Dezan v. Dignity Health

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Docket Number

No. D081552

Advocates

Janelle Carney Attorney at Law and Janelle C. Carney; Law Office of Joseph Antonelli and Joseph Antonelli; Salusky Law Group and Anna Salusky for Plaintiffs and Appellants. Sheppard, Mullin, Richter &Hampton, Richard J. Simmons, Jason W. Kearnaghan, Hilary A. Habib, Tyler J. Johnson, and Bryanne J. Lewis for Defendants and Appellants.

Judges

CASTILLO, J.

Acts

California Labor Code — Employment Regulation And Supervision — Title of part
Of The Parties To Civil Actions — California Code Of Civil Procedure — Permissive Joinder — Party not consenting to joinder as plaintiff made defendant
California Evidence Code — Judicial Notice — Matters permitting judicial notice
California Labor Code — Employment Regulation And Supervision — General — Effect of collective bargaining agreement
California Labor Code — Employment Regulation And Supervision — General — Eight hour workday; compensation for overtime
California Labor Code — Employment Regulation And Supervision — General — Alternative workweeks
CALIFORNIA CODE OF CIVIL PROCEDURE — OF CIVIL ACTIONS — OF THE PLEADINGS IN CIVIL ACTIONS — SUMMARY JUDGMENTS AND MOTIONS FOR JUDGMENT ON THE PLEADINGS — [Effective 1/1/2025] Motion for summary judgment
California Labor Code — Employment Regulation And Supervision — Payment Of Wages — General Occupations — Itemized statement of wages
California Labor Code — Employment Regulation And Supervision — Payment Of Wages — General Occupations — Disclosure of information regarding working conditions
California Labor Code — Employment Regulation And Supervision — Wages, Hours And Working Conditions — Liquidated damages in action to recover wages
California Labor Code — Employment Regulation And Supervision — General — Meal periods
Labor — Fair Labor Standards — Maximum Hours

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CLAYTON DEZAN et al., Plaintiffs and Appellants, v. DIGNITY HEALTH et al., Defendants and Appellants.

CASTILLO, J.

NOT TO BE PUBLISHED

APPEALS from an amended judgment and orders of the Superior Court of San Bernardino County, No. CIVDS1516658, David S. Cohn, Judge. Affirmed in part, reversed in part, remanded with directions.

Janelle Carney Attorney at Law and Janelle C. Carney; Law Office of Joseph Antonelli and Joseph Antonelli; Salusky Law Group and Anna Salusky for Plaintiffs and Appellants.

Sheppard, Mullin, Richter &Hampton, Richard J. Simmons, Jason W. Kearnaghan, Hilary A. Habib, Tyler J. Johnson, and Bryanne J. Lewis for Defendants and Appellants.

CASTILLO, J.

I. INTRODUCTION

Plaintiffs Clayton Dezan, Cathy Rhinehart, and Shelley Wardrop worked as registered nurses at Community Hospital Of San Bernardino (Hospital), operated by Dignity Health (together, Defendants). They were members of the California Nurses Association (CNA) union and subject to its collective bargaining agreement (CBA). They filed a putative wage and hour class action for hourly Hospital workers, which included a claim under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).

After denying class certification, the trial court granted summary adjudication to Defendants on certain issues. The case proceeded to a Phase I jury trial on the remaining individual claims, a Phase II jury trial on PAGA, and post-trial motions. The court entered an amended judgment in January 2022. Plaintiffs challenge a number of rulings, while Defendants contest the denial of judgment notwithstanding the verdict (JNOV) on the individual meal and rest break claims. We resolve these contentions as follows.

First, we affirm the order denying class certification as to employees outside of Plaintiffs' union. We reverse as to Plaintiffs' adequacy to represent CNA members and remand for further proceedings, as limited herein.

Second, we affirm summary adjudication for Defendants on the CBA overtime exemption and preemption. The CBA met applicable requirements.

Third, we reverse the directed verdict on the PAGA rounding claim and JNOV on the individual rounding claims. Plaintiffs supplied evidence in each trial phase that rounding here was not neutral in application.

Fourth, we reverse the order denying Plaintiffs' motion for liquidated damages, which related to the individual rounding claims.

Fifth, we affirm the denial of JNOV on the individual meal and rest break claims, and conclude any instructional error was harmless. We reverse the entry of nonsuit on the PAGA rest break claim, as the underlying exclusion of Plaintiffs' rest break survey was an abuse of discretion.

Sixth, we reverse the wage statement rulings with respect to derivative liability and remand for further proceedings, and otherwise affirm.

Seventh, we affirm the directed verdict on the PAGA regular rate claim. The record showed the bonus at issue was nondiscretionary.

Accordingly, we affirm the amended judgment and orders in part, reverse in part, and remand for further proceedings.

II. OVERVIEW OF CALIFORNIA WAGE AND HOUR LAW

In California, "'wage and hour claims are today governed by two complementary and occasionally overlapping sources of authority: the provisions of the Labor Code, enacted by the Legislature, and a series of 18 wage orders,'" adopted by the Industrial Welfare Commission. (Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58, 66.) Wage Order 5 "applies to persons employed in the public housekeeping industry," which includes hospitals. (Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 839, fn. 8; Cal. Code Regs., tit. 8, § 11050 (Wage Order 5), subds. 1, 2(P)(4).)

PAGA "'authorizes an employee to bring an action for civil penalties on behalf of the state against his or her employer for Labor Code violations committed against the employee and fellow employees.'" (Kilby v. CVS Pharmacy, Inc. (2016) 63 Cal.4th 1, 23.)

"Because the California wage and hour laws are modeled to some extent on federal laws, federal cases may provide persuasive guidance." (Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555, 562.)

III. CLASS CERTIFICATION

Plaintiffs argue the trial court erred by denying class certification. We conclude the court reasonably denied certification on typicality grounds as to non-CNA employees, but abused its discretion by denying certification as to other CNA members on adequacy grounds. We further conclude certain CNA class claims still cannot proceed at this point and Plaintiffs do not establish any reversible failure to permit substitution.

During the relevant period (November 2011 to July 2017), the Hospital had approximately 2,337 non-exempt employees in 260 job roles across 48 departments. Dezan worked eight-hour shifts in Behavior Health Services. Rhinehart also worked in that position and is now retired. Wardrop worked 12-hour shifts in Labor and Delivery, and is also retired. Other hourly employees belong to the Service Employees International Union (SEIU) and some are not union members. CNA and SEIU employees are covered by different CBAs.

In their complaint and class certification motion, Plaintiffs proposed six classes: overtime, rounding, on-call/standby, meal break, rest break, and wage statement. They also proposed overtime and meal break subclasses. Plaintiffs supplied declarations from themselves, their counsel, and expert Dr. Brian Kriegler, who conducted a study for certification purposes, as well as other evidence (e.g., policies, CBAs, etc.). Defendants opposed certification.

In December 2017, the trial court denied certification. It found "common questions of law or fact . . . predominate," but Plaintiffs "failed to show that they can adequately represent class members who work pursuant to [CBAs]-whether SEIU's or CNA's-or class members who are non- unionized." It also found they did not show typicality for those who were not registered nurses in their departments.

Pursuant to Code of Civil Procedure section 382, a party seeking certification must "establish the existence of both an ascertainable class and a well-defined community of interest among class members." (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.) The "community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class." (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.)

We review an order denying class certification for abuse of discretion. (Sav-On, 34 Cal.4th at pp. 326-327.)

"Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification." (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) A reviewing court generally "will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used"; or "(2) erroneous legal assumptions were made." (Richmond, 29 Cal.3d at p. 470.) We "must examine the trial court's reasons" for its order (Linder, at p. 436), and any "valid pertinent reason" will suffice to uphold it (Caro v. Procter &Gamble Co. (1993) 18 Cal.App.4th 644, 656).

We pause to note certain briefing standards. An appellant must raise all points in the opening brief, as we "generally do not consider arguments raised for the first time in a reply brief." (Raceway Ford Cases (2016) 2 Cal.5th 161, 178.) Here, we deem all belatedly raised points forfeited unless noted. Parties must support all points with reasoned argument and authority, or we may deem them forfeited as well. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.) The same principle applies for record citations. (WFG National Title Ins. Co. v. Wells Fargo Bank, N.A. (2020) 51 Cal.App.5th 881, 894 (WFG).) Nor do we consider record string cites without elaboration, which are not adequate for appellate review. (Stop Syar Expansion v. County of Napa (2021) 63 Cal.App.5th 444, 459.) They essentially ask us to "ascertain the relevant portions" and verify the assertions at issue, which is not our function. (See Billauer v. Escobar-Eck (2023) 88 Cal.App.5th 953, 969.)

We conclude the trial court reasonably determined Plaintiffs lacked typicality for SEIU and non-union members, and need not address adequacy. We address claim-specific issues as warranted herein.

The "typicality requirement's purpose is to assure that the interest of the named representative aligns with the interests of the class .... The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct." (Martinez v. Joe's Crab Shack Holdings (2014) 231 Cal.App.4th 362, 375 [cleaned up].)

The trial court determined Plaintiffs proposed to certify a "variety of 'wage and hour' claims" for "all 2,337 members of the proposed class . . . irrespective of job title, department, or union membership," and could not do so. The court explained the "concerns of CNA members" like Plaintiffs "may differ substantially" from those of SEIU and non-union employees or, at least, they had "not shown that they are the same." It found they did not show their claims were "typical of any potential claims by SEIU members." It also found there was "no showing" Plaintiffs, as "unionized medical professionals," have the "same specific concerns as workers in the kitchen, in housekeeping, or in the accounting department."

Plaintiffs do not establish any abuse of discretion here.

First, Plaintiffs argue the trial court applied the wrong legal standard when it commented they did not show they had the "same specific concerns" as other workers. Viewing the ruling as a whole, the court properly focused on whether class members who were not unionized nurses were subject to the same conduct as Plaintiffs, such that their interests aligned or failed to. (Martinez, 231 Cal.App.4th at p. 375.)

Second, Plaintiffs argue their "claims are typical," and the trial court "cites no evidence demonstrating a meaningful variance." It was their burden to prove typicality, not the court's burden to prove its absence. (SavOn, 34 Cal.4th at p. 326.) Nor were the court's concerns hypothetical, as Plaintiffs suggest. Rather, the court reasonably focused on both union status and the numerous job positions at issue, which implicated different conduct toward class members and a lack of aligned interests. (Martinez, 231 Cal.App.4th at p. 375.) Differences included CBA terms and/or their absence, patient versus non-patient care roles, shift length, standby terms, and status as "[e]mployees in the health care industry" to whom a different "hours worked" definition and other provisions apply. (Wage Order 5, §§ 2(G), (K), 3(B), 11(D).) We grant Defendants' request for judicial notice of California Division of Labor Standards (DLSE) opinion letters regarding the "hours worked" definition. (Evid. Code, § 452, subd. (c); e.g., DLSE Op. Letter 1996.07.12.)

Plaintiffs also argue the court improperly questioned the lack of evidence from other class members, citing Sav-On to assert one declaration can support certification. Sav-On involved a grant of certification, and noted the declaration at issue "was not the only" one from plaintiffs. (Sav-On, 34 Cal.4th at p. 334.) They relatedly claim their declarations asserting all hourly workers had to follow Hospital job requirements and break policies sufficed, citing Franchise Tax Bd. Limited Liability Corp. Tax Refund Cases (2018) 25 Cal.App.5th 369. The trial court there did not reach typicality and, to the extent it commented on it, noted an irrelevant issue (out-of-state income). (Id. at pp. 395-396.) Here, the trial court did rule on typicality and found it lacking for relevant reasons.

