Hill v. Walmart Inc.

32 F.4th 811

Bijon HILL, Plaintiff-Appellant,

v.WALMART INC., a Delaware corporation, Defendant-Appellee.

No. 21-15180

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 9, 2021 Pasadena, California

Filed April 26, 2022

Jordanna G. Thigpen (argued), Thigpen Legal P.C., Beverly Hills, California; Roger Y. Muse, Excelsior Law, Beverly Hills, California; for Plaintiff-Appellant.

Timothy L. Reed (argued), Ford & Harrison LLP, Oakland, California; Jenny S. Choi, Ford & Harrison LLP, Los Angeles, California; for Defendant-Appellee.

Before: PAUL J. KELLY, JR.,^** MILAN D. SMITH, JR., and DANIELLE J. FORREST, Circuit Judges.

M. SMITH, Circuit Judge:

Plaintiff-appellant Bijon Hill appeals from the district court's grant of summary judgment to defendant-appellee Walmart, Inc. Hill modeled in several Walmart photo shoots and claims that Walmart owes her penalties pursuant to California Labor Code § 203 because it failed to pay her immediately after each shoot. In the district court, Walmart contended that no penalties are owed because Hill was an independent contractor rather than a Walmart employee. Alternatively, Walmart argued that no penalties are owed because there was a good-faith dispute as to Hill's employment status. The district court concluded that disputes of material fact prevented it from deciding whether Hill had performed her work as an employee but granted summary judgment to Walmart based on its good faith defense.

We affirm. It is undisputed that Hill modeled for Walmart for a total of fifteen days over the course of a year, and that she performed her services as a freelancer in sporadic one-or two-day increments. Along with other indicators that Hill was an independent contractor, the limited and irregular nature of her work made it reasonable for Walmart to believe that Hill was not an employee, and, as a result, that she was not entitled to immediate payment at the conclusion of each photo shoot. That is enough for Walmart's good-faith defense to succeed.

BACKGROUND

I. LEGAL FRAMEWORK

In California, "[i]f an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately." Cal. Lab. Code § 201(a). "Discharge" includes not only involuntary termination, but also releasing an employee after she has "complet[ed] the specific job assignment or time duration for which [she] was hired." Smith v. Super. Ct. , 39 Cal.4th 77, 45 Cal.Rptr.3d 394, 137 P.3d 218, 229 (2006) ( L'Oreal ).

California Labor Code § 203(a) provides that if an employer "willfully" fails to pay wages upon discharge, the employee's wages "shall continue as a penalty" from the discharge date for up to thirty days.

"A willful failure to pay wages within the meaning of [ § 203 ] occurs when an employer intentionally fails to pay wages ... when [they] are due." 8 C.C.R. § 13520. "However, a good faith dispute that any wages are due will preclude imposition of waiting time penalties under [ § 203 ]." Id.

II. FACTUAL AND PROCEDURAL BACKGROUND

Hill appeared in ten photo shoots organized by Walmart in San Francisco between July 2016 and August 2017. She worked for a total of fifteen days during this time, in non-consecutive periods of one or two days. Hill claims that this amounted to ten separate instances of employment and that she was "discharged" at the end of each photo shoot.

During this time, Hill was represented by Scout Talent Management Agency. Walmart had a contract with Scout whereby it agreed to pay Scout a daily flat rate for each day of modeling services, which was to be passed along to Hill, plus a commission. Scout was required to send Walmart invoices, which were payable within thirty days. Walmart and Scout's contract specified that Scout and its "personnel" were independent contractors.

In July 2019, Hill sued Walmart in the San Francisco Superior Court, claiming that Walmart violated the California Labor Code provisions discussed above by failing to pay her immediately after each photo shoot ended. She sought more than $540,000 in penalties. Walmart removed the case to federal court based on diversity of citizenship. It also filed a third-party complaint against Scout.

In November 2020, Walmart moved for summary judgment on Hill's claims. The district court denied summary judgment on Walmart's defense that Hill was an independent contractor outside the protection of the relevant Labor Code provisions, concluding that Hill had raised a triable question of fact about whether she was an employee. The district court noted, for example, that Walmart controlled when the photo shoots occurred and nearly every aspect of Hill's appearance, including her clothing, hair, makeup, and nails. Though Walmart argued that Hill used her "discretion and expertise as a model in making poses," the record showed that she was given highly specific instructions about which poses to strike.

However, the district court granted summary judgment on Walmart's defense that there was a good-faith dispute about whether Hill was an independent contractor, reasoning that the short length of time Hill worked for Walmart and the fact that she had also worked for other companies, among other factors, made it objectively reasonable for Walmart to believe Hill was not an employee.

