Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_17-cv-06211/USCOURTS-cand-5_17-cv-06211-4/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

ELISA ARROYO,

Plaintiff,

v.

INTERNATIONAL PAPER COMPANY,

Defendant.

Case No. 17-cv-06211-BLF 

ORDER DENYING PLAINTIFF’S 

REQUEST FOR CONTINUANCE 

UNDER FEDERAL RULE OF CIVIL 

PROCEDURE 56(d); AND GRANTING

IN PART AND DENYING IN PART 

DEFENDANT’S MOTION FOR 

SUMMARY JUDGMENT

[Re: ECF 51, 52]

Plaintiff Elisa Arroyo (“Arroyo”) asserts individual claims, a certified class claim, and a 

representative PAGA1claim against Defendant International Paper Company (“IPC”) for alleged 

failures to reimburse uniform expenses and provide accurate wage statements. Following this 

Court’s order granting in part and denying in part Arroyo’s motion for class certification, the 

following claims are at issue: Claim 1 for failure to reimburse uniform expenses in violation of 

Cal. Lab. Code § 2802 (individual); Claim 2 for failure to provide accurate wage statements in 

violation of Cal. Lab. Code § 226 (class); Claim 3 for civil penalties under PAGA; and Claim 4 

for violation of California’s Unfair Competition Law (“UCL”) (individual). 

IPC seeks summary judgment on all claims. Arroyo opposes the summary judgment 

motion and, in the alternative, requests a continuance pursuant to Federal Rule of Civil Procedure 

56(d) to take additional discovery. IPC contends that the requested continuance is unwarranted 

because Arroyo has not shown that she diligently pursued discovery. 

1 Private Attorneys General Act, Cal. Lab. Code §§ 2698 et seq.

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For the reasons discussed below, the request for a continuance is DENIED. The motion 

for summary judgment is GRANTED as to the class claim (Claim 2), GRANTED IN PART AND 

DENIED IN PART as to the PAGA claim (Claim 3) and DENIED as to the individual claims 

(Claims 1 and 4).

 I. BACKGROUND

Arroyo worked for IPC and its predecessor, Weyerhaeuser, from November 1998 through 

February 2017. Arroyo Dep. 18:2-10, Def.’s Compendium Exh. 8, ECF 51-2. IPC manufactures 

paper, boxes, bags, and other paper-based products. Bates Decl. ¶ 6, Def.’s Compendium Exh. 11, 

ECF 51-2. IPC owns twenty-six different facilities across California. Id. ¶ 4. Those facilities 

previously were owned by different companies, each of which had its own policy regarding use of 

uniforms and its own method of timekeeping. Id.; Scharff Decl. ¶ 5, Def.’s Compendium Exh. 9, 

ECF 51-2. As a result, the uniform policies and timekeeping methods differ among IPC’s 

California facilities. Bates Decl. ¶ 6; Scharf Decl. ¶ 5. 

Uniforms

Some of IPC’s facilities have handbooks that include a uniform policy, some use a standalone written uniform policy, and some do not have a formal written policy for uniforms. Bates 

Decl. ¶ 12, Def.’s Compendium Exh. 11, ECF 51-2. Employees who are required to wear a 

uniform by IPC are provided with the uniform at no cost to them. Bates Decl. ¶ 13. IPC pays a 

third party vendor such as Cintas to provide and maintain those employees’ uniforms. Id. 

Employees who are not required to wear a uniform by IPC may voluntarily rent a uniform from 

the third party vendor by having the rental expense deducted from their paychecks. Id. 

Employees who voluntarily rent uniforms may cancel uniform service at any time. Id. ¶ 14. 

In 2008, IPC took over the Salinas facility where Arroyo had worked since 1998; prior to 

that time the Salinas facility was operated by Weyerhaeuser. Bates Decl. ¶ 8; Arroyo Decl. ¶ 2, 

ECF 40-2. It does not appear that the Salinas facility ever had a formal uniform policy. Arroyo 

testified that when she began working for Weyerhaeuser in 1998, her supervisor told her to wear a 

coverall-style uniform to protect her from hot wax from the Cascader machine. Arroyo Dep. 