Third, Plaintiffs offer reasons why each claim can proceed. We focus on two overarching issues: their attempt to rely on purported class limits and policy uniformity (which is not persuasive), and Defendants' suggestion that some claims are no longer viable (which is).

Plaintiffs contend they limited the overtime class (which related to the CBA overtime exemption) and a CBA-based meal break subclass to union employees. But the trial court found they did not show their claims were typical of either non-union or SEIU workers. Their claim that they proposed patient and non-patient care break subclasses is unpersuasive, too, as we address in our amendment discussion. On uniformity, Plaintiffs argue the Hospital used common policies and paystubs, and all employees have an interest in receiving wages and breaks. The court could reasonably find any such general similarities did not obviate the differences that undermined typicality.

Defendants argue the "total hours worked" paystub claim was resolved against Plaintiffs, referencing summary adjudication. They also argue the regular rate and AWS overtime claims turn on the CBA overtime exemption (also resolved on summary adjudication, as to CNA), and note the court later granted a PAGA-phase directed verdict for non-union employees on the regular rate issue. As Plaintiffs suggest, merits disputes "generally must be postponed until after class certification" is decided. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1023.) But these rulings were merits determinations, separate from certification, and we affirm them. "[N]othing prevents a court from weeding out legally meritless suits prior to certification" upon an appropriate motion, much less after. (Linder, 23 Cal.4th at p. 440.) We also agree with Defendants that a derivative paystub claim can proceed only as to other viable claims.

Fourth, Plaintiffs offer additional reasons they can represent SEIU employees. For example, Plaintiffs cite Aguirre v. Genesis Logistics (C.D. Cal., Mar. 26, 2013, No. SACV 12-00687-JVS (ANx)) 2013 WL 12129648, at p. *7, to argue Hospital union employees are subject to common policies. Aguirre involved a single CBA, and said "all CBA-covered drivers were subject to the same pay provisions" and "performed the same work[.]" (Id. at pp. *2, *7.) SEIU employees had a different CBA, with its own pay provisions, and did different work. Plaintiffs also argue that the "CBAs have substantially similar rest break provisions." As our break discussion will reflect, break claims can involve disputed factual issues involving implementation.

Finally, Plaintiffs argue the federal cases cited by the trial court are inapposite. We disagree.

In Allchin v. Volume Services, Inc. (S.D. Cal., Aug. 4, 2017, No. 3:16-cv-00488-H-KSC) 2017 WL 3337141, union members at two of seven worksites (some with different CBAs) sought to represent hourly employees in an overtime action. (Id. at p. *1.) The court denied certification, including on typicality grounds, stating in part that they failed to address "differences in unionization and the impact of [CBAs]" and there was no "evidence regarding other class members." (Id. at pp. *3, *6.) It also noted CBA-covered plaintiffs may "fail to fully protect the interests of employees not covered by one." (Id. at p. *6.)

Adams v. Inter-Con Security Systems, Inc. (N.D. Cal. 2007) 242 F.R.D. 530 and Romero v. Alta-Dena Certified Dairy, LLC (C.D. Cal., Jan. 30, 2014, No. CV13-04846 R (FFMx)) 2014 WL 12479370 involved non-union plaintiffs, and similarly found union differences could impede representation. In Adams, the court excluded those subject to CBAs, noting CBAs "generally . . . provide their own remedies." (Adams, at p. 539.) In Romero, the court ruled in part that the plaintiff was not typical, because most employees were in unions. (Romero, at p. *2.)

Consistent with these cases, the trial court could fairly conclude Plaintiffs failed to show their claims were typical of non-CNA employees.

The trial court abused its discretion by ruling Plaintiffs were not adequate to represent fellow CNA nurses due to conflicting interests. To the extent the court referenced typicality for these class members generally, its substantive focus was on adequacy and we limit our review accordingly. We do address one typicality finding on the on-call/standby class and a meal break subclass below, which we affirm in part.

"The party seeking class certification has the burden of proving the adequacy of its representation." (Richmond, 29 Cal.3d at p. 470.) "When the party opposing certification presents evidence that indicates widespread antagonism to the suit, adequacy of representation is called into question .... But only a conflict that goes to the very subject matter of the litigation will defeat a party's claim of representative status." (Id. at pp. 470-471 [cleaned up].)

The trial court determined Plaintiffs could not "adequately represent similarly situated employees-Registered Nurses who belong to CNA." It stated collective bargaining involves compromises, and if "agreed upon 'wage and hour' policies are disrupted," then "important non-monetary rights may be jeopardized" in later negotiations. It further stated Plaintiffs did not show other CNA members supported the case, noting they supplied no declarations from them. Neither reason is sound.

First, the notion that wage and hour litigation necessarily disrupts collective bargaining is unpersuasive. The trial court cited Allchin's comment about the plaintiffs' failure to address CBA impact there. (Allchin, 2017 WL 3337141 at p. *3.) But Allchin also focused on "differences in unionization," implying one could potentially represent fellow union members. (Ibid.)

Lerwill v. Inflight Motion Pictures, Inc. (9th Cir. 1978) 582 F.2d 507 held as much. The district court let movie projector technicians proceed with a class action for overtime pay under the FLSA and Section 301 of the Labor Management Relations Act (LMRA). (Id. at pp. 510-511.) The Ninth Circuit affirmed, holding it was proper for them to sue and maintain class treatment. (Id. at p. 511.) It stated that although certain "questions of labor policy" are reserved to the union, "personal rights . . . may be enforced . . . directly under section 301," including "'wages, hours, [o]vertime pay, and wrongful discharge.'" (Ibid.) As for class treatment, it rejected defendant's argument that most members "would not support a suit," noting in part that they could opt-out and that the CBA had expired. (Id. at p. 512.)

The trial court viewed Lerwill as distinguishable, stating an opt-out right was insufficient here "because the claims are inimical to the [CBA] and the compromises" of collective bargaining. Lerwill impliedly rejected this premise, and did so before addressing opt-outs and CBA expiration (the other basis on which the trial court tries to distinguish the case). (Lerwill, 582 F.2d at pp. 510-511.) We also reject Defendants' related concern regarding Plaintiffs' challenge to the CBA overtime exemption. Our affirmance of the exemption ruling renders any such conflict moot.

Second, Plaintiffs argue the trial court erred in placing a burden on them to demonstrate support for the lawsuit, rather than on Defendants to show antagonism. (Richmond, 29 Cal.3d at p. 470.) We agree. Even if certain CBA arrangements could pose a risk of conflict, like seniority systems, Defendants have not shown one exists here. (Cf. e.g., Air Line Stewards &Stewardesses Asso. v. American Airlines, Inc. (7th Cir. 1973) 490 F.2d 636, 640.) A "hypothetical conflict" does not suffice. (Imperial County Sheriff's Assn. v. County of Imperial (2023) 87 Cal.App.5th 898, 910, 914.)

Having concluded Plaintiffs are adequate to represent CNA members, we now address which claims are subject to remand for further proceedings.

First, the trial court found Plaintiffs did not show typicality for "on-call nurses" or "employees . . . provided shortened meal breaks due to . . . rounding," as they "did not fall" in those categories. Plaintiffs' arguments suffice for further proceedings as to the shortened meal break subclass. However, they do not address the lack of on-call/standby work until reply. There, they claim merely that they need not "be subject to every single violation," and, if required, the court erred by not granting leave to amend. This belated and cursory argument is insufficient, and the issue is deemed forfeited. (Badie, 67 Cal.App.4th at pp. 784-785.)

Second, as discussed above, we see no reason to remand for nonviable claims. (See Linder, 23 Cal.4th at p. 440.) We affirm merits rulings on certain issues elsewhere in this opinion (e.g., summary adjudication on CBA overtime exemption, etc.). Others were not raised at all, and those rulings are now final too. (See Tiernan v. Trustees of Cal. State University &Colleges (1982) 33 Cal.3d 211, 216, fn. 4.)

Third, we remand for further proceedings as to claims that remain viable in whole or part, in light of our other conclusions: rounding, meal break, rest break, and derivative wage statement liability.

We disagree with Defendants that a conflict of interest remains for the break claims, because many employees, including Rhinehart and Wardrop, were charge nurses or leads. They argue class members would have to accuse others of not providing breaks, citing criminal liability under the Labor Code. Plaintiffs sued Defendants. Defendants cite no evidence Plaintiffs believed charge nurses engaged in wrongdoing, much less criminal conduct. The cases they cite confirm potential criminal liability exists, which is not in dispute or relevant. (See, e.g., Gentry v. Superior Court (2007) 42 Cal.4th 443, 456.) Further, courts have declined to adopt a "per se rule concerning adequacy . . . where the class includes employees at different levels of an employment hierarchy." (Staton v. Boeing Co. (9th Cir. 2003) 327 F.3d 938, 958.) We are not persuaded by Lampe v. Queen of the Valley Medical Center (2018) 19 Cal.App.5th 832, which relied on distinguishable cases involving direct conflicts among business scheme participants to find meal scheduling implicated a conflict of interest. (Id. at p. 850; see, e.g., J.P. Morgan &Co. v. Superior Court (2003) 113 Cal.App.4th 195, 202, 214-215.)

To the extent Defendants retain other concerns about further class proceedings (e.g., adequacy of Kriegler's survey), it is appropriate for the trial court to exercise its discretion to consider any such issues raised on remand. (See Linder, 23 Cal.4th at p. 435.)

Finally, Plaintiffs argue the trial court erred by "failing to grant [their] request for leave to amend to add a more suitable class representative." Only non-CNA employees remain at issue here. Plaintiffs do not establish they adequately sought such leave or any other reversible error.

Jones v. Farmers Insurance Exchange (2013) 221 Cal.App.4th 986, cited by Plaintiffs, held the "lack of an adequate class representative . . . does not justify" denial of certification, and a "trial court must allow . . . an opportunity to amend" the complaint. (Id. at p. 999.) Payton v. CSI Electrical Contractors, Inc. (2018) 27 Cal.App.5th 832 affirmed denial of leave to find a new representative, stating an "absolute rule" requiring substitution after an inadequacy ruling "would be inconsistent with the general principle that a trial court has discretion in deciding whether to permit an amended complaint." (Id. at p. 848.) It is unclear if these adequacy cases apply, as we affirm as to non-CNA employees on typicality grounds, and they do not support error either way.

In their opening brief, Plaintiffs claim they sought leave to amend, but cite a supplemental trial brief on certification that noted a court's ability to redefine and subdivide a class. They argue on reply they also "implicitly sought leave to amend, by offering to modify several classes," (italics omitted), citing a certification reply brief discussion stating they or the trial court could create patient and non-patient care break subclasses. They also argue on reply, without record citations, that they "offered to eliminate" the non-union issue "by creating sub-classes" and the "obvious remedy" for SEIU, non-union, and non-patient care employees "would be to add representatives[.]"

They cite no authority requiring a court to rule on requests in briefing and the trial court could fairly disregard them. In Romero, the district court denied the plaintiff's reply brief request to exclude union members covered by Labor Code section 514, explaining he had "ample opportunity" to define the class, the new definition was "raised for the first time in his reply brief," and he did not move to amend. (Romero, 2014 WL 12479370, at p. *2.) Plaintiffs' belated remark on reply here that adding non-CNA representatives is an "obvious remedy" does not support error by the trial court.

To summarize, we affirm the trial court's order denying certification as to the SEIU and non-union employees, and do not address them further (other than as part of the workforce, for the PAGA claim). We also affirm the order as to CNA claims that cannot proceed. We reverse and remand for further proceedings as to the remaining CNA claims.

IV. CBA OVERTIME EXEMPTION AND PREEMPTION

Plaintiffs argue the trial court improperly granted summary adjudication to Defendants regarding the CBA overtime exemption and preemption. We disagree.

