) will have direct ramifications as bindinglegal precedent onthe entire payroll service provider industry. Goonewardene will not only change the legal landscape for wage and hourlitigation in California, it also alters the well understood boundaries between employers and payroll service providers and creates unnecessary confusion regarding the obligations and responsibilities between those parties. A material aspect of Paychex’s business model, and of the payroll service provider industry as a whole,is that payroll service providers assist clients in meeting their non-delegable obligationsto properly pay their employees. The decision in Goonewardene substantially impacts the payroll service provider industry becauseit short-circuits the liability protections the service providers negotiate with their clients and subjects payroll service providers to unforeseen liability to their clients’ employees with whom the payroll service provider has norelationship. 4814-7609-4277.6 Thisshift in liability will significantly increase the cost of doing business in the industry given that payroll service providers will now face addedlitigation risks associated with wage and hour claimsthat are traditionally asserted against employers. Goonewardene will, therefore, expose payroll service providersto staggering defense costs and to damagesclaims for wage and hour lawsuits. Increases in costs for payroll provider services will in turn directly impact employers’ accessto these services, potentially making such services cost prohibitive, resulting in less compliance and weakenedprotections for California workers. Moreover, the incorrect rulings in Goonewardeneessentially eviscerate the concept of non-delegable employer responsibilities by placing upon a third party (7.e., the payroll provider) employer responsibilities regarding individuals with whom they have nodirectrelationship. Consequently, Goonewardene will have devastating consequencesfor the payroll provider industry and will negatively impact the countless California employers and employeesthatrely on these services. To inform the Court about these mattes, Paychex respectfully requestsleave to file theaccompanying amicus curiae brief. 10 4814-7609-4277.6 PROPOSED BRIEF INTRODUCTION The decision in Sharmalee Goonewardene v. ADP LLCet. al., (hereinafter “Goonewardene”) exposespayroll service providers to massive and unforeseenliability for their clients’ non-delegable obligations to properly pay their employees. In doing so, Goonewardene changesthe legal landscape for wage and hour litigation in California, to the detrimentofthe entire payroll service provider industry and the countless California employers who depend on these services. Specifically, Goonewardenesignificantly increases payroll service providers’ litigation risks, exposing payroll service providers to staggering defense costs and to damagesclaims for wage and hour lawsuits that are traditionally asserted against employers. The added litigation risks imposed by Goonewardene will have a devastating impacton the industry and will lead to significant increases in the prices for payroll provider services, potentially making such services cost-prohibitive to many California employers. California employers’ loss of access to payroll provider services will in turn result in less compliance and weakenedprotections for California workers. In Il 4814-7609-4277.6 addition, the lower court’s holding creates unnecessary confusion regarding the rights and obligations between an employer,its employeesandthe third party payroll service. Finally, federal and state wage and hour lawsalready provide ample avenuesfor employeesto seek full remedy from their employers for unpaid wages and other Labor Codeviolations. Reversing, Goonewardene will, therefore, not leave employees without recourse, but rather, will restore the well-established and effective process pursuant to which California employees have long sought redress for wage payment violations. Based on the foregoing, amicus curiae Paychex respectfully requests this Court to reverse the court of appeal’s decision in Goonewardene. STATEMENT OF FACTS Paychex specifically adopts the Statement of the Case set forth in Petitioners’ Opening Brief On The Merits, to the extent the facts are relevant and applicable for the purposesof this amicus curiae brief. 12 4814-7609-4277.6 ARGUMENT I. THE PAYROLL SERVICE PROVIDER INDUSTRYIS HIGHLY CONCENTRATEDIN POPULOUSSTATES LIKE CALIFORNIA,IS HIGHLY COMPETITIVE, AND SERVES A VAST NUMBER OF CALIFORNIA EMPLOYERS. For over 60 years, payroll service providers have assisted countless employers in fulfilling their payroll obligations. Specifically, payroll service providers provide tools that assist clients in meeting their non-delegable obligations to properly paytheir employees. In order to perform their work, payroll service providers depend on thedata provided bytheir clients, including employees’ hours and rates and other information about the client’s work force. Payroll service providers range in size and sophistication and provide a variety of products and services including, generating paychecks, payroll reports, and tax filings for clients, that allow clients to meet their diverse payroll processing obligations and needs. (See Barnes Report, 20/7 U.S. Industry & Market Outlook, (Oct. 2016) at 6; Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at. 3.) * Retrieved July 7, 2017 from Hoover’s database. 