Choate v. Celite Corp.

Plaintiffs dismissed their unpaid vacation claim because Celite eventually paid them for the pro rata vacation time, and they dismissed their unfair competition claim to expedite appellate review. The parties also stipulated to class certification for the waiting time penalties claim. The court subsequently entered judgment for Plaintiffs.

DISCUSSION

Celite argues that it should not be held liable for waiting time penalties because (1) it never owed Plaintiffs the pro rata vacation time in the first place; (2) even if it did, it did not “willfully” refuse to pay Plaintiffs because it reasonably believed the Agreements had waived Plaintiffs’ right to that pay; and (3) Plaintiffs’ claims are preempted by the LMRA in any event.

Celite con

tends that the Union waived Plaintiffs’ statutory right under section 227.3 to the pro rata vacation time. As evidence of this waiver, Celite notes that (1) the Agreements discuss what vacation pay terminated employees are to receive and limit that pay to the “vacation allotment” for the year of termination and (2) consistent with the Agreements, Celite had for decades paid terminated employees only the “vacation allotment” without any objection from the Union. Because section 227.3 empowers a union to waive its members’ rights to “vested vacation time” by entering into a collective bargaining agreement that “otherwise provide[s]” (§ 227.3), Celite’s arguments present two questions for review: How clearly must a waiver of rights under section 227.3 be, and do the Agreements here meet that standard? We review both questions de novo. (Coito v. Superior Court (2012) 54 Cal.4th 480 , 488 [ 142 Cal.Rptr.3d 607 , 278 P.3d 860 ] [issues statutory construction reviewed de novo]; Roybal v. Governing Bd. of Salinas City Elementary School Dist. (2008) 159 Cal.App.4th 1143 , 1148 [ 72 Cal.Rptr.3d 146 ] [application of law to undisputed facts reviewed de novo].)

Second, we construe ambiguities in labor statutes to be more (rather than less) protective of employees’ rights. (Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244 , 1250 [ 140 Cal.Rptr.3d 173 , 274 P.3d 1160 ].) Requiring greater clarity to effect a waiver of employees’ rights is more protective of those rights.

Lastly, we try to harmonize state and federal law. (Independent Union of Pub. Service Employees v. County of Sacramento (1983) 147 Cal.App.3d 482 , 488 [ 195 Cal.Rptr. 206 ].) As noted above, waiver of federal statutory rights must be clear and unambiguous. (Metropolitan Edison Co., supra, 460 U.S. at p. 708.) This counsels in favor of requiring the same degree of clarity for waivers of state statutory rights.

Celite proffers three reasons why implied waivers suffice under section 227.3. First, Celite relies on precedent. Celite contends that language in Livadas v. Bradshaw (1994) 512 U.S. 107 [ 129 L.Ed.2d 93 , 114 S.Ct. 2068 ] (Livadas) draws a distinction between waiving the right to waiting time penalties under sections 201 and 203 and the right to vested vacation pay under section 227.3, and only requires clear and unmistakable waivers for the former. (Livadas, supra, at p. 128 .) Livadas contrasted sections 201 and 203 with section 227.3, but did so to illustrate that section 227.3’s plain language empowers a union to waive its protections whereas section 219 prohibits waiving the protections of sections 201 and 203. Livadas said nothing about what the waiver standard under section 227.3 should be. Indeed, the court only mentioned the clear and unmistakable waiver standard with-regard to sections 201 and 203 while commenting on the clarity of the waiver the court would require before it would consider whether federal common law preempted section 219’s prohibition of such a waiver. (Livadas, supra, at p. 125, citing Lingle v. Norge Division of Magic Chef, Inc. (1988) 486 U.S. 399 , 409-410, fn. 9 [ 100 L.Ed.2d 410 , 108 S.Ct. 1877 ] (Lingle).)

