WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE.
Plaintiffs, truck drivers formerly employed by Indian River Transport Co. ("Indian River"), brought this action on behalf of themselves and similarly aggrieved employees against Indian River alleging various violations of California law, including 1) Labor Code § 226.7 (failure to provide mandated rest breaks); 2) Labor Code § 226(a) (failure to provide accurate itemized wage statements); 3) Labor Code §§ 2699,
After a two-day bench trial and extended closing arguments, the matter was submitted to the court for decision. Having considered the evidence and arguments of counsel, and having read and considered the briefs, the court finds in favor of defendant Indian River on all claims. This memorandum constitutes the court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).
1. Plaintiffs Shook and Berringer and other aggrieved employees are current and former California-resident drivers ("California drivers") employed by Indian River.
2. Plaintiff Shook worked for Indian River from May to October 2012 and plaintiff
3. Plaintiffs paid California state income taxes on all their earnings for Indian River. Plaintiffs also received all their Indian River wage statements in California.
4. Indian River is a Florida corporation with its headquarters in Winter Haven, Florida. Indian River offers liquid food-grade tank carrier services nationwide, transporting products such as milk and orange juice.
5. Indian River's administrative staff and management are located at Indian River's headquarters in Winter Haven. The headquarters is responsible for payroll and other back office functions, including the issuing of wage statements and the resulting electronic deposits of paychecks, and drivers are hired out of Winter Haven and trained there. The Winter Haven facility also has a tank wash and maintenance facilities. The Winter Haven facility provides 24-hour dispatch service, including for drivers in the western United States after hours.
6. Indian River provides transportation services across the country. Drivers typically spend several days or weeks away from home, during which they pick up and drop off product between suppliers and recipients that are 1-5 days apart. The area where a driver has his or her residence will normally determine only the beginning and end of the overall trip. Thus, a driver who lives in California will usually begin and end his or her overall trip in California but may spend the majority of that time outside California. Indian River has about 25 customers in California.
7. Although Indian River dispatches most of its trucks out of it headquarters in Winter Haven, it has facilities in Clovis, New Mexico and in Turlock, California, with dispatchers in both locations. There are no drivers based in the Turlock facility, and its California drivers live throughout California. The Turlock facility, which is much smaller than the Winter Haven facility, provides light maintenance for Indian River trucks and has two dispatchers and only a few other employees. The Turlock facility also has a small lounge that drivers may use and parking spots where drivers can leave their trucks after hours. Drivers may also send paperwork to Indian River's headquarters from the Turlock facility, though they were not required to do so and could submit some, if not all, paperwork at commercial truck rest stops across the country. The Turlock facility does not have shower facilities or an indoor restroom for drivers, who may use a single portable toilet outside the facility.
8. Indian River hires and employs drivers nationwide, of which there are 600-650 at any time. In 2016, Indian River had approximately 50 drivers at any particular time who were residing in California. Indian River drivers are dispatched based upon freight demands and the location of drivers at the time of demand, not their place of residence. Defendant estimates that based on fuel and tax records, Indian River drivers, including those living in California, spend on average 15-30% of their time driving in California.
9. While some California drivers spend almost no time in California, others spend nearly half their time in the state in any particular pay period. These figures vary from driver to driver and from one week to the next, depending on driver preferences and demand.
