Case Name: Ian McCray v. Marriott Hotel Services, Inc., et al.

Case No.: 16CV291271

This is a putative wage and hour class action arising from defendants Marriott Hotel Services, Inc. and SJMEC, Inc.’s alleged violations of the City of San Jose Minimum Wage Ordinance. Before the Court is defendants’ motion for summary judgment (or, alternatively, summary adjudication) on the ground that plaintiff’s collective bargaining agreement (“CBA”) contains a valid waiver of the Ordinance. Plaintiff opposes defendants’ motion, urging that the waiver reflected in the CBA is invalid under the Ordinance.

I. Factual and Procedural Background

As alleged in the operative complaint, plaintiff was employed by defendants as a server at the San Jose Mariott Hotel from June 2013 through August 15, 2015. (Complaint, ¶ 10.) He alleges that defendants have, “in accordance with the terms of a Collective Bargaining Agreement between SJMEC and Unite Here, Local 19, engaged in a practice of paying their servers, including for their restaurant Acadia, their bar, Tanq, in-room dining, and banquets,” an hourly wage below that required by the City of San Jose Minimum Wage Ordinance. (Id., ¶¶ 2, 18, 22.) Based on these allegations, plaintiff brings putative class claims for (1) violation of the Ordinance, (2) failure to timely pay wages in violation of Labor Code section 204, (3) failure to timely pay wages due at termination in violation of Labor Code sections 201 and 203, (4) knowing and intentional failure to comply with itemized employee wage statement provisions in violation of Labor Code section 226, and (5) unlawful and unfair business practices in violation of Business & Professions Code section 17200 et seq.

Shortly after plaintiff filed this action on February 5, 2016, defendants removed it to federal court. Plaintiff filed a motion to remand the case, which was denied by the district court. The court found that plaintiff’s claims were preempted under the Labor Management Relations Act (“LMRA”) because resolving them would require interpreting the CBA. On March 22, 2017, the district court granted defendants’ motion for summary judgment on the ground that plaintiff failed ot exhaust his claims through a required grievance process. Plaintiff appealed, and the court of appeals reversed, holding that the LMRA did not preempt plaintiff’s claims, and the district court accordingly erred both in denying plaintiff’s motion to remand the case to state court in granting summary judgment for defendants. (See McCray v. Marriott Hotel Services, Inc. (9th Cir. 2018) 902 F.3d 1005, 1014.) The court of appeals directed the district court to remand the action to this Court for further proceedings.

The case was remanded, deemed complex, and assigned to this Department in 2019. At a case management conference, the instant motion for summary judgment was set for hearing on January 24, 2020. In a stipulated order filed on September 18, 2019, the hearing was rescheduled to February 28, 2020.

II. Legal Standard for Defendant Seeking Summary Judgment or Adjudication

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; see also Code Civ. Proc., § 437c, subd. (p)(2).) The traditional method for a defendant to meet its burden on summary judgment is by “negat[ing] a necessary element of the plaintiff’s case” with its own evidence. (Guz v. Bechtel Nat’l, Inc. (2000) 24 Cal.4th 317, 334.) The defendant may also demonstrate that an essential element of plaintiff’s claim cannot be established by “present[ing] evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence-as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 855.)

This standard provides for a shifting burden of production; that is, the burden to make a prima facie showing of evidence sufficient to support the position of the party in question. (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at pp. 850-851.) The burden of persuasion remains with the moving party and is shaped by the ultimate burden of proof at trial. (Ibid.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Ibid.) The opposing party must produce substantial responsive evidence that would support such a finding; evidence that gives rise to no more than speculation is insufficient. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163.)

On summary judgment, “the moving party’s declarations must be strictly construed and the opposing party’s declaration liberally construed.” (Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717; see also Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64 [the evidence is viewed in the light most favorable to the opposing plaintiff; the court must “liberally construe plaintiff’s evidentiary submissions and strictly scrutinize defendant’s own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiff’s favor”].) Summary judgment may not be granted by the court based on inferences reasonably deducible from the papers submitted, if such inferences are contradicted by other inferences which raise a triable issue of fact. (Hepp v. Lockheed-California Co., supra, 86 Cal.App.3d at pp. 717-718.)

