Oman v. Delta Air Lines, Inc.

9 Cal.5th 762

466 P.3d 325

264 Cal.Rptr.3d 20

Dev Anand OMAN et al., Plaintiffs and Appellants,

v.DELTA AIR LINES, INC., Defendant and Respondent.

S248726

Supreme Court of California.

June 29, 2020

Nichols Kaster, Matthew C. Helland, San Francisco, Daniel S. Brome, Almeda; Altshuler Berzon, Michael Rubin, Sacramento, and Barbara J. Chisholm, San Francisco, for Plaintiffs and Appellants.

Carol Vigne, Katherine Fiester; Cynthia L. Rice, Oakland; Olivier Schrieiber & Chao, Monique Olivier, Francisco; Anna Kirsch; and Nayantara Mehta for California Employment Lawyers Association, California Rural Legal Assistance Foundation, Legal Aid at Work, National Employment Law Project and Women's Employment Rights Clinic as Amici Curiae on behalf of Plaintiffs and Appellants.

Mastagni Holstedt, David E. Mastagni and Isaac S. Stevens, Sacramento, for Dan Goldthorpe, James Donovan, Chris Bennett, James Isherwood and David Vincent, as Amici Curiae on behalf of Plaintiffs and Appellants.

Duckworth Peters Lebowitz Olivier, Monique Olivier, San Francisco, and J. Erik Heath, San Francisco, for California Employment Lawyers Association as Amicus Curiae on behalf of Plaintiffs and Appellants.

Morgan, Lewis & Bockius, Thomas M. Peterson, Robert Jon Hendricks, San Francisco, and Andrew P. Frederick, Palo Alto, for Defendant and Respondent.

Ogletree, Deakins, Nash, Smoak & Stewart, Robert R. Roginson and Christopher W. Decker, Los Angeles, for Employers Group and California Employment Law Council as Amici Curiae on behalf of Defendant and Respondent.

Mayer Brown, Donald M. Falk, Palo Alto, John P. Zaimes, Los Angeles, and Ruth Zadikany, Los Angeles, for Cathay Pacific Airways Limited as Amicus Curiae on behalf of Defendant and Respondent.

Greines, Martin, Stein & Richland, Robert A. Olson, Los Angeles, and Cynthia E. Tobisman, Los Angeles, for California New Car Dealers Association as Amicus Curiae on behalf of Defendant and Respondent.

Jones Day, Douglas W. Hall, Shay Dvoretzky and Vivek Suri for Airlines for America as Amicus Curiae on behalf of Defendant and Respondent.

Opinion of the Court by Kruger, J.

In this case, as in the companion cases Ward v. United Airlines, Inc. , and Vidrio v. United Airlines, Inc. (2020) ––– Cal.5th ––––, 264 Cal.Rptr.3d 1, 466 P.3d 309, we confront a question about the application of various California wage and hour laws to flight attendants who work primarily outside California's territorial jurisdiction. Consistent with our holding in those cases, we conclude that California's wage statement laws apply only to flight attendants who have their base of work operations in California, and that the same is true of California laws governing the timing of wage payments. Finally, we hold that, whether or not California's minimum wage laws apply to work performed on the ground during the flight attendants’ brief and episodic stops in California, the pay scheme challenged here complies with the state requirement that employers pay their employees at least the minimum wage for all hours worked.

I.

Defendant Delta Air Lines, Inc., is a national and international air carrier incorporated in Delaware and based in Georgia. Delta offers service in and out of roughly one dozen California airports, connecting cities as small as Palm Springs and as large as Los Angeles to the rest of the country and the world.

Plaintiffs Dev Anand Oman, Todd Eichmann, Michael Lehr, and Albert Flores are or were flight attendants for Delta. Oman lived in New York and had a New York airport as a home base. Lehr lives in Nevada but has a California airport as his home base. Eichmann and Flores both live in California and have California airports as their home bases. All four employees have served on flights in and out of California airports, as well as airports outside the state.

In 2015, the named plaintiffs (collectively Oman) filed a putative class action in federal court, alleging that Delta violates California labor law by failing to pay its flight attendants at least the minimum wage for all hours worked. According to the operative complaint, Delta's published work rules (hereafter Work Rules) pay flight attendants pursuant to formulas that compensate them on an hourly basis for certain hours worked but fail to provide any compensation at all for other working hours, in contravention of an obligation under California statutory and regulatory law to pay no less than the minimum wage for every hour worked. (See Lab. Code, §§ 1182.12, 1194, 1194.2 ; Industrial Welfare Commission (IWC) wage order No. 9–2001, § 4 (Wage Order No. 9).) Oman also alleged Delta fails to pay all wages in accordance with the semimonthly timeframe prescribed by Labor Code section 204 ( section 204 ) and to provide comprehensive wage statements reporting hours worked and applicable hourly pay rates, as required by California's wage statement statute, Labor Code section 226 ( section 226 ). Oman sought relief under these statutes, as well as civil penalties under the Labor Code Private Attorneys General Act of 2004 ( Lab. Code, § 2698 et seq. ) and restitution and injunctive relief under the unfair competition law ( Bus. & Prof. Code, § 17200 et seq. ).

