JEFFREY T. MILLER, District Judge.
Before the court is Defendant Saks & Company's ("Saks's") motion for summary judgment, (Doc. No. 15), and its related request for judicial notice, (Doc. No. 15-3). The matters were fully briefed and were found suitable for resolution without oral argument pursuant to Local Civil Rule 7.1.d.1. For the reasons set forth below, the court denies Saks's motion for summary judgment and its request for judicial notice.
In this putative class action, Plaintiff Ilia Derum asserts that Saks violated California Labor Code § 226(a), which requires employers to provide accurate itemized wage statements that include, among other things, the inclusive dates of the relevant pay period.
Plaintiff was a sales associate for Saks at a Saks Off Fifth store for about seven weeks, beginning on May 6, 2014. (Doc. No. 15-7 ("Joint Stip.") ¶ 1; Doc. No. 15-6 ("Rodriguez Decl.") ¶ 3.) At the beginning of her employment, she received, reviewed, and kept a copy of Saks's "Associates Handbook." (Joint Stip. ¶ 2.) The handbook stated: "Hourly Associates are paid weekly and checks are dated on Friday for the previous pay period. The pay period runs Sunday to Saturday." (Rodriguez Decl., Exh. B.) The handbook provided instructions for how to sign up for Direct Deposit, and it stated: "If Direct Deposit is not elected, live payroll checks are distributed via U.S. Mail to all Associates. 2008-current payroll checks can be viewed in Employee Self Service (ESS) via the S
(Id.)
Plaintiff was informed that hard-copy paychecks would include detachable wage statements, and she chose to receive her checks by mail rather than by direct deposit. (Doc. No. 19-2 ("Pl.'s Decl.") ¶ 2; Doc. No. 15-5 ("Lowry Decl.") ¶ 8.) Accordingly, she was issued a paper paycheck every Friday from May 16, 2014, to June 20, 2014. (Joint Stip. ¶ 3.) Attached to each paycheck was an itemized pay stub, which listed, among other things, the number of hours worked, gross earnings, itemized withholdings for taxes and other deductions, net pay, and the end date for the pay period. (Joint Stip. ¶ 3; Pl.'s Decl., Exh. 1.) The parties agree, however, that the hard-copy pay stubs did not include the beginning date of the pay period. (Joint Stip. ¶ 3; Pl.'s Decl., Exh. 1.)
For each pay period, Saks also uploaded to its ESS website an electronic wage statement. (Lowry Decl. ¶ 9 & Exh. A.) Unlike the pay stubs, the electronic statements included the beginning date of the pay period. (Lowry Decl., Exh. A.)
According to Maria Rodriguez, the store's Selling and Service Manager, when Plaintiff contacted her about the problem with her paychecks, Rodriguez sat down with Plaintiff and used Plaintiff's log-in and password to access the ESS system and review Plaintiff's electronic wage statements with her. (Rodriguez Decl. ¶¶ 1, 7.) Rodriguez further states in her declaration that Plaintiff received a copy of the Associates Handbook, and that a flyer posted in the employee break room informed employees as to what their identification and passwords were to access the ESS website. (Id. ¶ 4 & Exh. A.)
According to Plaintiff, when she contacted Rodriguez about the problem with her paychecks, Rodriguez logged into the system, reviewed Plaintiff's W-4 form without Plaintiff's help and without showing Plaintiff her electronic wage statements, and printed a new blank W-4 form for her to fill out. (Pl.'s Decl. ¶ 11.) She does not remember anyone at Saks directing or encouraging her to review her paychecks on ESS, and she does not recall anyone telling her that the information contained in her pay stubs was in any way different from the information contained in the electronic wage statements on ESS. (Id. ¶ 8.) She believed that her hard-copy pay stubs were identical to the ESS statements, and no one told her anything to make her think otherwise. (Id.) She also does not recall anyone encouraging her to review the flyer and does not remember seeing it in the employee breakroom or anywhere else. (Pl.'s Decl. ¶ 7.)
The parties agree, however, that Plaintiff never tried to access the ESS system to retrieve her electronic wage statements. (Joint Stip. ¶ 4.)
