Citations
- 384 F. Supp. 3d 1058
Full opinion text
LUCY H. KOH, United States District Judge
Plaintiff Roderick Magadia, on behalf of 3 classes (collectively, "Plaintiffs"), brings suit against Defendants Wal-Mart Associates, Inc. and Wal-Mart Stores, Inc. (collectively, "Wal-Mart") regarding alleged violations of California wage and hour laws. Specifically, Plaintiffs claim Wal-Mart violated: (1) Cal. Lab. Code § 226.7 for failure to pay adequate compensation for missed meal breaks; (2) Cal. Lab. Code § 226 for failure to provide accurate itemized wage statements; (3) Cal. Bus. & Prof. Code § 17200 et seq . ("UCL") for engaging in unfair and unlawful business practices; and (4) Cal. Lab. Code § 2698 ("PAGA") because Wal-Mart failed to pay adequate compensation for missed meal breaks and failed to provide accurate itemized wage statements. ECF No. 1-1 at ¶¶ 24-42. However, the operative claims are claims (1) and (2) because as explained below, the UCL merely extends the statute of limitations for claim (1), and PAGA provides for penalties for underlying violations of the California Labor Code.
On January 9, 2018, the Court granted Plaintiffs' motion for class certification. The Court certified the following 3 classes:
Meal Period Regular Rate Class : All current and former California non-exempt retail store employees of [Wal-Mart] who received non-discretionary remuneration, including "MYSHARE INCT," and was paid any meal period premium payments in the same period that the non-discretionary remuneration was earned, at any time between December 2, 2012, through the present.
Overtime/INCT Wage Statement Class : All current and former California non-exempt employees of [Wal-Mart] who received "OVERTIME/INCT," at any time between December 2, 2015, through the present.
Final Wage Statement Class : All former non-exempt employees who worked for [Wal-Mart] in the State of California and whose employment terminated (whether voluntarily or involuntarily) at any time from December 2, 2015 to the present.
ECF No. 84 at 22. The Court also appointed Roderick Magadia as class representative. Id.
Wal-Mart moved to decertify the Meal Period Regular Rate Class. ECF No. 132. The Court denied Wal-Mart's decertification motion on November 13, 2018. ECF No. 187.
On October 30, 2017, Plaintiffs moved for partial summary judgment on Plaintiffs' claim under PAGA, Cal. Lab. Code §§ 2698 - 2699.5. ECF No. 67. On May 11, 2018, the Court granted Plaintiffs' motion for partial summary judgment on Plaintiffs' PAGA claims. ECF No. 121. On June 25, 2018, the Court denied Wal-Mart's request for leave to file a motion for reconsideration. ECF No. 130.
On July 26, 2018, Wal-Mart moved for partial summary judgment on Plaintiffs' three remaining claims. ECF No. 131. On September 27, 2018, the Court denied Wal-Mart's motion for partial summary judgment. ECF No. 157.
The Court held a 3-day bench trial in this matter beginning on November 30, 2018. The parties filed post-trial briefs on December 7, 2018. ECF Nos. 214, 215. Having considered the evidence and arguments of counsel, the relevant law, and the record in this case, the Court hereby enters the following findings of fact and conclusions of law.
I. FINDINGS OF FACT
A. Stipulated Facts
The Parties stipulated to the following facts:
1. From June 17, 2008 to September 12, 2016, Magadia worked as an hourly associate at a Wal-Mart retail store in San Jose, California as a stock associate/cart pusher. ECF No. 176 at 8.
2. On September 12, 2016, Magadia was terminated for absenteeism. Id.
3. During the relevant time period, Wal-Mart used a "Myshare" incentive program for its employees in California retail stores, the details of which are set forth in its written "Myshare Quarterly Incentive Plan." Id.
4. During the relevant time period, Wal-Mart has provided, and continues to provide, all eligible associates when they begin their employment a copy of Wal-Mart's written "MyShare Quarterly Incentive Plan" in effect at that time. Id.
5. MyShare incentive plan payments, a type of bonus, appear on wage statements as "MYSHARE/INCT." Id.
6. Employees who received a MyShare bonus and worked overtime during the relevant time period also receive an incremental overtime payment adjustment. The wage statements report that payment as "OVERTIME/INCT." Id.
7. The OVERTIME/INCT payment is listed on the wage statement as a lump sum without "hours worked" or "hourly rate." This has been Wal-Mart's practice during the relevant time period and continues to be Wal-Mart's current practice. Id.
8. The formula for calculating the OVERTIME/INCT payment cannot be determined from the wage statement alone. Id.
9. Wal-Mart employees, during their employment, have online access to their time records and wage statements via Wal-Mart's intranet. Id.
10. Wal-Mart employees are paid biweekly, and wage statements are produced biweekly to correspond to the biweekly pay periods. Id.
11. Wal-Mart's biweekly on-cycle wage statements include pay period start and end dates. Id.
12. Magadia was aware that he was paid biweekly at all times during his employment with Wal-Mart. Id.
13. When an employee is terminated, the employee immediately receives all wages earned through the date of termination by check. A "Statement of Final Pay" accompanies the check. Id. at 9.
14. The Statements of Final Pay do not include pay period start or end dates. This has been Wal-Mart's practice during the relevant time period, and continues to be Wal-Mart's current practice. Id.
15. Magadia received a Statement of Final Pay during his exit interview on the day of his termination. Id.
16. Wal-Mart generates a daily Meal Exception Report at each store. The Meal Exception Report identifies all employees who had a meal exception as determined by the employee's time punches. Id.
17. The Meal Exception Report reflects a meal exception irrespective of whether the associate voluntarily or involuntarily skipped their lunch, voluntarily or involuntarily took a less-than-30-minute break, voluntarily or involuntarily took a late meal period, or actually took a full, compliant meal period but merely forgot to clock in or out for lunch.
18. All employees who appear on the final weekly Meal Exception Report, for whatever reason, receive a meal period premium payment equivalent to one hour of compensation at the employee's base rate of pay. Id.
19. Wal-Mart pays meal period premiums using the employee's base rate of pay. Id.
B. Cal. Lab. Code § 226.7 for Failure to Pay Adequate Compensation for Missed Meal Breaks
A meal exception occurs when a Wal-Mart employee misses a meal, begins their meal late, or cuts a meal short. Tr. at 241:14-17. If a meal exception occurs, an informal conversation takes place between a supervisor and the employee to determine the reason the exception occurred. Id. at 244:12-24. If necessary, an internal Wal-Mart investigation may begin based on the reason for the meal exception. Id. at 244:25-245:4. This investigation is conducted using a meal investigation worksheet. Id. On the worksheet, the employee reports the reason the meal exception occurred. Id. at 250:9-13. Then, the supervisor determines whether the meal exception was voluntary or involuntary. Id. at 306:9-307:8. Once that takes place, the results of the investigation are encoded into Wal-Mart's Exception Management System ("EMS") as numbered codes that stand for a particular reason the Wal-Mart employee reported as resulting in a meal exception. Id. at 309:10-15. There are three codes that are relevant to the instant case: code 1 (associate initiated customer support); code 5 (manager directed, no coverage for customer support); and code 12 (management directed). Id. at 276:18-21; id. at 360:22-24; id. at 361:8-17.