10. Until September 5, 2016, all Indian River drivers throughout the United States were generally only paid "piece-rate" or per mile driven, at a rate of approximately $.41 per mile. Plaintiffs and other drivers were not separately paid for
11. Until September 5, 2016, Indian River wage statements identified the dates of each trip during the weekly pay period, and the rate and dollar amount paid for that trip. The wage statements did not list the actual hours worked, whether driving, on duty but not driving, or while on break, though drivers recorded such time on daily logs. The wage statements also did not list any hourly rates for drivers, with the exception of certain hourly work not at issue in this case. (
12. Indian River drivers were informed of their obligations to comply with federal regulations regarding rest breaks and the penalties that would result from failure to comply. Specifically, drivers were informed of federal regulations requiring drivers to take a 30-minute, off-duty break within 8 hours of coming on duty, to not exceed more than 11 hours of driving in a 14-hour period, and to be off-duty for at least 10 hours after 14 hours of work. Drivers were also informed of federal regulations prohibiting working more than 70 hours in an 8-day period. Drivers were also required to maintain 30-day and daily logs (prior to the implementation of electronic logs) recording hours driving, hours on-duty but not driving, and hours off-duty. Indian River drivers were warned of the punishments that Indian River would impose for failure to comply with federal regulations. (
13. Defendant did not schedule rest breaks for its drivers, as drivers were permitted and encouraged to take rest breaks for safety and comfort reasons when they wanted. Defendant's rest break policy was the same for all its drivers, and Indian River drivers understood that they were free to take breaks as desired.
14. Indian River did not discourage its drivers from taking rest breaks. In that regard, the court does not find the testimony of Jeffrey Pilon credible to the extent that he claimed he was punished four times in connection with taking rest breaks. Even assuming Mr. Pilon was punished in connection with his rest breaks as he claimed, those isolated episodes do not establish that Indian River discouraged any other drivers from taking rest breaks, including plaintiffs Shook and Berringer. The court finds the testimony of all other witnesses to be substantially credible.
15. Indian River drivers were not specifically informed of California law regarding rest breaks prior to September 5, 2016. However, plaintiffs' Complaint does not assert any cause of action based on Indian River's failure to inform plaintiffs or its California drivers of California law regarding rest breaks. Nor does their Complaint raise any allegation to that effect.
16. On September 5, 2014, plaintiffs filed the present action against Indian River.
17. On June 27, 2016, Indian River provided written notice to the California Department of Industrial Relations of its intent to make payments to current and former California drivers under California Labor Code § 226.2's "Safe Harbor" provision. (
18. Indian River modified its compensation and payroll system for California drivers on September 5, 2016 in order to comply with California law. Indian River
19. This change in compensation structure was not well-taken by Indian River's California drivers, with approximately 20% resigning, leaving Indian River with approximately 35 California drivers in 2017.
20. Since September 5, 2016, Indian River's rest-break policy specifically informs drivers who live in California of their rights to take breaks under California law, and it now separately pays for rest breaks.
21. On December 15, 2016, pursuant to section 226.2's Safe Harbor provision, Indian River paid its current and former California drivers (including plaintiffs) 4% of their gross wages from July 1, 2012 to December 31, 2015, which totaled approximately $282,000. (Def.'s Ex. F.) Indian River did not reduce the amount of the Safe Harbor payment based on the percentage of time its drivers worked outside of California. The only drivers who did not receive such payment were drivers for which the payments were returned by the U.S. Mail due to lack of a current address.
22. Indian River did not make any payments to its drivers for any violations of the California Labor Code's rest break and wage requirements occurring after January 1, 2016.
23. Although plaintiffs' Complaint was filed as a class action on behalf of all California drivers, plaintiffs did not move for class certification under Federal Rule of Civil Procedure 23. At trial, plaintiffs sought civil penalties for themselves and other California drivers under PAGA, Cal. Labor Code §§ 2698-2699.5, as well as statutory penalties and damages in their individual capacity.
The California Supreme Court has explained that there is a presumption against the extraterritorial application of California law, under which a court should presume the California legislature "did not intend a statute to be operative, with respect to occurrences outside the state, unless such intention is clearly expressed or reasonably to be inferred from the language of the act or from its purpose, subject matter, or history."
California law is unclear as to exactly what a California resident must show in order to overcome this presumption and invoke the protection of the California Labor Code's rest break and wage requirements extraterritorially.
Looking at these factors, the court in
Similarly, the court in
On the other hand, the California Supreme Court has observed that in some circumstances the Legislature has explicitly extended application of its statutes outside the state's territorial boundaries and may have so intended in other instances.
