Ornelas v. Tapestry, Inc.

Background

John Ornelas, a former non-exempt hourly employee at Tapestry’s Stuart Weitzman retail stores, brought a putative class action under California wage-and-hour laws. The complaint alleged that Tapestry required sales employees to have bags and coats searched, or to obtain visual acknowledgment from another employee or manager, before leaving the store for breaks or after shifts. Ornelas alleged that employees were told to clock out before the screening and therefore remained under Tapestry’s control without pay.

The operative complaint asserted eight claims: unpaid compensation for hours worked; minimum wages; overtime; rest- and meal-break violations; inaccurate wage statements; waiting-time penalties for unpaid termination wages; unfair business practices; and civil penalties and attorney’s fees under California’s Private Attorneys General Act, or PAGA. Tapestry moved for partial summary judgment on liquidated damages tied to the first two claims, claims four through seven in their entirety, and claim eight as it concerned rest- and meal-break violations.

Break Claims

The court granted summary judgment on the meal-break portion of claim four. California law requires an employer to provide a 30-minute, off-duty meal break and prohibits the employer from impeding or discouraging that break. Ornelas testified that he sometimes waited five to ten minutes for a manager to finish a conference call before he could leave for lunch. But he offered no evidence that Tapestry required him to return exactly 30 minutes after clocking out. His timecards showed many meal periods longer than 30 minutes, and Tapestry had paid more than 100 meal-break premiums before he complained. The court concluded that Ornelas had not shown Tapestry prevented or discouraged a full meal break or that he could recover additional break penalties.

The court also granted summary judgment on the rest-break portion of claim four. Ornelas testified during his deposition that, after being observed leaving, he always took at least a ten-minute rest break. His later declaration said that some rest-break time was spent waiting for a manager or coworker to conduct a bag check. The court did not disregard that declaration under the rule limiting affidavits that contradict earlier testimony, because the testimony left open the possibility that longer checks occurred when Ornelas wore a coat. Even accepting that possibility, however, the court found no genuine dispute that Tapestry made a full ten-minute rest break available and did not discourage him from taking one. The court also declined to consider allegations that busy or understaffed stores caused missed breaks because those allegations were not in the operative complaint, which focused on security screenings.

Wage-Statement and Waiting-Time Penalties

The court granted summary judgment on claims five and six. Claim five sought damages for inaccurate wage statements, which require a knowing and intentional violation and resulting injury. Claim six sought waiting-time penalties for a willful failure to pay wages due at termination. Because the court found no break violations, Ornelas could not recover penalties based on those alleged violations.

The court also held that Tapestry had a good-faith dispute about whether security-screening time had to be paid. A good-faith dispute is a reasonable legal or factual defense that can prevent a finding that an employer acted willfully or knowingly and intentionally, even if the defense later fails. The California Supreme Court later held that security-screening time must be compensated, but that decision came after Ornelas’s employment ended. The court found that the law was unsettled during his employment, including because the applicability of the federal rule for very small amounts of work was unclear. That good-faith dispute independently barred the requested penalties.

Liquidated Damages

The court denied Tapestry’s motion as to liquidated damages under California Labor Code section 1194.2 for claims one and two. The court found that Tapestry had a good-faith belief, based on reasonable grounds, that it did not have to compensate Ornelas for security-screening time. That finding gave the court discretion to refuse liquidated damages, but the court declined to decide whether to exercise that discretion at the summary-judgment stage.

Unfair-Business-Practices Claim

The court granted Tapestry’s motion as to claim seven to the extent it was based on rest- and meal-break violations. Ornelas, a former employee, could not seek an injunction against Tapestry’s employment practices because he no longer faced a real or immediate threat from them. The court also found that he could not seek restitution for break violations because he was not owed break premiums. Because the underlying break claims failed, the related unfair-business-practices claim failed as well.

PAGA Claim and Disposition

The court held that Ornelas lacked Article III standing—a requirement that a plaintiff personally experience the injury asserted in federal court—to pursue PAGA penalties based on break violations. The court did not dismiss or grant summary judgment on that claim. Instead, it denied Tapestry’s motion as to claim eight, held the break-related PAGA issue in abeyance, and stated that the claim would be remanded to the California Superior Court for Alameda County after the other claims were fully adjudicated.

In its conclusion, the court stated that Tapestry’s motion was granted as to claim seven insofar as it concerned rest- and meal-break violations and as to claims four through six in their entirety. The motion was denied as to liquidated damages under claims one and two and denied as to claim eight, which was to remain in abeyance pending possible remand.