However, Magadia, the named Plaintiff, never suffered a meal exception coded as 1, 5, or 12. ECF No. 214 at 15. Moreover, Magadia always received a meal break, albeit the break was sometimes later than scheduled. Tr. at 108:18-109:8. None of these late breaks were after the fifth hour worked, with a sole exception. Id. at 118:25-119:5. During the entire time he worked at Wal-Mart, Magadia recalled only having one meal break after the fifth hour worked, but does not recall what date or year that meal exception took place. Id.
When a Wal-Mart employee incurs a meal exception, a meal premium is automatically paid. Id. at 144:11-20. The meal premium is paid at the employee's base rate of pay. Id. at 145:13-16. That means the rate paid for the meal premium is not adjusted upward based on, for instance, MyShare incentive plan payments. Id. at 145:17-146:1.
C. Cal. Lab. Code § 226(a) for Failure to Provide Accurate Itemized Wage Statements
1. Statements of Final Pay
Wal-Mart pays employees on a biweekly basis. ECF No. 176 at 8. In line with this practice, Wal-Mart provides employees with biweekly wage statements corresponding to the pay period. Id. These wage statements list the start and end dates of the pay period. Id. When an employee is terminated, Wal-Mart pays all wages earned through the date of termination by check on the day of termination. Id. at 9. On the date of termination, the employee also receives a "Statement of Final Pay" that lists the wages being paid to the employee at the end of employment. Ex. 13-1. These statements of final pay do not specify pay period start or end dates. ECF No. 176 at 9. However, Wal-Mart also generates a final wage statement at the close of the normal biweekly pay period that does contain pay period start and end dates. Tr. at 171:10-12; Ex. 16-1. Wal-Mart tells a terminated employee how to access this final wage statement during the employee's exit interview. Tr. at 165:16-167:5. Upon his termination from Wal-Mart, Magadia received a statement of final pay that did not include the pay period start and end dates. Ex. 13-1.
2. OVERTIME/INCT Line Item on Wage Statements
Wal-Mart employees who receive a MyShare incentive award at the end of a quarter and also worked overtime during that quarter are given additional overtime pay based on having received the incentive. ECF No. 176 at 8. The additional overtime pay appears retroactively on the employee's wage statement as "OVERTIME/INCT." Id. The amount of additional overtime pay is determined by a formula that accounts for the number of overtime hours the employee worked, the employee's overtime rate, and the incentive award amount paid. Tr. at 136:14-19. The OVERTIME/INCT item appears on the employee's wage statement as a lump sum and does not specify how many hours the employee worked or the employee's hourly rate. ECF No. 176 at 8. Magadia received wage statements containing OVERTIME/INCT line items that did not include the hours worked and the rates of pay. Ex. 17-1.
D. Damages Calculations
Plaintiffs' expert, Dr. Brian Kriegler, was certified at trial as an expert in wage and hour damages. Tr. at 437:18-19. Dr. Kriegler relied upon a computational code written by his associates to arrive at his final results; he did not manually calculate anything by hand due to the volume of data provided. Id. at 486:9-17. For the calculation of all damages, Dr. Kriegler used the data provided to him by Wal-Mart. Ex. 102-7 to 102-8. The Court will first address Dr. Kriegler's calculations regarding Plaintiffs' first claim, which alleged that Wal-Mart failed to pay adequate compensation for missed meal breaks. Then, the Court will address Dr. Kriegler's calculations regarding Wal-Mart's second claim, which alleged that Wal-Mart failed to provide accurate itemized wage statements.
1. Failure to Pay Adequate Compensation for Missed Meal Breaks
Dr. Kriegler calculated the meal exception claim damages under Plaintiffs' two theories of liability. First, Dr. Kriegler calculated damages for those employees who had meal exceptions coded in EMS as 1, 5, or 12 ("Theory 1"). Ex. 201-7. The three relevant codes are: code 1 (associate initiated customer support); code 5 (manager directed, no coverage for customer support); and code 12 (management directed). Tr. at 276:18-21; id. at 360:22-24; id. at 361:8-17. Second, Dr. Kriegler calculated damages for employees who had meal exceptions coded as 5 or 12 ("Theory 2"), but not 1. Ex. 201-7.
For the calculation of principal damages under both theories of liability, Dr. Kriegler first looked in the data for meal exceptions coded as 1, 5, or 12 (or alternatively, 5 or 12 under Theory 2). Tr. at 470:17-22. Then, Dr. Kriegler looked at the MyShare data, which showed the non-discretionary bonus amounts, covering the period that included the meal exceptions. Id. Using these two pieces of information, Dr. Kriegler gave an example of how he did the calculation:
So, for instance, if there was a meal exception on February 1, 2013, and there was a quarterly bonus going from January 1, 2013, through March 31, 2013, hypothetically let's suppose that award amount was $ 1000 ... and hypothetically let's say there were ten workweeks with some work time.... So per workweek, that [award amount] ends up being $ 100 per workweek. For the workweek that the meal exception occurred, I then prorated that $ 100 to a dollar amount per hour. So that would be-let's suppose there were 30 straight time hours in the workweek, so I would take $ 100 and divide it by 30 hours to get $ 3.33, and that would be the damages amount for that particular meal exception.
Id. at 470:23-471:11. Dr. Kriegler conducted the above calculation for every single unique employee that had a meal exception coded as 1, 5, or 12 (or alternatively, just 5 or 12), added up the amounts, and arrived at his principal damages calculation of $ 21,115 for Theory 1. Id. at 471:13-17; Ex. 201-7. His principal damages for Theory 2 were calculated to be $ 3,911. Ex. 201-7. Under both Theories, the damages run from December 2, 2012 (the statute of limitations date) to August 5, 2018 (the most up-to-date data that Wal-Mart provided). Id. ; Tr. at 471:21-22.
Dr. Kriegler also calculated pre-judgment interest. He did so by computing per annum interest at a rate of 10%, with a pre-judgment accrual date of November 30, 2018. Tr. at 471:23-472:7. Under Theory 1, this computation resulted in a pre-judgment interest amount of $ 7,402. Ex. 201-7. Under Theory 2, his computation resulted in a pre-judgment interest amount of $ 1,533. Id.