Specifically, the court noted in
There is no evidence that plaintiffs in this case worked exclusively or principally in California. Such evidence as was presented was to the contrary. It is apparent from the undisputed evidence that the majority of the drivers' time working was spent outside California. While California drivers' overall routes usually began or ended in California, the drivers would spend days, weeks, or even months on the road working outside of California. In other words, the California drivers worked principally outside of California.
Courts have also given substantial weight to the fact that the employer is based in California or receives subsidies or other benefits for its California-related work in determining whether its California employees are covered by California laws while working outside the state. For example, in
In the present case, in contrast, defendant was neither based nor had its headquarters in California. Such evidence as was presented, again, was to the contrary. It appears from the undisputed evidence adduced at trial that Indian River was headquartered in Florida, sent drivers payments from that headquarters, and had most of its facilities at that headquarters. Indian River's compensation structure and rest break policies were developed and applied at Indian River's headquarters in Florida and it trained new employees in Florida.
Plaintiffs talk about the Turlock facility as if it were somehow defendant's headquarters. The evidence at trial could not have been more to the contrary. What the court learned from the evidence about that facility was that it employed only two dispatchers, performed only minor maintenance, and had a small lounge and space for parking trucks. Apparently, no routes involved the facility, as loading and unloading occurred at the customer's businesses. The facility had no permanent bathroom or shower facilities for drivers. Only a single outdoor porta potty was provided. Finally, while drivers could submit their paperwork to Indian River from the Turlock facility, they were not required to do so and could submit some, if not all, paperwork at commercial truck rest stops across the country.
Thus, because plaintiffs did not work exclusively or principally in California, and defendant was not based or headquartered in California, this case is unlike either
Plaintiffs did establish that they were residents of California, received their wages and wage statements in California,
Beyond showing their California residency, plaintiffs have shown very little in their attempt to overcome the presumption against extraterritorial application of the California laws relating to wages and rest breaks to them while working outside of California. The nature of the work being performed, truck driving, adds nothing to the analysis. The conduct which gave rise to the alleged liability was Indian River's practice with regard to wages and rest breaks, which can best be inferred to have been devised and implemented in Indian River's corporate offices in Florida.
Plaintiffs point to evidence that Indian River has about 25 customers in California, and the drivers sometimes completed paperwork in and/or sent paperwork to Indian River from California. However, because the evidence at trial did not establish how much business Indian River conducts in California or nationally, the court cannot draw any significance from the fact of those 25 customers. The drivers may have sometimes turned in the hard copies of their paperwork at the Turlock facility, but the court gathered from the evidence that the electronic submission, which they could submit from stations in various parts of the country, was the significant transmittal.
From the evidence adduced at trial, the court concludes that the presumption against extraterritorial application of California's wage and rest break laws to Indian River's California drivers' work outside California is not overcome. Thus, California's wage and rest break laws do not apply to Indian River's drivers' work performed outside California, and Indian River is entitled to judgment on all of plaintiffs' causes of action with respect to work performed outside California.
Assuming the California Labor Code's wage and rest break provisions apply to work performed in California by Indian River's California drivers,
Prior to trial, the parties were directed to submit proposed findings of fact and
However, it appears from the evidence that California drivers spent most and sometimes all of their time in a given pay period outside of California. Thus, plaintiffs' estimates regarding total nonproductive time in a given pay period and the total number of pay periods without reference to where that time was spent are of no assistance to the court.
It would be reasonable to assume that plaintiffs spent some time working in California during the relevant time period. But it is not for the court to speculate on how many, if any, uncompensated rest breaks or other breaks occurred while they were in California. It was plaintiffs' burden to establish that by competent evidence, such as the percentage of work, number of pay periods, or number of hours performed inside California. Plaintiffs made no effort to do so at trial. Try as it may, the court is unable on its own to reconstruct that information from the evidence before it.
