Case Name: Ronald Balanag, et al. v. Laptalo Enterprises, Inc., et al.
Case No.: 16-CV-292680

This is a putative class action arising from allegations that defendant Laptalo Enterprises, Inc. dba JL Precision imposed illegal time rounding and break policies on its employees. Before the Court are the parties’ cross-motions for summary adjudication of issues pursuant to stipulation under Code of Civil Procedure section 437c, subdivision (t). Both motions are opposed.

I. Allegations of the Operative Complaint and Procedural Background

Defendant is a sheet metal design and manufacturing company located in San Jose. (First Amended Complaint (“FAC”), ¶ 5.) Plaintiffs Ronald Balanag and Javier Graciano were employed by defendant as sheet metal printers, painters, and hardware operators at different periods during their employment. (Id. at ¶¶ 11-12.) Plaintiffs allege that they and other non-exempt employees routinely worked without receiving a timely ten-minute rest period for every four hours worked or major fraction thereof; without receiving a timely thirty-minute meal period during eligible shifts; and without receiving a second meal period or third rest break for shifts of ten hours or more. (Id. at ¶¶ 16, 55.) In addition, plaintiffs and other employees were not paid for all hours worked due to illegal time rounding. (Id. at ¶ 17.) As a result of these policies, plaintiffs and other putative class members received wage statements that did not reflect the number of hours worked and the lawful wages due thereon, and did not receive all wages due and owing at termination. (Id. at ¶ 19.)

This action was filed on March 14, 2016. On June 30, 2017, plaintiffs filed the operative FAC for (1) failure to pay wages owed (minimum wages and/or overtime wages), (2) failure to provide meal and rest periods, (3) failure to pay wages on separation of employment, (4) failure to provide accurate itemized wage statements, (5) unfair business practices, and (6) recovery under the Private Attorneys General Act (“PAGA”).

On November 28, 2017, the Court granted plaintiffs’ motion for class certification as to the following class:
All individuals who have been employed by defendant LAPTALO ENTERPRISES, INC. as non-exempt machinists, machine operators, welders, shipping clerks, customer service representatives, administrative assistants, or painters at defendant’s factory on Zanker Road in San Jose, California at any time from March 14, 2012 to the present, excluding individuals who have executed a release of the claims in this action.
The Court also certified subclasses of class members who (1) worked shifts before January 4, 2016; (2) worked shifts of more than 10 hours; (3) worked shifts beginning at 6 a.m. during the period from March 14, 2012 to March 23, 2016; and (4) are no longer employed by defendant and received their final paycheck during the class period. The first and third subclasses describe groups of employees who were similarly impacted by defendant’s meal and rest break policies, which were modified on two occasions in 2016. On March 23, 2018, the claims administrator mailed notice of class certification, providing class members with an April 23, 2018 deadline to opt out of the class. None of the 148 class members opted out.

On October 17, 2018, the Court entered a stipulated order providing for the summary adjudication of two issues: (1) whether class members received lawful rest breaks between March 8, 2012 and January 4, 2016 (impacting the first subclass) and (2) whether class members who worked shifts that started at 6:00 a.m. between March 8, 2012 and January 4, 2016 received timely meal periods (impacting the third subclass). Pursuant to the stipulated order, plaintiffs move for summary adjudication of the first and second issues, while defendant seeks summary adjudication of the first issue only.

II. Legal Standard

In addressing a motion for summary adjudication pursuant to Code of Civil Procedure section 437c, subdivision (t), the usual rules governing summary adjudication apply. (See Code Civ. Proc., § 437c, subd. (t)(5) [motion filed pursuant to subdivision (t) “shall proceed in all procedural respects as a motion for summary judgment”]; Magana Cathcart McCarthy v. CB Richard Ellis, Inc. (2009) 174 Cal.App.4th 106, 116-120 [parties may not stipulate to a procedure that does not comply with the statutory requirements and rules of court governing summary judgment motions].) The Court must determine whether it may find in favor of one party or another based on the undisputed material facts, or whether factual disputes preclude it from finding in favor of either party. (See Code Civ. Proc., § 437c, subd. (c).) The moving party bears the initial burden to show that summary adjudication is proper; the burden then shifts to the opposing party to show that there is at least one triable issue of material fact precluding summary adjudication.

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. (2001) 25 Cal.4th 826, 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 party].) 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.)

