155 F. Supp. 3d 1068
E.D. Cal.2016Background
- Troy Lindell sued Synthes Companies on behalf of two certified classes: an "Expense Class" (commission sales consultants alleging failure to reimburse business expenses) and a "Deduction Class" (sales consultants alleging unlawful paycheck deductions and improper final pay). The suit covers December 13, 2007 onward.
- Synthes paid some reps a base salary + allowances and others who met sales thresholds a higher "straight commission" (up to 12.5%) and had policy language stating straight-commission reps "will not be reimbursed for their expenses while in-territory."
- Plaintiffs produced testimony that class members regularly incurred cell, shipping, car, office and education/entertainment expenses and were not reimbursed; Synthes produced testimony that the higher commission was intended to indemnify expenses and that ad hoc reimbursements could be made for unusual items.
- Synthes had written policy updates (2007, 2010, claimed 2011/2012 documents, and a 2013 Compensation Plan/commission statements) and employee acknowledgments; there is dispute over when and how the company communicated any apportionment method.
- Synthes’ payroll practices allowed large deductions (up to 50% of list price) as PPOR/PINVR chargebacks; commissions were paid on a net basis and advances were used pending invoicing/payment.
- The court evaluated cross-motions for summary judgment and applied California Labor Code § 2802 and related wage/deduction law, concluding differing results by time period and claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Synthes violated Cal. Lab. Code § 2802 (expense reimbursement) for Dec 13, 2007–Dec 30, 2012 | Lindell: straight-commission reps were not reimbursed and Synthes had no communicated apportionment method; therefore § 2802 liability | Synthes: higher commission was intended to indemnify expenses (lump-sum), and some ad hoc reimbursements existed | Court: genuine factual dispute exists; PL’s summary judgment denied and DEF’s summary judgment denied for this period |
| Whether Synthes satisfied § 2802 after Jan 2013 (post-policy change) | Lindell: 2013 plan still insufficient under Gattuso and evidence of non-reimbursement lacking | Synthes: 2013 Compensation Plan/commission statements explicitly allocate allowances into commission and were communicated to employees | Court: GRANTS Synthes’ summary judgment for Jan 2013–present (Plaintiff produced no evidence of incurred expenses after Dec 2012) |
| Whether Synthes’ paycheck deduction policy (PPOR/PINVR) violated Cal. law (Lab. Code §§ 221, 223) for Dec 13, 2007–Dec 30, 2012 | Lindell: deductions exceeded advances and therefore deducted actual wages unlawfully; policy shifted business losses to employees | Synthes: deductions were chargebacks against advances, not deductions from wages | Court: GRANTS Plaintiff summary judgment on liability for the Deduction Class for this period (policy could result in deductions from wages and thus violated law); DENIES defendants’ motion |
| Lawfulness of deductions from final pay / waiting-time penalties (third cause) | Lindell: final paycheck deductions were improper because earned wages/commissions cannot be recouped at termination without clear contractual entitlement | Synthes: manuals/policies precluded accrual after separation; deductions applied only to advances | Held: DENIES Synthes’ summary judgment; factual dispute whether employees forfeited post-termination commissions — cannot resolve on summary judgment |
Key Cases Cited
- Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (2007) (employer may indemnify expenses via higher pay only if method apportions reimbursement and is communicated; employee may challenge insufficiency)
- Prachasaisoradej v. Ralphs Grocery Co., 42 Cal.4th 217 (2007) (public policy limits employer deductions that shift business costs to employees)
- Cassady v. Morgan, Lewis & Bockius LLP, 145 Cal.App.4th 220 (2006) (elements plaintiff must prove under § 2802)
- Steinhebel v. Los Angeles Times Communications, 126 Cal.App.4th 696 (2005) (advances are not wages; employer may reconcile overpayments by charging future commissions when conditions precedent exist)
- Koehl v. Verio, Inc., 142 Cal.App.4th 1313 (2006) (commission rights depend on compensation agreement; advances may be offset by contract terms)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard: do not weigh credibility; evidence construed for nonmovant)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (moving party’s initial summary judgment burden explained)