At trial, the pay stubs for plaintiffs Shook and Berringer were introduced, which show the total miles driven by the drivers and the beginning and end points of the routes driven. Such information is insufficient to allow the court to determine what how much time plaintiffs spent in California during a given pay period. While perhaps such information could be determined through a combination of the drivers' daily logs and pay stubs, mileage charts, and an online map service, the testimony and exhibits introduced at trial leave the court without any feasible method of calculating the proper penalties and damages as to Shook and Berringer, much less all other California drivers, for whom pay stubs and daily logs were not introduced at trial.
An examination of the evidence also does not give the court the tools necessary to determine defendants' potential liability. Defendant introduced charts showing the number of miles driven by
Accordingly, plaintiffs' claims for violations occurring within the state of California fail due to their failure to meet their burden of establishing the extent of any violations by Indian River as well as the proper penalties or damages for such violations. Defendants are thus entitled to judgment on all of plaintiffs' claims with respect to all work performed inside California.
Even assuming the California Labor Code's provisions applied extraterritorially or that plaintiffs met their burden of proof to establish the extent of any violations and accompanying penalties or damages, the court concludes that California's Safe Harbor provision in Labor Code § 226.2 bars plaintiffs' claims.
Here, Indian River properly notified the California Department of Industrial Relations of its election to make Safe Harbor payments to its current and former employees on June 27, 2016. Indian River also paid 4% of its current and former employees' gross wages to its current former employees, including plaintiffs, for the period between July 1, 2012 and December 31, 2015 complied with California Labor Code § 226(b). Thus, defendant has fully complied with California Labor Code § 226(b)'s requirements.
Even where an employer complies with Labor Code § 226.2(b)'s notice and payment requirements, the Safe Harbor defense does not apply to claims exempted under certain "carve-outs" provided in section 226.2(g).
However, plaintiffs' Complaint asserts no claim based on Indian River's failure to advise California drivers of their right to take rest or recovery breaks under California law. Rather, the Complaint refers to Indian River's alleged failure to authorize and permit drivers to take rest breaks and failure to separately pay for such breaks, without any mention of a failure to inform drivers of such rights. (
The court assumes that section 226.2(g)(3)'s carve-out applies to plaintiffs' claim that Indian River failed to provide rest breaks and prevented or discouraged such breaks. However, the court finds no credible evidence that Indian River failed to provide rest breaks or sought to discourage or prevent drivers from taking such breaks. As discussed above, the court finds credible the testimony of multiple witnesses that drivers were encouraged to take breaks at any time and as frequently as necessary and that drivers did so. The court also finds credible the testimony of multiple witnesses that drivers were not
Section 226.2's Safe Harbor provision bars all of plaintiffs' claims based on conduct during the Safe Harbor period, as the affirmative defense applies broadly to any claim for recovery of wages, damages, statutory penalties, civil penalties, and premium pay, including claims based on the failure to pay drivers for nonproductive time under section 226.2(a)(1); failure to provide a proper itemized wage statement under sections 226(a) and 226.2(a)(2); waiting time penalties under section 203; and penalties under PAGA.
Because Indian River changed its compensation policy and wage statements to comply with California law on September 5, 2016, any liability could only be based on conduct from January 1, 2016 to September 4, 2016. Thus there are only 36 pay periods during which there could be violations relating to the non-payment of nonproductive time, and to the non-payment of rest-break time, which would include any derivative claims for statutory or civil penalties. However, plaintiffs were not employed by Indian River after the Safe Harbor period and thus cannot personally recover penalties or damages for the post-Safe Harbor period.
Nor can plaintiffs recover on behalf of other employees for the post-Safe Harbor period. Shook's and Berringer's claims were extinguished by their receipt of the Safe Harbor payments and they were not employed after the Safe Harbor period. Thus, they are not "aggrieved employees" under PAGA, at least with respect to the post-Safe Harbor period.
The court accordingly finds that Indian River is entitled to judgment on all of plaintiffs' causes of action based on Indian River's Safe Harbor defense.
For all the foregoing reasons, THE COURT HEREBY FINDS in favor of defendants
IT IS SO ORDERED.