Even if there are some triable issues in the case, the court has the power to summarily adjudicate that one or more causes of action has no merit, there is no affirmative defense or no merit to an affirmative defense as to any cause of action, there is no merit to a claim for punitive damages (Civil Code section 3294), or one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. (Code Civ. Proc., § 437c, subd. (f)(1).) Absent a stipulation approved by the court, “[a] motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Ibid.)

III. Undisputed Material Facts

As the parties agree, the facts material to the disposition of defendants’ motion are not in dispute. Plaintiff was hired by defendant SJMEC, Inc. as a busser in 2012 and transitioned to a server position in the Acadia restaurant the week of August 10, 2013, at an hourly rate of $9. (Pl.’s Counter Sep. Statement in Opp. to Mtn., nos. 1, 5 [these facts are undisputed].) His employment terminated on August 24, 2015. (Id., no. 6.) At all times during his employment, plaintiff was represented by Unite Here, Local 19 (the “Union”). (Id., no. 7.)

Plaintiff’s hourly rate as a server was below the rate established by the Ordinance, and every cause of action in his complaint derives entirely from his claim that this violated the Ordinance. (Pl.’s Counter Sep. Statement, nos. 14-21.) However, the CBA in effect from August 1, 2011 to June 30, 2015 contains the following waiver of the Ordinance:

The Employer and the Union, through collective bargaining, have agreed to explicitly waive as part of the parties’ collective bargaining agreement, all provisions and requirements of the City of San Jose Minimum Wage Ordinance Chapter 4.100-4.100-120 (“Ordinance”), as provided for in Section 4.1000.050, should the Ordinance become law as well as any other state, county, or federal minimum wage increases that contain similar waiver provisions. This is intended to be a clear and unequivocal waiver in their entirety of the Ordinance and any other state, county or federal minimum wage increases that contain waiver provisions. Should it be declared or determined by the City of San Jose, or any other state, county or local regulatory authority, any court, or any arbitrator that this Section does not or cannot act as a complete waiver of the Ordinance or does not or cannot act as a waiver of any other state, county or federal minimum wage increase that contains waiver provisions, the Employer shall have the option to reopen this collective bargaining agreement to negotiate changes to the agreement, including but not limited to wages, health and welfare benefits, and pension and other terms and conditions as if no agreement had ever been reached. In the event the Employer exercises this option, the Employer and the Union will be free to exercise its statutory rights as the contract provisions (including but not limited to provisions restricting strikes and lockouts) would not be in effect.

(Pl.’s Counter Sep. Statement, no. 12 [existence and content of the waiver provision are not in dispute].) The same waiver is contained in the CBA covering July 1, 2015 through June 30, 2018. (Id., no. 13.)

The existence and content of this waiver provision—as well as its clear indication of the parties’ intent to waive the Ordinance and its applicability to plaintiff’s employment—are not in dispute. However, as discussed below, plaintiff urges that the waiver is not valid under the Ordinance.

IV. Requests for Judicial Notice and Amicus Brief

Defendants’ request for judicial notice is GRANTED as to the Ordinance (Ex. 1), “Frequently Asked Questions” published by the San Jose Office of Equality Assurance (Exs. 2 and 3), a memorandum to the Mayor and City Council pursuant to Section 9212 of the California Elections Code (Ex. 4), and the Official Title and Ballot Summary for the measure that became the Ordinance (Ex. 5). (Evid. Code, § 452, subds. (c) and (h).) The request is unopposed with regard to these materials.

Defendants’ request is also GRANTED as to the existence and content of filings in this action while it was pending in federal court (Exs. 6-9). (Evid. Code, § 452, subd. (d).) Plaintiff generally opposes the request as to these filings on hearsay and relevance grounds, and the Court does not consider the truth of any hearsay statements reflected in these filings. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1568 [court cannot take judicial notice of the truth of hearsay statements or facts set forth even in otherwise judicially noticeable documents].) However, the filings are properly considered to establish the procedural history of this case and with regard to plaintiff’s concession that the CBA’s waiver of the Ordinance would be effective if the Ordinance permitted such waivers.