13 4814-7609-4277.6 The United States is the “world’s primary market for payroll services.” (See Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at. 3.) The payroll service providerindustry in the United States includes approximately 5,900 establishments that generate an annual revenue of approximately thirty-three billion dollars. /d. In the UnitedStates, the industry is “most highly concentrated in populousstates with large numbers of businesses.” (/d. at 5.) Consequently, California, Florida, New York, Texas, and Illinois have the most payroll service providers. Jd. As of 2017, California had an estimated 1,162 payroll provider service establishments. (Barnes Report, 2017 U.S. Industry & Market Outlook, (Oct. 2016) at 10.) That numberis expected to increase to approximately 1,251 in 2018. (/d. at /6.) Payroll service providers typically serve a diverse base of small-to-medium-sized clients operating in a broad range ofindustries throughout the UnitedStates, including California. (Paychex, Inc. Form 10-K (May 31, 2016)° at 6; Hoover’sInc., Payroll Services * United States Securities and Exchange Commission, Form 10- ue K, Paychex, Inc. (May 31, 2016), - https://www.sec.gov/Archives/edgar/data/72353 1/0000723531 160000 46/payx-2016053 1x10k.htm 14 4814-7609-4277.6 First Research Custom Report, (2017) at 4.) Manyoftheseclients typically employ fewer than 20 people. (Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at 4; see Paychex,Inc. Form 10-K (May 31, 2016) at 6.) According to the National Payroll Reporting Consortium, its member payroll service providers serve more than 1.4 million employers, with a combinedtotal of more than 35 million employees — more than one third of the private sector work force in the UnitedStates.’ The market for payroll processing services is highly competitive and fragmented. Competition in the payroll services industry is primarily based on service responsiveness, product quality and reputation, ease of use, accessibility of technology, breadth of service products, and price. (Paychex, Inc. Form 10-K (May31, 2016) at 6.) Furthermore, Payroll service providers typically enter into service agreementswith clients that are generally terminable by the client at any time or upon a relatively short notice. (Paychex,Inc. Form 10-K (May 31, 2016) at 6; Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at 4.) Service contracts are typically not long-term and payroll service providers “depend on excellent * Available at: http://www.nprc-inc.org/about.htm! 15 4814-7609-4277.6 service to ensure high contract renewal rates.” (Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at 4.) The highly competitive nature of the industry, andthetypical ease with whichclients are able to terminate service agreements, results in increased competition amongnational, regional, local and online providers to be innovative and flexible in tailoring products and services to meet the clients’ diverse needs. Given the high concentration of payroll service providers in California and the widespread use of payroll provider services among California employers, the Goonewardene decision will have a devastating impact on the industry as a whole and will adversely affect the countless California employers whorely on payroll provider services, Il. GOONEWARDENE WILL EXPOSE PAYROLL SERVICE PROVIDERS TO CRUSHING FINANCIAL BURDENS ASSOCIATED WITH DEFENDING WAGE AND HOUR LAWSUITS. “Litigation is expensive, for the innocent as well as the wrongdoer.” Reno v. Baird (1998) 18 Cal. 4th 640, 663. Nowhereis this maxim moreclearthan in California wage and hourlitigation because employers must navigate a minefield of regulatory requirements underboth federal and state law. Most significantly, the 16 4814-7609-4277.6 California Labor Coderegulates nearly all facets of employee compensation: the hours an employee works (see, e.g., Cal. Lab. Code § 510), the hourly compensation an employeereceives (see, e. g., id. § 1182.12), the frequency and length of required breaks throughout the workday (id. § 512), compensation for overtime (id. § 510), when employees must bepaid (see, e.g., id. § 204), and even the information that must be provided to employees whenthey are paid (id. § 226). In addition, the Federal Labor Standards Act imposes similar regulations underfederal law. (See 29 U.S.C. §§ 201 et seq.) As a result, employers routinely face costly and time-consuming litigation for alleged violations of one or moreof thesestate or federal regulations. (Norton Rose Fullbright, 20/6 Litigation Trends Annual Survey(Sept. 2016) at 10 (noting that 46% of respondentsin the United States indicated they had a labor and employmentlawsuit pendingin the prior twelve months).) The decision in Goonewardene, however, extends to payroll service providersthelitigation risks associated with wage disputes and claimstraditionally asserted against employers for violations of state and federal wage and hourlaws. 