III. Issue 1: Whether Class Members Received Lawful Rest Breaks Between March 14, 2012 and January 4, 2016

With few exceptions, members of the first subclass worked uniform schedules of at least eight hours, either from 6:00 a.m. to 2:30 p.m. or from 7:00 a.m. to 3:30 p.m. (See JL Precision’s Statement of Disputed Facts in Opp. to Plaintiffs’ Mot. (“DSDF”), no. 22.) In their filing under Code of Civil Procedure section 437c, subdivision (t), the parties stipulated that, between March 8, 2012 and January 4, 2016, “Class Members received a fifteen-minute rest break at 9:00 a.m. and a thirty-five minute combined meal/rest break that started at 11:30 a.m.” (Stipulation and Order, p. 3.) “Each break period was signaled by an audible buzzer and all Class Members took breaks at the same time.” (Ibid.) Consistent with this stipulation, defendant admitted in response to requests for admission that class members “who worked shifts between March 12, 2012 and January 4, 2016 were not provided with [a] separate ten-minute rest break falling after the meal period”; class members who worked shifts during that time period “were only provided with one fifteen minute rest break and one combined thirty-five minute long meal/rest break”; and a buzzer system was utilized to signal the start and end of meal and rest periods. (Ex. M to Pls.’ Mot, JL Precision’s Resps. to Pls.’ First Set of Reqs. for Admis., nos. 1-4.) During their depositions, defendant’s Vice President Tony Grizelj and former Vice President Todd Morey described the buzzer system consistent with defendant’s stipulations and admissions, and confirmed that the same meal and rest break policy applied to all production employees during the relevant time period. (Ex. G to Pls.’ Mot., Dep. of Person Most Knowledgeable Tony Grizelj, pp. 52-58, 64-66, 70-71, 105, 107-108; Ex. H to Pls.’ Mot., Dep. of Todd Morey, pp. 19-24, 38-39.)

Based on this and other evidence, plaintiffs contend that the undisputed facts establish that defendant had a uniform policy of providing one 15-minute rest period at 9:00 a.m. and one 5-minute rest period at 12:00 p.m., following the end of a uniform meal period beginning at 11:30 a.m. According to plaintiffs, the relevant legal authorities require two uninterrupted, ten-minute rest breaks, each of which must be in the middle of each work period if practicable. Consequently, plaintiffs contend that the second rest period was noncompliant because it was combined with a meal period rather than being provided in the middle of a work period, and because it lasted only 5 minutes rather than the required 10 minutes. In its memorandum of points and authorities, JL Precision urges that the policy plaintiffs describe is legally compliant, and, alternatively, that there is a triable issue of fact regarding the availability of additional afternoon rest breaks (see JL Precision’s Mem. of P. & A., p. 7, fn. 1). In its Statement of Disputed Facts and in the supporting declaration of Tony Grizelj, defendant also attempts to dispute other facts to which it previously stipulated and/or admitted. (See, e.g., DSDF, nos. 29 [disputing that the buzzer system was utilized for all shifts], 41, 43-45, 48-50 [disputing that a uniform meal and rest break schedule was utilized].)

A. Defendant’s Attempt to Dispute Facts to Which It Previously Stipulated and/or Admitted

In the absence of any request to modify the parties’ stipulation or to withdraw defendant’s admissions—or even an explanation of defendant’s newly equivocal position regarding the material facts described above—the Court will enforce the stipulation and assume that the stipulated and admitted facts are undisputed. Notably, defendant describes the buzzer system in its memorandum of points and authorities consistent with its admissions and without qualification (see JL Precision’s Mem. of P. & A., p. 2) and states that “there is a core of material facts which are plainly undisputed between the parties, thereby creating pure issues of law regarding … whether Class Members received lawful rest breaks between March 8, 2012 and January 4, 2016” (id. at p. 4). Inconsistent with this position, defendant then argues in a footnote that if the Court adopts plaintiffs’ position on the law, it should nevertheless find that there are disputed material facts that foreclose summary adjudication in plaintiffs’ favor. As an initial matter, it would be patently unfair to hold plaintiffs to their agreement that these motions be heard under Code of Civil Procedure section 437c, subdivision (t) without also holding defendant to the factual stipulations upon which plaintiffs’ agreement was based. Further, the Court has discretion to disregard self-serving declarations submitted in opposition to a summary judgment motion, where the declarations contradict a party’s clear and unequivocal admission and no explanation is provided for the contradiction. (See Benavidez v. San Jose Police Dept. (1999) 71 Cal.App.4th 853, 860-863.) The Court exercises that discretion here and disregards those aspects of Mr. Grizelj’s declaration that contradict defendant’s admissions and Mr. Grizelj’s own prior deposition testimony.