Plaintiff’s request for judicial notice, which is unopposed, is GRANTED as to San Francisco’s minimum wage ordinance, the complaint in this action, and an “Official Notice” issued by the Office of Equality Assurance. (Evid. Code, § 452, subds. (c), (d), and (h).) Plaintiff’s request is DENIED as to a page from the web site “Ballotpedia.” Unlike the federal government web site at issue in Mission Springs Water Dist. v. Verjil (2013) 218 Cal.App.4th 892, there is no indication that this web site is a source “of reasonably indisputable accuracy.” (Evid. Code, § 452, subd. (h); see Duronslet v. Kamps (2012) 203 Cal.App.4th 717, 737 [declining to take judicial notice of information on the California Board of Registered Nursing web site].)

Finally, the Court has read and considered the amicus brief filed by the Union, although it does not rely on that brief to support its ruling below. Plaintiff does not object to the Court’s consideration of the Union’s brief.

V. Analysis

The parties’ dispute centers on the proper interpretation of section 4.100.050 of the Ordinance, entitled “Waiver through collective bargaining,” which provides:

To the extent required by federal law, all or any portion of the applicable requirements of this Chapter may be waived in a bona fide collective bargaining agreement, provided that such waiver is explicitly set forth in such agreement in clear and unambiguous terms.

Plaintiff contends that the language “[t]o the extent required by federal law” reflects that this section is a “savings clause” that would apply only if the Ordinance were found to be preempted by the National Labor Relations Act under the “Machinists” doctrine. Defendants urge that this language refers to the requirement that a waiver be “explicitly set forth … in clear and unambiguous terms,” which is the current standard for enforceability of a union-negotiated waiver of employees’ statutory rights under federal law. (See Wright v. Universal Maritime Service Corp. (1998) 525 U.S. 70, 80.)

A. Principles Governing Construction of the Ordinance

As explained by the California Supreme Court,

[w]hen we interpret a statute, our fundamental task is to determine the Legislature’s intent so as to effectuate the law’s purpose. We first examine the statutory language, giving it a plain and commonsense meaning. We do not examine that language in isolation, but in the context of the statutory framework as a whole in order to determine its scope and purpose and to harmonize the various parts of the enactment. If the language is clear, courts must generally follow its plain meaning unless a literal interpretation would result in absurd consequences the Legislature did not intend. If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute’s purpose, legislative history, and public policy.

(City of San Jose v. Superior Court (Smith) (2017) 2 Cal.5th 608, 616-617, internal citation and quotation omitted.)

“[S]tatutory language, even if it appears to have a clear and plain meaning when considered in isolation, may nonetheless be rendered ambiguous when the language is read in light of the statute as a whole or in light of the overall legislative scheme.” (People v. Valencia (2017) 3 Cal.5th 347, 360.) Courts must accordingly “consider portions of a statute in the context of the entire statute and the statutory scheme of which it is a part, giving significance to every word, phrase, sentence, and part of an act in pursuance of the legislative purpose.” (City of San Jose v. Superior Court, supra, 2 Cal.5th at p. 617.)

The same principles apply when interpreting an ordinance or voter initiative. (Chaffee v. San Francisco Public Library Com. (2005) 134 Cal.App.4th 109, 114 [ordinance]; Professional Engineers in California Government v. Kempton (2007) 40 Cal.4th 1016, 1037 [voter initiative].) Where there is ambiguity in the language of a voter initiative, “ ‘[b]allot summaries and arguments may be considered when determining the voters’ intent and understanding of a ballot measure.’ ” (Professional Engineers in California Government v. Kempton, supra, 40 Cal.4th at p. 1037, quoting Legislature v. Deukmejian (1983) 34 Cal.3d 658, 673, fn. 14.) Moreover, courts “must give due consideration to [a] public entity’s view of the meaning of its ordinance,” although the public entity’s view is not binding. (Chaffee v. San Francisco Public Library Com., supra, 134 Cal.App.4th at p. 114.)

