Nordman v. Bon Appetit Management Co.

Background

Julie Nordman and Linda Peppars filed a proposed wage-and-hour class action against Bon Appetit Management Co. and Compass Group USA, Inc. The plaintiffs worked as concession workers for the defendants and were members of UNITE HERE Local 2. Bon Appetit and the union negotiated collective bargaining agreements covering the defendants’ hourly, non-exempt employees.

The plaintiffs alleged violations of California law involving unpaid wages, meal and rest periods, final wages, wage statements, business expenses, tips and gratuities, and unfair business practices. They originally filed in California state court. Bon Appetit removed the case to federal court, arguing that Section 301 of the Labor Management Relations Act completely displaced the state-law claims and created federal-question jurisdiction. The plaintiffs moved to remand, meaning they asked the federal court to return the case to state court.

Court’s analysis

The court explained that Section 301 can displace a state-law claim when the claim depends on the meaning of a collective bargaining agreement. The court applied the Ninth Circuit’s two-step test: whether the claimed right exists only because of the agreement, and, if the right exists independently under state law, whether resolving the claim substantially depends on interpreting the agreement.

For the overtime claim under California Labor Code section 510, the defendants relied on the exemption in section 514. That exemption requires a collective bargaining agreement to provide, among other things, a regular hourly rate at least 30 percent above the state minimum wage for all covered employees. The court held that the defendants did not show that the agreements satisfied this requirement. The court also found that the defendants had not identified an active dispute about the meaning of any agreement term. Referring to or applying contract provisions to determine applicable standards was not enough to require interpretation. The overtime claim therefore was not displaced by Section 301.

The court reached similar conclusions about the meal-period claims under California Labor Code section 512. The defendants did not establish that the agreements met the statutory exemption’s pay requirement, and they did not address the second part of the preemption test. The court held that the meal-period claims were not displaced.

The court also held that the expense-reimbursement claims under California Labor Code sections 2800 and 2802 were not displaced. Those rights came from state law, and the defendants did not identify an active dispute over the agreement provision concerning functional tools and equipment. The court found that the plaintiffs’ claims concerned unreimbursed business expenses, not whether the defendants had provided functional equipment.

The court held that the conversion claim concerning tips and gratuities was not displaced either. Although the collective bargaining agreements addressed tip records, eligibility, and distribution, the plaintiffs alleged that Bon Appetit failed to distribute all tips and gratuities owed. Consulting the agreements to calculate damages did not require displacement of the state-law claim.

Finally, the court rejected the argument that the agreements’ grievance and arbitration procedures created federal jurisdiction. The provisions did not clearly and unmistakably refer to the state-law rights at issue. The court also explained that using an agreement as a defense does not create federal jurisdiction. Because it concluded that Section 301 did not displace any of the plaintiffs’ claims, the court declined to exercise supplemental jurisdiction over the remaining state-law claims.

Ruling

Chief Magistrate Judge Donna M. Ryu granted the plaintiffs’ motion to remand the case to the Superior Court of the State of California, County of San Mateo. The court denied Bon Appetit’s motion to dismiss as moot. The opinion does not resolve the underlying wage-and-hour claims; it resolves where those claims may proceed.