Michael Oliver, et al. v. Konica Minolta Business Solutions, USA, Inc

Case Name: Michael Oliver, et al. v. Konica Minolta Business Solutions, USA, Inc., et al.

Case No.: 2014-1-CV-263183

In this class action, plaintiffs allege various Labor Code violations by defendant Konica Minolta Business Solutions, USA, Inc. (“KMBS”). Plaintiffs worked as service technicians for KMBS. (First Amended Complaint (“FAC”), ¶ 5.) They allege that KMBS required them and similarly situated service technicians to drive their personal vehicles to and from the first and last job of the day while transporting the tools and equipment necessary to do their jobs, but did not provide compensation for the time spent driving. (Id., ¶ 6.) KMBS also failed to reimburse its technicians for all expenses incurred, including those for miles driven, and failed to provide accurate wage statements (among other things, KMBS did not provide hard copies of the statements and did not list all hours worked). (Ibid.)

The FAC sets forth the following causes of action: (1) Failure to Pay Overtime Wages Pursuant to California Labor Code § 1194; (2) Failure to Reimburse for Work Related Expenses in Violation of Labor Code § 2802; and (3) Unlawful, Unfair and Fraudulent Business Practices Pursuant to Business & Professions Code § 17200, et seq.

The following motions are before the Court: (1) plaintiffs’ motion for summary adjudication of issues; (2) KMBS’s motion for summary adjudication of issues; (3) KMBS’s motion to compel the production of documents; and (4) KMBS’s motion to seal documents related to plaintiffs’ motion for class certification.

I. The Motions for Summary Adjudication

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. (Code Civ. Proc., § 437c, subd. (f)(1).) With respect to an issue of duty, a party may seek summary adjudication if it contends that “one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.” (Ibid.) Summary adjudication of general “issues” or of facts is not permitted. (See Raghavan v. The Boeing Company (2005) 133 Cal.App.4th 1120, 1136.) There is a split in authority regarding whether a motion for summary adjudication of an issue of duty may be granted where the motion would not dispose of an entire claim or terminate any portion of the action. (Cf. Regan Roofing Co. v. Superior Court (Pacific Scene) (1994) 24 Cal.App.4th 425, 436 [motion seeking an interpretation of the scope of a duty, which did not dispose of an entire claim or affirmative defense or terminate any portion of an action, was improper], disapproved of on another point by Crawford v. Weather Shield Mfg. Inc. (2008) 44 Cal.4th 541 with Linden Partners v. Wilshire Linden Associates (1998) 62 Cal.App.4th 508, 522 [“the court may rule whether a defendant owes or does not owe a duty to plaintiff without regard for the dispositive effect of such ruling on other issues in the litigation, except that the ruling must completely dispose of the issue of duty”].) The view that it cannot is more consistent with legislative intent to avoid piecemeal adjudication of what are basically factual issues. (See Hood v. Superior Court (United Chambers Administrators, Inc.) (1995) 33 Cal.App.4th 319, 323; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2015) ¶ 10:44.)
Plaintiffs’ notice of motion indicates that they seek summary adjudication of the following “issues of duty”: (1) that KMBS has the duty “to pay class members for the time spent transporting Defendant’s tools and parts in their personal vehicles to and from the first and last customer call of the day and their homes” and (2) that it has the duty “to reimburse class members for the miles driven in their personal cars transporting Defendant’s tools and parts to and from their homes to the first and last customer calls of the day.” As alleged in the FAC, the sources of these asserted “duties” are Labor Code section 1194, the overtime statute, and Labor Code section 2802, which requires reimbursement for work-related expenses, respectively.

