Gessele v. Jack in the Box, Inc.

427 F.Supp.3d 1276

Jessica GESSELE, Ashley Ortiz, Nicole Gessele, Tricia Tetrault, and Christina Mauldin, on behalf of themselves and all others similarly situated, Plaintiffs,

v.JACK IN THE BOX, INC., a corporation of Delaware, Defendant.

3:14-CV-01092-BR

United States District Court, D. Oregon.

Signed November 13, 2019

JON M. EGAN, 240 Sixth Street, Lake Oswego, OR 97034-2931, (503) 697-3427, Attorney for Plaintiffs.

DOUGLAS S. PARKER, JENNIFER NETH WARBERG, DON STAIT, Littler Mendelson, P.C., 121 S.W. Morrison Street, Suite 900, Portland, OR 97204, (503) 221-0309, Attorneys for Defendant.

OPINION AND ORDER

BROWN, Senior Judge.

DEFENDANT'S MOTION (#161) FOR SUMMARY JUDGMENT NO. 1 - ARBITRATION OF CLAIM...1292

I. Arbitration Agreement...1292

II. Terms of the Agreement...1294

III. Waiver...1294

DEFENDANT'S MOTION (#162) FOR SUMMARY JUDGMENT NO. 2 - WBF DEDUCTION CLAIMS BARRED BY TAX LAWS...1297

I. The WBF...1297

II. The WBF assessments are not a tax pursuant to Oregon Revised Statutes § 316.197...1298

A. Oregon Rules of Statutory Construction...1299

B. The WBF as Assessment or Tax...1299

C. Applicability of § 316.197...1301

III. Plaintiffs' WBF claims are not barred by federal tax law...1302

PLAINTIFF'S MOTION (#172) FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF PRIMA FACIE LIABILITY ON THEIR WORKERS' BENEFIT FUND CLAIMS...1304

I. Defendant improperly over-withheld Plaintiffs' WBF contributions...1304

II. Penalty Wages under Oregon Revised Statutes § 652.150...1305

A. The Law...1305

B. Analysis...1306

IV. Defendant's Due-Process Rights...1306

V. Summary...1308

PLAINTIFFS' MOTIONS (#173, #179, #180, #181) RELATED TO THEIR SHOE CLAIMS...1308

I. Deductions from Employees' Wages Permitted under Oregon Law...1309

II. Uniforms...1310

A. Facts...1310

B. Non-Slip Shoes as Part of Employees' Uniforms...1311

III. Exceptions Permitting Deductions...1312

A. Exception under Oregon Revised Statutes § 653.035(1)...1312

B. Exceptions under Oregon Revised Statutes § 652.610(3)(b)...1313

C. Oregon Revised Statutes § 652.610(3)(c)...1319

IV. Summary of Rulings on Shoe-Deduction Motions...1321

DEFENDANT'S MOTION (#163) FOR SUMMARY JUDGMENT NO. 3 - REMEDIES RELATED TO ALLEGED WRONGFUL DEDUCTIONS ARE LIMITED...1322

I. Background...1322

II. Penalties Pursuant to Oregon Revised Statutes §§ 652.615 and 652.150...1323

III. Plaintiffs may recover penalties under §§ 652.615 and 652.150 for improper WBF or shoe deductions that reduced their pay below minimum wage or resulted in them receiving insufficient overtime...1323

IV. Plaintiffs are limited to a single $200 sum or actual damages for improper WBF deductions and/or a single $200 sum or actual damages for improper shoe deductions...1325

V. Willfulness of Defendant's Alleged Violations...1326

VI. Limitations Period...1326

VII. Due-Process Concerns...1327

VIII. Summary...1327

DEFENDANT'S MOTION (#164) FOR SUMMARY JUDGMENT NO. 4 - BREACH OF FIDUCIARY DUTY TORT CLAIMS IS TIME-BARRED...1327

I. Background...1327

II. Parties' Arguments...1331

III. The Law...1332

IV. Analysis...1333

DEFENDANT'S MOTION (#165) FOR SUMMARY JUDGMENT NO. 5 - QUASI-CONTRACT/UNJUST ENRICHMENT CLAIM FAILS AS A MATTER OF LAW...1334