30:10-31:5, Def.’s Compendium Exh. 8, ECF 51-2. The Cascader was one of the machines on 

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which Arroyo worked, both for Weyerhaeuser and for IPC. Id. 18:16-19:3, 31:2-16. “The 

‘Cascader’ is named as such because wax cascades from the machine onto specialty boxes for 

those clients who have requested a wax coating.” Bates Decl. ¶ 10, Def.’s Compendium Exh. 11, 

ECF 51-2. Id. Arroyo testified that other employees wore street clothes while working on the 

Cascader. Arroyo Dep. 32:1-14. However, she believed she had to wear a uniform while working 

on the Cascader to prevent her street clothes from becoming caked with wax, and to avoid getting 

burned. Id. 24:12-24, 33:11-34:12. 

Arroyo completed a payroll deduction authorization form when she worked for 

Weyerhaeuser. Arroyo Dep. Exh. 8, Def.’s Compendium Exh. 8, ECF 51-2. The form authorized 

a “continuing uniform service deduction” for each pay period. Id. Arroyo was fitted for and 

provided with uniforms by third party vendor Cintas. Arroyo Dep. 21:24-22:7. Cintas maintained 

and cleaned the uniforms. Id. When IPC took over the Salinas facility, Arroyo continued to use 

the uniforms provided by Cintas, and the uniform service deduction continued to be made from 

her paychecks. Id. 22:8-22. Arroyo understood that she could cancel the uniform service at any 

time but she never did so. Id. 31:20-22, 34:21-24. Arroyo always wore a uniform at work, even 

when working on machines other than the Cascader, that is, machines that did not involve hot 

wax. Id. 22:23-23:2, 34:2-20. 

Timekeeping

Fifteen of IPC’s California facilities, including the Salinas facility where Arroyo worked, 

used the Workbrain timekeeping system during the relevant period. Bates Decl. ¶ 3. Below is an 

exemplar of a wage statement generated using Workbrain.

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Arroyo Dep. Exh. 1, Def.’s Compendium Exh. 8, ECF 51-2. According to IPC, this wage 

statement shows that the employee’s regular rate of pay is $20.37 per hour; the employee’s 

overtime pay is the regular rate plus a premium of $10.185 per hour; the employee worked a total 

of 64.70 hours in the pay period; of the 64.70 hours worked in the pay period, 0.75 hours were 

overtime hours; and the total salary earned in the pay period is $1,655.57. Arroyo contends that 

the wage statement is confusing, and that an employee looking at the statement would not know 

that the 64.70 figure in the box at the intersection of “Regular Hours” and “HRS. CURR” reflects 

the total hours – regular and overtime – worked for the pay period, and would not know that the 

overtime rate was the rate listed for “Regular Hours” plus the rate listed for the “Overtime 

Premium.” 

This Lawsuit

Arroyo filed this action in the Monterey County Superior Court on September 27, 2017, 

asserting multiple wage and hour violations against IPC on behalf of a putative class of California 

employees. See Notice of Removal, Exh. A, ECF 1. IPC removed the action to federal district 

court under the Class Action Fairness Act of 2005 (“CAFA”). See Notice of Removal, ECF 1. 

Arroyo immediately filed a first amended complaint as of right. See FAC, ECF 9. After two 

rounds of motion practice, Arroyo filed the operative third amended complaint (“TAC”), 

containing four claims for relief. See TAC, ECF 38. Those claims are: (1) failure to reimburse 

uniform expenses in violation of Cal. Lab. Code § 2802; (2) failure to provide accurate wage 

statements in violation of Cal. Lab. Code § 226; (3) penalties under PAGA; and (4) violations of 

California’s UCL, Cal. Bus. & Prof. Code § 17200 et seq. 

Arroyo sought certification of three classes: (a) all non-exempt manufacturing employees 

who were employed by IPC in the State of California at any time from September 27, 2013, 

through the present, and who paid for uniform expenses (the “Expense Reimbursement Class”);

(b) all non-exempt employees who were employed by IPC in the State of California and who were 

paid overtime wages at any time from January 27, 2017, through the present (the “Wage Statement 

Class”); and (c) all non-exempt employees who were employed by IPC in the State of California 

and who were provided wage statements containing payment for overtime wages that were created 

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from data from the Workbrain system at any time from January 27, 2017, through the present (the 

“Workbrain Wage Statement Sub-Class”). 

