Case Name: Shailendra Singh v. Inter-Con Security Systems, Inc., et al.
Case No.: 17-CV-313202

This is an action under the Private Attorneys General Act (“PAGA”). Before the Court is defendant Inter-Con Security Systems, Inc.’s motion for summary judgment, which plaintiff opposes.

I. Allegations of the Operative Complaint

From March 3, 2015 to May 19, 2017, plaintiff worked for defendant as a security guard/officer. (Second Amended Complaint, ¶ 6.) During his employment, plaintiff was paid on an hourly basis as a non-exempt employee. (Ibid.) Plaintiff alleges that Inter-Con failed to pay security guards/officers on a weekly basis as required of “temporary services employers” by Labor Code section 201.3. (Id. at ¶ 16.) Based on these allegations, he asserts a single cause of action under PAGA.

II. Requests for Judicial Notice

Defendant’s request for judicial notice of legislative history materials related to section 201.3 and a related provision of the Unemployment Insurance Code is GRANTED. (Evid. Code, § 452, subd. (c).) While plaintiff argues that these materials are irrelevant in light of subsequent amendments to section 201.3, the statute’s original legislative history remains relevant to its proper interpretation.

Plaintiff’s request for judicial notice is DENIED as to unpublished orders by this Court (Hon. Kirwan) in another case, Huff v. Securitas Security Services USA, Inc. (Super. Ct. Santa Clara County, No. 2010-1-CV-172614) (Exs. 1 and 2 to plaintiff’s request). The Court is familiar with this case as it has been assigned to this department following an appeal. Still, unpublished California opinions “must not be cited or relied on by a court or a party in any other action.” (Cal. Rules of Court, rule 8.1115(a).) Plaintiff’s request is GRANTED as to relevant legislative history materials and materials associated with plaintiff’s unemployment claim (Exs. 3-6). (Evid. Code, § 452, subds. (c) and (d).)

III. Legal Standard

“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).)

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.)

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” or establishing a defense 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., supra, 25 Cal.4th at p. 855.)

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.)

IV. Analysis

Here, the facts relied on by Inter-Con are undisputed. Inter-Con is a security service company that provides guard services for government and commercial clients. (Pl.’s Resp. to D.’s Sep. Statement of Undisputed Material Facts, no. 5.) Plaintiff was hired by Inter-Con to work for its client, the California Highway Patrol, as a security guard, and he worked for that client at the San Jose Department of Motor Vehicles from March 2015 through May 2017—the duration of his employment with Inter-Con. (Id., nos. 1-4.) Plaintiff performed a different job than DMV employees, and viewed defendant as his employer. (Id., nos. 8 and 10.) Inter-Con also provided plaintiff and its other guards with equipment like uniforms and radios. (Id., no. 7.)

On these facts, Inter-Con contends that it is not a “temporary services employer” under Labor Code section 201.3, and even if it were, plaintiff was not required to be paid on a weekly basis because his assignment lasted for more than 90 days. Plaintiff does not dispute the facts relied on by Inter-Con, but urges that defendant is a “temporary services employer” and section 201.3’s 90-day exception does not apply to his employment.

A. Whether Inter-Con Is a Temporary Services Employer

Labor Code section 201.3, subdivision (a)(1) defines a “temporary services employer” as

an employing unit that contracts with clients or customers to supply workers to perform services for the clients or customers and that performs all of the following functions: (A) Negotiates with clients and customers for matters such as the time and place where the services are to be provided, the type of work, the working conditions, and the quality and price of the services[;] (B) Determines assignments or reassignments of workers, even if workers retain the right to refuse specific assignments[;] (C) Retains the authority to assign or reassign a worker to another client or customer when the worker is determined unacceptable by a specific client or customer[;] (D) Assigns or reassigns workers to perform services for clients or customers[;] (E) Sets the rate of pay of workers, whether or not through negotiation[;] (F) Pays workers from its own account or accounts[;] (G) Retains the right to hire and terminate workers.

“Employing unit” has the same meaning as defined in Section 135 of the Unemployment Insurance Code (Lab. Code, § 201.3, subd. (a)(3)): “an individual or type of organization that has in its employ one or more individuals performing services for it within this state,” including a corporation (Unemp. Ins. Code, § 135, subd. (a)(2)). As noted in the legislative history materials submitted by defendant, section 201.3’s definition of a “temporary services employer” is substantially identical to the definition of that term set forth in section 606.5 of the Unemployment Insurance Code.