17 4814-7609-4277.6 A. Goonewardene Exposes Payroll Service Providers To Staggering Defense Costs For Wage And Hour Violations Without Providing Any Added Benefit To Employees. Labor and employmentclass actionlitigation “has increased [] over the past decade,” and wage and hourclass actions in particular are “the leading type of ‘high stakes’ lawsuits being pursued by the plaintiffs’ bar.” (Seyfarth Shaw LLP, /3” Annual Workplace Class Action Litigation Report, 2017 Edition, at 1-2.) California leads the wayin this regard, and “[t]he most dominanttrend has been a steep rise in the numberofclass action lawsuits filed in state courts alleging violations of California’s overtime lawsor the California Labor Code and wage & hour regulations.” (/d. at 445.) Worsestill, the costs of wageand hour lawsuits have been increasing dramatically year over year. (Seyfarth Shaw LLP, 13” Annual Workplace Class Action Litigation Report, 2017 Edition, at 34 (top ten private plaintiff settlements for wage and hour lawsuits rose from $215 million in 2014 to $463.6 million in 2015 to $695.5 million in 2016).) As withall litigation, defending wage and hour claims can be extremely expensive. The cost of defending and prosecuting large wage and hourclass actions oftentimes can be in the millions of dollars. See Laffitte v. Robert HalfInt'l, Inc. (2016) 1 Cal. 5th 480, 18 4814-7609-42776 487 (plaintiffs’ attorneys collectively billed more than 4,000 hours resulting in approximately $3 million in fees). Unlike most claims, however, Labor Codeviolations typically permit an employee to recovertheir attorneys’ fees. See, e.g., Cal. Lab. Code §§ 218.5, 226(e), 226(h), 233(e), 1194, 2699(g). Manyof these are one-way fees shifting provisions, which further increases an employer’s costs of wage andhourlitigation. See, e.g., id. § 2699(g) (“Any employee whoprevails in any action shall be entitled to an award of reasonable attorney’s fees and costs.”). Goonewardene exacerbates this problem by extending these potentially crippling defense costs to payroll service providers while confusing the fact that the employerobligations in question are non- delegable and thus should notbe visited upon a third party (such as the payroll service provider) whichhasno directrelationship with the employees. Under Goonewardene, employeeswill continue to sue their employers in addition to suing payroll service providers, because the employees cannot obtain complete relief from payroll service providers since such providersare not their employers. Such a result not only confuses the employmentobligations amongtheparties,it 19 4814-7609-42776 places a huge financial burden on third party who has no control over the circumstances and environment of employment. The myriad provisions of the California Labor Code do not apply to payroll service providers because payroll service providers are not “employers” under the Code. Futrell vy. Payday California, Inc. (2010) 190 Cal. App. 4th 1419, 1428. Thus the only damages theoretically available to employees under Goonewardeneare unpaid wages that the payroll service provider allegedly wascontractually obligated to make. Employees therefore have a strong incentive under Goonewardeneto sue payroll service providers as wellas their employer because unlike a payroll service provider, “an employeris potentially liable for unpaid wagesandinterest, statutory penalties andcivil penalties for many violations of Labor Code wage-and-hour provisions.” Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal. App. 4th 365, 378. Allowing employeesto seek relief directly from payroll service providers merely makes wage and hourlitigation extremely inefficient and misdirects attention to the payroll provider rather than the employeritself. Employees cannotobtain any relief from payroll eS service providers that they could not obtain directly from their sh yg an ia e 20 4814-7609-4277.6 employers throughthe traditional wage and hour enforcement mechanismsestablished by the Legislature. Goonewardene significantly increases the costs oflitigating wage and hourclaims without providing any added benefit to employees. To the contrary, extending potentialliability to payroll service providerswill likely result in more protracted and complexlitigation which would only increase defense costs forall parties and delay any recovery by employees. B. Goonewardene Exposes Payroll Service Providers To Staggering Damages Claims For Wage And Hour Violations Without Providing Any Added Benefit To Employees. Incurring unnecessary defense costs is merely the tip of the iceberg — the potential damagespayroll service providers could face under Goonewardeneis disastrous. The size and scope of wage and hour lawsuits have been increasing dramatically year over year: the top ten private plaintiff settlements for