Two CNA CBAs were in place during the relevant time period. For purposes of this appeal, they were substantially similar, and we refer to them as the CBA. The CBA covered multiple Dignity Health hospitals, and had a side letter with additional terms for Hospital nurses. The CBA had numerous sections, including for wages, overtime, and benefits; breaks; vacation and other leave; discipline; grievances; and staffing. The side letter addressed additional wage, staffing, and other matters, including standby.

Plaintiffs alleged employees who worked 10 and 12-hour shifts under the CBA (like Wardrop) were denied overtime. Defendants' answer included an affirmative defense stating they "relied on a lawful overtime exemption" under Labor Code section 514.

In 2018, the trial court denied cross-motions for summary adjudication on this affirmative defense, but rejected certain of Plaintiffs' arguments. During 2020 summary adjudication proceedings, the court ruled the CBA met the exemption. It also ruled Plaintiffs' overtime claims were preempted under Section 301 of the LMRA.

Under Labor Code section 510, subdivision (a), employees "must be paid overtime compensation for work performed in excess of eight hours in one day, calculated at one and one-half times the regular rate of pay." (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 899.) Employees receive overtime at twice the regular rate for "work in excess of 12 hours" in a day. (Lab. Code, § 510, subd. (a).) Labor Code section 511 covers alternative workweek schedules.

The Labor Code has overtime exemptions, for which the employer generally bears the burden of proof. (Sav-On, 34 Cal.4th at p. 338.)

Labor Code section 514 states: "Sections 510 and 511 do not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage."

A party is entitled to summary adjudication of a cause of action if "there is no triable issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subds. (c) &(f)(1), (2).) "We review an order on a motion for summary adjudication de novo." (Esparza v. Safeway, Inc. (2019) 36 Cal.App.5th 42, 51.)

We also review statutory interpretation issues de novo. (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 529.) The "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." (Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737.) "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." (Ibid.)

Plaintiffs argue the CNA CBA did not meet Labor Code section 514's wage, working conditions, premium pay, and minimum rate requirements. Each argument lacks merit.

The CBA side letter contained wage grids showing hourly rates by calendar year, job position, and years of experience. A side letter section titled "Hours of Work" addressed, among other things, when overtime was paid and at what rate (e.g., "time and one-half . . . the RN's hourly rate"). A separate section titled "Compensation" addressed standby pay, listing "Two Tier Standby Rates" of $5.00 per hour for "[l]ower tier" and $7.50 per hour for "[h]igher tier."

Plaintiffs object that the CBA (i) referred to "regular rate of pay," "straight time," and "base rate," without defining the terms or referencing them in the wage tables; (ii) did not state a wage rate for paid time off (PTO), continuing education, extended sick leave, or work on a particular committee; and (iii) "due to . . . rounding," did not provide wages for all work time. The trial court disagreed. It stated that, while there was "arguably some ambiguity with the [rate] terms," this did not preclude the exemption. It further stated that where overtime was not outlined, straight pay applied, and concerns about rounding went to implementation, not facial validity. The court's ruling was sound.

First, Plaintiffs do not establish definitions or other explanations were required. Labor Code section 514 requires a CBA to "expressly provide[ ] for the wages" of employees. It does not mandate including definitions too. "'[S]o long as the [CBA] establishes regular and overtime hours,'" and satisfies the other requirements, the "exemption established by . . . § 514 is applicable." (Vranish v. Exxon Mobil Corp (2014) 223 Cal.App.4th 103, 112.) Here, the CBA used wage grids to state the regular hourly rates, and other provisions to identify when overtime applied. No more was required.

Second, Plaintiffs do not establish the CBA had to list rates for items like education or committee time. Labor Code section 514 mandates express provision of "wages," not a specific rate for every potential type of work, and the CBA set forth presumptively applicable hourly rates. The Legislature could have required more specificity, as illustrated by the detailed wage statement requirements in Labor Code section 226. It did not.

Third, Plaintiffs argue the "CBAs do not expressly provide for wages" because Defendants' rounding policy meant they "fail[ed] to pay at least 130% of minimum wage for all hours worked." They conflate the wage provision issue with both a separate exemption requirement (provision of a minimum hourly rate) and an implementation issue (whether the rounding system was lawful, such that all work was paid). We address the minimum hourly rate issue shortly, and conclude it is satisfied. But the adequacy of payment is beyond the scope of Labor Code section 514. The statute focuses on what the CBA must "expressly provide" or "provide," not what an employer must do. Thus, the exemption is "conditioned on the terms of the [CBA], not on the actual behavior of the employer." (Thieroff v. Marine Spill Response Corporation (C.D. Cal., Jun. 6, 2022, No. CV 21-6075-DMG (MRWx)) 2022 WL 2965393, at p. *3.)

Plaintiffs next argue the CBA did not satisfy the working conditions requirement because it did not include either compliant break provisions or conditions for standby. These points lack merit.

The CBA stated nurses receive a "rest period of fifteen (15) minutes during each four (4) hours" of work, and those who work shifts of five or more hours are entitled to a meal period. The missed break penalty was one hour at the "employee's base rate of pay."

The side letter contained a "Standby and Callback" section. For regular standby, it said a nurse "must be available to report to work within one hour of notification," and listed the callback order by job position. It defined mandatory standby as being "required to accept standby outside of . . . regularly scheduled work hours," and said it applied in ambulatory care, special procedures, "PACU," dialysis, and surgery. For mandatory standby, a nurse had to "be available to report to work within 30 minutes of notification." For both types, nurses received "one and one-half . . . times their straight-time rate for all hours worked with a 2 hour minimum." Standby rates were addressed separately, as noted.

Plaintiffs do not establish these descriptions were inadequate. We start with the question of what it means to "expressly provide[ ] . . . working conditions" under Labor Code section 514. Plaintiffs contend working conditions are "necessarily broad," include "all existing circumstances affecting labor in the workplace," and must be legally compliant, but they cite no persuasive authority or legislative history. Defendants argue none of this is required. Defendants' interpretation is more consistent with the statutory text and more reasonable.

Labor Code section 514 does not say "all" working conditions or require any level of detail or compliance. Nor it is reasonable to infer such requirements, as they could impede use of the exemption at all. They could also transform a straightforward analysis of whether a CBA contains certain elements into a minitrial on the merits.

District courts have applied the exemption without exhaustive lists of working conditions. Cathcart v. Sara Lee Corp. (N.D. Cal., Nov. 30, 2011, No. C-09-5748 MMC) 2011 WL 5981849, listed four examples: start and end times, seniority, route organization, and paid holidays and vacations. (Id. at p. *3.) Marquez v. Toll Global Forwarding (USA) Inc. (C.D. Cal., Jun. 28, 2018, No. 2:18-cv-03054-ODW (ASx)) 2018 WL 3218102, listed two CBA sections: sanitary conditions and safety. (Id. at p. *2.) In Mauia v. Petrochem Insulation, Inc. (N.D. Cal., Nov. 21, 2018, No. 18-cv-01815-TSH) 2018 WL 6092726, the district court found there were "various provisions throughout the CBA that govern[ed] working conditions," and noted the CBA provided "even more detail" than in Marquez or Cathcart. (Id. at pp. *6-*7.)

The cases cited by Plaintiffs do not help them (Cathcart) or otherwise do not support their point. United States ex rel. Lupo v. Quality Assurance Services, Inc. (S.D. Cal. 2017) 242 F.Supp.3d 1020 addressed the term "[w]orking conditions" in a different statute unrelated to CBAs, which barred discipline for disclosing them. (Id. at p. 1031; Lab. Code, § 232.5.) Valles v. Ivy Hill Corporation (9th Cir. 2005) 410 F.3d 1071 and Vasserman v. Henry Mayo Newhall Memorial Hospital (2014) 65 F.Supp.3d 932 discussed Labor Code section 514 in connection with preemption, but not the requisite scope of working conditions. (Valles, at p. 1080; Vasserman, at p. 954.)

Plaintiffs' remaining arguments here lack merit.

First, Plaintiffs argue the trial court erroneously placed the burden of proof on them. The court did note they did not supply new evidence during the 2020 summary adjudication proceedings. But the court also stated the "evidence is the CBA[ ]," which Plaintiffs do not dispute. Any error was harmless.

Second, Plaintiffs contend the CBA failed to address second meal periods or track the Wage Order language for rest breaks, and said premiums were paid at the base rate (not the regular rate). The trial court determined the terms were "not necessarily inconsistent" with the law, elaborating in part that the lack of "every possible working condition does not render the exemption" inapplicable. Plaintiffs contest this reasoning, arguing a CBA could then just omit any working conditions and that breaks are "basic, fundamental" ones. (Bolding omitted.) But a CBA with no working conditions plainly cannot meet the exemption. At any rate, the CBA here does address breaks, just not in the manner preferred by Plaintiffs.

Third, regarding standby, Plaintiffs contend the CBA did not provide "working conditions regarding standby pay" because it purportedly only listed time to report. They cite the Mendiola factors that courts use to assess when standby pay is compensable under California law, suggesting they should have been addressed in the CBA. (Mendiola, 60 Cal.4th at pp. 840-841.) The trial court found inclusion of reporting times was enough, and we discern no error. Preliminarily, the CBA did have other details, like applicable departments for mandatory standby and callback order. Beyond that, Plaintiffs again conflate issues, similar to their rounding argument above: the working condition description issue here, a separate exemption requirement (provision of a minimum hourly rate), and implementation (whether standby was properly treated as noncompensable). Plaintiffs do not show the standby description was inadequate.

Plaintiffs also argue the CBA does not "expressly provide[ ] 'premium wage rates for all overtime hours worked,'" including standby time, time after returning from standby, and activities like committee participation. Labor Code section 514 requires a CBA to provide premium wages, not expressly provide them, and their position lacks merit regardless.

In Vranish, 223 Cal.App.4th 103, the court of appeal rejected the argument that a qualifying CBA had to provide for overtime as defined in section 510. (Id. at pp. 106, 110.) The court held parties are "free to bargain over not only the rate of overtime pay, but also when overtime pay will begin," including "within a given week." (Id. at p. 111, italics omitted and cleaned up.) Flowers v. Los Angeles County Metropolitan Transportation Authority (2015) 243 Cal.App.4th 66 applied Vranish in affirming application of a rest break exemption that also required premium rates for overtime. (Id. at p. 83.) The CBA there excluded "certain tasks" from overtime, such as completing a daily log and attending a particular training. (Id. at p. 84.) The court agreed with the defendant that CBA parties may "exclude the specified tasks" from their definition of overtime. (Id. at pp. 84-85.)

Here, the CBA did have premium rates for overtime. Plaintiffs' objection is that certain tasks are, or may be, excluded from overtime. The trial court rejected their concern, stating parties are "free to outline the number of hours and the types of work that qualify for overtime." This reasoning is consistent with Vranish and Flowers, and Plaintiffs' arguments are unpersuasive.

First, Plaintiffs argue the CBA did not provide premium pay for standby. Even if standby were work time under the CBA, the parties could have excluded it from overtime. Curtis v. Irwin Industries, Inc. (9th Cir. 2019) 913 F.3d 1146, which involved an oil rig, held a CBA that did not provide overtime for 12-hour standby shifts complied with the exemption, citing Vranish and Flowers. (Id. at pp. 1154-1155.) We note the CBA did appear to provide premium pay for callback shifts of two hours or more.