I. The Law...1335

II. Analysis...1335

PLAINTIFFS' MOTION (#174) FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF PRIMA FACIE LIABILITY ON THEIR FRANCHISE TRANSFER CLAIMS AND PLAINTIFFS' MOTION (#178) FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF DAMAGES UNDER O.R.S. 652.140...1337

I. Willfulness...1338

A. The Law...1338

B. Analysis...1339

II. Calculation of Penalty Wages...1340PLAINTIFFS' MOTION (#175) FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF DAMAGES UNDER O.R.S. 652.615...1341PLAINTIFFS' MOTION (#176) FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF DAMAGES UNDER O.R.S. 653.025 and PLAINTIFFS' MOTION (#177) FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF DAMAGES UNDER O.R.S. 653.261...1341CONCLUSION...1342

This matter comes before the Court on the following Motions by Defendant Jack in the Box, Inc.:

1. Motion (#161) for Summary Judgment No. 1 - Arbitration of Claim

2. Motion (#162) for Summary Judgment No. 2 - WBF Deduction Claims Barred by Tax Laws

3. Motion (#163) for Summary Judgment No. 3 - Remedies Related to Alleged Wrongful Deductions Are Limited

4. Motion (#164) for Summary Judgment No. 4 - Breach of Fiduciary Duty Tort Claims is Time-Barred

5. Motion (#165) for Summary Judgment No. 5 - Quasi-Contract/Unjust Enrichment Claim Fails as a Matter of Law

and on the following Motions by Plaintiffs Jessica Gessele, Ashley Ortiz, Nicole Gessele, Tricia Tetrault, and Christina Mauldin:

1. Motion (#172) for Partial Summary Judgment on the Issue of Prima Facie Liability on Their Workers' Benefit Fund Claims

2. Motion (#173) for Partial Summary Judgment on the Issue of Prima Facie Liability on Their Shoe Claims

3. Motion (#174) for Partial Summary Judgment on the Issue of Prima Facie Liability on Their Franchise Transfer Claims

4. Motion (#175) for Partial Summary Judgment on the Issue of Damages under O.R.S. 652.615

5. Motion (#176) for Partial Summary Judgment on the Issue of Damages under O.R.S. 653.025

6. Motion (#177) for Partial Summary Judgment on the Issue of Damages under O.R.S. 653.261

7. Motion (#178) for Partial Summary Judgment on the Issue of Damages under O.R.S. 652.140

8. Motion (#179) for Partial Summary Judgment on Jack in the Box's Third Affirmative Defense (Authorized Deductions) 9. Motion (#180) for Partial Summary Judgment on Jack in the Box's Fourth Affirmative Defense (Benefit to Employees)

10. Motion (#181) for Partial Summary Judgment on Jack in the Box's Fifth Affirmative Defense (Valid Deduction).

The Court concludes the record for each of these Motions is sufficiently developed, and, particularly in light of the many interrelated issues raised in these several motions, oral argument would not be helpful to resolve them. See United States v. Delgado , 640 F. App'x 620, 621 (9th Cir. 2016) ("Whether [a] ... hearing is appropriate rests in the reasoned discretion of the district court.")(quotation omitted)); L.R. 7-1(d)("The Court will determine whether oral argument would help it resolve the matter.").