wage and hour lawsuits rose from $215 million in 2014 to $463.6 million in 2015 to $695.5 million in 2016. (Seyfarth Shaw LLP, 73” Annual Workplace Class Action Litigation Report, 2017 Edition, at 34.) Even whenlimited to wages due, the damages in a wage and hour lawsuit can be massive. For example, in Alexander v. FedEx 21 4814-7609-4277.6 Ground Packaging System, Inc., more than $21 million of the settlement amount was for unpaid wages. (Settlement Agreement, Alexander v. FedEx Ground Packaging System, Inc. (N.D.Cal. Sept. 11, 2015) Case No. 3:05-CV-38-EMCat 13.) Underthe California Labor Code, only an employeris responsible for paying employee wages, and thus a payroll service provider should have no obligation to pay any damagesfor unpaid wages to the employee. Futrell, supra 190 Cal. App. 4th at 1428. Nonetheless, under Goonewardene, payroll service providers could be liable to employees for their unpaid wages. Payroll service providers forced to pay damages for unpaid wages may beable to recover their damages payments from the responsible employer, but only after incurring additionallitigation expensesfor bringing indemnification claims. Thus, under Goonewardene, payroll service providers’ clients each bring an unforeseenand inescapablerisk that the payroll service provider may incur millions of dollars defending a wage and hour lawsuit brought by the client’s employees, may face multi-million dollar judgments to > The Settlement Agreementis available on PACERandat https://alexander-v-fedexground- settlement.com/Portals/0/Documents/2015%200915%20EXH%201% 20(Settlement™%20Agreement™20with%20signatures).pdf 22 4814-7609-4277.6 the client’s employees for unpaid wages, and additionallitigation expensesto obtain indemnification from the client — none of which benefits the employees whoalready can seek their unpaid wages from their employer. Indeed, such a result only confuses the true non- delegable duties an employer hasto its employees. Il. GOONEWARDENE WILL DISTORT THE ECONOMICS OF PAYROLL SERVICES AND WILL ADVERSELY IMPACT THE PAYROLL SERVICE PROVIDER INDUSTRY AND COUNTLESS CALIFORNIA EMPLOYERS WHO RELY ON THESESERVICES. The decision in Goonewardenewill significantly alter the legal landscape for wage and hourlitigation in California and will have a devastating impact on the payroll provider industry to the detriment of countless California employers and workers. Morespecifically, Goonewardene: (1) will increase prices for payroll provider services to reflect the addedlitigation risks and costs of defending wage and hour lawsuits, potentially making such services cost-prohibitive to manyCalifornia employers; (2) will lead to employers’ loss of access to payroll providerservices,resulting in less compliance and weakenedprotections for workers; and (3) will produce unnecessary confusion as to the obligations between employers, employees and third party payroll service providers. 23 4814-7609-4277.6 A. The Pricing of Payroll Provider Services Will Increase To Reflect The AddedLitigation Risks Potentially Making Such Services Cost-Prohibitive To California Employers. As morefully set forth above, the ruling in Goonewardenewill significantly increase a payroll service provider’s risk of incurring massivelitigation costs. This changein the legal landscape will necessarily increase the costs of payroll provider services, potentially making such services cost-prohibitive for many California employers. In addition, the increasedlitigation risk and massive defensecosts may prove insurmountable to many payroll service providers who may choose, or may be forced, to leave the California market altogether. Payroll service providers currently offer employers cost- effective tools andservices that facilitate an employer’s compliance with federal and state labor laws. (See Paychex, Inc. Form 10-K (May 31, 2016) at 3 “Our. . . tools, can assist companies with the scheduling, tracking and reporting of time which can be beneficial to clients in complying with [labor laws]”).) The price of these tools and services is a key factor in determining whether an employerwill engage a payroll service providerin the first place and, once engaged, whetherthey will opt for a competing payroll service provider who 24 4814-7609-4277.6 offers a more cost-effective option. (/d. at 6.) Althoughthe cost of payroll servicesvaries, the pricing structure typically involves a flat base fee that is charged per month orper pay period and addedcosts for more advanced services. (Paychex, Inc. Form 10-K (May31, 2016) at 2; see Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at 4.) For example, Paychex charges recurring fees for services performed that are driven by various factors, including the numberoftransactions per client per pay period and whether the client uses any ancillary products. (Paychex, Inc. Form 10-K (May 31, 2016) at 2.) The competitive nature of the industry provides employers with a variety of options to choose from. In fact, payroll service providers have an incentive to offer increasingly flexible products and systemsthatallow different employers to use different aspects of those systems to varying degrees, depending on the employer’s diverse needs and budget. The pricing ofpayroll provider services, however,also reflects the risks inherent in the industry. (See Paychex, Inc. Form 10-K (May 31, 2016) at 7.) Changesin laws and regulations thatresult in increased risks will necessarily increase the cost of these services. 