Second, Plaintiffs maintain the CBA did not satisfy the exemption because it excluded education and committee participation from overtime, citing Angeles v. U.S. Airways, Inc. (N.D. Cal., Feb. 19, 2013, No. C 12-05860 CRB) 2013 WL 622032. In Angeles, the employer excluded certain work shifts (i.e., traded shifts). (Id. at p. *5.) Even assuming such treatment limits use of the exemption, employers remain free to define the scope of overtime as to ancillary tasks. (See Flowers, 243 Cal.App.4th at p. 85.)

Finally, Plaintiffs argue the CBA failed to pay 130 percent of minimum wage as required, based on the sub-minimum wage standby rates and rounding. We already concluded rounding is an implementation issue, and reach a similar conclusion here as to standby pay.

Labor Code section 514 requires a CBA to "provide[ ] . . . a regular hourly rate of pay . . . of not less than 30 percent more than the state minimum wage." On its face, the statute mandates only a particular minimum rate. It "does not require courts to determine whether any given employee . . . was paid for every regular hour worked" at that rate. (Mauia, 2018 WL 3241049 at p. *5.) Thus, "'[s]o long as the [CBA] establishes . . . the regular rate of pay is more than (30) percent above the minimum wage,'" section 514 applies. (Vranish, 223 Cal.App.4th at p. 112.)

Plaintiffs' concern is that standby is not treated as work time, and should be under the Mendiola factors. They focus on employer control, such as whether employees actually engage in personal activities. (See Mendiola, 60 Cal.4th at pp. 840-841.) Defendants argue the applicable "hours worked" definition omits the control standard. We need not resolve this apparent disagreement. By agreeing to the standby rates here, the CBA parties impliedly concurred standby was not work. Even under a control-based standard, this was not necessarily unreasonable; for example, reporting times ranged from 30 to 60 minutes. (See Gomez v. Lincare, Inc. (2009) 173 Cal.App.4th 508, 524.) If the CBA parties were wrong, employees may have a claim. That does not mean the CBA failed to provide the required "regular hourly rate" for the exemption.

Plaintiffs do not persuade us otherwise. They simply maintain the standby time is compensable, citing language from Hospital policies and a distinguishable district court case, Baltazar v. Ace Parking Management, Inc. (S.D. Cal., Mar. 14, 2022, No. 21-cv-01228-H-AHG) 2022 WL 1589297. There, the CBA did not provide the required hourly rate for all covered employees, and the issue was whether it had to. (Id. at p. *3.) No such issue is before us.

Plaintiffs argue the trial court erred in relying on the CBA exemption to rule the LMRA preempted their overtime claims. We disagree.

Under Section 301 of the LMRA, "[s]uits for violation of contracts between an employer and a labor organization" may be brought in federal district courts. The Ninth Circuit developed the two-step Burnside test to analyze Section 301 preemption. (Curtis, 913 F.3d at pp. 1152-1153, citing Burnside v. Kiewit Pac. Corp. (9th Cir. 2007) 491 F.3d 1053.) If the "right exists solely as a result of the CBA," preemption applies and the analysis ends. (Burnside, at p. 1059.) If the "right exists independently of the CBA," a court must consider if it is substantially dependent on an analysis of the CBA. (Ibid.)

In Curtis, the oil rig case, the plaintiff's overtime claim "fail[ed] at step one." (Curtis, 913 F.3d at p. 1155.) Curtis explained the plaintiff's CBAs satisfied Labor Code section 514, and the "claim for overtime pay is controlled" by them. (Ibid.) Thus, because the plaintiff's overtime right existed solely from the CBAs, the claim was preempted. (Ibid.)

The trial court properly found preemption. It correctly concluded the CBA satisfied Labor Code section 514, as just discussed. Thus, Plaintiffs' overtime rights existed solely as a result of the CBA, and, as in Curtis, their overtime claims were preempted at step one of the Burnside test. (Curtis, 913 F.3d at p. 1155.)

V. ROUNDING

Plaintiffs contend the trial court erred by granting JNOV on their individual rounding claims and a directed verdict on their PAGA rounding claim. We agree.

The trial court issued its directed verdict on trial Phase II (PAGA), before its JNOV ruling on Phase I (individual). For clarity, we start by describing some factual background and expert evidence chronologically. We then provide an overview of rounding law and proceed to the rulings.

The Hospital used two timekeeping systems during the relevant period. Both tracked time to the minute and rounded shift entries to the nearest quarter-hour (i.e., the rounding system). No time entry was rounded by more than seven minutes.

Plaintiffs alleged rounding resulted in underpayment, including due to other Hospital policies. Under the attendance and punctuality policy, tardiness was "failure to arrive, clock in, and begin work on time," and failure to be at work consistently was subject to discipline up to termination. The timekeeping policy said employees "should record their start time no earlier than seven (7) minutes before the scheduled shift" or "later than seven (7) minutes" after shift end, absent preauthorized overtime. A lack of preauthorization could lead to discipline up to termination under the overtime policy.

The Phase I jury trial on Plaintiffs' individual claims started in August 2021. Witnesses included Plaintiffs' expert, Dr. Brian Kriegler; Defendants' expert Dr. Scott Sternberg; the Hospital's director of human resources, Deena Marano; and Plaintiffs.

Kriegler testified the rounding system was not neutral from a statistical perspective. His data included percentages of (i) shifts with early versus late entries; (ii) pay periods with rounding-based underpayment; and (iii) employees disadvantaged due to rounding. 59.6 percent of employees were disadvantaged. Kriegler acknowledged Sternberg found a shortage of .07 percent of hours (and he found .06 percent), but opined this was a "distraction." He said the hours included time not subject to rounding, and it was "not very thorough to just look at one number." Kriegler further opined there was "virtually no chance" this rounding system could flip in favor of employees, explaining his probability calculation showed the chance of getting a 59.6 percent disadvantage with neutral rounding was "less than one in a trillion."

Sternberg confirmed he found a 0.07 percent hours difference, and testified that comparing rounded and unrounded hours was "more than enough" to tell the rounding system was fair as applied.

We address Marano and Plaintiffs' testimony below. The jury entered a special verdict for Plaintiffs on their rounding claims.

The case proceeded to the Phase II jury trial on PAGA in September 2021. Kriegler, Sternberg, and Marano again testified, as did a statistician for Defendants, Stefan Boedeker.

Kriegler again testified 59.6 percent of employees were disadvantaged and the chances of the system being neutral were "one in a trillion." He used a coin toss example to explain his probability calculation. He further testified that for 54.8 percent of pay periods, an employee was disadvantaged.

Sternberg testified the rounding system was neutral, and stated 51.1 percent of employees lost .26 percent of hours or fewer. He questioned Kriegler's approach, including the significance of the 59.6 percent disadvantage number. He also opined the rounding advantage could flip, but he did not compute the probability.

Boedeker disagreed with Kriegler's use of a probability analysis, opining in part that unlike a coin toss, many factors impact time clock use. He did not evaluate Sternberg's view that rounding could flip to favor employees. On redirect, Kriegler said he disagreed with Boedeker, maintained that whether an advantage can flip is a probability issue, and defended his approach.

Defendants moved for a directed verdict, which the trial court granted in October 2021. In December 2021, the court granted JNOV on Plaintiffs' individual rounding claims.

In See's Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889 an employee challenged a nearest-tenth rounding policy. (Id. at p. 892.) Applying the federal regulatory standard, this court held an employer is entitled to use such a rounding policy if it is "fair and neutral on its face and . . . used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked." (Id. at p. 907 [cleaned up].) We stated that whether rounding is "biased against employees is a factual issue and not a legal one." (Id. at p. 906.)

In 2022, Camp v. Home Depot U.S.A., Inc. (2022) 84 Cal.App.5th 638 reversed summary judgment on a rounding claim, and invited the California Supreme Court to decide the validity of the rounding standard in See's Candy. (Id. at pp. 644, 660-661.) The Court granted review. (Rev. granted Feb. 1, 2023, S277518.) Woodworth v. Loma Linda University Medical Center (2023) 93 Cal.App.5th 1038 also reversed summary adjudication on a rounding claim, and expressed agreement with Camp. (Woodworth, 93 Cal.App.5th at pp. 1045-1046, review granted Nov. 1, 2023, S281717.)

The parties disagree whether Camp and Woodworth apply here, including in light of the "hours worked" standard in Wage Order 5. We need not resolve these issues. Plaintiffs establish the trial court erred in taking the rounding issues from the jury at each phase, regardless of which rounding standard applies.

We start with the PAGA directed verdict ruling. A court can only grant a directed verdict when "disregarding conflicting evidence, and indulging every legitimate inference" for the "party against whom the verdict is directed," there is "no evidence of sufficient substantiality to support a verdict" for such party. (Newing v. Cheatham (1975) 15 Cal.3d 351, 358-359.) A court cannot "weigh the evidence" or "consider the credibility of witnesses." (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 629.)

Defendants cite a limited exception to these standards, which may apply when one rebuts a plaintiff's showing with "clear, positive[,] and uncontradicted evidence" that is "not subject to doubt[.]" (Hicks v. Reis (1943) 21 Cal.2d 654, 660.) They presented no such rebuttal here.

We decide "de novo whether sufficient evidence was presented to withstand a directed verdict." (Magic Kitchen LLC v. Good Things Internat., Ltd. (2007) 153 Cal.App.4th 1144, 1154.)

We conclude Plaintiffs supplied evidence of sufficient substantiality that the rounding system was not neutral as applied, and the trial court erred in finding otherwise.

The trial court determined Plaintiffs failed to establish systematic disadvantage. The court criticized Kriegler for presuming rounding "must balance out," indicating an "unfavorable balance must be systematic," his probability analysis did not bear on the issue, and it was otherwise flawed. (Italics omitted.) The court said the question was whether there was evidence the "tardiness policy systematically influenced employees" to start early, and Plaintiffs supplied no such evidence. (Italics omitted.) The court also found they could not rely on Kriegler's employee disadvantage percentage, because Sternberg's hour loss percentage was dispositive under David v. Queen of Valley Medical Center (2020) 51 Cal.App.5th 653. The court erred in multiple respects.

First, the trial court demanded more than the law requires. In See's Candy, we explained a rounding policy is unlawful if it "systematically undercompensates employees, such as where the . . . rounding policy encompasses only rounding down." (See's Candy, 210 Cal.App.4th at p. 902 [cleaned up].) We then held, as noted above, rounding could be used if it "'will not result, over a period of time, in failure to compensate'" all time worked. (Id. at p. 907.) State and federal courts have applied this standard. (Donohue, 11 Cal.5th at p. 72.) The Eighth Circuit has similarly held rounding is permissible if it "'will not result' in systematic or routine underpayment 'over a period of time[.]'" (Houston v. Saint Luke's Health System, Inc. (8th Cir. 2023) 76 F.4th 1145, 1152-1153.)

Thus, to prove the rounding system was unlawful, Plaintiffs had to offer evidence of systematic underpayment over time. They did so.

Second, the trial court improperly weighed the expert evidence by rejecting Kriegler's opinions in favor of Defendants' experts. (Howard, 72 Cal.App.4th at p. 630.) It is "for the jury to resolve the conflict between . . . any competing expert opinions." (Davis v. Honeywell International Inc. (2016) 245 Cal.App.4th 477, 480.)

Regarding Kriegler's probability analysis, the trial court found it was flawed because, in substance, clock entries are not random-essentially crediting the view of Defendants' statistician, Boedeker. But Kriegler testified he disagreed with Boedeker and defended his approach. Further, despite Sternberg claiming the system advantage could flip, neither he nor Boedeker analyzed that. This competing expert testimony presented a dispute for the jury.

