236 F. Supp. 3d 1165
E.D. Cal.2017Background
- Plaintiffs (Shook and Berringer), California-resident truck drivers for Indian River Transport Co., sued on behalf of themselves and other California drivers for alleged California Labor Code and UCL violations about rest breaks, unpaid nonproductive time, and inaccurate wage statements.
- Indian River is headquartered in Florida; drivers are nationally dispatched, typically begin/end trips in drivers’ home states but spend substantial time working outside California; only a small Turlock, CA facility exists with minimal functions.
- Until Sept. 5, 2016, Indian River paid drivers on a piece-rate (per-mile) basis, did not separately pay for rest breaks or many nonproductive tasks, and issued wage statements that did not show hours.
- Plaintiffs filed suit in 2014; Indian River elected the Labor Code §226.2 Safe Harbor, notified the state in June 2016, and paid 4% of gross wages for July 1, 2012–Dec. 31, 2015 to current/former California drivers on Dec. 15, 2016.
- Indian River changed its pay and wage-statement practices for California drivers on Sept. 5, 2016 to separately compensate rest/nonproductive time; plaintiffs did not pursue class certification and offered no reliable proof quantifying in-state violations.
- After a bench trial, the court found for defendant on all claims, concluding California law did not apply extraterritorially to most work, plaintiffs failed to prove in-state violations, and the §226.2 Safe Harbor barred claims during the Safe Harbor period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Extraterritorial application of CA wage/rest-break laws | CA-resident drivers are entitled to California protections even for work outside CA | Presumption against extraterritorial application; drivers principally worked outside CA and employer headquartered in FL | CA law does not apply to work performed outside California; presumption not overcome |
| Liability for work performed inside California | Plaintiffs asserted unpaid rest/nonproductive time and deficient wage statements for in-state work | Defendant argued plaintiffs offered no reliable proof calculating in-state violations or damages | Plaintiffs failed to prove extent or amount of in-state violations; claims fail for lack of proof |
| Effect of Labor Code §226.2 Safe Harbor for 7/1/2012–12/31/2015 | Carve-outs (e.g., failure to inform, discourage breaks) defeat Safe Harbor | Indian River complied with notice/payment; carve-outs inapplicable or unsupported by evidence | Safe Harbor applies: payments + notice negate liability for that period; carve-out inapplicable due to lack of proof of discouragement or failure to inform |
| Post–Safe Harbor (1/1/2016–9/4/2016) and PAGA standing | Plaintiffs sought penalties for post-Safe Harbor period and PAGA relief for others | Plaintiffs were not employed post-Safe Harbor and received Safe Harbor payments; thus lack aggrieved-employee status for post-period PAGA claims | Plaintiffs lack standing as aggrieved employees for post-Safe Harbor PAGA claims; no individual recovery for post-period because plaintiffs had left employment |
Key Cases Cited
- Sullivan v. Oracle, 51 Cal.4th 1191 (California Supreme Court) (presumption against extraterritorial application of California law)
- Tidewater Marine W., Inc. v. Bradshaw, 14 Cal.4th 557 (California Supreme Court) (California protections presumptively apply to wage earners who principally work in California)
- Fowler Packing Co. v. Lanier, 844 F.3d 809 (9th Cir.) (discussing Labor Code §226.2 Safe Harbor requirements)
- Bernstein v. Virgin Am., Inc., 227 F.Supp.3d 1049 (N.D. Cal.) (employer headquartered in CA and extensive CA operations support extraterritorial application)
- Oman v. Delta Air Lines, Inc., 230 F.Supp.3d 986 (N.D. Cal.) (limited in-state work by CA residents weighed against extraterritorial application)
- Sarviss v. General Dynamics Information Tech., Inc., 663 F.Supp.2d 883 (C.D. Cal.) (focus on situs of employment, not mere residency, in extraterritorial analysis)