25 4814-7609-4277.6 The ruling in Goonewardenewill significantly increase the litigation risk and defense costs for payroll service providers which will, in turn, significantly increase the cost of these services. For example, consider a company in Los Angeles with ten employeesthat uses a payroll service provider that charges a flat fee of $100 per month and an additional $5 per employee per pay periodto process the company’s bi-weekly payroll. (See The Payroll Blog, (“While base account fees vary widely from oneprovider to the next, you can expect to pay anywhere from $20 to $100 per month, plus an additional $1.50-$5.00 per payroll run for each employee.”).)° On average, the company pays $20 for each employeeto processtheir payroll [$5 each for the two pay periodsplus the pro-rata share ofthe $100 monthly flat fee]. Assume one of the company’s employees sues the payroll service provider alleging that the employee was misclassified as falling within the “Executive Exemption” and therefore wasentitled to be paid overtime and entitled to rest and meal breaks none of which she received. (See e.g. Wage Order 4 § 1(A)(1); Cal. Lab. Code §§ 510, 512, 515.) The $435 filing fee the payroll ® Available at: https://www.surepayroll.com/resources/blog/small-business-payroll- cost 26 4814-7609-4277.6 service provider must incur to merely file an answerin that lawsuit is nearly double the yearly revenue the payroll service provider earned for that employee’s payroll. (See Superior Court of California, County of Los Angeles Civil Fee Schedule, Effective July 1, 2016.)’ In addition, the legal fees the payroll service provider would have to expendto draft the answer, the cost of furtherlitigation, the damages the payroll service provider could have to pay for the employee’s unpaid overtime wages and missed mealandrest breaks,or the legal fees the payroll service provider would have to expend seeking indemnification for these expenses from the employer, would dwarf the profit the payroll service provider earned from processingthat company’s payroll. Consequently, payroll service providers faced with the addedlitigation risks imposed by Goonewardenewill be forced to increasethe cost of their services to reflect the added litigation risks. Given that payroll service providers range from individuals to large enterprises, the added litigation risk may prove insuperable to many smaller payroll service providers. (Barnes Report, 2017 US. ” Available at: http://www. lacourt.org/forms/pdf/fees/fee- schedule-2016 rev.pdf. 27 4814-7609-4277.6 Industry & Market Outlook, (Oct. 2016) at 10.)® Additionally, risk averse payroll service providers may chooseto leave the market altogether, decreasing competition and further increasingprices for these services. Significant price increases coupled with the potential for a mass exodusof California payroll service providers, will have an adverse and widespread impact on California employers whorely on these services. 1. Price Increases For Payroll Provider Services Will Adversely Impact Small California Employers. Small businesses in California will be particularly impacted by increased pricesfor payroll services and a constricted payroll service provider market. Paychex alone services 605,000 small to medium- sized businessesacross a variety of industries, with an averageclient size of approximately 17 employees. (See Paychex, Inc. Form 10-K (May 31, 2016) at 6; Paychex Press Release (June 28, 2017) at 2, 5.)” : Accordingto the 2017 Barnes Report, there are approximately 1,162 payroll service provider establishments in California, 512 of which employ fewer than 20 employees. ” Paychex,Inc. Reports Fourth Quarter And Fiscal 2017 Results, Paychex Press Release (June 28, 2017), https ://www.paychex.com/a/d/investor/releases/2017-4Q.pdf; https://www.sec.gov/Archives/edgar/data/72353 1/0000723531170000 14/payx-20170628xex99_1.htm 28 4814-7609-4277.6 Because these companies have few employees,hiring another employee to process their payroll is potentially cost-prohibitive. (See Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at 4.) Similarly, paying significantly increased costs for the payroll services they currently use could also be cost-prohibitive to many small businesses. California businesses will therefore either have to bear the increasedcosts for their payroll service provider or perform these services in-house. Providing payroll services in-house, however, will be difficult for businesses that lack the size and scope to efficiently and cost-effectively perform these services on their own. Td. Consequently, Goonewardenewill decrease countless California employers’ accessto