On April 4, 2019, the Court issued an order granting in part and denying in part Arroyo’s 

motion for class certification. See Order Granting in Part and Denying in Part Plaintiff’s Motion 

for Class Certification, ECF 48. The Court granted certification as to Claim 2 for violation of §

226 and Claim 4 for violation of the UCL, to the extent those claims are based on wage statements 

generated by the Workbrain system, and it otherwise denied certification. See id. at 12. In her 

opposition to the present motion for summary judgment, Arroyo clarifies that Claim 4 for 

violation of the UCL is not based on wage statement violations under Cal. Labor Code § 226, but 

only on business expense violations under Cal. Labor Code § 2802 and related code sections. See

Opp. at 26, ECF 52. Accordingly, Claim 4 for violation of the UCL is an individual claim only. 

 II. DISCUSSION

IPC seeks summary judgment on all claims. Arroyo opposes the motion for summary 

judgment and, in the alternative, seeks a continuance under Federal Rule of Civil Procedure 56(d) 

for the purpose of conducting additional discovery. Arroyo also objects to evidence submitted by 

IPC in support of its motion. The Court addresses Arroyo’s Rule 56(d) motion and evidentiary 

objections before turning to the merits of IPC’s summary judgment motion.

A. Rule 56(d) Motion for Continuance

IPC’s motion for summary judgment relies in part on the declaration of Jan Scharff, who 

worked for IPC in various capacities over the years, most recently as IPC’s Global Payroll, 

Compliance and Project Lead. See Scharff Decl. ¶ 2, Def.’s Compendium Exh. 9, ECF 51-2. 

Scharff’s declaration is offered by IPC to prove its good faith belief that its wage statements 

complied with § 226. Arroyo asserts that she was completely surprised by the Scharff declaration

because IPC never disclosed Scharff as a witness in its initial or supplemental disclosures as 

required under Federal Rule of Civil Procedure 26. Arroyo requests that if the Court is inclined to 

grant summary judgment for IPC based on a finding of good faith, the Court grant a continuance 

to permit Arroyo to depose Scharff on the issue of good faith and to take other relevant discovery.

IPC opposes the request for a continuance, arguing that Arroyo’s assertion that IPC failed to 

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disclose Scharff in violation of Rule 26 is disingenuous given that Scharff was identified as IPC’s 

person most knowledgeable (“PMK”) with respect to all wage statement topics and was deposed 

by Arroyo on January 7, 2019.

Rule 56(d) provides in relevant part that: “If a nonmovant shows by affidavit or 

declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the 

court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or 

declarations or to take discovery; or (3) issue any other appropriate order.” Fed. R. Civ. P. 56(d). 

“The burden is on the party seeking additional discovery to proffer sufficient facts to show that the 

evidence sought exists, and that it would prevent summary judgment.” Chance v. Pac-Tel 

Teletrac Inc., 242 F.3d 1151, 1161 n.6 (9th Cir. 2001). The party seeking additional discovery 

also must demonstrate that he or she acted diligently to pursue discovery in the past. See id. The 

district court’s ruling on a request for a continuance is reviewed for abuse of discretion. See id. 

“[T]he district court does not abuse its discretion by denying further discovery if the movant has 

failed diligently to pursue discovery in the past.” Id. (internal quotation marks and citation 

omitted). “Stated another way, [the appellate court] will only find that the district court abused its 

discretion if the movant diligently pursued its previous discovery opportunities, and if the movant 

can show how allowing additional discovery would have precluded summary judgment.” Id.

(internal quotation marks and citation omitted).