There does not appear to be any dispute that KMBS was required to comply with these statutes with respect to plaintiffs’ employment. Rather, the parties dispute the proper interpretation of the statutes and whether KMBS violated them under the particular facts of this case. Thus, although cast as a request for a ruling on the existence of a duty, plaintiff really seeks summary adjudication of KMBS’s liability under the statutes at issue. Such a request is improper, whether the Court follows Regan Roofing or Linden Partners. (See Paramount Petroleum Corporation v. Superior Court (Building Materials Corp. of America) (2014) 227 Cal.App.4th 226, 244 [“[T]here is no legal basis for a plaintiff’s motion for summary adjudication on liability only ….”]; Singh v. Superior Court (UHS of Delaware, Inc.) (2006) 140 Cal.App.4th 387, 391 [trial court found that summary adjudication of “the scope, rather than the existence, of” an employer’s duty to pay overtime was inappropriate; the issue was resolved on summary adjudication pursuant to the parties’ agreement that the court treat it as a motion for summary adjudication of a legal issue pursuant to subdivision (t) of section 437c].) Furthermore, under Regan Roofing, plaintiffs’ motion would not dispose of any claim or terminate any portion of this action.

KMBS’s motion is also procedurally flawed. KMBS seeks an order holding that “Defendant has no duty to compensate Service Technicians for their normal commute time and has no duty to reimburse Service Technicians for their normal commute miles.” Such vaguely-defined issues are wholly inappropriate for resolution by summary adjudication pursuant to the authorities discussed above. KMBS does not contend that the resolution of these issues would entirely dispose of any of plaintiffs’ claims, which is unsurprising given that the FAC is not premised on the theory that KMBS has a duty to compensate plaintiffs for “normal commuting.” Rather, plaintiffs’ theory is that, given the facts at issue here, plaintiffs were working during their commute time for purposes of the Labor Code provisions at issue.

Since the motions are procedurally improper, the parties’ motions for summary adjudication are DENIED. The requests for judicial notice and objections to evidence associated with the motions are consequently moot.

II. KMBS’s Motion to Compel

KMBS moves to compel a further response to request no. 10 from its first set of requests for production of documents served on plaintiff Michael Oliver on August 19, 2014. Request no. 10 sought “all tax DOCUMENTS, including returns and schedules” relating to “any business expense deductions claimed by [Oliver] in connection with [his] employment with KMBS for the years 2010 to the present.” Oliver responded on October 14, 2014 by interposing a number of objections, including objections based on his right to privacy and his privilege in his tax returns. Oliver did not indicate that he would produce documents responsive to request no. 10, and has not done so.

Following meet and confer efforts between the parties, including an informal discovery conference with the Court, KMBS filed a motion to compel a further response to request no. 10 on February 27, 2015. The Court denied the motion in an order noting that discovery at that time was limited to issues relevant to class certification and “[i]t is not apparent how the requested discovery has any bearing on class certification,” but going on to address the merits of the parties’ dispute and hold that the tax return privilege and right to privacy protected Oliver’s returns.

Class certification was granted on October 8, 2015. On April 21, 2016, KMBS filed the instant motion, again seeking to compel a further response to request no. 10. Plaintiffs oppose the motion on both procedural and substantive grounds.