Finally, defendant also submits declarations by non-class member employees who state that “[d]espite the absence of a formal afternoon rest break,” there was an “informal policy” of allowing afternoon rest breaks, “including taking a cigarette.” The declarations do not give an example of any employee taking such a break that was not a cigarette break, do not specify the permitted duration of such breaks, and do not establish or even suggest that these cigarette breaks satisfied “the requirement [that the employer] relieve employees of all work duties and employer control during … rest periods.” (Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5th 257, 269.) While the Court considers these declarations, they do not constitute substantial evidence that additional, compliant afternoon rest breaks were provided.

B. Whether Defendant’s Rest Break Policy Complied With the Law

Turning to the merits of the issue the parties have asked the Court to decide, the parties agree that Industrial Welfare Commission (“IWC”) Order No. 1-2001 governs the Court’s analysis of defendant’s former rest break policy. (See Cal. Code Regs., tit. 8, § 11010, subd. (1) [Wage Order 1-2001 applies “to all persons employed in the manufacturing industry,” with specified exceptions].) That wage order provides that the employer

shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof.

(Cal. Code Regs., tit. 8, § 11010, subd. (12)(A).)

As interpreted by Rodriguez v. E.M.E., Inc. (2016) 246 Cal.App.4th 1027, Wage Order 1-2001 provides that “in an eight-hour shift with a single meal break, the preferred schedule requires the provision of a rest break in the middle of each ‘work period’ before and after the meal break.” (At p. 1044.) Rodriguez held that an employer’s practice of providing a combined, 20-minute rest period prior to lunch violated this preferred schedule; however, summary adjudication was inappropriate because there were triable issues of material fact regarding whether the preferred schedule was “practicable” for the employer to implement. (Id. at p. 1039 [“Wage Order 1–2001 obliged E.M.E. to provide a 10-minute rest break in the middle of the work periods occurring before and after the 30-minute meal break ‘insofar as practicable.’ ”].)

In the absence of contrary published California authority, Rodriguez binds this Court. Defendant identifies no such authority, but points only to a Division of Labor Standards and Enforcement (“DLSE”) opinion letter that states that a combined meal and rest break is authorized under some circumstances. While the Court takes judicial notice of this opinion letter and may consider it for its persuasive value, it finds the letter to be unpersuasive and in conflict with Rodriguez. (See Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 584 [advice letter may be “persuasive” to a court, particularly where the DLSE’s interpretation is consistent with the court’s independent analysis]; but see Hudgins v. Neiman Marcus Group, Inc. (1995) 34 Cal.App.4th 1109, 1124-1126 [refusing to defer to opinion letter that misinterpreted California law].)

With no analysis, the letter states that where an employee “begins the day at 7:00 a.m., working five hours before the 12:00 noon thirty minute lunch break,” the employer may “provid[e] a ten minute rest period sometime during the morning and then add 10 minutes to lunch in order to comply with the afternoon break requirement.” (Dept. Industrial Relations, DLSE Opn. Letter No. 2001.09.17 (2001), p. 3.) However, the same letter goes on to state that “[a]s a general matter, the first rest period should come sometime before the meal break and the second rest period should come sometime after the meal break” to “comport with the requirement that the rest periods ‘insofar as practicable, shall be in the middle of each work period.’ ” (Id. at p. 4, italics added.) It reiterated that “[t]he IWC intended that as a normal practice, employees ought to have two 10 minute rest period[s] during an eight hour day, one in the first four hours of the day, and the other in the second four hours of the day,” and concluded that the second break consequently could not immediately precede quitting time. (Id. at p. 5.) The Court finds that the letter’s apparent conclusion that an afternoon break may ordinarily be combined with a meal period ignores the wage orders’ language that breaks be provided “in the middle of each work period” and is inconsistent with the reasoning later in the letter, which is cited with approval by Rodriquez, as well as in dicta in an opinion by the Supreme Court of California. (See Rodriguez v. E.M.E., Inc., supra, 246 Cal.App.4th at p.1036, citing Brinker Restaurant Corp. v. Superior Court (Hohnbaum) (2012) 53 Cal.4th 1004, 1031-1032.) It also conflicts with Rodriquez’s express conclusion that “Wage Order 1–2001 oblige[s] [the employer] to provide a 10-minute rest break in the middle of the work periods occurring before and after the 30-minute meal break ‘insofar as practicable.’ ” (Rodriguez v. E.M.E., Inc., supra, 246 Cal.App.4th at p.1039.)