The Court finds that Arroyo has not shown diligence in pursing discovery. While Arroyo

claims that Scharff was not disclosed as a witness in IPC’s disclosures or supplemental 

disclosures, Arroyo does not deny that Scharff was identified as IPC’s PMK and deposed in 

January 2019. “Under FRCP 26(a), a party’s initial disclosures must identify witnesses who are 

‘likely to have discoverable information . . . that the disclosing party may use to support its claims 

or defenses.’” Nuance Commc’ns, Inc. v. ABBYY Software House, No. C 08-02912 JSW MEJ, 

2012 WL 2838431, at *1 (N.D. Cal. July 10, 2012) (quoting Fed. R. Civ. P. 26(a)). “There is also 

an affirmative obligation to supplement these initial disclosures ‘in a timely manner’ if they 

become incomplete or incorrect.” Id. (quoting Fed. R. Civ. P. 26(e)(1)(A)). “Supplementation, 

however, is not mandatory if the additional or corrective information has been made known to the 

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other parties during the discovery process or in writing.” Id. (internal quotation marks, citation, 

and alteration omitted). Arroyo’s counsel, Larry W. Lee, concedes that “[o]n January 7, 2019, 

Plaintiff took the deposition of Jan Scharff, who was designated as Defendants’ Rule 30(b)(6) 

corporate representative witness on topics related to Defendants’ policies and practices on the 

issue of wage statements as to the class, including what information appears on the wage 

statements and deductions made from wage statements.” Lee Decl. ¶ 2, ECF 52-1. Given that 

Scharff was identified as IPC’s PMK with respect to wage statements, and Schraff’s deposition 

was actually taken by Arroyo ten months before IPC filed its summary judgment motion, the 

Court finds no merit in Arroyo’s contention that IPC breached its disclosure obligations with 

respect to Scharff. 

Mr. Lee represents that Arroyo limited her deposition of Scharff, and has limited all other 

discovery, to class certification issues. See Lee Decl. ¶¶ 2-4. Mr. Lee states that “[a]side from 

topics related to class certification, Plaintiff has not yet conducted discovery relating to the merits 

of her claims.” Lee Decl. ¶ 4. Mr. Lee suggests that it would be unfair for the Court to grant 

summary judgment for IPC without first granting Arroyo an opportunity to depose Scharff and 

take other merits discovery.

Arroyo’s failure to take any merits discovery to date is inexplicable. The Court did not 

phase discovery in this case. The case schedule was set at the Initial Case Management 

Conference on March 29, 2018 and was memorialized in a Case Management Order issued on the 

same date. See Case Management Order, ECF 21. The Case Management Order clearly set the 

“Last Day to Hear Dispositive Motions” for November 7, 2019. See id. Under long-settled 

standards governing summary judgment, Arroyo was on notice that if IPC were to meet its initial 

burden on summary judgment, she would have the burden to “designate specific facts 

demonstrating the existence of genuine issues for trial.” In re Oracle Corp. Sec. Litig., 627 F.3d 

376, 387 (9th Cir. 2010). Arroyo similarly was on notice that, as the non-moving party, she would 

have the burden at summary judgment to “come forth with evidence from which a jury could 

reasonably render a verdict” in her favor. Id. Under these circumstances, Arroyo’s failure to take 

merits discovery during Scharff’s deposition – or any merits discovery – prior to the scheduled 

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summary judgment hearing date shows a complete lack of diligence.

At the hearing, Arroyo’s counsel argued that the Court should excuse the failure to take 

merits discovery and grant the requested Rule 56(d) continuance because an adverse summary 

judgment ruling would be binding not only on Arroyo but also on the certified class. Counsel 

suggested that the Court has a “fiduciary duty” to protect the rights of absent class members. 

Arroyo has not cited, and the Court has not discovered, any authority for the proposition that the

diligence requirement for Rule 56(d) relief does not apply when the non-diligent party is the 

representative of a certified class. The Court’s obligation runs to both sides in this litigation, and 

Arroyo has not presented any factual or legal basis for forcing IPC to rebrief and relitigate its 

summary judgment motion because Arroyo chose to delay merits discovery. When the Court 

asked at the hearing whether Arroyo would be willing to bear the expense her lack of diligence 

would cost IPC in the event a continuance were granted, Arroyo’s counsel stated that Rule 56(d) 

did not require Arroyo to bear that cost. When the Court asked why Arroyo had not filed a request 

to modify the case schedule at any point between issuance of the class certification order in April 

2019 and the October 2019 deadline to file summary judgment motions, Arroyo’s counsel was 

unable to offer a satisfactory explanation. Under these circumstances, the Court finds that 

Arroyo’s inability to present evidence to controvert Scharff’s declaration is entirely of Arroyo’s 

own making and was entirely preventable. 