Addressing Kriegler's testimony that 59.6 percent of employees were disadvantaged by rounding, the trial court found the "overall difference between rounded time and unrounded time, hospital-wide . . . is only 0.07%" citing Sternberg's hourly percentage difference. The court said this was "substantially less" than the .26 percent in David and "perforce statistically meaningless." The court further stated a "majority of the employees, 51.1%, had a loss of 0.26% or less of their total time," again citing Sternberg. (Italics omitted.) But Kriegler testified Sternberg's focus on hours was a distraction. In short, the experts again disagreed.

Third, and relatedly, the trial court's adoption of a statistical relevance threshold from David was misplaced. David was an individual case, in which the defense expert found the plaintiff lost 0.26 percent of hours, or 7.75 hours. (David, 51 Cal.App.5th at pp. 657, 665.) Affirming summary judgment for the defendant, the court said the plaintiff sometimes gained minutes and pay, and sometimes lost them, and the "overall loss of 0.26 percent in compensation over the relevant time period is statistically meaningless." (Id. at p. 664.) It noted her expert did not analyze her timesheets, among other issues. (Id. at p. 665, fn. 4.) It did not hold a 0.26 percent difference in hours or pay was always meaningless-much less in a case, as here, with representative claims and competent plaintiffs' expert testimony. Indeed, two district courts declined to apply David in class actions, with thousands of hours at issue. (See Feltzs v. Cox Communications Cal., LLC (C.D. Cal., Oct. 27, 2021, No. SACV 19-2002 JVS (JDEx)) 2021 WL 5050259, at p. *7; Bebber v. Dignity Health (E.D. Cal., Sept. 6, 2022, No. 1:19-cv-00264-DAD-EPG) 2022 WL 4080956, at p. *7.)

AHMC Healthcare, Inc. v. Superior Court (2018) 24 Cal.App.5th 1014 and Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership (9th Cir. 2016) 821 F.3d 1069, also cited by the trial court (Corbin in its JNOV order), are distinguishable. In AHMC, stipulated expert findings showed employees gained thousands of hours, though a slight majority lost time at one site and the plaintiffs lost hours. (Id. at pp. 1018-1019, 1027.) The court held "where the system . . . overcompensates employees overall by a significant amount," a plaintiff "must do more . . . than show . . . a bare majority . . . lost minor amounts of time over a particular period." (Id. at p. 1028.) Here, there is no evidence of overcompensation, the expert evidence is in dispute, and Plaintiffs' expert testified to a nearly 60 percent disadvantage unlikely to ever flip. Corbin, like David, involved an individual claim by one employee who lost minimal time. (Corbin, 821 F.3d at pp. 10721073.)

Finally, Plaintiffs did offer evidence Hospital policies contributed to the rounding disadvantage. Human resources director Moreno confirmed the tardiness and unauthorized overtime rules were in effect. Kriegler testified "clocking in early happens more often than clocking in late," and also more often than early clock-outs. The jury could infer that, because noncompliance could lead to discipline up to termination, this motivated workers to clock in early and out on time, but not in so early, or out so late, as to incur overtime. The trial court discounted Plaintiffs' evidence, noting most employers have tardiness policies and there was no evidence of discipline. Even accounting for those points, the jury could still conclude the policies influenced clock behavior.

We now turn to Plaintiffs' individual claims. A court may grant a motion for JNOV "only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence in support." (Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68.) The court "cannot weigh the evidence . . . or judge the credibility of witnesses." (Hauter v. Zogarts (1975) 14 Cal.3d 104, 110.) Our standard of review, "[a]s in the trial court, . . . is whether any substantial evidence-contradicted or uncontradicted-supports the jury's conclusion." (Sweatman, at p. 68.)

Substantial evidence supports the jury's verdict for Plaintiffs on their individual rounding claims. The trial court erred in granting JNOV.

We start with additional factual context. We described some expert evidence from Phase I above. Kriegler also testified Plaintiffs clocked in early most of the time, and early clock-outs did not balance this completely. Dezan lost 171.94 hours, Rhinehart lost 30.96 hours, and Wardrop lost 25.64 hours. Sternberg said he did not focus on their results, as the issue was whether the system was fair, but he was aware they lost time and calculated the amounts.

As she did in the PAGA phase, human resources director Marano confirmed the tardiness and overtime rules remained in effect. Plaintiffs testified they usually clocked in early or tried to do so. Dezan explained, "I know there's a tardy policy, and I don't want to get in trouble," noting he was aware of coworkers being reprimanded. As for shift end, Dezan and Wardrop testified they tried not to go past seven minutes; Dezan said it would "put you in overtime" and he had "been talked to," while Wardrop said she would have to call a superior and document it. Rhinehart testified she had been counseled for clocking out late.

In granting JNOV, the trial court noted courts can look at "multiple datapoints," citing AHMC, and described factors identified by the district court in Feltzs. Yet, the court stated, "Nevertheless, David[ ] appears to establish a threshold whereby anything less than a 0.26% difference is, as a matter of law, neutral as applied." (Italics omitted.) The court found Wardrop's hour difference was less than 0.26 percent. For Dezan and Rhinehart, whose differences exceeded 0.26 percent, the court found, in part, that most time was due to early clock-ins and there was no evidence they were disciplined for tardiness.

The trial court's JNOV ruling shares flaws with its PAGA directed verdict: relying on David for a statistical relevance threshold and, impliedly, crediting Sternberg's expert opinions over Kriegler's; requiring Plaintiffs to prove more than systematic underpayment over time; and discounting their policy-related evidence. These issues support reversal, for both the reasons discussed above and as set forth here.

First, the trial court recognized, but did not apply, the principle that multiple factors may bear on whether a rounding system is neutral. (AHMC, 24 Cal.App.5th at p. 1028; Feltzs, 2021 WL 5050259 at p. *4.) These factors include whether rounding "increased or decreased the compensation of the class as a whole"; the "relative magnitude of any net change" in pay; the "percentage of shifts" rounded in each side's favor; and the percentage of employees with a "net increase or decrease" in pay from rounding. (Feltzs, at p. *5.) This was error. As Plaintiffs explain, while Sternberg focused on one data point, Kriegler presented evidence as to other factors that the jury could properly consider.

Second, the trial court erred in granting JNOV as to Wardrop because her hour difference was under 0.26 percent. By relying on this threshold from David, the court disregarded Plaintiffs' showing that the rounding system was not neutral, including Kriegler's statistical evidence, Marano's testimony that the policies remained in place, and Wardrop's testimony that she usually clocked in early. Defendants elsewhere note her arrival depended on traffic and, later, seeking an electric car parking spot. That was evidence for the jury to consider, too.

Third, the trial court granted JNOV as to Dezan and Rhinehart based on their purported failure to supply evidence that the tardiness policy was the reason for their early clock-ins and lost time. The court focused on the lack of discipline, and noted Plaintiffs "frequently did clock in late . . . suggesting that the early clock-ins were not due to concerns about tardiness." (Italics omitted.) The court again discounted their evidence. Here, that included Dezan's testimony he was aware of the tardiness policy and did not want to get in trouble, and he and Rhinehart saying they were talked to about clocking-out late. Whether concerns about policy compliance were genuine was a credibility issue for the jury. (Hauter, 14 Cal.3d at p. 110.)

The trial court's JNOV ruling on rounding is reversed, with directions to enter judgment for Plaintiffs. The PAGA directed verdict on rounding is reversed for further proceedings.

VI. LIQUIDATED DAMAGES

After Plaintiffs prevailed on their rounding claims, but before the trial court granted JNOV, they moved for liquidated damages on the unpaid minimum wages. The court denied the motion on the grounds that Defendants acted in good faith. We conclude the court failed to properly exercise its discretion and remand for further proceedings.

Labor Code section 1194.2, subdivision (a), provides that for certain actions to recover unpaid minimum wages, an "employee shall be entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon." They are "in effect a penalty equal to the amount of unpaid minimum wages." (Martinez v. Combs (2010) 49 Cal.4th 35, 48, fn. 8.) However, under Labor Code section 1194.2, subdivision (b), if the employer "demonstrates to the satisfaction of the court" that it acted in "good faith" and had "reasonable grounds for believing" the act "was not a violation of any provision of the Labor Code relating to minimum wage," the court "may, as a matter of discretion, refuse to award liquidated damages" or award a lesser amount.

"All exercises of discretion must be guided by applicable legal principles, . . . which are derived from the statute under which discretion is conferred." (Farmers Ins. Exchange v. Superior Court (2013) 218 Cal.App.4^th 96, 106.) A "discretionary order based on an application of improper criteria or incorrect legal assumptions is not an exercise of informed discretion and is subject to reversal." (Ibid.)

The trial court's order denying liquidated damages stated the "question for this motion is whether good faith is demonstrated," said "[i]t is," and listed three reasons. They were: (1) the rounding system was facially neutral; (2) the overall hour difference was statistically meaningless under David; and (3) there was no evidence Defendants took "action causing plaintiffs to clock in early or to avoid clocking out early" citing a lack of evidence for enforcement or consistent early clocks-ins.

In other words, the trial court essentially determined Defendants acted in good faith because it did not engage in unlawful rounding, for some of the same reasons we rejected above. We note, however, Kriegler did provide evidence Plaintiffs regularly clocked in early, including Dezan at 96.4% of the time.

The more significant issue is that the trial court's reasoning reflects it failed to exercise its discretion consistent with Labor Code section 1194.2, subdivision (b). (Farmers, 218 Cal.App.4th at p. 106.) Although the court identified good faith as an issue, it appeared to treat it as largely coextensive with liability. This approach was neither supported by the subdivision text (which does not mention liability), nor reasonable. An employer who is not liable in the first place does not need to prove good faith. Further, the court did not address whether Defendants had "reasonable grounds for believing" their rounding system did not violate Labor Code rules relating to minimum wages.

VII. MEAL AND REST BREAKS

Plaintiffs argue the trial court used an incorrect rest break instruction in Phase I, though they prevailed on their individual meal and rest break claims. Defendants claim the denial of JNOV on those claims was error. Plaintiffs further argue the court erred in Phase II by excluding their rest break survey and granting nonsuit on the PAGA rest break claim. We conclude only the Phase II arguments by Plaintiffs have merit.

Hospital policies and the CBAs provided for meal and rest breaks, and there were procedures for reporting noncompliant breaks and requesting missed break premiums. Whether the Hospital actually provided compliant breaks, and whether its reporting mechanism was adequate, were disputed issues for trial.

"Under California law, employers must generally provide . . . one 30-minute meal period that begins no later than the end of the fifth hour of work and another 30-minute meal period that begins no later than the end of the 10th hour of work." (Donohue, 11 Cal.5th at p. 61, citing Lab. Code, § 512.) Wage Order 5 includes this standard, along with certain waiver provisions. (§ 11(A), (D).) An "employer is liable only if it does not provide . . . the opportunity to take a compliant meal period." (Donohue, at p. 78.) The "employer is not obligated to police meal breaks and ensure no work . . . is performed." (Brinker, 53 Cal.4th at p. 1040.)

California law also mandates rest breaks. (Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5th 257, 272; Lab. Code, § 226.7, subd. (b).) Wage Order 5 provides for a "rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof" and states the rest periods "insofar as practicable shall be in the middle of each work period." (§ 12(A).)

Under Labor Code section 226.7, subdivision (c), an employer who fails to provide a meal or rest break "shall pay the employee one additional hour of pay at the employee's regular rate" of pay. The employer also must pay for work during meals that it knew or reasonably should have known about. (Donohue, 11 Cal.5th at p. 68.)

We start with Phase I and the individual claims. Plaintiffs testified, as did another nurse and multiple managers. As described below, the employees explained breaks were missed due to understaffing and, although they raised the staffing issue, they did not report all missed breaks- including because of pressure not to.

