Magadia v. Wal-Mart Assocs., Inc., Case No. 17-CV-00062-LHK

384 F.Supp.3d 1058

Roderick MAGADIA, Plaintiff,

v.WAL-MART ASSOCIATES, INC., et al., Defendants.

Case No. 17-CV-00062-LHK

United States District Court, N.D. California, San Jose Division.

Signed May 31, 2019

Dennis Sangwon Hyun, Hyun Legal APC, Kwanporn Tulyathan, Diversity Law Group, Larry W. Lee, Nicholas Rosenthal, Diversity Law Group, P.C., Los Angeles, CA, William Lucas Marder, Polaris Law Group, LLP, Hollister, CA, for Plaintiff.

Aaron Thomas Winn, Pro Hac Vice, Duane Morris LLP, San Diego, CA, Natalie Frances Hrubos, Pro Hac Vice, Duane Morris, LLP, Philadelphia, PA, for Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

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...