The party opposing summary judgment “cannot complain if it fails to pursue discovery 

diligently before summary judgment.” Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d 1439, 

1443 (9th Cir. 1986); see also In re Fu, 739 F. App’x 432, 434-35 (9th Cir. 2018) (“It is not an

abuse of discretion to deny a Rule 56(d) motion when the moving party failed to pursue discovery 

diligently earlier in the litigation.”). Because it is apparent from this record that Arroyo “failed 

diligently to pursue discovery in the past,” see Chance, 242 F.3d at 1161 n.6, Arroyo’s request for 

a continuance of the summary judgment motion pursuant to Rule 56(d) is DENIED. 

B. Arroyo’s Evidentiary Objections

Arroyo raises a number of objections to evidence submitted by IPC in support of its 

summary judgment motion. Those objections are not well-taken for the reasons discussed below.

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1. IPC’s Exhibits 3-5 (DLSE and DOL Materials)

Arroyo objects to IPC’s Exhibits 3, 4, and 5, which are publications of the U.S. 

Department of Labor and California Department of Industrial Relations indicating that the 

overtime rate properly may be displayed as a “premium” equaling one-half the regular rate of pay. 

Arroyo does not challenge the authenticity of the documents or dispute that documents of this type 

generally may be considered by the Court. She asserts that the documents should be stricken 

pursuant to Federal Rule of Evidence 402 on relevance grounds. However, the documents are 

relevant to the issue for which they are cited, as they constitute examples of instances in which the 

overtime rate has been described by state and federal regulators as a “premium” of one-half the 

regular rate of pay. The objections to IPC’s Exhibits 3, 4, and 5 are OVERRULED.

2. IPC’s Exhibit 9 (Scharff Decl.)

Arroyo objects to and seeks to exclude Scharff’s declaration based on IPC’s asserted 

failure to disclose Scharff earlier in the litigation. That objection is without merit for the reasons 

discussed above in connection with Arroyo’s Rule 56(d) motion. Arroyo also objects to various 

portions of Scharff’s declaration for lack of foundation, lack of personal knowledge, and lack of 

relevance. However, paragraphs 4 and 12 lay a foundation for Scharff’s statements by explaining 

where she acquired her knowledge; paragraphs 7-10 discuss Scharff’s presence at the March 2011 

meeting and show her personal knowledge of the results of that meeting; and paragraphs 8-11 are 

relevant to the issues in this case because they bear on IPC’s assertion that it had a good faith 

belief that its wage statements complied with Cal. Lab. Code § 226. Arroyo’s objections to the 

Scharff declaration are OVERRULED.

3. IPC’s Exhibit 10 (Scharff Notes)

Arroyo objects to Scharff’s notes from the March 2011 meeting as irrelevant. The notes 

are relevant to IPC’s assertion that it had a good faith belief that its wage statements complied 

with Cal. Lab. Code § 226. Arroyo also contends that the notes should be stricken, or that she 

should be given leave to take discovery regarding the notes, because they were not disclosed 

earlier. IPC’s counsel has submitted a declaration stating that the notes were not discovered by 

counsel until late August 2019 and were produced to Arroyo in early September 2019. See Olsen 

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Suppl. Decl. ¶ 5, ECF 53-1. The notes total only two pages. See id. Under these circumstances, 

the Court finds that IPC met its obligations to supplement its disclosures in a timely fashion. 

Arroyo did not seek a continuance of the summary judgment hearing as a result of the disclosure 

of the notes. Arroyo’s objections to the Scharff notes are OVERRULED.

4. IPC’s Exhibit 12 (HR Email)

Arroyo objects to an email sent between two of IPC’s Human Resources representatives, 

indicating that optional uniform services can be cancelled at any time. Arroyo asserts that 

although the email is authenticated by Derrick A. Bates, Bates lacks sufficient personal knowledge 

because he was not the sender or recipient of the email. However, Bates is IPC’s Regional Human 

Resources Manager, and in that role he has knowledge of the email which is maintained as a 

business record. Arroyo’s objections to the email are OVERRULED.