The trial court instructed the jury in part that "Every employer shall authorize and permit all employees to take rest breaks, which insofar as practicable shall be in the middle of each period. The authorized rest break time should be based on the total hours worked daily at the rate 10 minutes net rest time per 4 hours. Employees must be authorized and permitted to take 10 minutes of rest time for shifts of 3 and one-half hours to 6 hours in length, 20 minutes of rest time for shifts of more than 6 hours, and up to 10 hours in length. 30 minutes of rest time for shifts of more than 10 hours up to 14 hours in length and so on."

During closing arguments, Defendants' counsel argued the law "doesn't say you have to break [rest time] up in three 10s" or "can't break it up in two 15s." He said splitting up the time is "preferred," but "if it's not reasonable . . ., you don't have to." Plaintiffs' counsel maintained Defendants were supposed to provide a break every four hours.

The jury returned a special verdict for Plaintiffs. Defendants moved for JNOV, which the trial court denied.

Plaintiffs argue the rest break instruction was legally erroneous. They do not establish reversible error.

"Instructional error in a civil case is not ground for reversal unless it is probable the error prejudicially affected the verdict." (Red Mountain, LLC. v. Fallbrook Public Utility Dist. (2006) 143 Cal.App.4th 333, 359.) Thus, even if error exists, "we must determine whether it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of error." (Weiner v. Fleischman (1991) 54 Cal.3d 476, 490.)

Plaintiffs assert the trial court "erred by instructing the jury that Defendants could routinely aggregate rest breaks - without requiring [them] to present evidence as to the facts and circumstances necessary to aggregate breaks." The instruction did not use the term aggregate. It did state "rest breaks . . . insofar as practicable shall be in the middle of each period," and closing arguments alerted the jury this issue was in dispute. (Italics added.)

Regardless, any error was harmless. The jury found Plaintiffs proved their rest break claims, and we affirm the denial of JNOV. They do not show they would have achieved a more favorable result absent the alleged error. (Weiner, 54 Cal.3d at p. 490.)

Plaintiffs maintain they suffered prejudice because "during the Phase 2 trial, the trial court relied on the erroneous jury instruction to exclude [their] expert survey." We view these as distinct issues. To the extent the court misconstrued rest break law in ruling on the PAGA-phase survey, this supports error as to the PAGA claim.

Defendants argue the trial court erred in denying JNOV on Plaintiffs' individual meal and rest break claims. We disagree.

The trial court first found there was substantial evidence the "units were chronically understaffed," employees were "often unable to take breaks," and the issue was raised repeatedly, including at staff meetings. It stated the jury "could reasonably conclude . . . legally-compliant meal and rest breaks were not, in fact, always provided due to understaffing." (Italics omitted.) The court then rejected Defendants' view that the law just required premiums as a result. It stated that while there was no evidence Plaintiffs were told not to request premiums, Dezan testified they "were pressured to not fill out these missed meal breaks or missed breaks." The court found this testimony was substantial evidence for Plaintiffs' claims, and defeated Defendants' reliance on their reporting system to limit liability.

The trial court properly viewed the evidence in the light most favorable to Plaintiffs, and the record supports each step of its analysis. (Sweatman, 25 Cal.4th at p. 68.)

First, there was ample testimony Defendants did not always provide compliant breaks and employees raised concerns about understaffing.

On staffing, both Plaintiffs and managers testified nurses could not leave patients unattended and sometimes could not take breaks.

On complaints, Dezan, who worked in behavioral health, testified he and others raised the understaffing issue, including at staff meetings. Rhinehart, also in behavioral health, testified in part that she raised the issue for charge nurses, understaffing came up often at committee meetings, and inability to get breaks "came up every time." Although Sharon Pudlo, behavioral health director, said she did not hear concerns about breaks, former unit manager William Crowder acknowledged getting a complaint. Wardrop, a labor and delivery nurse, said understaffing and breaks were frequently discussed at staff meetings. She filled out union grievances and objections, but "never got a . . . resolution" from them. Darla Olds, a labor and delivery shift manager, agreed they would discuss staffing at meetings, but did not remember complaints about breaks.

An "employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks," or by "imped[ing] or discourag[ing]" them. (Brinker, 53 Cal.4th at p. 1040.) Such practices may include scheduling that makes breaks difficult. (See id., at p. 1040, discussing Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1304-1305, et al.) Nor does the press of hospital operations excuse compliance. Alberts v. Aurora Behavioral Health Care (2015) 241 Cal.App.4th 388, involving certification of break claims, explained the "mere existence of a lawful break policy" does not preclude liability in the "face of actual contravening policies and practices that, as a practical matter, undermine the written policy and do not permit breaks." (Id. at p. 406.)

Second, there was also substantial evidence employees felt pressure or other reasons not to report missed breaks.

Dezan testified about feeling pressure, as the trial court found. He also said it was "frowned upon" to record missed breaks, noting at staff meetings they would "tell us you have to find a way to take it," and "you don't want to cause more trouble" for yourself. Jennifer Sanchez, another behavioral health nurse, said she did not always seek a premium for missed rest breaks, because "that would be almost sometimes daily." Rhinehart, also in behavioral health, submitted a request "one time or something," and the jury could infer it was for similar reasons as Dezan and/or Sanchez. When Wardrop was asked why she did not report missed rest breaks more often, she said it "seemed kind of trivial and . . . was frowned on." She stated, "We were expected to work hard, work fast, not complain. A little bit of it is being a nurse and a big part of it was the culture[.]" She also said she requested a penalty for interrupted meals "[a]bout half and half . . . usually not . . . because it was so common."

Thus, the jury could find Plaintiffs failed to report all of their missed breaks not because they chose to work through them or to disregard policy, but because Defendants' conduct impeded reporting.

Defendants do not persuade us to reach a different result. As an initial matter, they do not address understaffing until reply, where they claim it "does not change the analysis," assert they "took considerable steps to comply with California's nurse-to-patient staffing ratios," and urge us to focus on their reporting system. None of this is persuasive, including because their reporting system arguments lack merit. We explain.

First, Defendants argue it was undisputed they had a "successful and lawful system for Plaintiffs to request and receive premium payments." We disagree. It is true they had a system for reporting missed breaks, as contemplated in Donohue, 11 Cal.5th at p. 77. But it remained their duty to "ensure that employees use the [reporting] mechanism properly," and to maintain accurate records. (Id. at pp. 77-78.) By presenting evidence Defendants knew breaks were being missed, and employees felt unable to report at least some of them, Plaintiffs raised a disputed issue as to the reporting system's adequacy.

Defendants do not address the testimony about pressure not to report until reply, as part of a newly raised point about presumptions based on meal break records. We deem the point forfeited (Raceway, 2 Cal.5th at p. 178), but elect to address their view on pressure not to report. They claim Plaintiffs' "general, purely subjective belief" was "objectively unreasonable" without "direct evidence that a supervisor told them not to report," and insufficient under the principles in Brinker and Donohue. They do not establish Brinker and Donohue considered this particular issue, and we see nothing unreasonable or insufficient about the employee testimony here.

Defendants also cite FLSA cases, which do not aid them. Allen v. City of Chicago (7th Cir. 2017) 865 F.3d 936 affirmed judgment after trial for the employer, still said discouragement could be "subtle," and noted evidence in the plaintiffs' favor (e.g., they did not seek overtime due to employer culture or concern for their jobs). (Id. at pp. 938-939, 945-946.) In White v. Baptist Memorial Health Care Corp. (6th Cir. 2012) 699 F.3d 869, a meal period case, the majority affirmed summary judgment where a contradictory postdeposition declaration did not establish reporting was discouraged, while the dissent noted evidence of actual knowledge of missed breaks. (Id. at pp. 872, 877, 883.) Here, there was trial testimony as to such pressure. Additionally, Defendants seek judicial notice of United States Department of Labor Field Bulletin, No. 2020-5, which concerned remote work and discussed Allen and White. We grant notice, mainly to note it confirms an employer "cannot implicitly or overtly discourage or impede accurate reporting." (Italics added.)

Second, Defendants maintain they cannot be liable for missed breaks they did not know about, and by electing not to report at times, Plaintiffs deprived them of a chance to comply. But there was no real dispute Defendants knew breaks were being missed, and Plaintiffs supplied evidence they did not voluntarily elect to skip reporting.

Nor are we persuaded by Defendants' assertion on reply that employees may not request only some premiums, lest they "ambush[ ] employers" with claims. Although employees "cannot manipulate [employer] flexibility . . . to generate . . . liability" (Brinker, 53 Cal.4th at p. 1040), employees could feel pressure to report fewer breaks. Defendants cite no authority that break compliance is an all-or-none proposition. In Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, this court affirmed judgment for the plaintiff on a PAGA meal break claim, stating she "was not required to show that [the] policies universally precluded employees from taking all meal breaks." (Id. at pp. 507, 528-529, italics omitted.)

Finally, the cases cited by Defendants are distinguishable. We already discussed Allen and White. The others mostly involve employers arguably unaware of an issue due to lack of reporting (e.g., overtime, off-the-clock work, work during meals, etc.) (See, e.g., Forrester v. Roth's I.G.A Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, 414.) Here, again, there was no real question Defendants knew breaks were missed, and the adequacy of its reporting system was at issue.

We now turn to the PAGA rest break claim. Plaintiffs' survey expert, Dr. Jeffrey Petersen, conducted a survey regarding rest break practices, which 250 current and former employees completed.

A handful of questions are pertinent. First, the survey asked "what percentage of your six to ten-hour work shifts were you authorized and permitted two rest periods of at least ten minutes," with a similar question about three breaks for shifts of more than ten hours.

Second, for each such question, the survey asked if breaks were not authorized or permitted "due to any of the following," asked for a "'yes or no' to each," and offered four options. These were: heavy workload, understaffing, no one available to relieve job duties, or "[o]ther reason: please specify." Petersen found "near unanimity" that the reasons for missed rest breaks were heavy workloads, understaffing, or no one available for relief, as around 97 percent of respondents reported these issues.

Third, the survey asked if employees were "ever told by [their] manager" they could "submit a request to receive one hour of pay" when a break was not authorized or permitted.

During the Phase II trial, the trial court held an evidentiary hearing on the admissibility of Petersen's survey. The court excluded it, citing three defects. First, the court found the break number questions were not consistent with the law and its jury instruction, noting a "respondent who answered no to . . . whether they got two 10-minute breaks may well have received a 20-minute break." Second, the court found "there were no questions about . . . the reasons that they did not ask for a premium," or if "their failure to take a rest break was voluntary." Third, the court said the survey asked "did your manager inform you that you were entitled to request a premium," not "whether the employee[ ] knew."

Plaintiffs asked the trial court to let them amend the witness list to add survey respondents to testify at trial, which the court denied.

Plaintiffs argue the trial court prejudicially abused its discretion by excluding the survey. We agree and do not reach their argument about additional witnesses.

"Except to the extent the trial court bases its ruling on a conclusion of law (which we review de novo), we review its ruling excluding or admitting expert testimony for abuse of discretion." (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773.) This discretion "must be exercised within the confines of the applicable legal principles." (Ibid.) Only prejudicial error supports reversal. (Christ v. Schwartz (2016) 2 Cal.App.5th 440, 446-447.)

The California Supreme Court has "remained open to the appropriate use of representative testimony, sampling, or other procedures employing statistical methodology." (Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 33.) Federal authority offers guidance here. The Ninth Circuit holds survey evidence should be admitted "as long as [it is] conducted according to accepted principles and [is] relevant." (Wendt v. Host Int'l, Inc. (9th Cir. 1997) 125 F.3d 806, 814.) Issues including "methodology, survey design, reliability, . . . critique of conclusions, and the like go to the weight of the survey rather than its admissibility," and are for the factfinder. (Clicks Billiards, Inc. v. Sixshooters, Inc. (9th Cir. 2001) 251 F.3d 1252, 1263.) "[S]erious methodological flaws" may still support exclusion. (Obrey v. Johnson (9th Cir. 2005) 400 F.3d 691, 696.)