Notably, unlike the defendant in Rodriguez, JL Precision does not argue that it would have been impracticable to comply with the preferred schedule established by the wage order. It is undisputed that as of January 4, 2016, defendant in fact changed its break schedule to match that preferred schedule. (DSDF, nos. 54-55.) Defendant has also specifically admitted that “it was practical to offer CLASS MEMBERS separate rest breaks falling in the middle of each work period.” (JL Precision’s Resps. to Pls.’ First Set of Reqs. for Admis., no. 12; DSDF, no. 58 [not disputing this admission, but urging that “the offering of a longer morning rest period and longer meal period in lieu of an afternoon break was done at the behest of employees and was not objected to by any employee”].) Given that this issue is not in dispute, the Court concludes that issue 1 should be summarily adjudicated in plaintiffs’ favor, so long as the treatment of office workers improperly included in the class is appropriately addressed, as discussed below. Defendant’s motion for summary adjudication of this issue will be denied.

IV. Issue 2: Whether Class Members Who Worked Shifts That Started at 6:00 a.m. Between March 14, 2012 and January 4, 2016 (or March 23, 2016) Received Timely Meal Periods?

In their filing under Code of Civil Procedure section 437c, subdivision (t), the parties stipulated that, between March 8, 2012 and January 4, 2016, “Class Members who started shifts at 6:00 a.m. were not provided with a meal period until a buzzer sounded at 11:30 a.m.” Consistent with this stipulation, JL Precision admitted in response to a request for admission that, other than office workers, “CLASS MEMBERS who worked shifts beginning at 6:00 a.m. during the period from March 14, 2013 [sic.] to March 23, 2016 were not provided with a meal period until after the start of their fifth hour of work during that shift.” (JL Precision’s Resps. to Pls.’ First Set of Reqs. for Admis., no. 9.) In addition, both Tony Grizelj and Todd Morey testified that class members who started at 6:00 a.m. during the relevant time period did not receive a meal period until 11:30 a.m. (Tony Grizelj Dep., p. 108; Todd Morey Dep., pp. 38-39.)

As with the facts material to the first issue submitted to the Court for summary adjudication, defendant now attempts to dispute that class members who started at 6:00 a.m. did not receive a meal break until 11:30 a.m. (See DSDF, nos. 41, 43-45.) Again, only the self-serving and inconsistent declaration of Tony Grizelj is offered to dispute this fact. (Ibid. [citing only Mr. Grizelj’s declaration].) While defendant references its employee handbook and the non-class member employee declarations discussed above, none of this additional evidence addresses the timing of meal breaks for class members who started work at 6:00 a.m. For the reasons already discussed, JL Precision’s attempt to dispute a fact to which it clearly and unequivocally admitted on multiple occasions by submitting an inconsistent declaration by Mr. Grizelj is improper. The Court will enforce defendant’s stipulation and admissions to this fact.

As to the legal merits of plaintiffs’ theory, defendant concedes that the relevant authorities require employers to offer a first meal period after no more than five hours of work. (See Lab. Code, § 512, subd. (a) [“An employer shall not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.”]; Cal. Code Regs., tit. 8, § 11010(11)(A) [same].) Consequently, issue 2 should also be summarily adjudicated in plaintiff’s favor, contingent upon the appropriate resolution of the treatment of office workers.

V. Treatment of Office Workers Improperly Included in the Class

Finally, defendant maintains that “[o]ffice staff,” namely, “customer service representatives and administrative assistants” were not subject to the buzzer system. In their moving papers, plaintiffs indicate that “Class Counsel will be prepared to address this at hearing but is inclined to agree to remove these positions from the class definition due to Defendant’s error.” (Pls.’ Mot., p. 5, fn. 4.) Redefining the class in this manner as the action progresses is within the Court’s authority. (See ABM Industries Overtime Cases (2017) 19 Cal.App.5th 277, 307, fn. 14 [the court itself can and should redefine the class if necessary to preserve the case as a class action; as the action progresses, the trial court should modify the class definitions as necessary “to avert developing certification problems or to otherwise enhance the efficiencies of the class certification model”].) Moreover, it is not clear that the Court may award summary adjudication in plaintiffs’ favor without redefining the class or rewriting the issues presented by the parties, given that there are disputed issues of material fact as to the office staff.

The parties are directed to meet and confer regarding this issue and to be prepared to discuss it with the Court at the hearing on this matter. The parties shall address whether, in the event that they stipulate to the exclusion of office staff from the class or that the Court excludes these individuals on its own motion, these employees should receive notice of this development. (See Cal. Rules of Court, rule 3.767.)

VI. Conclusion and Order

The parties shall appear at the hearing to address the potential amendment of the class definition to exclude office workers. Assuming this issue is appropriately resolved, the Court is inclined to grant plaintiffs’ motion for summary adjudication with regard to both issues before it.

Defendant’s motion for summary adjudication is DENIED.

Finally, the Court will not rule on the objections to evidence filed with plaintiffs’ reply papers since they are immaterial to its disposition of these motions. (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.