Plaintiff initiated this putative class action in San Diego Superior Court on July 15, 2014, alleging that Saks failed to provide proper wage statements in violation of California Labor Code § 226(a) by failing to include the pay-period start date on her pay stubs. (Doc. No. 1, Exh. 3.) Saks removed the case to this court on August 15, 2014, pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2). (Doc. No. 1.) On October 24, 2014, with leave of court, Plaintiff filed the operative first amended complaint, which added a cause of action for penalties under the Private Attorneys General Act of 2004 ("PAGA"), California Labor Code § 2699, based on the alleged violation of California Labor Code § 226(a). (Doc. No. 11.) Plaintiff seeks to litigate on behalf of all persons employed in California by Saks at any time since July 14, 2013. (Id. ¶ 9.)
After meeting and conferring, the parties agreed that there is a threshold issue that should be resolved by an early summary judgment motion before they litigate the issue of class certification, namely, whether Saks violated California Labor Code § 226 by providing Plaintiff with a pay stub attached to her paychecks that did not include the beginning pay-period date, when it also issued electronic wage statements that did contain the beginning pay-period date. (Joint Stip. at 2.)
On December 19, 2014, Saks filed the instant motion for summary judgment, (Doc. No. 15), and a related request for judicial notice, (Doc. No. 15-3). Plaintiff filed an opposition on February 9, 2015, (Doc. No. 19), and Saks replied on February 16, 2015, (Doc. No. 20).
Saks asks the court to take judicial notice of two items from the docket for
Plaintiff opposes Saks's request. (Doc. No. 19 at 8 n. 2.) She asserts that the court should decline to take notice of the documents because Saks failed to show why they are appropriate for judicial notice or relevant to this case. (Id.) She argues that "[t]he only apparent purpose of Saks' request is to imbue the documents with precedential value they neither have nor can acquire." (Id.)
Rule 201 is a method of establishing facts that are not reasonably subject to dispute, not legal principles. See Fed. R.Evid. 201(a) & advisory committee note to subdivision (a) (regarding the difference between adjudicative facts and legislative facts). Here, Saks asks the court to consider Peabody for the legal principle it represents, not to establish a fact at issue in this case. Although the order was not published in the commercial legal databases, there is nothing special, in precedential terms, about the orders that are selected (or not selected) for inclusion in the commercial databases, and it is well established that courts may consider the legal reasoning and conclusions of other federal courts without resort to Rule 201. See McVey v. McVey, 26 F.Supp.3d 980, 984-85 (C.D.Cal.2014) (collecting cases). The court, therefore, denies Saks's request for judicial notice, but will consider the documents for whatever value they may have as non-binding precedent.
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A dispute of fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. When ruling on a motion for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party, and must draw all justifiable inferences in the nonmovant's favor. See Johnson v. Poway Unified Sch. Dist., 658 F.3d 954, 960 (9th Cir.2011).
Plaintiff's first cause of action is for inadequate wage statements under California Labor Code § 226(a), which requires employers to provide accurate itemized wage statements to employees that provide nine pieces of information. Section 226(a) reads in relevant part:
Cal. Lab.Code § 226(a).
Section 226(e) provides a remedy for an employee injured by an employer's failure to comply with these requirements. It provides:
Cal. Lab.Code § 226(e).
Thus, a claim for damages under § 226(e) requires proof of three elements: (1) a violation of § 226(a); (2) that is "knowing and intentional"; and (3) a resulting injury. See Willner v. Manpower Inc., 35 F.Supp.3d 1116, 1128 (N.D.Cal. 2014). Saks contends that it is entitled to summary judgment in its favor because Plaintiff cannot establish any of these elements. The court takes each of them in turn.
Plaintiff asserts that Saks violated § 226(a) because the pay stubs attached to her paychecks lacked the beginning date of the pay period. She cites three cases that, indeed, held that wage statements violated § 226(a)(6) because they did not include the beginning date of each pay period. See Willner, 35 F.Supp.3d at 1129 ("A failure to include the start date of the pay period in a statement constitutes a violation of Section 226(a)(6)."); McKenzie v. Fed. Express Corp., 765 F.Supp.2d 1222, 1229 (C.D.Cal.2011) ("FedEx violated Labor Code Section 226(a)(6) by failing to include the beginning date for the pay period in its wage statements until December of 2009."); Lopez v. G.A.T. Airline Ground Support, Inc., 2010 WL 2839417, at *6 (S.D.Cal.2010) ("It is ... undisputed that GAT's wage statements indicate only the end date for each pay period, and do not list the beginning date.").
Saks does not dispute that the itemized pay stubs Plaintiff received did not include the beginning date of each pay period. (Joint Stip. ¶ 3.) However, it points out that none of Plaintiff's cases involved the situation here, where the employer additionally provided a compliant wage statement. It asserts that the pay stubs Plaintiff received were merely in addition to the electronic wage statements, which contained all of the required information and were readily accessible to Plaintiff through the company's ESS website. (Doc. No. 15-1 at 5-8.)