B. Interpretation of the Ordinance

The language of the Ordinance is literally susceptible to both of the interpretations advanced by the parties. The Court will thus consider available aids beyond the Ordinance itself in construing section 4.100.050, as well as the reasonableness and practical impact of the parties’ competing interpretations.

1. Materials Reflecting the City’s View of the Ordinance

Prior to the initiative vote through which the Ordinance became law, the Mayor and City Council received a report pursuant to Section 9212 of the California Elections Code, which addressed the effects of the proposed Ordinance. The report was prepared through the participation of several City agencies, including the office of the City Attorney. (Defs.’ Req. for Judicial Notice, Ex. 4, Memorandum, p. 5.) In summarizing the initiative, the report stated that “[t]he proponents modeled their initiative on the municipal minimum wage ordinance in the City and County of San Francisco, which started at $8.50 in 2004 and due to annual increases is currently at $10.24/hour.” (Defs.’ Req. for Judicial Notice, Ex. 4, City of San Jose Minimum Wage Initiative Report, p. 2.) The report further stated that “[t]he initiative provides for a waiver of the minimum wage through a bona fide collective bargaining agreement….” (Ibid.)

The summary of the initiative prepared by the City Attorney and submitted to voters is less clear regarding the proper interpretation of the waiver section, stating merely that “[t]he proposed measure would not preempt any federal law respecting an express waiver of all or any portion of the minimum wage requirement in a collective bargaining agreement.” (Defs.’ Req. for Judicial Notice, Ex. 5.) However, since the Ordinance became law, the City agency charged with enforcing the Ordinance and issuing guidance regarding its interpretation has consistently taken the position that waivers are permitted by section 4.100.050. A set of “Frequently Asked Questions” published by the agency explains:

The San Jose Minimum Wage Ordinance is a minimum labor standard and a law of general application that applies to all employees covered by the Ordinance whether or not represented by a bargaining unit or union. However, under Ordinance Section 4.100.050, the provisions of the Minimum Wage Ordinance may be waived by a collective bargaining agreement. The Ordinance requires that the waiver must be in a bona fide collective bargaining agreement and must be in clear and unambiguous terms.

The parties to a collective bargaining agreement are free to negotiate any language they desire and the City of San Jose will not interfere with or participate in the negotiation of such language.

There may be many different ways to accomplish an effective waiver in a collective bargaining agreement. An example of an effective waiver the City of San Jose’s Office of Equality Assurance would recognize for purposes of enforcement is as follows: “Waiver of San Jose Minimum Wage Ordinance: To the fullest extent permitted, this agreement shall operate to waive any provisions of the San Jose Minimum Wage Ordinance and shall supersede and be considered to have fulfilled all requirements of said Ordinance as presently written, and or amended during the life of this agreement.”

(Defs.’ Req. for Judicial Notice, Ex. 2, San Jose Minimum Wage Ordinance Frequently Asked Questions (Preliminary), pp. 4-5 and Ex. 3, San Jose Minimum Wage Ordinance Frequently Asked Questions (Nov. 9, 2016), p. 2.)

While not binding on the Court, these consistent expressions of the City’s view of the Ordinance are entitled to consideration, which plaintiff does not dispute.

Plaintiff does urge the Court to also consider the clearer language of the CBA waiver provision found in San Francisco’s minimum wage ordinance, as well as litigation challenging the City’s Living Wage Ordinance that was pending around the time the Ordinance was drafted. However, there is no indication that the City or the Ordinance’s proponents considered the waiver provision in San Francisco’s ordinance—as opposed to its implementation of a minimum wage through multiple annual increases—or that they considered the Living Wage Ordinance litigation at all. While the Court has read and considered plaintiff’s arguments on these subjects, it would be speculative to attribute plaintiff’s reasoning to the City or the Ordinance’s proponents, and the Court declines to do so.

2. Reasonableness of the Parties’ Positions

In addition to harmonizing with the City’s construction of the statute, defendants’ interpretation is ultimately the more reasonable one. “When the statutory language is ambiguous, a court may consider the consequences of each possible construction and will reasonably infer that the enacting legislative body intended an interpretation producing practical and workable results rather than one producing mischief or absurdity.” (Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 567; see also Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1122 [“The court will apply common sense to the language at hand and interpret the statute to make it workable and reasonable.”].)