Dr. Kriegler additionally calculated waiting time penalties under Cal. Lab. Code § 203 for terminated employees only. Pursuant to Cal. Lab. Code § 203(a), "[i]f an employee willfully fails to pay...any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days." Dr. Kriegler relied on the termination dates provided in Wal-Mart's data. Tr. at 472:22-473:13. Thus, Dr. Kriegler assumed that each employee was working 8 hours a day and multiplied the employee's last base rate of pay by 30. Id. at 473:14-19. The Court presumes that Dr. Kriegler multiplied the base rate of pay by 30 because under Cal. Lab. Code § 203(a), "the wages shall not continue for more than 30 days" for any waiting time penalties. Thus, under Theory 1, § 203 penalties were calculated to amount to $ 10,937,844. Ex. 201-7. Under Theory 2, § 203 penalties were calculated to be $ 1,303,819. Id. These waiting-time penalties run from the statute of limitations date of December 2, 2013 to August 5, 2018. Id. ; tr. at 456:16-457:5.
Lastly, Dr. Kriegler calculated PAGA penalties for the meal exception claim. For each pay period after October 4, 2015 (the statute of limitations date for the PAGA penalties) that there was an alleged underpayment for a meal exception, Dr. Kriegler multiplied that by $ 100. Tr. at 478:1-479:10. The results obtained were $ 821,400 under Theory 1, and $ 70,000 under Theory 2. Ex. 201-7. The PAGA penalties run from October 4, 2015 to August 5, 2018. Id. Next, the Court will address Dr. Kriegler's calculations regarding Wal-Mart's second claim, which alleged that Wal-Mart failed to provide accurate itemized wage statements.
2. Failure to Provide Accurate Itemized Wage Statements
Under Plaintiffs' theory that Wal-Mart failed to provide accurate itemized wage statements as required by Cal. Lab. Code § 226(a), statutory penalties for violations of that portion of the Labor Code are provided in Cal. Lab. Code § 226(e). Cal. Lab. Code § 226(e) specifies a $ 50 penalty for the initial pay period in which a violation occurs and a $ 100 penalty for violations in subsequent pay periods, not to exceed an aggregate penalty of $ 4,000. Wal-Mart is accused of failing to provide accurate itemized wage statements in two respects. First, Wal-Mart is accused of failing to provide the rates and hours worked for the OVERTIME/INCT line item. Second, Wal-Mart is alleged to have failed to provide the pay period start and end dates for the final wages paid in the statement of final pay. The Court addresses Dr. Kriegler's damages calculations for each of these alleged violations in turn.
a. OVERTIME/INCT Line Item
To calculate the § 226(e) penalty, Dr. Kriegler took Wal-Mart's data, and for the first pay period in which there was an overtime incentive payment (i.e., OVERTIME/INCT line item), Dr. Kriegler assessed a $ 50 penalty per employee. Tr. at 446:25-447:14. For each subsequent pay period in which there was an OVERTIME/INCT line item, Dr. Kriegler assessed a $ 100 penalty per employee. Id. Dr. Kriegler calculated the total amount of § 226(e) damages for the OVERTIME/INCT Wage Statement Class to be $ 48,046,000. Ex. 201-7. This calculation runs from the statute of limitations date of December 2, 2015 to August 5, 2018. Tr. at 447:19-448:8.
To calculate the PAGA penalties, Dr. Kriegler multiplied each instance of an OVERTIME/INCT line item per pay period by $ 250. Id. at 452:12-117. The total amount of PAGA penalties calculated is therefore $ 131,427,750. Ex. 201-7. However, Dr. Kriegler admitted that he made a mistake in calculating PAGA penalties here. Instead of using the PAGA statute of limitations of October 4, 2015, he erroneously used a starting date of December 2, 2015 to calculate the PAGA penalties. Tr. at 452:19-453:16. Thus, the calculated PAGA penalties run from December 2, 2015 to August 5, 2018. Id. The actual PAGA penalties, had they been calculated starting on the correct date of October 4, 2015, would have been higher. Id. at 451:25-452:4.
b. Statements of Final Pay
To calculate the § 226(e) penalty, Dr. Kriegler adopted the same tack as described above. For a first termination, he assessed $ 50. Id. at 458:22-459:10. For subsequent terminations (as there were some Wal-Mart employees who were hired and terminated more than once), he assessed $ 100 per termination. Id. The total amount of damages calculated was $ 5,823,900. Ex. 201-7. This calculation runs from the statute of limitations date of December 2, 2015 to August 5, 2018. Tr. at 459:11-12; id. at 460:14-15.
Moreover, in calculating PAGA penalties, Dr. Kriegler did not make the same mistake as discussed above regarding the statute of limitations date for the PAGA penalties. He used the correct statute of limitations date of October 4, 2015, and multiplied each instance of a termination by $ 250. Id. at 460:19-461:14. Thus, Dr. Kriegler calculated $ 28,928,500 for PAGA penalties running between October 4, 2015 and August 5, 2018. Id.
3. Total Statutory and PAGA Damages Sought
For the Meal Period Regular Rate Class, Plaintiffs have calculated damages for meal exceptions coded as 1, 5, or 12 as well as for meal exceptions coded just as 5 or 12. Specifically, for meal exceptions coded as 1, 5, or 12, Plaintiffs request: $ 21,115 in principal damages for Wal-Mart's alleged violations of § 226.7 ; $ 7,402 in pre-judgment interest; $ 10,937,844 in § 203 waiting time penalties; and $ 821,400 in PAGA penalties. Id. Alternatively, for meal exceptions coded just as 5 or 12, Plaintiffs request: $ 3,911 in principal damages for Wal-Mart's alleged violations of § 226.7 ; $ 1,533 in pre-judgment interest; $ 1,303,819 in § 203 waiting time penalties; and $ 70,000 in PAGA penalties.
For the Final Wage Statement Class, Plaintiffs request $ 5,823,900 in statutory § 226(e) damages and $ 28,928,500 in PAGA penalties for Wal-Mart's alleged violation of § 226(a)(6). Id.
For the OVERTIME/INCT Wage Statement Class, Plaintiffs request $ 48,046,000 in statutory § 226(e) damages and $ 131,427,750 in PAGA penalties for Wal-Mart's alleged violation of § 226(a)(9). Ex. 201-7.
In total, Plaintiffs request $ 226,013,911 in damages for the OVERTIME/INCT Wage Statement Class, the Final Wage Statement Class, and the Meal Period Regular Rate Class (for meal exceptions coded as 1, 5, or 12). Alternatively, Plaintiffs request $ 215,605,413 in damages for the OVERTIME/INCT Wage Statement Class, the Final Wage Statement Class, and the Meal Period Regular Rate Class (for meal exceptions coded as 5 or 12).
II. CONCLUSIONS OF LAW
The Court first turns to the Plaintiffs' first claim for failure to pay adequate compensation for missed meal breaks. Then, the Court turns to the Plaintiffs' second claim for failure to provide accurate itemized wage statements-namely, the failure to include the start and end dates of the payment period on the statements of final pay, and the failure to list an hourly rate or hours worked for the OVERTIME/INCT line item on wage statements. Lastly, the Court addresses the parties' requests for judicial notice.