Hill timely appealed. We review the district court's grant of summary judgment de novo. Oswalt v. Resolute Indus., Inc. , 642 F.3d 856, 859 (9th Cir. 2011).

ANALYSIS

I. LEGAL STANDARDS

To prevail on its summary judgment motion, Walmart had to show that "there is no genuine issue as to any material fact and [that it] is entitled to judgment as a matter of law" on its good-faith defense. Fed. R. Civ. P. 56(a). "A genuine issue of material fact will be absent if, upon viewing the evidence and inferences which may be drawn therefrom in the light most favorable to the adverse party, the movant is clearly entitled to prevail as a matter of law. Summary judgment is inappropriate if a reasonable juror, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor." James River Ins. Co. v. Hebert Schenk, P.C. , 523 F.3d 915, 920 (9th Cir. 2008) (cleaned up).

California law applies in this diversity case. See Carvalho v. Equifax Info. Servs., LLC , 629 F.3d 876, 889 (9th Cir. 2010). In the absence of controlling authority by the California Supreme Court, "we follow decisions of the California Court of Appeal unless there is convincing evidence that the California Supreme Court would hold otherwise." Id.

II. AVAILABILITY OF GOOD-FAITH DEFENSE

At the threshold, Hill argues that Walmart is foreclosed from raising a good-faith defense based on mistakenly classifying an employee as an independent contractor. We disagree.

To reiterate, "a good faith dispute that any wages are due will preclude imposition of waiting time penalties under [ § 203 ]." 8 C.C.R. § 13520. Hill argues that this defense does not apply here because it requires "a good faith dispute that any wages are due" under § 203, and Walmart does not dispute that some wages are due; Walmart just disputes when those wages are due.

That argument fails. Although neither party raised this point, "wages" and "payment" are not necessarily the same thing under the California Labor Code. For purposes of the statutes involved here, "wages" are specifically defined as "all amounts for labor performed by employees. " Cal. Lab. Code § 200(a) (emphasis added) (applying this definition to "this article," meaning Cal. Lab. Code §§ 200 – 244 ); see also id. § 203(a) (referring to "wages of an employee"). So, while there is no dispute that Walmart had to pay Hill, Walmart's contention that Hill is an independent contractor necessarily conflicts with the idea that there were "any wages due" within the meaning of § 203 or 8 C.C.R. § 13520.

Moreover, 8 C.C.R. § 13520 explains that "[a] ‘good faith dispute’ that any wages are due occurs when an employer presents a defense, based in law or fact which, if successful, would preclude any recovery on the part of the employee." Id. It is undisputed that if Hill were an independent contractor, then she would not be an "employee" entitled to an immediate payment of wages upon discharge pursuant to Labor Code § 201(a) or to recover penalties from Walmart pursuant to § 203. Consequently, Walmart's argument that Hill was an independent contractor is a "good faith dispute that any wages are due." See also Amaral v. Cintas Corp. No. 2 , 163 Cal. App. 4th 1157, 1202, 78 Cal.Rptr.3d 572 (2008) (employer had good-faith defense because its "legal obligations" were "unclear," and the arguments it made for its ultimately incorrect legal position were not "unreasonable or frivolous"); Barnhill v. Robert Saunders & Co. , 125 Cal. App. 3d 1, 8, 177 Cal.Rptr. 803 (1981) (legal ambiguity is a valid basis for a good-faith defense).

Along more general lines, Hill also argues that allowing a good-faith defense here would reward ignorance of the law and undermine § 203 's role in incentivizing timely payment of wages. But the fact that § 203 only punishes "willful" conduct suggests that the legislature only intended to impose penalties on employers who lack a good excuse for withholding payment to discharged employees. See, e.g., Amaral , 163 Cal. App. 4th at 1202, 78 Cal.Rptr.3d 572 (employer's failure to pay timely wages was not willful because it arose out of a mistake of law that was not "unreasonable or frivolous"). An important rationale behind allowing a good faith defense in this context is to prevent employers from being "penalized" in genuine cases of "uncertainty." Barnhill , 125 Cal. App. 3d at 8, 177 Cal.Rptr. 803 ; see also Amaral , 163 Cal. App. 4th at 1201, 78 Cal.Rptr.3d 572 (" Barnhill's holding was memorialized in [8 C.C.R. §] 13520."). So, to the extent that Walmart has raised such an ambiguity about Hill's employment status, allowing a good-faith defense here amply serves the balance struck by the...