For the following reasons the Court:

1. DENIES Defendant's Motion (#161) for Summary Judgment No. 1 - Arbitration of Claim;

2. DENIES Defendant's Motion (#162) for Summary Judgment No. 2 - WBF Deduction Claims Barred by Tax Laws;

3. GRANTS in part and DENIES in part Defendant's Motion (#163) for Summary Judgment No. 3 - Remedies Related to Alleged Wrongful Deductions Are Limited;

4. GRANTS Defendant's Motion (#164) for Summary Judgment No. 4 - Breach of Fiduciary Duty Tort Claims is Time-Barred;

5. DENIES Defendant's Motion (#165) for Summary Judgment No. 5 - Quasi-Contract/Unjust Enrichment Claim Fails as a Matter of Law;

6. GRANTS Plaintiffs' Motion (#172) for Partial Summary Judgment on the Issue of Prima Facie Liability on Their Workers' Benefit Fund Claims

7. DENIES Plaintiffs' Motion (#173) for Partial Summary Judgment on the Issue of Prima Facie Liability on Their Shoe Claims

8. GRANTS Plaintiffs' Motion (#174) for Partial Summary Judgment on the Issue of Prima Facie Liability on Their Franchise Transfer Claims

9. DENIES Plaintiffs' Motion (#175) for Partial Summary Judgment on the Issue of Damages under O.R.S. 652.615

10. DENIES Plaintiffs' Motion (#176) for Partial Summary Judgment on the Issue of Damages under O.R.S. 653.025

11. DENIES Plaintiffs' Motion (#177) for Partial Summary Judgment on the Issue of Damages under O.R.S. 653.261

12. GRANTS in part and DENIES in part Plaintiffs' Motion (#178) for Partial Summary Judgment on the Issue of Damages under O.R.S. 652.140

13. GRANTS in part and DENIES in part Plaintiffs' Motion (#179) for Partial Summary Judgment on Jack in the Box's Third Affirmative Defense (Authorized Deductions)

14. GRANTS in part and DENIES in part Plaintiffs' Motion (#180) for Partial Summary Judgment on Jack in the Box's Fourth Affirmative Defense (Benefit to Employees) 15. GRANTS in part and DENIES in part Plaintiffs' Motion (#181) for Partial Summary Judgment on Jack in the Box's Fifth Affirmative Defense (Valid Deduction).

BACKGROUND

Until September 30, 2011, Defendant Jack in the Box, Inc., owned and operated several restaurants in Oregon. From May 2006 through September 2011 Defendant sold its Oregon restaurants to various franchise operators as follows:

  May 1, 2006:           6 restaurants
  March 29, 2010:       21 restaurants
  March 7, 2011:        13 restaurants
  September 30, 2011:    3 restaurants

After September 30, 2011, Defendant did not own or operate any restaurants in Oregon and did not have any Oregon employees. The last Jack in the Box restaurant in Oregon owned by Defendant at which any of the named Plaintiffs worked was sold to Northwest Group, Inc. (NWG) on March 29, 2010.

Plaintiffs were employed by Defendant in its Oregon restaurants at various times. Plaintiffs received their final paychecks from Defendant on the following dates:

  Tricia Tetrault:     July 11, 2008
  Ashley Ortiz:        December 26, 2008
  Nicole Gessele:      March 20, 2009
  Jessica Gessele:     November 23, 2009
  Christina Mauldin:   March 30, 2010

On August 13, 2010, Jessica Gessele, Ashley Ortiz, Nicole Gessele, and Tricia Tetrault, on behalf of all those similarly situated, filed a putative class-action Complaint in this Court against Defendant Jack in the Box (Gessele I , Case No. 3:10-CV-00960-ST)¹ for violation of the minimum-wage and overtime provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq. , and various Oregon wage-and-hour laws. Gessele I was assigned to Magistrate Judge Janice M. Stewart.

On May 16, 2011, Jessica Gessele, Ashley Ortiz, Nicole Gessele, and Tricia Tetrault filed a First Amended Complaint in Gessele I in which they added Christina Mauldin as a named Plaintiff.

On March 20, 2012, Jessica Gessele, Ashley Ortiz, Nicole Gessele, Tricia Tetrault, and Christina Mauldin filed a Second Amended Complaint in Gessele I in which they alleged Defendant (1) failed to pay minimum wages in...