A. Claim 1: Failure to Pay Adequate Compensation for Missed Meal Breaks, Cal. Lab. Code § 226.7
Below, the Court analyzes whether Plaintiffs' § 226.7 class claims and Magadia's individual § 226.7 claim can proceed as stated, the Court then finds that the § 226.7 class must be decertified and that Magadia's individual claim fails. Nevertheless, the Court cannot eschew a discussion of the merits of Plaintiffs' claims under § 226.7 because Plaintiffs still can demonstrate that PAGA penalties should be awarded. Huff v. Securitas Sec. Servs. USA, Inc. , 23 Cal. App. 5th 745, 760-61, 233 Cal.Rptr.3d 502 (2018) ("PAGA states that an action may be brought by an employee against whom one or more of the alleged violations was committed, a clear expression that the Legislature intended that a PAGA plaintiff be affected by at least one, but not necessarily all , of the violations alleged in the action" (emphasis added) (internal quotation marks omitted).). Thus, after discussing Plaintiffs' § 226.7 class claims and Magadia's individual § 226.7 claim, the Court will then discuss the merits of Plaintiffs' PAGA claims under § 226.7.
1. Whether Plaintiffs' Class Claims and Magadia's Individual Claim Can Proceed
Magadia fails to satisfy the requirements of Rule 23(a) of the Federal Rules of Civil Procedure as class representative of the Meal Period Regular Rate Class. Moreover, the Court finds that Magadia has failed to show that his individual claim succeeds under the evidence presented at trial.
a. The Class Claims
" Rule 23(a) states four threshold requirements applicable to all class actions: (1) numerosity (a 'class [so large] that joinder of all members is impracticable'); (2) commonality ('questions of law or fact common to the class'); (3) typicality (named parties' claims or defenses 'are typical...of the class'); and (4) adequacy of representation (representatives 'will fairly and adequately protect the interests of the class.')." Amchem Prods., Inc. v. Windsor , 521 U.S. 591, 613, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997).
Magadia's claims are not typical of the claims or defenses of the class. Thus, as class representative, Magadia runs afoul of the typicality requirement of Fed. R. Civ. P. 23(a)(3). Magadia also is not an adequate representative of the class. Thus, he does not meet the adequacy requirement under Fed. R. Civ. P. 23(a)(4). It is of no moment that the Court already certified the Meal Period Regular Rate Class as a class represented by Magadia. ECF No. 84 at 22. "Before entry of a final judgment on the merits, a district court's order respecting class status is not final or irrevocable , but rather, it is inherently tentative." Officers for Justice v. Civil Service Comm'n of City & Cty. of San Francisco , 688 F.2d 615, 633 (9th Cir. 1982) (emphasis added).
First, "[t]he test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct." Hanon v. Dataproducts Corp. , 976 F.2d 497, 508 (9th Cir. 1992).
A meal break is defined as "a meal period of not less than 30 minutes" every five hours. Cal. Lab. Code § 512(a). Wal-Mart investigates noncompliant meal breaks (i.e., "meal exceptions"), and then encodes the results of the investigation into its EMS as numbered codes that stand for a particular reason the Wal-Mart employee reported as resulting in a meal exception. Tr. at 309:10-15. As discussed above, there are three codes that are relevant to the instant case: code 1 (associate initiated customer support); code 5 (manager directed, no coverage for customer support); and code 12 (management directed). Id. at 276:18-21; id. at 360:22-24; id. at 361:8-17. Plaintiffs' entire theory is predicated on employees who were allegedly denied a compliant meal break and as a result, had their meal exception coded as 1, 5, or 12 in the EMS system. See, e.g. , id. at 28:20-22 ("I want to say that the theory on [the meal break count] is based on what you heard defense counsel say, meal exception codes 1, 5, and 12."). Thus, the question becomes whether Magadia suffered a meal exception encoded as 1, 5, or 12 in Wal-Mart's EMS system.
In the joint pretrial statement the parties filed on November 1, 2018, Wal-Mart put Plaintiffs on notice that Plaintiffs must demonstrate that Magadia suffered a meal period exception coded as 1, 5, or 12. ECF No. 176 at 23. Specifically, Wal-Mart argued that "Plaintiff cannot prove that Walmart denied Plaintiff...a meal period required by section 226.7," and thus could not prove that Magadia suffered a meal exception coded as 1, 5, or 12. Id.
At trial, on direct examination, Plaintiffs' counsel only elicited that Magadia took "late" meal breaks; Magadia never specified whether or not those took place after the 5th hour worked as required for a § 226.7 violation.
Q. And for the times that you asked [to take a meal break], have there been times then [your supervisor and assistant manager] told you that you couldn't go on your meal break?
A. Yes.
Q. And on those times, did you then have to take your meal break after the scheduled time?
A. Yes.
Q. So would you then take a late meal break?
A. Yes.
Tr. at 85:12-19.
On cross-examination, counsel for Wal-Mart established that Magadia always received a meal break, though it was sometimes late.
Q. And did [Wal-Mart] ever say, "no, you can't take a break now, not in 30 minutes, not in 1 hour, never?" Did that ever happen?
A. What do you mean, never take - they give me - they give me a break, but a late break.
Q. OK. So they always gave you a break, but sometimes the timing of it -
A. Late break
Q. - Was late based on the time it was scheduled?
A. Yes, sir.
Id. at 110:15-111:6
On redirect examination, Plaintiffs' counsel failed to establish that Magadia ever suffered a meal exception coded as 1, 5, or 12 in Wal-Mart's EMS system, or that the sole meal exception Magadia could remember took place within the 4-year statute of limitations.
Q. And was there a time when you got a lunch that was after the fifth hour worked?
A. Yes.
Q. Do you recall how many times that happened?
A. I think I - I think at this - I think once, but I don't remember what date or what year.
Tr. at 118:25-119:5.
During oral closing arguments, Plaintiffs' counsel did not dispute that Plaintiffs failed to show at trial that Magadia had a meal exception coded as 1, 5, or 12. Tr. at 583:9-10 ("Now, again, I'm not disputing the fact that I did not show that evidence."). Nevertheless, Plaintiffs' counsel misleadingly represented to the Court that Magadia had meal exceptions coded as 1, 5, or 12, and even told the Court to go find that information in the record: "It's in the data. I mean, you can pull it up in the data." Id. at 583:16-17. But in the end, in their post-trial briefing, Plaintiffs' counsel conceded that Magadia did not ever have a meal break exception coded as 1, 5, or 12. ECF No. 214 at 15 ("Plaintiff concedes that [Magadia's] meal exceptions were not coded as 1, 5, or 12 in the EMS.").
Therefore, Magadia has failed to show that he personally suffered a violation of Cal. Lab. Code § 226.7 per Plaintiffs' theory that meal exceptions coded as 1, 5, or 12 in EMS reflected violations of § 226.7. Thus, Magadia's claim is not typical of the class he purports to represent.