We conclude the trial court's objection to the break timing question rested on legal error, and its other concerns involved phrasing issues that went to weight, not admissibility.

First, the trial court erred by treating combined rest breaks as presumptively lawful, rather than something an employer must justify, and thus rejecting questions that reasonably referenced separate breaks.

In the Brinker section echoed in the jury instruction here, the California Supreme Court was not talking about combining breaks, much less endorsing this approach. Rather, it was addressing the "amount of rest time that must be authorized"-hence describing rest in terms of minutes. (Brinker, 53 Cal.4th at pp. 1028-1029.) Further, in subsequently rejecting an argument that a rest break had to precede a meal break, the Court made clear the preference is for separate breaks. (Id. at p. 1031.) Addressing Wage Order 5, it explained in part that the "only constraint . . . is that rest breaks must fall in the middle of work periods 'insofar as practicable.'" (Ibid.) Thus, employers are "subject to a duty to make a good faith effort" to permit this, but "may deviate from that preferred course where practical considerations render it infeasible." (Ibid., italics added.)

Rodriguez v. E.M.E., Inc. (2016) 246 Cal.App.4th 1027 is instructive. The employer, who operated a metal finishing shop, provided one 20-minute break during each eight-hour shift. (Id. at pp. 1031, 1034.) Reversing summary judgment, the court of appeal focused on the phrase "'insofar as practicable'" in the wage order there, and guidance including Brinker. (Id. at p. 1035.) The court explained the phrase "directs employers to implement the specified rest break schedule absent an adequate justification why such a schedule is not capable of being put into practice, or is not feasible as a practical schedule." (Id. at p. 1040.) It held the employer had to show an "absence of triable issues regarding its departure from the preferred rest break schedule," and failed to do so. (Id. at p. 1041.)

Wage Order 5, and its "insofar as practicable" language, apply here. Thus, separate breaks are the preferred default, and departures must be justified-meaning the survey questions about separate breaks were consistent with the law, not contrary to it. In turn, the lack of questions about combined breaks goes to weight, not admissibility (as does Defendants' concern that respondents were not asked about rate of rest time). Defendants remain free to argue separate breaks were impracticable and the survey lacked merit for not addressing combined ones. But by excluding the survey, the trial court took the issue from the jury and impeded Plaintiffs' "ability to present [their] case"-thus exceeding its discretion. (See Sargon, 55 Cal.4th at p. 773.)

Second, the trial court erred in excluding the survey based on the questions about premium information and reasons for missed breaks and not seeking premiums. "Technical inadequacies" in a survey, "including the format of the questions . . ., bear on the weight of the evidence, not its admissibility." (Keith v. Volpe (9th Cir. 1988) 858 F.2d 467, 480.) Whether questions are suggestive also goes to weight. (Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc. (9th Cir. 2010) 618 F.3d 1025, 1036). Although the trial court couched its concerns in terms of relevance, its focus was on phrasing (e.g., why employees were asked if managers informed them about premiums, rather than if they knew about them).

Further, on reasons for missed breaks, 97 percent of respondents cited heavy workloads, understaffing, or no one available for relief, and they did have the option to say "other." We do not see how asking if they voluntarily skipped breaks would have produced more probative results. Similarly, we see no merit to Defendants' concern that the rest break question asked about shifts of "six to 10 hours," even though only one rest period is owed for six- hour shifts. As Plaintiffs suggest, it is not clear six-hour shifts were even in use. If they were, the parties could present evidence on the issue and argument on its impact on the survey.

In re Autozone Inc. (N.D. Cal., Aug. 10, 2016, No. 3:10-md-02159-CRB) 2016 WL 4208200, cited by Defendants, involved decertification of a rest period class and is otherwise distinguishable. The district court excluded the plaintiffs' survey for five reasons. (Id. at pp. *17-*19.) Just one issue, precision, related to the trial court's concerns here, and only in part (i.e., a subissue was that the survey did not ask about choosing to skip breaks). (Id. at p. *19.) Regardless of whether the concern was well-founded there, the phrasing of questions does not support survey exclusion here for the reasons discussed above.

Finally, Plaintiffs argue the trial court erred by granting nonsuit on the PAGA rest break claims. We agree.

A "party is entitled to a nonsuit when, as a matter of law, the evidence presented by the party opposing the nonsuit is insufficient to allow a jury to find in the opposing party's favor." (Morales v. 22nd Dist. Agricultural Assn. (2016) 1 Cal.App.5th 504, 517.) Our review is de novo. (Holistic Supplements, LLC v. Stark (2021) 61 Cal.App.5th 530, 541.)

The trial court began its nonsuit ruling by stating the "survey was excluded," and it then described evidence it viewed as missing (e.g., testimony showing "compliant rest breaks were not taken," etc.) Plaintiffs' counsel said they would limit their PAGA rest break claim to their departments, but the court confirmed its ruling. Plaintiffs argue the nonsuit ruling rested on the erroneous survey exclusion, and the trial court should have let them limit their claim. The first point supports reversal, and we do not reach the second one.

VIII. WAGE STATEMENTS

Plaintiffs argue the trial court erred in rejecting their wage statement claims based on the "total hours worked" requirement and use of rounded hours, as well as due to derivative liability. We reverse as to the derivative claims, and otherwise affirm.

Prior to mid-2017, paystubs "did not include a separate line item that totaled up the different types of hours worked" (total hours worked). Paystub columns included payment description, rate, hours, and earnings (or amount). There were description lines for regular and overtime work. Other descriptions included double time, shift differentials, PTO, Missed Meal/Break, and training. A summary section listed "hours paid."

Plaintiffs had multiple liability theories. The trial court granted summary adjudication to Defendants on the issue of whether the paystubs adequately listed total hours worked. During trial, the court addressed another non-derivative issue (if paystubs had to show unrounded hours) and derivative liability. It rejected these too, and granted nonsuit on the individual and PAGA claims. Although Plaintiffs' framing of these issues could be clearer, they adequately raise each one.

Labor Code section 226 requires an employer to provide accurate wage statements showing nine types of information, including "total hours worked" and gross and net wages earned. (Lab. Code, § 226, subd. (a).)

An "employee suffering injury as a result of a knowing and intentional failure" to comply is entitled to damages or penalties. (Lab. Code, § 226, subd. (e)(1).) One is deemed injured if the employer "fails to provide" the required information, and the employee "cannot promptly and easily determine" certain information. (Id., subd. (e)(2)(B)(i).) "'[P]romptly and easily determine' means a reasonable person would be able to readily ascertain the information without reference to other documents or information." (Id., subd. (e)(2)(C).) A PAGA plaintiff does not need to show injury. (Raines v. Coastal Pacific Food Distributors, Inc. (2018) 23 Cal.App.5th 667, 679.)

We start with Plaintiffs' argument that the paystubs did not show "total hours worked" and conclude it lacks merit.

The trial court determined the paystubs satisfied the Labor Code because they "list[ed] the total hours worked at each pay scale," and were not required to "contain a separate category with the sum," citing Morgan v. United Retail, Inc. (2010) 186 Cal.App.4th 1136, 1147.) The court also was not persuaded by Plaintiffs' focus on the inclusion of non-worked time (e.g. PTO) or the federal cases they cited. It did note "[m]any of the wage statements . . . are confusing," but said the "question is whether they comply" with the statute.

The trial court properly relied on Morgan to determine the paystubs were adequate, and Plaintiffs' arguments to the contrary lack merit.

In Morgan, the court of appeal held a wage statement complies with the Labor Code "where it separately lists the total number of regular hours and the total number of overtime hours worked . . ., but does not include an additional line with the sum of those two figures." (Morgan, 186 Cal.App.4th at p. 1144.) The court stated "nothing in the plain language of section 226" required otherwise. (Id. at p. 1147.) It further stated that requiring an employee to "simply add together the total regular hours figure and the total overtime hours figure" did not violate the statute. (Ibid.) This court later cited Morgan for the principle that "requir[ing] the employee to perform simple math" is permissible, in granting writ relief on a rate format issue. (General Atomics v. Superior Court (2021) 64 Cal.App.5th 987, 999-1000.)

Here, as in Morgan, the paystubs listed hours worked by category, and employees could add them together to determine the total hours worked. (Morgan, 186 Cal.App.4th at p. 1147.) In contrast, courts have found potential liability for failure to show hours worked in scenarios not present here, such as when paystubs always show the same hours. (Morgan, at p. 1144, discussing Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 956, et al.)

Plaintiffs maintain they had "difficulty calculating pay," citing declarations supporting motions below. Only Dezan and Wardrop mentioned hours worked, and neither said they were unable to add up the total hours.

Plaintiffs' other arguments are not persuasive either.

First, Plaintiffs contend the paystubs included non-work categories, but do not establish one's ability to add up hours worked is impeded by their inclusion. Indeed, the Morgan paystubs had items for "Other TY" ("an additional hour of pay for each meal period missed") and "Acct Assure" (a type of bonus). (Morgan, 186 Cal.App.4th at p. 1140, fn. 3; id. at p. 1147, fn. 8.) The unpublished district court cases Plaintiffs cite on reply involve certification, not liability. Plaintiffs also summarily assert the paystubs routinely listed "hours paid," which "differed from the sum . . . listed under 'Hours.'" The nature of their objection here is unclear, but if the issue is inclusion of non-work hours, it fails for similar reasons.

Second, Plaintiffs argue the trial court commented the paystubs were confusing. They fail to address why the court made the comment: to state confusion was not the issue, and statutory compliance was. We agree. Labor Code section 226, subdivision (a), imposes no general bar on being confusing; rather, it lists required elements. Cases addressing confusion discuss those elements, such as the employer's name. (Noori v. Countrywide Payroll &HR Solutions, Inc. (2019) 43 Cal.App.5th 957, 965.)

Third, the cases cited by Plaintiffs do not support reversal. Clarke v. First Transit, Inc. (C.D. Cal., Aug. 11, 2010, No. CV 07-6476 GAF (MANx)) 2010 WL 11459322 elected to follow another unpublished district court case, instead of Morgan, and had distinguishable facts (a truncated employer name). (Id. at p. *2.) McKenzie v. Federal Express Corp. (2011) 765 F.Supp.2d 1222 held the hours on a paystub with two overtime categories did "not sum up to the total hours worked," so "[w]ithout additional information," the employee could not reach that sum. (Id. at p. 1229.) In General Atomics, we stated McKenzie "to some extent . . . appears to run afoul" of the "simple math" principle in Morgan. (General Atomics, 64 Cal.App.5th at p. 999.) In Arroyo v. International Paper Co. (N.D. Cal. 2020) 611 F.Supp.3d 824, the district court found hours worked could not be summed because the regular hours included overtime hours. (Id. at p. 836.) Plaintiffs do not show a similar issue exists here.

Finally, Plaintiffs offer other points they do not develop in their opening brief and we address only briefly. For example, they cite their appendix to state if it is "'left to the employee to add up the daily hours shown on the time cards,'" and one "must perform arithmetic computations" to determine total hours worked, the requirements are not met. They are quoting a 2002 DLSE letter. Morgan addressed this letter, and explained the DLSE was addressing use of external time records-not hours listed by category on the paystub itself. (Morgan, 186 Cal.App.4th at p. 1145.) Plaintiffs also claim "hours paid" do "not reflect the actual hours worked." To the extent this relates to their other nonderivative theory (use of rounded hours), we turn to that issue next.