Here, plaintiff’s interpretation of section 4.1000.050 would read that provision out of the Ordinance for all practical purposes. The parties agree that, in plaintiff’s words, “[t]he Ordinance is not such an extreme substantive minimum labor standard that it would be pre-empted” under current federal law. (Opp., p. 13.) Given this context, there would appear to be no need for a “savings clause” to preserve the Ordinance. Moreover, it does not appear that section 4.1000.050 would be effective as a “savings clause” should the need for one arise. As explained in a recent decision cited by plaintiff,

Machinists prohibits states from regulating conduct that Congress intended to be controlled by the free play of economic forces. States are therefore prohibited from imposing additional restrictions on economic weapons of self-help, such as strikes or lockouts, unless such restrictions presumably were contemplated by Congress. Whether self-help economic activities are employed by employer or union, the crucial inquiry regarding pre-emption is the same: whether the exercise of plenary state authority to curtail or entirely prohibit self-help would frustrate effective implementation of the Act’s processes. Thus, Machinists preemption turns on the actual content of the ordinance and its real effect on federal rights.

(American Hotel & Lodging Association v. City of Los Angeles (C.D. Cal. 2015) 119 F.Supp.3d 1177, 1185–1186, aff’d (9th Cir. 2016) 834 F.3d 958.) Analyzing a minimum wage ordinance under Machinists, the court held that

Plaintiffs have failed to meet their burden that [sic] the Wage Ordinance’s $15.37 per hour minimum wage is economically unfeasible, such that it deprives Hotel Employers from having a meaningful choice as between paying the minimum wage and entering into a collective bargaining agreement, thereby forcing the hand of non-union hotels to unionize.

(American Hotel & Lodging Association v. City of Los Angeles, supra, 119 F.Supp.3d at p. 1187.) As demonstrated by American Hotel, a minimum wage ordinance will be analyzed under Machinists with regard to its “real effect” on an employer’s bargaining rights: specifically, courts will assess whether the wage established is so extreme “ ‘that business owners are virtually forced to enter into a collective bargaining agreement in order to pay lower wages.’ ” (Id. at p. 1190, quoting Fortuna Enterprises, L.P. v. City of Los Angeles (C.D. Cal. 2008) 673 F.Supp.2d 1000, 1010.) A “savings clause” that allows employers to avoid paying the minimum wage by entering into a collective bargaining agreement does nothing to address this concern, and would not be likely to “save” the Ordinance from a finding of preemption.

Rather than interpreting section 4.1000.050 as a needless and ineffectual “savings clause” that does not authorize CBA waivers in any form, it is more reasonable to interpret it, consistent with its title, as authorizing “[w]aiver through collective bargaining.” (See People v. Rocca (1980) 106 Cal.App.3d 685, 691-692 [“Title, chapter and section headings enacted by the Legislature as parts of a code may properly be given weight in construing legislation though they will not control a plain provision in a code section.”].) Consistent with this interpretation, the language “[t]o the extent required by federal law” is properly read to refer to the requirement that a CBA waiver be “explicitly set forth in such agreement in clear and unambiguous terms.” This requirement is consistent with current federal law, but would not apply in the event federal law evolves to allow some other form of waiver, as suggested by the City Attorney’s summary submitted to voters. (See Defs.’ Req. for Judicial Notice, Ex. 5 [“The proposed measure would not preempt any federal law respecting an express waiver of all or any portion of the minimum wage requirement in a collective bargaining agreement.”].)

3. Conclusion

For these reasons, the Court agrees with defendants that the Ordinance may be waived through a “clear and unambiguous,” express waiver in a bona fide CBA. Since there is no dispute that plaintiff’s CBA contains such a waiver, his claims based on the Ordinance must fail. Defendants are entitled to summary judgment.

V. Conclusion and Order

Defendants’ motion for summary judgment is GRANTED.

The Court will not rule on plaintiff’s objections to evidence submitted in support of defendants’ motion, since they are immaterial to its disposition of the motion. (See Code Civ. Proc., § 437c, subd. (q) [“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.”].)

The Court will prepare the order.