In Valentino v. Carter-Wallace, Inc. , the district court appointed class representatives to represent people who used a particular liver drug and developed "aplastic anemia or liver failure" as a result. 97 F.3d 1227, 1229 (9th Cir. 1996). However, the Ninth Circuit vacated and remanded the district court's decision. Id. at 1235. As part of its reasoning, the Ninth Circuit doubted that typicality had been established because the class representatives did not suffer from aplastic anemia and had difficulty withdrawing from the drug in question. Id. at 1234. Here, like the Valentino class representatives, the named Plaintiff Magadia did not suffer the same type of injury as the class he purports to represent. He does not have a meal break violation coded as EMS codes 1, 5, or 12. Therefore, Magadia does not satisfy the typicality requirement of Fed. R. Civ. P. 23(a)(3).
Second, Magadia fails to satisfy the adequacy requirement of Fed. R. Civ. P. 23(a)(4). "The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between named parties and the class they seek to represent." Amchem , 521 U.S. at 625, 117 S.Ct. 2231. "[A] class representative must be part of the class and 'possess the same interest and suffer the same injury' as the class members." Id. at 625-26, 117 S.Ct. 2231 (quoting East Tex. Motor Freight Sys., Inc. v. Rodriguez , 431 U.S. 395, 403, 97 S.Ct. 1891, 52 L.Ed.2d 453 (1977) ). The interests of the single class must be aligned with that of the named plaintiff. Id. at 626, 117 S.Ct. 2231.
Magadia has a conflict of interest with the class he purports to represent because he does not possess the same interest and suffer the same injury as the class members. In Amchem , the United States Supreme Court found it inappropriate that "named parties with diverse medical conditions sought to act on behalf of a single giant class rather than on behalf of discrete subclasses. In significant respects, the interests of those within the single class are not aligned." Id. Here, Magadia sought to act on behalf of a class of Wal-Mart employees with meal exceptions coded as 1, 5, or 12 in the EMS system when he himself did not have meal exceptions coded as such. Thus, Magadia's interests in resolving the case conflict with the interests of the class members. Therefore, Magadia is not an adequate class representative.
In conclusion, the Court hereby decertifies the Meal Period Regular Rate Class because Magadia fulfills neither the typicality requirement of Fed. R. Civ. P. 23(a)(3) nor the adequacy requirement of Fed. R. Civ. P. 23(a)(4). As the meal period regular rate class has been decertified, the Court now turns to Magadia's individual claim that he is owed compensation for his meal period violation.
b. Magadia's Individual Claim
Magadia could only recall one instance where he received a noncompliant meal break, but could not remember the incident's year or date. Because Plaintiffs bring a UCL claim, "[a ]ny action on any UCL cause of action is subject to the four-year period of limitations created by that section." Cortez v. Purolator Air Filtration Prods. Co. , 23 Cal. 4th 163, 179, 96 Cal.Rptr.2d 518, 999 P.2d 706 (2000) (emphasis in original). A business practice that violates the California Labor Code through failure to pay wages is a UCL cause of action. Id. at 178-79, 96 Cal.Rptr.2d 518, 999 P.2d 706. Thus, the December 2, 2012 date is the cutoff date for the 4-year statute of limitations, as Plaintiffs first filed their claim on December 2, 2016. ECF No. 1-1 at Cover Sheet.
Magadia worked for Wal-Mart from 2008 to 2016. ECF No. 176 at 8. Because Magadia's employment at Wal-Mart began well before December 2, 2012, Magadia's noncompliant meal break may have occurred before the cutoff date for the statute of limitations for the meal period claim. When questioned at trial about whether he ever received a meal break after the fifth hour worked and how many times such an event may have occurred, Magadia responded: "I think I - I think at this - I think once, but I don't remember what date or what year." Tr. at 119:4-5. Magadia bears the burden of proof at trial that his claims are timely by a preponderance of the evidence. Thus, because Magadia's noncompliant meal break could have taken place before December 2, 2012, he has failed to prove by a preponderance of the evidence that the statute of limitations does not bar his claim. Cf. Ryan v. Microsoft Corp. , 147 F. Supp. 3d 868, 896 (N.D. Cal. 2015) (granting motion to dismiss because "[p]laintiffs have not shown that an exception to the statutes of limitations or tolling doctrine should apply").
Moreover, as explained in detail above, Magadia's theory of liability is that those with meal exceptions coded as 1, 5, or 12 were the ones who were wronged by Wal-Mart's payment practices. See, e.g. , Tr. at 28:20-22 ("I want to say that the theory on [the meal break count] is based on what you heard defense counsel say, meal exception codes 1, 5, and 12."). Magadia did not have a meal exception coded as 1, 5, or 12 in Wal-Mart's EMS system. Therefore, Magadia's claim also fails because Magadia has failed to show he was wronged under his own theory of liability.
Thus, Magadia's individual claim for a violation of Cal. Lab. Code § 226.7 fails because Magadia has not shown that his claim is not barred by the statute of limitations. Furthermore, Magadia's claim is inconsistent with his theory of liability that the rights of employees with meal exceptions coded as 1, 5, or 12 were violated under Cal. Lab. Code § 226.7.
Even though Plaintiffs' class claim and Magadia's individual claim cannot proceed under § 226.7, the Court next turns to the merits of the claim that Plaintiffs may still establish a claim for PAGA penalties if Wal-Mart violated § 226.7 with respect to employees other than Magadia.
2. Liability under Cal. Lab. Code § 226.7
Under California law, if an employer fails to provide a compliant meal break, "the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation." Cal. Lab. Code § 226.7(c). A meal break is defined as "a meal period of not less than 30 minutes" every five hours. Cal. Lab. Code § 512(a).
Wal-Mart currently does not factor in the MyShare incentive award, a nondiscretionary quarterly bonus, Tr. at 134:22-135:8, in calculating what is an employee's regular rate of compensation. Rather, Wal-Mart pays the meal period premium at the employee's base rate of pay. ECF No. 176 at 9. The crux of Plaintiffs' argument is that the regular rate of compensation an employee receives should factor in the MyShare incentive award. Id. at 3. In the Court's Order denying Wal-Mart's motion for partial summary judgment, the Court adopted the Plaintiffs' position that regular rate of compensation under § 226.7 means the employee's base rate of compensation plus "other forms of qualifying compensation." ECF No. 157 at 8 (quoting Ibarra v. Wells Fargo Bank, N.A. , 2018 WL 2146380, at *3 (C.D. Cal. May 8, 2018) ). Therefore, Wal-Mart is in violation of § 226.7 by failing to pay employees who had a meal exception at their regular rate of compensation, which means the employee's base rate of compensation plus the employee's MyShare incentive award.
The question now becomes whether Plaintiffs' Theory 1 (meal exceptions coded in the EMS as 1, 5, or 12) or Theory 2 (meal exceptions coded in the EMS as just 5 or 12) renders Wal-Mart liable for violating § 226.7. As described above, EMS code 1 means a meal exception resulting from "associate initiated customer support"; EMS code 5 means a meal exception that was management directed because of no coverage for customer support; and code 12 means a meal exception that was management directed. Tr. at 276:18-21; id. at 360:22-24; id. at 361:8-17. The Court finds that Theory 2 is the correct method of assessing liability.