cost-effective payroll provider services resulting in less compliance and weakened protections for thousands of California workers. B. Employers’ Loss Of Access To Payroll Provider Services Will Result In Less Compliance And Weakened Protections For Workers. Anincrease in the cost of payroll provider services, and the resulting decrease of cost-effective options for employers, will directly impact countless California employers and will result in less 29 4814-7609-4277.6 compliance with wage and hour laws and weakenedprotections for California workers. The adverse impact of Goonewardenewill be widespread because thousands of California employers, across various industries, utilize payroll provider services. For example, Paychex provides payroll processing servicesto over ten million client employees throughout the United States, including California. (Paychex, Inc. Shareholder/Analyst Call Oct. 12, 2016 at 5; see Anne Saunders, Paychex Expecting More Strong Growth, Rochester Business Journal, October 14, 2016.)'° This translates to approximately one out of every twelve employeesin the private sector. Jd. Furthermore,the National Payroll Reporting Consortium (“NPRC”), a nonprofit trade association of organizations that provide payroll processing services, reports that its members serve a combinedtotal of more than 35 million employees, or over onethird of the private sector.'' The decision in Goonewardene,therefore, has the potential to negatively impact a vast portion of the California work force. '0 Available at: http://rbj.net/2016/10/14/paychex-expecting- more-strong-growth/ '! Availableat: http://nprc-inc.org/about.html 30 4814-7609-4277.6 Payroll service providers have created proven systemsthat facilitate accurate, legally compliant, consistent, and timely payroll processing. These systems are widely used by employersto assist them in discharging their wage obligations because they have determined that outsourcing payroll is more cost-effective and efficient than handlingit in-house. (See Hoover’s Inc., Payroll Services First Research Custom Report, (2017) at 4.) Employers who chooseto or are forced to take payroll services in-house will not have access to payroll service providers’ trusted systems and are therefore morelikely to generate inaccurate and non-compliant paychecks and paystubsfor their employees. Consequently, Goonewardene will expose California employeesto less protections, expose employers to more litigation, and devastate an industry that thousands of California employers currently rely on to assist them in complying with their wage obligations. Moreover, the lower court’s decision in Goonewardene confusesthe obligations between employer, employee andthird party payroll service provider. Ifthere is any error in the services provided by a payroll service provider, the employerhas sufficient contractual groundsto bring a claim. However, the payroll service provider has 31 4814-7609-42776 no direct relationship with its clients’ employees and does not have an effect on the terms of employmentfor those employees. To foist such wage and hourresponsibilities on payroll service providers not only places an unfair burden on a third party,it ignores the fact that such wage and hourobligations are non-delegable duties of an employer which cannot and should not be placed on the shoulders ofan independentthird party with no powerto affect the employer/employeerelationship. IV. PAYROLL SERVICE PROVIDERS SHOULD NOT BE FORCED TO INCUR THE MASSIVE LITIGATION RISKS AND COSTS IMPOSED BY GOONEWARDENE. Payroll service providers should not be forced to incur the massivelitigation risks and massive defense costs imposed by Goonewardene. Asan initial matter, payroll service providers assist employers with their wage paymentobligations but do not employ their clients’ workers andare not in a position to enforce the employer’s non-delegable wage obligations. Goonewardene, therefore, improperly extendsliability to payroll service providers for their clients’ non-delegable duties to pay their employees. In addition, federal and state laws regulating the payment of wages, and the existing enforcement mechanism for wage and hour laws, provide 32 4814-7609-4277.6 ample avenues for employees to seek relief for wage disputes. (See e.g. Cal. Lab. Code §§ 201 et. seg.; 29 U.S.C. §§ 201 et. seg.) A. Goonewardene Improperly Extends Liability To Payroll Service Providers For Employers’ Non- Delegable Wage Obligations. In holding that employees are third-party beneficiaries of the contracts between payroll service providers and employers, Goonewardene improperly extendsliability to payroll service providers for employer wage obligations. In doing so, Goonewardene disregards the fact that employers’ duties to pay their employeesare non-delegable andthat payroll service providers are dependent on data generated by employers, to perform their work. Pursuant to California law, an employer’s duties to adequately pay its employees are non-delegable. Martinez v. Combs (2010) 49 Cal. 4th 35, 49x. Both the federal government andthestate