As to the law, Saks contends that it is well settled that employers can satisfy their obligations under § 226(a) by furnishing electronic wage statements, and that "multiple district courts in California have agreed that an employer satisfies Labor Code § 226 so long as it provides a compliant wage statement, even if the actual paystubs attached to its paychecks did
Saks is correct that an electronic wage statement can satisfy an employer's obligations under § 226(a), at least under some circumstances. In 2006 the California Department of Labor Standards Enforcement ("DLSE") issued an opinion letter approving a plan to implement an electronic wage-statement system, subject to certain conditions. See DLSE Opinion Letter No. 2006.07.06 (July 6, 2006), available at http://www.dir.ca.gov/dlse/ opinions/2006-07-06.pdf.
Saks is also correct that employers can satisfy § 226(a) by providing a wage statement on a separate piece of paper that is not attached to the paycheck as a detachable stub. In Ruelas v. Costco Wholesale Corp., 67 F.Supp.3d 1137, 2014 WL 4421572 (N.D.Cal. Sept. 8, 2014), the plaintiff asserted that Costco violated § 226(a) because the detachable portion of his paycheck did not include his name or the start date of the pay period. See id. at 1222, 2014 WL 4421572 at *2. The court dismissed the claim because it was undisputed that the plaintiff had received a compliant itemized wage statement, which was stapled to the paycheck. See id. The court relied on the DLSE opinion letter, which "confirmed that Section 226(a)'s purpose is to allow the continued use of detachable pay stubs but does not require them." Id. at 1222 & n. 28, 2014 WL 4421572 at *2 & n. 28.
But it is not clear that providing an electronic wage statement satisfies § 226(a) when, as in this case, an employee has chosen to be paid by hard-copy check.
The beginning point of this analysis is the statute, which is silent about electronic wage statements. As noted above, it requires employees to
Cal. Lab.Code § 226(a) (emphasis added). A plain reading of this language suggests that a written statement must be supplied together with a paper paycheck, either as a stub or a separate piece of paper. But the language does not clearly foreclose Saks's position either.
The primary California authority on electronic wage statements appears to be the DLSE opinion letter mentioned earlier. It approves the use of electronic wage statements, but only so long as employees retain the right to elect to receive hard-copy statements. The letter discusses the purpose of § 226(a):
Id. at 2 (footnote omitted). It explains that an electronic statement can qualify as a statement in writing because California Labor Code § 8 defines a writing as "any form of recorded message capable of comprehension by ordinary visual means." Id. (internal quotation marks omitted). Although the reference to "detachable part of the check" could be read to always require hard-copy, it says, "in the context of the entire subsection it appears to allow for the continued use of the convenient and traditional `pay stub' alternative to a separate statement in writing." Id. It concludes that electronic wage statements are
Id. at 2-3 (emphasis added).
Although the letter is not binding authority, it appears to be the primary state-law authority, and it indicates that when an employee has chosen to receive a written pay stub or record, the employee is entitled to one that satisfies § 226(a). Saks does not address the letter or its limitations on electronic statements, although the letter was the basis of the relevant holdings in two of Saks's cases. See Ruelas, 67 F.Supp.3d at 1140-42 & n. 28, 2014 WL 4421572, at *2 & n. 28; Apodaca v. Costco Wholesale Corp., 2014 WL 2533427, at *2 (C.D.Cal. June 5, 2014).
Saks relies on Peabody v. Time Warner Cable, Inc., No. CV 09-6485-AG (RNBx) (C.D.Cal. Nov. 1, 2010),
The only other case this court is aware of that involved both a paper stub and an online wage statement appears to have analyzed the stub and the electronic statement separately:
Ortega v. Sears, Roebuck & Co., 2011 WL 1991957, at *4 (Cal.Ct.App. May 24, 2011) (bracket omitted). But the decision addressed class certification, and, like Peabody, it offers no sign of the reason for that approach.
Section 226(e) defines "knowing and intentional" as follows:
Cal. Lab.Code § 226(e)(3).