Defendant contends that, for purposes of the Unemployment Insurance Code, the Legislature “considered ‘temporary service employers’ as entities that lease and/or loan employees to another entity to perform services the client regularly performs itself.” However, the legislative history material it cites does not discuss the type of services performed by employees, and reflects that the Unemployment Insurance Code utilizes a common definition for both a “leasing employer” and a “temporary services employer,” refuting the notion that the definition is limited to leasing employers. This is essentially the same definition set forth in section 201.3, which, again, does not refer to the type of services performed and makes no reference to “leasing employers.” Inter-Con’s arguments that it is “not an employee leasing company” and “provided a service that was separate and distinct from the service provided by CHP itself” accordingly do not establish that it is not a “temporary services employer” under section 201.3.

Inter-Con goes on to argue that courts have applied section 201.3 only to staffing agencies. Again, however, the statue itself makes no reference to “staffing agencies,” and none of the authorities cited by Inter-Con suggest that it is limited to this type of temporary services employer. As urged by plaintiff, since 2016, the statute has specifically contemplated the existence of “temporary services employer[s] in the security services industry.” (Lab. Code, § 201.3, subd. (b)(1)(B) [setting forth requirements for security guard employees of private patrol operators in the security services industry].) This refutes the limitation proposed by defendant.

Ultimately, section 201.3 defines a “temporary services employer” as one “that contracts with clients or customers to supply workers to perform services for the clients or customers and that performs all” of seven specified functions. As urged by plaintiff, in its moving papers, Inter-Con acknowledges that it employs security guards who provide guard services to its clients, and does not introduce evidence addressing whether it performs the functions specified by the statute, which must control the Court’s analysis. Inter-Con accordingly fails to meet its initial burden on this issue.

On reply, Inter-Con introduces new evidence addressing the statutory functions. The Court declines to consider this evidence given that no unusual circumstances justify its belated presentation and plaintiff has not had an opportunity to respond to it. (See Plenger v. Alza Corp. (1992) 11 Cal.App.4th 349, 362, fn. 8 [in ruling on a summary judgment motion, the trial court has discretion to consider new evidence included with a reply where the opposing party “has notice and an opportunity to respond to the new material”; still, “the inclusion of additional evidentiary matter with the reply should only be allowed in the exceptional case”]; San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 312-316 [trial court erred in considering supplemental declaration submitted with reply papers supporting summary judgment motion where opposing party did not have notice and an opportunity to respond].)

B. Whether the 90-Day Exception Applies

Subdivision (b)(6) of section 201.3 provides:

If an employee of a temporary services employer is assigned to work for a client for over 90 consecutive calendar days, this section does not apply unless the temporary services employer pays the employee weekly in compliance with paragraph (1) of subdivision (b).

Defendant contends that because plaintiff was hired to work for its client CHP and in fact worked for that client for over 90 days, this 90-day exemption to the weekly pay requirement applies. However, the statue focuses on the period the employee “is assigned to work for a client,” not the period the employee ultimately works at an assignment in reality. This makes sense because the employer must be able to determine whether an employee is subject to the weekly pay requirement at the outset of his or her assignment, without complete certainty as to how long the assignment will last in fact. This interpretation is consistent with subdivision (b)(1) of section 201.3, which imposes the weekly pay requirement “regardless of when the assignment ends.” It is also consistent with the other exemptions set forth in the statute. For example, subdivision (b)(2) requires employees “assigned to work for a client on a day-to-day basis” to be paid “at the end of each day, regardless of when the assignment ends” and subdivision (b)(3) requires employees “assigned to work for a client engaged in a trade dispute” to be paid at the end of each day as well. These exemptions reflect the absence of any expectation that such assignments will continue beyond a given day; similarly, the weekly pay requirement addresses the uncertainty of assignments not intended to last more than 90 days.

Based on this reasoning, the Court is of the view that the 90-day exemption would apply in a situation where a temporary services employee is assigned to a client under an “evergreen” contract between the temporary services employer and the client, and the employer and employee have the legitimate expectation that the assignment will last for more than 90 days, that is, that that duration is intended and is likely to happen. On the other hand, the exemption would not apply where there is no basis for such an expectation; for example, where an employee is assigned to a client for an expected term of one month, with the potential, but not the expectation, that the assignment could be extended beyond one month. Here, neither defendant’s argument in its moving papers nor its statement of undisputed material facts addresses the parties’ expectations at the time plaintiff was hired and assigned to CHP. The Court is consequently unable to determine whether subdivision (b)(6) applies to plaintiff’s employment based on the undisputed facts presented by Inter-Con. Again, the Court declines to consider new evidence bearing on this issue that was first submitted with Inter-Con’s reply papers.

Because the undisputed facts before the Court do not show that plaintiff’s assignment fell within subdivision (b)(6), Inter-Con fails to meet its initial burden on this issue as well.

V. Conclusion and Order

Defendant’s motion for summary judgment is DENIED.

The Court will prepare the order.