of California have enacted comprehensive wage and hour laws establishing minimum wages, overtime compensation requirements, and record keeping requirements, among others, for the primary purpose of protecting employees from oppressive working conditions. (See 29 U.S.C. § 202(a) (b) (federal policy); Cal. Lab. Code § 90.5(a) (purpose of enforcement of minimum laborstandardsis to “ensure 33 4814-7609-4277.6 that employees are not required or permitted to work under substandard or unlawful conditions ....”).) Employers covered by both federal and California wage and hour laws must comply with both. Employers are legally obligated, and best suited, to ensure compliance with state and federal wage and hourlaws because they directly benefit from the employee’s work. Furthermore, employers can readily obtain and verify the information needed to determine whether their employees are subject to the myriad of wage and hour laws or whether exemptions apply. In contrast, a payroll service provider does not havedirect access to the requisite day-to-day information to independently ensure compliance with wage and hourlaws. Instead, payroll service providers rely on the employer’s ability to provide such information. (See Paychex, Inc. Form 10-K (May 31, 2016) at 3 (“clients benefit from... products, which allow them to accurately andefficiently manage the gathering and recording of employee hours worked. Our ... tools, can assist companies with the scheduling, tracking and reporting of time which can be beneficial to clients in complying with [wage laws].”).) Goonewardene, however, makes payroll service providers legally responsible for discharging the employer’s non- 34 4814-7609-4277.6 delegable duties to pay wages, despite not having any direct knowledgeof, or control over the terms and conditions of employment betweentheir clients and their client’s employees. Payroll service providers do not control any aspect ofthe employmentrelationship betweentheir clients and their clients’ employees. Instead, payroll service providers provide tools that facilitate an employer’s compliance with federal and state wage and hour laws. (See Paychex, Inc. Form 10-K (May 31, 2016)at 3.) Payroll service providers, however, do not directly administer compliance with the law and do not have access to the necessary information to do so. Payroll service providers are heavily dependent on the quality and accuracy of data supplied to them bytheir clients in order to perform their work. For example, payroll service providers rely on the employer to determine whether specific employeesare exempt from the overtime provisions of the California Wage Orders and/or the Fair Labor Standards Act. Specifically, in order to determine whether an employee is exempt from the state overtime requirements, an employer mustfirst determine whetherto classify the employeeas an executive, administrative, or professional employee, among others. (Cal. Lab. Code § 515(a).) Payroll service providers do 35 4814-7609-4277.6 not make these determinations and instead rely on the employer’s classification of their employees. Indeed, the employer claiming an exemption bears the burden of proving that the exemption exists. See Baldwin v. Trailer Inns, Inc. (9th Cir. 2001) 266 F.3d 1104, 1112. If an employeeis not exempt underthe state and federal overtime laws, an employer mustalso determine an employee’s regular rate of pay, the applicable overtime premium rate and whether non-productive time, includingcall-back time, donning and doffing time, and travel time, is compensable. Payroll service providers rely on the employer to make these determinations as well. These determinations are made by the employer because the employertypically has direct contact with the employee, knows and understands the employee’s work and directly benefits from it, and has knowledge about its employees unavailable to the payroll service provider. Similarly, employers are exclusively responsible for distinguishing employees from independent contractors and a payroll service providerrelies on the employer to make that determination. Employers mustdistinguish employees from independentcontractors pursuant to a complicated set of factors, all of which must be considered, and none of whichis, alone, controlling. See S.G. Borello 36 4814-7609-4277.6 & Sons, Inc. v. Dep’t ofIndus. Relations (1980) 48 Cal.3d 341 350- 351. The legaltest to distinguish employees from independent contractors involves specific facts and circumstances which the payroll service provider is not privy to, including, terms of the contract agreement, the extent of control the employer exerts over the day-to-day aspects of the independent contractor’s work, whetherthe independentcontractor supplies the instrumentalities and tools required for doing the work, and details pertinent to the employer’s business and the independent contractor’s business. /d.; Estrada v. FedEx Ground Package System Inc. (2007) 154 Cal. App.4th 1, 10. The analysis is complicated and requires a thorough understanding of facts that payroll service