Celite also cites Firestone v. Southern California Gas Co. (9th Cir. 2000) 219 F.3d 1063 (Firestone) and Rawson v. Tosco Refining Co. (1997) 57 Cal.App.4th 1520 [ 67 Cal.Rptr.2d 790 ] (Rawson). Although Firestone could be read to support an implied waiver standard, both Firestone and Rawson

Second, Celite contends that the plain language of section 227.3 mandates an implied waiver standard because it requires only that a collective bargaining agreement “otherwise provide[].” Requiring a clear and unmistakable waiver, Celite reasons, rewrites the statute to require that an agreement “otherwise expressly provide[].” We disagree. By their very nature, waivers may be express or implied. In determining which type of waiver the Legislature intended to codify in section 227.3, we are not rewriting the statute; we are construing it. (Accord, Simmons v. Ghaderi (2008) 44 Cal.4th 570 , 585 [ 80 Cal.Rptr.3d 83 , 187 P.3d 934 ] [“whether or not implied waiver [rather than express waiver] applies to mediation confidentiality is ultimately an issue of statutory interpretation”].)

Third, Celite suggests that section 227.3 was designed to give the parties to a collective bargaining agreement a freer hand to negotiate because section 227.3—unlike sections 512, 514, 554, 750.5 and 2810.5—does not condition a waiver of employee’s rights upon the mandatory adoption of alternative contractual protections. From this, Celite extrapolates that section 227.3 must also give the parties greater flexibility in effectuating a waiver in. the first place. This extrapolation is flawed. That section 227.3 grants employers and unions greater latitude in defining alternative protections says nothing about the degree of clarity with which they must invoke that latitude.

B. The Agreements do not waive Plaintiffs’ rights under section 227.3 in clear and unmistakable terms

To be clear and unmistakable, a waiver must do more than speak in “ ‘[b]road, general language.’ ” (Vasquez, supra, 80 Cal.App.4th at p. 435.) It must be specific, and mention either the statutory protection being waived or, at a minimum, the statute itself. (Accord, Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193 , 1208 [ 142 Cal.Rptr.3d 312 ].) The Agreements here neither mention pro rata vacation pay nor cite section 227.3. Celite points out that the Agreements “affirmatively address” vacation payments upon termination. But discussing a topic while at the same time saying nothing about the statutory right at issue does not effect a clear and unmistakable waiver of that right. The trial court correctly concluded that this was insufficient to constitute a waiver in clear and unmistakable terms.

II. Celite Did Not Act “Willfully” in Not Paying Plaintiffs for Their Accrued Vacation Time

Celite argues that the trial court erred in concluding that Celite willfully refused to pay Plaintiffs for their pro rata vacation time. We review the trial

Section 203 entitles a terminated employee to waiting time penalties of up to 30 days’ wages if the employer “willfully fails to pay” the employee any outstanding wages immediately upon termination. (See § 201.) To act “willfully,” an employer need not act with a “deliberate evil purpose.” (Barnhill v. Robert Saunders & Co. (1981) 125 Cal.App.3d 1 , 7 [ 177 Cal.Rptr. 803 ].) Rather, the employer need only “intentionally fail[] or refuse[] to perform an act which was required to be done. [Citation.]” (Id., at pp. 7-8, italics omitted.) However, an employer’s reasonable, good faith belief that wages are not owed may negate a finding of willfulness. (Cal. Code Regs., tit. 8, § 13520, subd. (a); Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc. (2002) 102 Cal.App.4th 765 , 782 [ 125 Cal.Rptr.2d 804 ].)

The trial court’s ruling that Celite-acted willfully was based in part on the premise that Celite’s misunderstanding of the law governing waiver—even though shared by the Union—was unreasonable. This premise necessarily assumes that section 227.3 requires any waiver to be clear and unmistakable. Although we agree with the trial court that this is the appropriate standard, this is the first case to define the standard for waiver under section 227.3. Plaintiffs argue that Suastez decided this issue, but it did not. (Suastez, supra, 31 Cal.3d 774 .) Celite’s good faith reliance on a different waiver standard was accordingly reasonable, particularly in light of the language in Firestone supporting that standard. (Armenia v. Osmose, Inc. (2005) 135 Cal.App.4th 314 , 325-326 [ 37 Cal.Rptr.3d 460 ] [position taken where law is undecided can be reasonable].) That Celite’s position did not prevail does not mean that its position was unreasonable. (Cal. Code Regs., tit. 8, § 13520.)