Courts interpreting § 226.7 have held that "an employer need only relinquish control of the employee for an uninterrupted thirty-minute period; the employer need not ensure a meal break is in fact taken." McLeod v. Michael's Stores, Inc. , 2009 WL 10674458, at *2 (C.D. Cal. Dec. 15, 2009) ; see also Brown v. Fed. Express Corp. , 249 F.R.D. 580, 585 (C.D. Cal. 2008) ("It is an employer's obligation to ensure that its employees are free from its control for thirty minutes, not to ensure that the employees do any particular thing during that time."); White v. Starbucks Corp. , 497 F. Supp. 2d 1080, 1088 (N.D. Cal. 2007) ("[I]t cannot be the rule that employers must ensure that a meal period is actually taken, regardless of what an employee does, because that would create a strict liability standard.").
Wal-Mart's director of global business services technology Victoria Moore testified that "[a]ssociate initiated customer support [i.e., code 1] indicates the associate made the decision to either miss their meal, have a short meal, or a meal late, a late meal, as a result of some type of customer service action." Tr. at 265:11-14 (emphasis added). This testimony was unrebutted. Therefore, for EMS code 1, trial testimony established that the employee chose to engage in customer support despite it being their meal period. As McLeod held, Wal-Mart had already relinquished control over the employee for their meal period. It is up to the employee to decide what to do with his or her time. If the employee chose to engage in customer support even though it was the employee's meal period, Wal-Mart cannot force that employee to take a compliant meal period. There is no evidence here that Wal-Mart ordered the employee to engage in customer service activities. Thus, the Court finds that EMS code 1 does not reflect a violation of § 226.7.
On the other hand, Moore testified that EMS codes 5 and 12 show that management directed the employee to take a noncompliant meal break:
Q. And the third code you mentioned this morning was management directed, no customer support. What does that mean?
A. The associate is - that code means it was - the meal exception was manager directed. No coverage or for customer support.
Q. And in our review of the data contained in the Exception Management System, we also came across the code that just says manager directed without the customer support blurb.
A. Right.
Q. Is that the same thing basically as management directed?
A. Yes.
Id. at 265:20-266:6. Thus, because codes 5 and 12 reflect a Wal-Mart management decision not to let the employee take a compliant meal break, these codes reflect a violation of § 226.7.
Wal-Mart argues that the EMS codes do not show who was actually denied a meal break. Rather, they only show what Wal-Mart employees allege to be the reason a meal exception occurred. However, Wal-Mart's attempt to discredit its own process for investigating and classifying meal exceptions in the EMS is unpersuasive. Testimony by Todd Stokes, Wal-Mart's divisional human resources director, demonstrated that Wal-Mart itself relies on this investigation and classification process for identifying problems with employees' behaviors relating to meal periods:
Q. And this investigation would ultimately, the purpose of that investigation is to end up determining who is accountable for that meal violation, whether it's management or the associate; is that correct?
A. So one of the outcomes from that is that we can sometimes determine the associate worked too long and didn't take it, or sometimes we may learn that a manager pulled an associate away and didn't let them take it. So those are the two general outcomes that can come from that.
Q. And those outcomes, as a matter of practice, should be recorded down somewhere; correct?
A. So, yes, there's a form that's filled out.
Q. And part of the reason for this investigation process is to determine who was accountable and have a discussion with them to make sure that it doesn't happen again, is that correct?
A. That is - I would say that's a good classification. We want to make sure that we address the behavior that needs to change.
Id. at 146:9-147:3. As Wal-Mart conducts an investigation, assigns a code to each meal period exception as a result of Wal-Mart's investigation, and relies upon the results of Wal-Mart's investigation, Wal-Mart cannot turn around and repudiate the results of the investigation and associated EMS entry to avoid liability. As such, the Court finds that the EMS codes are reliable indicators of the reason why a meal exception occurred, because they are encoded as to the reason a meal exception occurred after an investigation conducted by Wal-Mart.
In sum, the Court holds that Wal-Mart violated Cal. Lab. Code § 226.7(c) when it failed to pay employees who had meal exceptions coded as 5 or 12 in the EMS system at their regular rate of compensation. The regular rate of compensation includes the base rate of compensation plus the employee's MyShare incentive award. The Court next turns to the question of damages, as Wal-Mart has been found liable for violating § 226.7(c).
3. Damages
Here, the Plaintiffs claim principal damages, pre-judgment interest, Cal. Lab. Code § 203 waiting time penalties, and PAGA penalties. However, because both the class claims and Magadia's individual claim fail, the Court does not award principal damages, pre-judgment interest, or § 203 waiting time penalties. Nevertheless, the Court awards PAGA penalties in the amount of $ 70,000. See Ex. 201-7. Below, the Court discusses why it awards PAGA penalties despite decertifying the class claims and finding that Magadia's individual claim fails.
a. PAGA Penalties
The California Court of Appeal has held that "so long as [plaintiff] was affected by at least one of the Labor Code violations alleged in the complaint, he can recover penalties for all the violations he proves." Huff , 23 Cal. App. 5th at 761, 233 Cal.Rptr.3d 502 ; see also Holak v. K Mart Corp. , 2015 WL 2384895, at *5 (E.D. Cal. May 19, 2015) ("By the plain language of the statute, an aggrieved employee need only suffer one of the Labor Code violations alleged against his or her employer to be able to bring a PAGA claim on behalf of...employees who suffered any Labor Code violation at the hands of the employer. Plaintiff need not have actually suffered all of the Labor Code violations she alleges to have taken place for purposes of seeking PAGA penalties."); Jeske v. Maxim Healthcare Servs., Inc. , 2012 WL 78242, at *13 (E.D. Cal. Jan. 10, 2012) ("[Plaintiff] is correct that she need not have suffered all PAGA violations for which she seeks to pursue civil penalties."). Huff convincingly explains that because in a PAGA case, the plaintiff is standing in for the state, "it would be arbitrary to limit the plaintiff's pursuit of penalties to only those Labor Code violations that affected him or her personally." 23 Cal. App. 5th at 757, 233 Cal.Rptr.3d 502.
As discussed in further detail below, Magadia was affected by violations of Cal. Lab. Code § 226 through Wal-Mart's failure to provide accurate itemized wage statements. Therefore, under Huff , it is of no moment that Wal-Mart did not violate Magadia's rights under § 226.7 for failure to pay adequate compensation for missed meal breaks. Magadia may still recover PAGA penalties for violations of § 226.7 that other Wal-Mart employees suffered. Dr. Kriegler calculated PAGA penalties under Theory 2 (meal exceptions coded in the EMS as just 5 or 12) to total $ 70,000. Ex. 201-7.