In granting nonsuit on the paystub claims, the trial court rejected Plaintiffs' nonderivative theory concerning rounded hours, which we affirm, and derivative liability, which we reverse.

During the Phase I trial, Plaintiffs' counsel agreed their remaining nonderivative theory was that the paystub did not "include the unrounded hours," so employees could not say "rounding was done correctly." Their derivative theory was that if rounding was not neutral, "you have to . . . calculate the missing wage." Defendants' counsel did "not agree . . . this is anything other than a derivative claim," and argued it failed under Maldonado v. Epsilon Plastics, Inc. (2018) 22 Cal.App.5th 1308. Maldonado limited derivative liability to missing hours worked, not miscalculated pay. (Id. at pp. 1336-1337.)

The trial court treated the theories as separate, and granted nonsuit. On the nonderivative issue, it ruled that "if the jury finds that the rounding system was neutral," there "isn't any authority" that the "wage statement is inaccurate because it didn't report" the unrounded hours. On derivative liability, it found Maldonado's reasoning applied.

During Phase II, the trial court granted nonsuit on the PAGA wage statement claim as well, and elaborated on its reasoning. The court stated, "[T]he wage statements accurately reflected the amount that was paid based upon the rounded hours. Nothing in the law requires two data sets for wage statements involving rounded hours." It further stated the law did not require listing unrounded hours to "enable employees to look at . . . each paycheck, and determine whether they're being advantaged or disadvantaged."

We now turn to Plaintiffs' arguments.

First, Plaintiffs contend the "failure to provide paystubs which reveal the actual hours worked (i.e., unrounded time) violates section 226(a)(2)," and they "could not determine" if "they were paid for all hours worked absent additional information - employee time punch data." Labor Code section 226(a), item (2), is the provision requiring "total hours worked[.]" Neither that provision, nor anything else in the section, addresses rounded versus unrounded time. When rounding is lawful, the rounded hours are the hours worked; they are just recorded in a certain way.

If Plaintiffs mean the hours were not "actual" because the unrounded time was compensable, that seems to replicate their derivative claim. If they mean the paystubs should have shown unrounded hours (e.g., so employees could assess the accuracy or impact of rounding), the trial court found no law required this and Plaintiffs have not cited anything showing otherwise. The cases they do cite are inapposite. While arguing Maldonado is inapplicable for other reasons, they cite it for the proposition that missing hours can support injury. But the case focused on derivative liability, and did not involve rounding. (Maldonado, 22 Cal.App.5th at pp. 1336-1337.) They also cite district court cases largely involving time that was not recorded at all, like off-the-clock work. (See, e.g., Fodera v. Equinox Holdings, Inc. (N.D. Cal., July 13, 2020, No. 19-cv-05072-WHO) 2020 WL 3961985, at p. *5.)

Second, Plaintiffs argue the trial court erred in granting nonsuit on their derivative claims, including in light of the California Supreme Court's decision in Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93 (Naranjo I). Here, we agree.

Before we address Naranjo, we elaborate briefly on Maldonado. There, the court of appeal held invalidation of an alternative workweek schedule did not mandate employees "receive penalties for the wage statements which accurately reflected" pay at the time, and the plaintiffs did not establish presumed injury under the statute. (Maldonado, 22 Cal.App.5th at pp. 1335, 1337.) The court explained "only the absence of the hours worked will give rise to an inference of injury; the absence of accurate wages earned will be remedied" by the violated law. (Id. at pp. 1336-1337.)

In Naranjo I, the California Supreme Court held, in part, that missed break premiums were "wages earned" for wage statement penalties, and remanded for consideration of whether conditions to impose them were met. (Naranjo I, 13 Cal.5th at pp. 121, 125-126.) It did not have occasion to address Maldonado's reasoning above, but noted the decision turned on a lack of injury there. (Id. at p. 120.) The Court later issued another decision after wage statement proceedings on remand. (Naranjo v. Spectrum Security Services, Inc. (2024) 15 Cal.5th 1056, 1077 (Naranjo II).) Pertinent here, the Court confirmed Naranjo I "dispelled any doubt" about "this sort of derivative wage statement claim" when it "explained wage statement requirements apply to amounts earned, even if . . . not paid because of confusion over whether the amounts were owed in the first place." (Naranjo II, 15 Cal.5th at p. 1077, citing Naranjo I, at p. 121.)

Here, the trial court relied on Maldonado to reject Plaintiffs' derivative wage statement claims. Naranjo I calls that reliance into question, and given our reversal of the court's rounding determinations, warrants further proceedings on remand.

Defendants' position here lacks merit. They address Naranjo I only briefly, and only to argue we can affirm due to Plaintiffs not showing injury. But, as Plaintiffs observe, Defendants did not raise this issue in their nonsuit motions, as generally required for affirmance (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1542), and injury need not be shown for the PAGA claim (Raines, 23 Cal.App.5th at p. 670). Otherwise, Defendants continue to rely on Maldonado, and pre-Naranjo I district court cases citing it, which is not persuasive. Indeed, in one case, the district court reconsidered a derivative paystub claim after Naranjo I, noting "courts have considered the extent to which Naranjo overruled Maldonado," and let the claim proceed. (Sousa v. Walmart, Inc. (E.D. Cal., Aug. 16, 2023, No. 1:20-cv-00500-EPG) 2023 WL 5278662, at pp. *16-*17, reconsidering Castro v. Walmart, Inc. (E.D. Cal., Aug. 17, 2020, No. 2:20-cv-00928-JAM-KJN) 2020 WL 4748167, at p. *2.)

IX. REGULAR RATE

Finally, Plaintiffs argue the trial court erred by granting a directed verdict on their PAGA regular rate claim, which involved Defendants' Broad Based Bonus (Bonus). We disagree.

Gail White, Dignity Health's Senior Vice President of Compensation, testified the Bonus was discretionary and explained the process. After the end of the fiscal year, she made a recommendation to the board's Human Resources and Compensation Committee (Board). The Board decided whether to approve "pay[ing] the award" and "what the award amount is." It considered factors that changed annually and were not always financial. Eligibility criteria were not set until after award approval, and although the same criteria existed since 2015 (hours and satisfactory performance), the

Board had discussed changing them. The amounts did change. There was no advance communication to employees.

Kriegler testified 129 non-union employees received the Bonus and worked overtime during the relevant time. Hospital human resources director Marano said employees did not receive the bonus when they "didn't meet the eligibility criteria," and "[t]here's also been times when . . . again, this is discretionary. So it's not a guarantee."

The employee's "regular rate" is the basis for overtime pay (Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5th 542, 561) and break penalties (Lab. Code, § 226.7). Unlike the straight time wage, it includes items like shift differentials and the "per-hour value of any nonhourly" pay. (Alvarado, at p. 554.)

The FLSA has exclusions from the regular rate, which California courts recognize. (29 U.S.C. § 207(e); Huntington, 131 Cal.App.4th at p. 902.) One is for "discretionary bonuses." (Hartstein v. Hyatt Corporation (9th Cir. 2023) 82 F.4th 825, 833.) These are "[s]ums paid in recognition of services performed during a given period if . . . both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract, agreement, or promise causing the employee to expect such payments regularly." (29 U.S.C. § 207(e)(3).)

The federal regulations state the employee must have "no contract right, express or implied, to any amount." (29 C.F.R. § 778.211(b).) They also indicate, in part, that a promised bonus contingent on financial condition is nondiscretionary, and bonuses "announced to employees to induce them to work more steadily" are included in the regular rate. (Id., subds. (b) &(c).)

The exceptions in 29 U.S.C. § 207(e) are "narrowly construed," and the "employer bears the burden of establishing" them (Minizza v. Stone Container Corp. Corrugated Container Div. East Plant (3d Cir. 1988) 842 F.2d 1456, 1459).

Plaintiffs establish no error here. The trial court stated the question for the jury was whether the bonus was "discretionary or nondiscretionary." It found "[n]o evidence demonstrated that bonuses were promised . . . or in what amounts they would be paid if one was paid." It also found, in part, Defendants "presented unrebutted evidence showing how the hospital determined to pay bonuses," including that the Board's decision "always occurred after" the fiscal year. (Italics omitted.)

Plaintiffs do not dispute the findings on process or timing. Rather, they argue "payment of the [bonus] annually pursuant to the same yearly eligibility requirements created an implied promise" and rendered it nondiscretionary. (Italics omitted.) We are not persuaded.

In Walling v. Frank Adam Electric Co. (8th Cir. 1947) 163 F.2d 277 (Frank Adam), cited by Defendants, the Eighth Circuit affirmed judgment for a company that voted to issue bonuses at or after the end of work periods. (Id. at p. 278.) The court explained there was a "total lack of any contract" before the applicable work period. (Id. at p. 283.) Meanwhile, in Walling v. Richmond Screw Anchor Co. (2d Cir. 1946) 154 F.2d 780 (Richmond Screw), the company voted in advance for monthly bonuses, at a set percentage of pay and subject to ending based on company finances. (Id. at pp. 781-782.) The Second Circuit held the bonuses should have been included in the regular rate, stating the "crucial fact" was that they were "regularly paid" and it "seems to . . . be enough" the employees assumed they would receive them. (Id. at p. 784.)

Mitchell v. American Electric Co. (D. Col. 1955) 133 F.Supp. 949, also cited by Defendants, found the Eighth Circuit approach more reasonable. (Id. at p. 951.) It stated that "[t]o make regularity . . . determinative" was "not justified by the language[.] Congress did not provide that bonuses, to be excluded from overtime computations, had to be . . . irregularly paid." (Ibid.) The court granted judgment to the employer, finding no employees regarded bonus continuation or amount assured and the board decided on it at the end of the work period. (Id. at p. 952-953.) Other courts have focused on the Second Circuit authority and its progeny. (See, e.g., Casarez v. Producers Service Corporation (S.D. Ohio, Jan. 28, 2020, No. 2:17-cv-1086) 2020 WL 1874132, at pp. *5-*6.)

Plaintiffs fail to address the case law that might help them, and it would not support reversal if they had. Even for an implied promise, regular receipt does not necessarily suffice. (Cf. Secretary United States Department of Labor v. Bristol Excavating, Inc. (3d Cir. 2019) 935 F.3d 122, 135-136.) Other indicia for reliance include advance announcement, tethering to financial results, and set amounts. (See Richmond Screw, 154 F.2d at pp. 781-782, 784.) Here, White's undisputed testimony established the Bonus was not announced in advance; it was based on varying factors, not just financial results; and the amount varied (with eligibility subject to change too, though it had not recently).

Plaintiffs discuss Frank Adam and Mitchell, but only on reply and not persuasively. They argue the Frank Adam bonus was voted after the work period. That is true here, too. They then argue the Mitchell bonuses were "not invariably" paid and workers did not view them as assured. Mitchell's point was that regularity is not dispositive, and there is no evidence of reliance here, either. (Mitchell, 133 F.Supp. at p. 952.)

Additionally, Plaintiffs also claim the Bonus was not discretionary "because it was not 'paid in recognition of services performed during a given period.'" They do not provide reasoned argument on this point (or even explain how it differs from their regularity point). We deem it forfeited. (Badie, 67 Cal.App.4th at pp. 784-785.)

X. DISPOSITION

We affirm the amended judgment and orders in part, reverse in part, and remand for further proceedings consistent with this opinion, as summarized in the introduction. The parties shall bear their own costs on appeal.

WE CONCUR: McCONNELL, P. J. O'ROURKE, J.

CLAYTON DEZAN et al., Plaintiffs and Appellants, v. DIGNITY HEALTH et al., Defendants and Appellants.

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