As discussed in the Court’s prior order, the taxpayer’s privilege may be waived where the gravamen of a lawsuit is wholly inconsistent with the assertion of the privilege (see Wilson v. Superior Court (Enid) (1976) 63 Cal.App.3d 825, 830 [where the plaintiff sued her tax accountants for negligently advising her regarding her taxes]), and records subject to the right of privacy are discoverable if they are directly relevant and essential to the fair resolution of an action (Britt v. Superior Court (San Diego Unified Port District) (1978) 20 Cal.3d 844, 859). KMBS contends that the tax returns are critical to the resolution of one of two theories supporting plaintiffs’ claim for inadequate reimbursements under Labor Code section 2802: the theory that taxes withheld from the reimbursements for certain service technicians rendered the reimbursements inadequate.
KMBS maintains that IRS regulations require it to withhold these taxes, an issue that will certainly be relevant to the merits of plaintiffs’ theory, but to which plaintiffs’ tax returns are not directly relevant. It also seeks to show that, to the extent plaintiffs contend they were damaged by these withholdings, they may have recouped some or all of their damages by claiming unreimbursed expenses as tax deductions. However, California cases establish that tax consequences are not to be considered as a mitigating factor in damage calculations. (See Cox v. Superior Court (Shields) (2002) 98 Cal.App.4th 670, 674 [discussing “the settled law in California that the trier of fact is not to consider evidence of tax considerations in determining damage awards”].) This rule is equally applicable in the context of a section 2802 claim. (See Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 15, fn. 14 [noting in a section 2802 action that the trial court had properly sustained objections to FedEx’s questions about information in unspecified witnesses’ tax returns, which were intended to show that drivers who were employed directly by FedEx received more compensation than they passed through to drivers they hired themselves, and that this extra compensation was designed to cover the expenses of the drivers who were employed by FedEx]; Schulz v. QualxServ, LLC (S.D. Cal., Apr. 26, 2012, No. 09-CV-17-AJB MDD) 2012 WL 1439066, at *5 [in a section 2802 claim, “[h]ow an individual employee dealt with his expenses in terms of his own financial and tax planning is irrelevant to the question of whether the employer should have reimbursed the technicians in the first place”], italics original.)
KMBS also urges that plaintiffs have failed to produce evidence of their actual expenses, and the expenses they claimed on their tax returns may contradict the expenses they claim in this action. However, plaintiffs represent that they will use the IRS mileage reimbursement rate as a baseline to demonstrate that KMBS’s method of reimbursement is inadequate, which they are permitted to do. (See Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 571 [either the actual expense method or the mileage reimbursement method may be used as a baseline to challenge an employer’s method of reimbursement].) The fact that tax returns may have impeachment value or may constitute a “better” form of evidence on this issue does not waive the privilege. (See Webb v. Standard Oil Co. of Cal. (1957) 49 Cal.2d 509, 512 [taxpayer privilege was not waived where insurance companies sought to show that plaintiffs claimed a lower property value on their returns than in litigation]; Weingarten v. Superior Court (Pointe San Diego Residential Community) (2002) 102 Cal.App.4th 268, 276 [“[t]he fact that financial records are difficult to obtain or that a tax return would be helpful, enlightening or the most efficient way to establish financial worth is not enough” to overcome the taxpayer privilege in a punitive damages case where the defendant’s financial condition is at issue].)
Finally, for the reasons discussed in the Court’s prior order, Gattuso v. Harte-Hanks Shoppers, Inc., supra, 42 Cal.4th 554 does not require that plaintiffs produce their tax returns. Again, the extent to which KMBS was required to withhold taxes from certain reimbursement payments can be determined without reference to plaintiffs’ tax returns.
KMBS’s motion to compel is accordingly DENIED.
III. KMBS’s Motion to Seal

KMBS moves to seal the following documents lodged with the Court in connection with plaintiff Oliver’s motion for class certification: (1) the unredacted version of plaintiff’s memorandum of points and authorities, lodged on June 4, 2015; (2) the unredacted version of the declaration of Robin G. Workman supporting plaintiff’s motion, including Exhibits E, G, I, J, K, L, and M, also lodged on June 4, 2015; and (3) the unredacted version of the declaration of Eric E. Hill supporting KMBS’s opposition, including Exhibits D, E, F, and G, which was lodged on July 2, 2015.

In its moving papers, KMBS explains that these documents contain private information about its employees and competitively sensitive, non-public information concerning its processes, procedures, policies, and systems. If this information was publicly disclosed, it would enable KMBS’s business competitors to obtain a significant and unfair competitive advantage over KMBS. KMBS has thus established that the information at issue is entitled to confidentiality (see Universal City Studios, Inc. v. Superior Court (Unity Pictures Corp.) (2003) 110 Cal.App.4th 1273, 1285-1286 [confidential matters relating to the business operations of a party may be sealed where public revelation of the information would interfere with the party’s ability to effectively compete in the marketplace]), and has filed appropriately redacted public versions of the documents at issue. Consequently, the Court finds that (1) there exists an overriding interest that overcomes the right of public access to the redacted portions of the documents at issue; (2) this interest supports sealing the unredacted documents; (3) a substantial probability exists that the overriding interest will be prejudiced if the unredacted documents are not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court, rule 2.550(d).)

KMBS’s motion to seal is accordingly GRANTED.

In what the Court assumes was an oversight, KMBS’s motion does not address the supplemental declaration of Robin G. Workman supporting plaintiff’s motion for class certification, lodged on July 20, 2015. KMBS’s deadline to move to seal this document is extended to May 23, 2016 to enable it to address this document if it desires.

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