The Court acknowledges that it has discretion, pursuant to the California Labor Code, to reduce a PAGA penalty if, "based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory." Cal. Lab. Code § 2699(e)(2). However, based on the facts and circumstances of the instant case, the Court does not find that a $ 70,000 PAGA penalties award is unjust, arbitrary and oppressive, or confiscatory. Therefore, the Court awards $ 70,000 in PAGA penalties to Wal-Mart employees who had meal exceptions coded in the EMS system under codes 5 or 12 from October 4, 2015 to August 5, 2018 for Wal-Mart's violation of Cal. Lab. Code § 226.7.
Next, the court turns to Plaintiffs' second claim for failure to provide accurate itemized wage statements.
B. Claim 2: Failure to Provide Accurate Itemized Wage Statements, Cal. Lab. Code § 226
To state a claim for failure to provide accurate itemized wage statements, Plaintiffs must show that (1) Wal-Mart failed to provide compliant wage statements under Cal. Lab. Code § 226(a), (2) Wal-Mart's failure to do so was "knowing and intentional," and (3) Plaintiffs were injured as a result. Cal. Lab. Code § 226.
At summary judgment, the Court found that Wal-Mart's statements of final pay were noncompliant because they do not include pay period start and end dates in violation of Cal. Lab. Code § 226(a)(6). ECF No. 121 at 16. Moreover, the Court found that Wal-Mart's wage statements were noncompliant because the OVERTIME/INCT line item does not list an hourly rate or hours worked in violation of Cal. Lab. Code § 226(a)(9). Id. at 13-14. This satisfies prong (1) of the above requirements. Thus, Plaintiffs still must prove prong (2), that Wal-Mart's failure to provide compliant wage statements was "knowing and intentional," and prong (3), that Plaintiffs were injured as a result. The Court addresses each in turn.
1. Whether Wal-Mart's Failure to Provide Compliant Wage Statements was "Knowing and Intentional"
As aforementioned, the California Labor Code requires that a violation of § 226 be "knowing and intentional." Plaintiffs' position is that provision of an inadequate wage statement that is not a clerical error or an inadvertent mistake satisfies the "knowing and intentional" requirement. ECF No. 214 at 9. On the other hand, Wal-Mart argues that knowing and intentional conduct is satisfied only when there is fair notice of the illegality of the practices at issue. ECF No. 215 at 9. Wal-Mart points out that "through its practices, policies, and procedures," Wal-Mart is "aware of the law and that it deliberately and intentionally tries to comply with the law." Id. As such, Wal-Mart asserts that it acted in good faith to comply with the law, which is enough to preclude liability. Id. at 8-11.
The Court finds that the knowing and intentional requirement of § 226 is akin to a willfulness requirement. That is, in order to be liable, Wal-Mart must have willfully intended to issue wage statements that were out of compliance with § 226. The Court bases this conclusion on the fact that the California Supreme Court has linked the knowing and intentional standard to a willfulness standard; that the majority of state appellate and federal trial courts have done the same; that linking the knowing and intentional standard to willfulness is consistent with another § 226 provision; and that the commonly-understood meanings of knowing and intentional support linking knowing and intentional to willfulness.
First, the California Supreme Court has linked the "knowing and intentional" standard in Cal. Lab. Code § 216 to the "willfulness" standard in Cal. Lab. Code § 203. Ex parte Trombley , 31 Cal. 2d 801, 807-08, 193 P.2d 734 (1948). The California Supreme Court found that Cal. Lab. Code § 216, which criminalizes willful failures to pay wages, was constitutional because of the 'willfulness' limitation. Id. In coming to its conclusion, the California Supreme Court connected "willfulness" in § 203 to a knowing and intentional standard. Id. In Trombley , the California Supreme Court held:
Subdivision (a) [of Section 216 ], construed together with the Penal Code definition of the word "willful," makes it a crime for an employer having the ability to pay, knowingly and intentionally to refuse to pay wages which he knows are due. The Court placed a similar construction on section 203 of the Labor Code which imposes penalties where an employer "willfully fails to pay...wages of an employee who is discharged or who quits." In interpreting that section, it was recognized that a dispute in good faith as to whether any wages were due would be a defense to an action for such penalties.
31 Cal. 2d at 807-08, 193 P.2d 734 (emphasis added); see also Woods v. Vector Marketing Corp. , 2015 WL 2453202, at *4 (N.D. Cal. May 22, 2015) ("The similarity between 'knowingly and intentionally' under Section 226 and 'willfully' under Section 203 with respect to their incorporation of a good faith dispute defense is consistent with the Labor Code generally ....The California Supreme Court has linked the two standards").
Moreover, although Trombley deals with Cal. Lab. Code § 216, a criminal statute, Trombley itself analogized the criminal statute to Cal. Lab. Code § 203, a civil statute. Id. Similarly, Woods found that the California Supreme Court's logic applied in the civil context as well. 2015 WL 2453202, at *4. Furthermore, "federal courts sitting in diversity cases, when deciding questions of substantive law, are bound by state court decisions as well as state statutes." Hanna v. Plumer , 380 U.S. 460, 465, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (internal quotation marks omitted). As the California Supreme Court has linked the knowing and intentional standard to a willfulness standard, this Court must follow the California Supreme Court's decision.
Furthermore, there is no question that the "settled meaning of 'willful,' as used in § 203, is that an employer has intentionally failed or refused to perform an act which was required to be done." Amaral v. Cintas Corp. No. 2 , 163 Cal. App. 4th 1157, 1201, 78 Cal.Rptr.3d 572 (2008). Thus, because "willful" in Cal. Lab. Code § 203 is linked to "knowingly and intentionally," "knowingly and intentionally" would correspondingly require that the employer "intentionally failed or refused to perform an act which was required to be done." Id.
Second, the majority of courts have found that satisfying the knowing and intentional requirement of § 226 requires something more than simply providing an inadequate wage statement that is not a clerical error or inadvertent mistake. The majority view is that an employer's good faith belief that it is not violating the California Labor Code precludes a finding of a knowing and intentional violation. For example, the Stafford v. Brink's, Inc. court noted:
Courts have diverged over the degree of intentionality required to establish a violation of § 226. All courts agree that the statute requires the employee to prove something more than a simple failure to provide required information. Some courts have held that provision of an inadequate wage statement is generally knowing and intentional so long as it was not a clerical error or inadvertent mistake....The majority of courts, however, have not taken this expansive view of the knowing-and-intentional requirement . In particular, many courts have held that the employer's good faith belief that it is not in violation of § 226 precludes a finding of a knowing and intentional violation.
2014 WL 12586066, at *5 (C.D. Cal. Aug. 5, 2014) (emphasis added). The Stafford court noted that the majority of courts have rejected the view that the mere provision of an inadequate wage statement that is not a result of clerical error or an inadvertent mistake is enough to give rise to liability under § 226. Id.