On cross-motions for summary judgment, the district court concluded Delta's pay scheme does not violate California's minimum wage requirements. ( Oman v. Delta Air Lines, Inc. (N.D.Cal. 2015) 153 F.Supp.3d 1094, 1095.) Oman argued that Delta fails to pay any compensation at all for certain hours worked in California and, under Gonzalez v. Downtown LA Motors, LP (2013) 215 Cal.App.4th 36, 155 Cal.Rptr.3d 18 (Gonzalez ) and Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 37 Cal.Rptr.3d 460 (Armenta ), Delta is prohibited from borrowing compensation due for other hours worked to make up for any shortfall. The district court examined the pay formulas set out by Delta's Work Rules and concluded they adequately compensate flight attendants for all hours worked, without any impermissible borrowing or reduction in agreed-to contractual rates. ( Oman , supra , 153 F.Supp.3d at pp. 1102–1107.)

The parties then filed cross-motions for summary judgment on Oman's remaining wage statement and timing claims. The district court granted judgment in favor of Delta, concluding that the relevant California statutes, sections 204 and 226, do not apply to Oman. The court held that the jurisdictional reach of the statutes should be determined according to a multifactor analysis that examines "the particular Labor Code provision invoked, the nature of the work being performed, the amount of work being performed in California, and the residence of the plaintiff and the employer." ( Oman v. Delta Air Lines, Inc. (N.D.Cal. 2017) 230 F.Supp.3d 986, 992–993.) Here, "[f]ocusing on the purpose of Section 226 (to give employees clarity as to how their wages are calculated, so they can verify that their wages are calculated appropriately under California law), because the undisputed facts show that the named plaintiffs only worked a de minimis amount of time in California (ranging from 2.6% to a high of 14%), and in light of the nature of their work (necessarily working in federal airspace as well as in multiple other jurisdictions but during each pay period and day at issue)," the court concluded that section 226 does not apply to Oman's claims. ( Oman , supra , 230 F.Supp.3d at p. 993, fn. omitted.) Seeing no argument for a different result under section 204, and because plaintiffs’ counsel had conceded the statute should have a similar scope, the district court likewise rejected Oman's section 204 claims. (Oman , at p. 994.)

On appeal, the Ninth Circuit asked that we resolve three unsettled questions of California law underlying Oman's claims. ( Oman v. Delta Air Lines, Inc. (9th Cir. 2018) 889 F.3d 1075, 1076–1077.) We accepted the request and agreed to resolve the following issues:¹

(1) Do sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? (See Lab. Code, §§ 1182.12, 1194 ; Cal. Code Regs., tit. 8, § 11090, subd. (4).)

(3) Does the Armenta / Gonzalez bar on averaging wages (see Armenta , supra , 135 Cal.App.4th 314, 37 Cal.Rptr.3d 460 ; Gonzalez , supra , 215 Cal.App.4th 36, 155 Cal.Rptr.3d 18 ) apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?

II.

A.

Our precedent makes clear that the application of California wage and hour protections to multistate workers like Oman may vary on a statute-by-statute basis. (See Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, 1201, 127 Cal.Rptr.3d 185, 254 P.3d 237 (Sullivan ).) We thus consider separately each of the wage and hour statutes on which Oman relies, beginning with section 226. That provision requires an employer to supply each employee "semimonthly or at the time of each payment" a written wage statement disclosing the pay period and itemizing the hours worked, applicable hourly rates, gross and net wages earned, any deductions taken, and other relevant information. ( § 226, subd. (a).)

As we explained in Ward , supra , ––– Cal.5th 264 Cal.Rptr.3d 1, 466 P.3d 309, section 226 does not, in so many words, define its geographic reach. (Ward , at p. ––––, 264 Cal.Rptr.3d 1, 13, 466 P.3d 309.) But we ordinarily presume the Legislature drafts laws with domestic conditions in mind (id. at p. ––––, 264 Cal.Rptr.3d 1, 10, 466 P.3d 309 ), and thus requires some degree of connection between the subject matter of the statutory claim and the State of California. In Ward , we addressed the nature of the connection required to...