Few cases have applied the "knowing and intentional" standard in the context of this statute. The most comprehensive treatment appears to be in Willner v. Manpower Inc., 35 F.Supp.3d 1116 (N.D.Cal.2014). The court in Willner identified three principles from the language of the statute: first, "knowing and intentional" requires something more than a violation of § 226(a) alone; second, a "knowing and intentional" failure must be more than an "isolated and unintentional payroll error due to a clerical or inadvertent mistake"; and third, whether a violation of § 226(a) was "knowing and intentional" is a factual determination. Id. at 1130-31. Based on those conclusions and California courts' definition of the similar phrase "willingly and knowingly," which appears in other sections of the California Labor Code, the court concluded that "a `knowing and intentional' violation requires a showing that the defendant knew that facts existed that brought its actions or omissions within the provisions of section 226(a)." Id. at 1131.
Plaintiff contends that Saks knowingly and intentionally violated § 226(a) under this definition because Saks affirmatively mailed multiple defective wage statements to her; it stipulated that the statements did not comply with § 226(a)(6); it admitted during discovery that it mailed defective statements to class members between July 14, 2013, and June 27, 2014; and it admitted that its internal payroll department created and mailed the paychecks. (Doc. No. 19-1 at 13-14.)
Saks does not take issue with Plaintiff's evidence or the analysis in Willner. Rather, it argues that the omission of the beginning dates from the pay stubs was not a "willful and intentional violation of Labor Code § 226" because the electronic wage statements included the pay-period beginning dates. (Doc. No. 15-1 at 10.)
Saks's argument is unsupported and misses the mark. Under the standard persuasively articulated in Willner, the employee must show only that the employer "knew that its wage statements did not contain the inclusive dates of the period for which its employees were paid." 35 F.Supp.3d at 1131. Whether the employer knew it was violating § 226(a) is irrelevant. See id.; accord Perez v. Safety-Kleen Sys., Inc., 2007 WL 1848037, at *9
Saks asserts in its reply brief that it had systems in place such that pay-period beginning dates would be on its wage statements, as evidenced by the electronic wage statements, and that Plaintiff has presented no evidence that the lack of the dates on her pay stubs was anything more than a clerical oversight. (Doc. No. 20 at 8.)
However, arguments raised for the first time in a reply brief are improper, and the court need not consider them. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007). Considering such arguments "would unfairly deny the non-moving party an opportunity to respond." Rosales v. FitFlop USA, LLC, 882 F.Supp.2d 1168, 1176 (S.D.Cal.2012).
Regardless, Saks admitted that its internal payroll department created the defective pay stubs and mailed them to every employee who received a hard-copy paycheck for almost a year. This is sufficient to create a genuine dispute regarding whether this element is satisfied. This is not, therefore, an issue that can be resolved by summary judgment.
Effective January 2013, the California legislature amended § 226(a) to clarify the injury requirement under § 226(e). The amended version reads in relevant part:
Cal. Lab.Code § 226(e)(2)(B)(i) and (e)(2)(C) (emphasis added). Thus, the injury requirement is met if the employee must refer to "other documents or information" beyond the four corners of each wage statement to determine the inclusive dates of the pay period.
Plaintiff asserts that she suffered an injury within the meaning of the statute because she "cannot determine the beginning pay period dates by examining her hard copy wage statements alone." (Doc. 19 at 11.)
Saks essentially concedes that Plaintiff would need to refer to outside information to determine the relevant dates, as it argues that she did not suffer an injury because she could determine the pay period by counting back seven days from the end date on her pay stubs, since she "knew that she was paid on a weekly basis based on her own receipt of her paychecks as well as information provided to her by Saks during orientation and her employee handbook." (Doc. No. 15-1 at 9.)
Saks relies on two cases that rejected § 226(a) claims because the only injury alleged was the need to perform "simple math" to determine the accuracy of the
Based on the court's review of the individual stubs, there is no way to determine the pay-period start date. Plaintiff has, thus, presented evidence of an injury within the meaning of the statute, and Saks has not shown that it is entitled to judgment on this issue.
Plaintiff's second cause of action, for penalties under the Private Attorneys General Act ("PAGA"), California Labor Code § 2699, is derivative of her claim for inadequate wage statements under California Labor Code § 226(a).
Saks asserts that it is entitled to judgment on this claim because Plaintiff's § 226(a) claim fails. (Doc. No. 15-1 at 10-11.) However, as discussed above, Plaintiff has presented a triable § 226(a) claim.
Saks's motion for summary judgment, (Doc. No. 15), and its related request for judicial notice, (Doc. No. 15-3), are DENIED.
IT IS SO ORDERED.
Peabody, No. CV 09-6485-AG (RNBx), at 7.