In the instant case, this Court declines to take the approach for which Plaintiffs advocate and that a minority of courts have adopted, which is that the knowing and intentional requirement can be satisfied by simply showing that an employer provided an inadequate wage statement not as a result of clerical error or inadvertent mistake. Rather, the Court adopts the majority of courts' view that an employer's good faith belief that it is not violating § 226 precludes a finding of a knowing and intentional violation. See, e.g. , Apodaca v. Costco Wholesale Corp. , 2014 WL 2533427, at *3 (C.D. Cal. June 5, 2014) ("Where an employer has a good faith belief that it is not in violation of Section 226, any violation is not knowing and intentional.");
Wright v. Adventures Rolling Cross Country, Inc. , 2013 WL 1758815, at *9 (N.D. Cal. Apr. 24, 2013) (same); Ricaldai v. U.S. Investigations Servs., LLC , 878 F. Supp. 2d 1038, 1047 (N.D. Cal. 2012) (same); Dalton v. Lee Publ'ns, Inc. , 2011 WL 1045107, at *5 (S.D. Cal. Mar. 22, 2011) (same); see also Hoffman v. Construction Protective Servs., Inc. , 293 Fed. App'x 462, 463 (9th Cir. 2008) ("We affirm the district court in this instance because the record contains no evidence that any violation of § 226 was knowing and intentional as required under California law. Indeed, the jury's conclusion that [the defendant] did not intentionally fail to pay [the plaintiff] all wages upon termination of employment supports the conclusion that the evidence does not support a finding of knowing and intentional conduct."). Indeed, as explained below, § 226 's good faith dispute originates from the good faith dispute under Cal. Lab. Code § 203. Courts have extended § 203 's good faith dispute to § 226. See, e.g. , Woods , 2015 WL 2453202, at *3 (noting that courts have interpreted the " 'good faith dispute' rule...to apply to California Labor Code Section 226 wage statement penalties"); Villalpando v. Exel Direct Inc. , 2015 WL 5179486, at *37 (N.D. Cal. Sept. 3, 2015) ("[T]he good faith defense that applies to claims under section 203 also applies to Claims asserted under section 226...."); Wright , 2013 WL 1758815, at *9 ("There is no dispute by the parties that there is a comparable good faith defense for § 226 which, similar to § 203, requires knowing and intentional conduct").
Third, the Court's approach is consistent with the statutory language of § 226(e)(3). Cal. Lab. Code § 226(e)(3) allows courts "[i]n reviewing for compliance with this section" to determine "whether the employer, prior to an alleged violation, has adopted and is in compliance with a set of policies, procedures, and practices that fully comply with this section." The statute explicitly gives courts permission to consider the circumstances surrounding a § 226 violation.
Fourth, the interpretation that an employer's good faith belief precludes a finding of a knowing and intentional violation is consistent with the general understanding of "knowing and intentional." Black's Law Dictionary defines "knowing" as "[h]aving or showing awareness or understanding." Knowing, Black's Law Dictionary (10th ed. 2014). Similarly, "intentional" is defined as "[d]one with the aim of carrying out the act." Intentional, id. Knowingness and intentionality are scienter requirements. To adopt an interpretation that would essentially read out any scienter requirement from "knowing and intentional" would create tension with the commonly-understood legal meanings of these words. See, e.g. , Dalton , 2011 WL 1045107, at *5 (describing "knowing and intentional" as the "requisite scienter" requirements for a violation of § 226 ); cf. Johnson v. United States , 260 F. 783, 786 (9th Cir. 1919) (holding that in the context of a criminal statute, "we think the court below correctly defined the word 'willfully' as meaning 'knowingly and intentionally' ").
The Court now turns to whether Wal-Mart's noncompliance with § 226(a) was knowing and intentional. First, the Court analyzes Plaintiffs' § 226(a)(6) claim regarding Wal-Mart's statements of final pay. Then, the Court analyzes Plaintiffs' § 226(a)(9) claim regarding the OVERTIME/INCT line item on Wal-Mart's wage statements.
a. Whether Wal-Mart Knowingly and Intentionally Violated § 226(a)(6) Regarding the Statement of Final Pay
Cal. Lab. Code § 226(a)(6) requires wage statements to contain "the inclusive dates of the period for which the employee is paid." Wal-Mart admits that "it is aware of the law." ECF No. 215 at 9. Yet, Wal-Mart issued and continues to issue deficient statements of final pay. Plaintiffs argue that because the intentional omission of the dates for which the employee is paid from the statement of final pay was and continues to be Wal-Mart's practice, Wal-Mart is liable. ECF No. 214 at 12-13. Wal-Mart argues that a good faith dispute excuses any liability under § 226(a)(6). ECF No. 215 at 10-11. For the reasons stated below, the Court finds that Wal-Mart has shown that a good faith dispute precludes a finding that Wal-Mart knowingly and intentionally violated § 226(a)(6) prior to the issuance of the Court's May 11, 2018 summary judgment order. However, the Court also finds that Wal-Mart knowingly and intentionally violated § 226(a)(6) after the Court's May 11, 2018 summary judgment order.
Wal-Mart employees are paid biweekly, and wage statements are produced biweekly to correspond to the biweekly pay periods. Stipulated Facts at ¶ 10. These biweekly on-cycle wage statements include pay period start and end dates. Id. at ¶ 11. When an employee is terminated, the employee immediately receives all wages earned through the date of termination by check. A statement of final pay accompanies the check. Id. at ¶ 13. The statements of final pay do not include pay period start or end dates. Id. at ¶ 14. After termination, Wal-Mart employees receive one last wage statement, termed a final wage statement. This final wage statement is not issued at the time employees receive their final paycheck or their statement of final pay unless the employee happens to be terminated on the day biweekly wages are paid and a biweekly wage statement is issued. Depending on when an employee is terminated in relation to Wal-Mart's biweekly wage statement cycle, a terminated employee could potentially wait up to 14 days to receive a final wage statement.
The Court now discusses the merits of Plaintiffs' § 226(a)(6) claim. Admittedly, there is a dearth of statutory, regulatory, and case law guidance as to the metes and bounds of a good faith dispute as applied to Cal. Lab. Code § 226. See, e.g. , Wright , 2013 WL 1758815, at *10 ("[T]he legal issue is a close one, and there is no judicial precedence providing clear guidance on the scope of the [good faith] exemption [under § 226 ] at issue."). However, Cal. Lab. Code § 203 's good faith dispute does not face the same lack of interpretive guidance as § 226. § 203 's good faith dispute, which applies to § 226 's good faith dispute, see, e.g. , Pedroza v. PetSmart, Inc. , 2012 WL 9506073, at *5 n.6 (C.D. Cal. June 14, 2012) (holding that § 203 's " 'good faith dispute' defense also applies to Labor Code § 226(e)"), has clear and abundant guidance. Both case law and a regulation, Cal. Code Regs. tit. 8 § 13520, set forth the particularities of a good faith dispute under Cal. Lab. Code § 203.
Many courts have applied § 203 's good faith dispute to § 226. For instance, the Woods court noted that courts have interpreted the § 203 " 'good faith dispute' rule...to apply to California Labor Cod