By itself, our ruling would ordinarily call for a remand for further proceedings. However, the parties have stipulated that they had a longstanding practice of not paying pro rata vacation time to terminated employees. The parties further stipulated that Celite otherwise acted in good faith. Bound as we are by these stipulations, the outcome of a remand is a foregone conclusion. Accordingly, we order that summary adjudication be entered for Celite on the waiting time penalties claim.

III. Plaintiffs’ Claims Are Not Preempted by Federal Law

Celite alternatively argues that Plaintiffs’ claims are preempted by section 301 of the LMRA, 29 United States Code section 185(a). Whether a state

The LMRA preempts state actions when they are (1) based upon a right conferred by a collective bargaining agreement or (2) otherwise “ ‘ “substantially dependent [upon an] analysis” ’ ” of such an agreement. (Lingle, supra, 486 U.S. at p. 410, fn. 10; see Caterpillar Inc. v. Williams (1987) 482 U.S. 386 , 394 [ 96 L.Ed.2d 318 , 107 S.Ct. 2425 ]; Firestone, supra, 219 F.3d at p. 1066.) A claim is “substantially dependent [upon an] analysis” of an agreement if it “requires . . . interpretation” of the agreement. (Lingle, supra, at p. 413 ; see Firestone, supra, at p. 1066 .) Due in part to the presumption against federal preemption (Fort Halifax Packing Co. v. Coyne (1987) 482 U.S. 1 , 21 [ 96 L.Ed.2d 1 , 107 S.Ct. 2211 ]), the term “interpret” is “defined narrowly” (Balcorta v. Twentieth Century-Fox Film Corp. (9th Cir. 2000) 208 F.3d 1102 , 1108). An action will not be preempted just because the court, to resolve the state claim, needs to “consider,” “refer to,” or “apply” one or more terms of a collective bargaining agreement. (Ibid.; see Soremekun v. Thrifty Payless, Inc. (9th Cir. 2007) 509 F.3d 978 , 991; Burnside v. Kiewit Pacific Corp. (9th Cir. 2007) 491 F.3d 1053 , 1060.) Only if the court must “construe” disputed terms of the agreement will the claim be preempted. This rule of preemption empowers the federal courts to develop and apply a uniform body of federal common law governing the interpretation of collective bargaining agreements, which is thought to encourage collective bargaining. (Lingle, supra, at p. 404, fn. 3, 407 ; Livadas, supra, 512 U.S. at p. 122; Allis-Chalmers Corp. v. Lueck, supra, 471 U.S. at pp. 210-211.)

Plaintiffs’ claim for waiting time penalties under sections 227.3 and 203 is not preempted. That claim is based solely on state law. More to the point, resolving that claim only requires a court to ascertain whether the Agreements contain clear and unmistakable language waiving Plaintiffs’ rights to “vested vacation time.” Checking to see whether the Agreements affirmatively mention section 227.3 or its protections does not entail interpretation. (Accord, Burnside v. Kiewit Pacific Corp., supra, 491 F.3d at p. 1060 [assessing whether collective bargaining agreement contained a waiver in clear and unmistakable terms; no “interpretation” and no preemption].) Celite argues that a more in-depth inquiry into the parties’ mutual intent and past practices would require interpretation, but the clear and unmistakable waiver standard we have adopted makes such probing inquiry irrelevant and hence unnecessary.

The judgment is reversed and remanded. The trial court is ordered to grant summary adjudication to Celite on the waiting time penalties count (count 2). Costs on appeal are awarded to Celite.

Gilbert, P. J., and Perren, J., concurred.