providers cannot themselves obtain, or readily verify. Litigation regarding misclassification of employeesas independentcontractors is common for employers. The practical effect of the ruling in Goonewardene will be to extend liability for misclassification claims to payroll service providers despite having no involvementor controlof the relationship between the employerclient and its employees. In sum,in extendingliability to payroll service providers for employers’ non-delegable wage obligations, Goonewardene 37 4814-7609-4277.6 R R S S A R S e e S e i t e disregards the fact that payroll service providers do not employ their clients’ workers, that employers’ duties to pay their employees are non-delegable, and that payroll service providers are dependent on data generated by employers, to perform their work. B. Federal And State Laws Regulating The Payment Of Wages Provide Ample Avenues For Employees To Seek Relief For Wage Disputes. Federal and state wage and hour laws provide ample avenues for employeesto seek relief for wage disputes. For decadesprior to Goonewardene, employees have been ableto seek redress for wage disputes via the comprehensive enforcement scheme,established by the Legislature, to enforce Labor Code and Wage Orderobligations. (See Cal. Lab. Code §§ 201 et. seg.; 29 U.S.C. §§ 201 et. seq.) If this Court reverses the court of appeal’s decision in Goonewardene, said system will continue to function as it has for decades and employees will continue to have remedies against their employers for wage disputes. For example, the typical wage and hourviolation alleged by employees seeking redress pursuant to the wage and hour lawsare based ona statutory or Wage Order requirement applicable to “employers.” (See e.g. Cal. Lab. Code §§ 226, 510, 512.) Those 38 4814-7609-4277.6 types of claims can be brought by employees,the state, or on the state’s behalf via private-party PAGAactions. An employee seeking to enforce federal and state wage paymentobligations is not required to, and prior to Goonewardene, was not permitted to, allege said claimsagainsta payroll service provider. Although Goonewardene creates new causes ofaction that allow employees to namepayroll service providers as defendants in wage and hourdisputes, said claims are redundantto the wage and hourclaimstypically alleged against employers. Consequently, reversing Goonewardene would not leave employees without recoursefor alleged wage paymentviolations, but wouldrestore the well-established and effective process pursuant to which employees have long sought redress for wage disputes. Vv. CONCLUSION Based on the foregoing, amicus curiae Paychex respectfully requests this Court reject Plaintiff’s position and reverse the judgementof the court of appeal. 39 4814-7609-4277.6 Dated: July 19, 2017 Dated: July 19, 2017 Dated: July 19, 2017 4814-7609-4277.6 FOLEY & LARDNER LLP Eileen R. Ridley, Bar No. 151735 Yesenia Garcia Perez, Bar No. 264880 Anthony James Dutra, Bar No. 277706 » LF Name: Eileen R. Ridley Attorneysfor Amicus Curiae PAYCHEX, INC. FOLEY & LARDNER LLP Eileen R. Ridley, Bar No. 151735 Yesenia Garcia Perez, Bar No. 264880 Anthony James Dutra, Bar No. 277706 By: ufDoAsee, Ae Name: Mesenia GarkigPere Attorneys for Amicus Curiae PAYCHEX, INC. FOLEY & LARDNER LLP Eileen R. Ridley, Bar No. 151735 Yesenia Garcia Perez, Bar No. 264880 Anthony James Dutra, Bar No. 277706 Name: Anthony James Dutta Attorneysfor Amicus Curiae PAYCHEX, INC. 40 CERTIFICATE OF COMPLIANCE WITH CRC 8.520(C) TYPE-VOLUMELIMITATION 1. This brief complies with the type-volumelimitation of Rule 8.520(c) of the California Rules of Court because it contains 5,302 words, not including the Application For Leave to File Amicus Curiae Brief. In certifying the foregoing I haverelied upon the word count of the word processing system used to prepare the brief as authorized by CRC 8.520(c). Dated: July 19, 2017 j Eileen R. Ridley Dated: July 19, 2017 poor:poe “Ania Garcia Pérek B h Dated: July 19, 2017 no Anthony James Dutra 4814-7609-4277.6 CERTIFICATE OF SERVICE I herebycertify that one (1) copy of the foregoing APPLICATION OF PAYCHEX,INC. FOR PERMISSION TO FILE AMICUS CURIAE BRIEF AND PROPOSEDBRIEF IN SUPPORT OF DEFENDANTS AND RESPONDENTSwassent via United States Postal First Class Mail on this date, postage prepaid to: Honorable William Barry Los Angeles County Superior Court 200 West Compton Boulevard Compton, CA 90220 Robert A. Lewis Morgan, Lewis & Bockius LLP One Market Street, Spear Tower San Francisco, CA 94105 I also certify that four (4) copies were sent via United States Postal First Class Mail on this date, postage prepaid to: California Court of Appeal Second Appellate District, Division 4 300 S. Spring Street North Tower — Second Floor Los Angeles, CA 90013 4814-7609-4277.6 42 I also certify that one (1) copy wassentthis date via Federal Expresson this date, with the Airbill listing the account numberfor billing to sender,to: Glen Broemer 135 West 225™Street, Apt. F Bronx, NY 10463 Dated: July 19, 2017 By: CO Name: Cherri Plainfield 43 4814-7609-4277.6