Brandon Gay v. Pacific Steel Group

Background

The court addressed Pacific Steel Group’s two motions for summary judgment on the narrow question whether the plaintiffs’ claims were governed by and preempted by collective bargaining agreements (CBAs). “Preemption” means that federal labor law displaces a state-law claim when resolving the claim requires applying or interpreting a CBA. The court had previously directed targeted discovery on the issue.

The Gay case involved claims for unpaid overtime, meal-period premiums, rest-period premiums, minimum wages, untimely payment of final wages and wages during employment, inaccurate wage statements, incomplete payroll records, unreimbursed business expenses, and violation of California’s unfair-competition law. Berber asserted civil penalties under California’s Private Attorneys General Act based on several alleged Labor Code violations.

Evidentiary objections and judicial notice

The plaintiffs objected to the declaration of David A. Perkins and its exhibits, which included three CBAs and other documents. The court overruled the objections based on lack of personal knowledge or foundation, the best-evidence rule, improper legal conclusion or opinion, and hearsay. The court terminated as moot Pacific Steel Group’s request for judicial notice of the CBAs because it had already found the exhibits admissible for purposes of the motions. The court denied the request for judicial notice of two opinions from unrelated cases.

Applicability of the CBAs

The court found no genuine dispute that the CBAs governed the named plaintiffs’ employment. Gay and Berber each admitted being members of Local Union 377 throughout their employment with Pacific Steel Group, and the court found that Local Union 377 was a party to the CBAs. The court also found that Pacific Steel Group had shown it was a party to the relevant CBAs through documents including agreements executed by Pacific Steel Group and powers of attorney authorizing Western Steel Council, Inc. to negotiate and enter into replacement agreements.

Preemption of the Gay plaintiffs’ claims

The court applied the Ninth Circuit’s two-part test under § 301 of the Labor Management Relations Act. Under the first part, a claim is preempted if the right exists only because of the CBA. Under the second part, a state-law claim is preempted if resolving it substantially depends on interpreting the CBA rather than merely referring to it.

The court held that the overtime claim was preempted under the first part of the test. It found that the CBAs satisfied the California statutory requirements concerning wages, hours, working conditions, overtime premiums, and pay rates above the required minimum-wage threshold. The meal-period claim was also preempted under the first part because the CBAs satisfied the statutory requirements for exempting covered employees from California’s ordinary meal-period rules. The rest-period claim was preempted under the first part because the CBAs provided equivalent protection under the applicable wage order.

The sixth cause of action, concerning wage payments during employment under California Labor Code section 204, was preempted under the first part because section 204 addresses different pay arrangements provided by a CBA. The court rejected Pacific Steel Group’s argument that the same reasoning automatically preempted the fifth cause of action concerning final wages under sections 201 and 202. The court stated that section 204 does not provide a basis for preempting the claims under sections 201 and 202. The court further stated that the fifth cause of action could survive only to the extent it was derivative of the minimum-wage claim, because the other non-derivative claims were preempted.

The unpaid minimum-wage claim was not preempted. The court reasoned that the claim could be resolved under state law by determining whether the plaintiffs worked, whether they were paid below the state minimum wage, and the amount of unpaid wages, without interpreting the CBA.

The unreimbursed-business-expenses claim was preempted under the second part of the test because resolving it would require interpreting industry-specific CBA terms, including terms concerning mileage reimbursement, routes, job locations, and subsistence.

The claims concerning wage statements, payroll records, and California’s unfair-competition law were described as derivative claims. Because the parties had not clearly explained which underlying claims supported them, the court stated that those claims survived only to the extent they were based on the non-preempted minimum-wage claim. The court held the potentially derivative causes of action in abeyance pending a discussion with the parties.

Berber’s PAGA claims

The court treated Berber’s Private Attorneys General Act claims as derivative of the underlying Labor Code violations. It held that the PAGA claims based on overtime, meal periods, rest periods, and timely payment of wages during employment were preempted under the first part of the test. The PAGA claims based on unreimbursed business expenses were preempted under the second part. The claim based on minimum wages was not preempted. The claims based on final-wage payment, wage statements, and payroll records survived only to the extent they were based on the non-preempted minimum-wage claim.

Grievance procedure and amendment

Pacific Steel Group argued that the cases should be dismissed because the plaintiffs had not exhausted the grievance procedure in the 2017 CBA. The court did not need to decide whether the plaintiffs clearly and unmistakably waived their right to a judicial forum for the preempted claims. It held, however, that the CBA did not clearly and unmistakably waive the plaintiffs’ right to bring the statutory minimum-wage claim in court.

The plaintiffs asked for permission to amend. The court stated that they would need to file a motion satisfying Rule 15 and expressed skepticism that amendment would be appropriate so late in the case, after summary judgment had been briefed and decided.

Disposition

Judge Haywood S. Gilliam, Jr. granted in part and denied in part Pacific Steel Group’s motions for summary judgment. The court held the potentially derivative causes of action in abeyance, scheduled a case-management conference for October 19, 2023, and ordered the Gay and Berber plaintiffs to file standalone copies of their operative complaints within seven days.