5. IPC’s Exhibits 13-65 (Employee Declarations)

Finally, Arroyo objects to IPC’s Exhibits 13 through 65, which are declarations of IPC’s 

employees. Arroyo argues that these employees were not disclosed in IPC’s initial or 

supplementary disclosures; they are inherently biased; they are boilerplate and conclusory; and 

they are irrelevant. Arroyo acknowledges that the Court accepted the declarations as evidence at 

class certification, but she re-asserts her evidentiary objections to the declarations to preserve the 

record for appeal. The objections are not well-taken. The declarations were provided to Arroyo in 

January 2019. There is no indication that the declarations are not credible. And although Arroyo 

is correct that injury under § 226(e) is evaluated under an objective standard, the employees’ 

subjective experiences bear on the objective reasonableness of the parties’ competing views of the 

wage statements. Arroyo’s objections to the employees’ declarations are OVERRULED.

C. IPC’s Motion for Summary Judgment

IPC contends that it is entitled to summary judgment on all of Arroyo’s claims. IPC first 

addresses the class claim for failure to provide accurate wage statements in violation of Cal. Lab.

Code § 226, then Arroyo’s individual claims for failure to reimburse uniform expenses in violation 

of Cal. Lab. Code § 2802 and the UCL, and finally the PAGA claim. Arroyo asserts that summary 

judgment is not warranted with respect to any of the claims. The Court addresses the parties’

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arguments in turn after setting forth the applicable legal standard.

1. Legal Standard

“A party is entitled to summary judgment if the ‘movant shows that there is no genuine 

dispute as to any material fact and the movant is entitled to judgment as a matter of law.’” City of 

Pomona v. SQM North America Corp., 750 F.3d 1036, 1049 (9th Cir. 2014) (quoting Fed. R. Civ. 

P. 56(a)). “The moving party initially bears the burden of proving the absence of a genuine issue 

of material fact.” In re Oracle, 627 F.3d at 387. “Where the moving party meets that burden, the 

burden then shifts to the non-moving party to designate specific facts demonstrating the existence 

of genuine issues for trial.” Id. “[T]he non-moving party must come forth with evidence from 

which a jury could reasonably render a verdict in the non-moving party’s favor.” Id. “The court 

must view the evidence in the light most favorable to the nonmovant and draw all reasonable 

inferences in the nonmovant’s favor.” City of Pomona, 750 F.3d at 1049. “Where the record 

taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 

genuine issue for trial.” Id. (internal quotation marks and citation omitted).

2. Class Claim for Inaccurate Wage Statements (Claim 2)

Claim 2 alleges that IPC failed to provide accurate wage statements in violation of Cal. 

Lab. Code § 226(a)(2) and (a)(9). The Court granted class certification as to Claim 2 to the extent

the claim is based on wage statements generated by the Workbrain system. See Order Granting in 

Part and Denying in Part Plaintiff’s Motion for Class Certification, ECF 48.

California Labor Code § 226 provides in relevant part that: “An employer, semimonthly or 

at the time of each payment of wages, shall furnish to his or her employee, either as a detachable 

part of the check, draft, or voucher paying the employee’s wages, or separately if wages are paid 

by personal check or cash, an accurate itemized statement in writing showing . . . (2) total hours 

worked by the employee, . . . and (9) all applicable hourly rates in effect during the pay period and 

the corresponding number of hours worked at each hourly rate by the employee.” Cal. Lab. Code 

§ 226(a). 

“An employee suffering injury as a result of a knowing and intentional failure by an 

employer to comply with subdivision (a)” may to recover the greater of actual damages or 

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statutory penalties. Cal. Lab. Code § 226(e)(1). An employee is deemed to suffer injury if the 

employer fails to provide accurate and complete information as required by § 226(a) and “the 

employee cannot promptly and easily determine” the required information from the wage 

statement alone. Cal. Lab. Code § 226(e)(2)(B). The statute defines “promptly and easily 

determine” to mean “a reasonable person would be able to readily ascertain the information 

without reference to other documents or information.” Cal. Lab. Code § 226(e)(2)(C).

“Thus, a claim for damages under Section 226(e) requires a showing of three elements: (1) 

a violation of Section 226(a); (2) that is “knowing and intentional”; and (3) a resulting injury.” 

Willner v. Manpower Inc., 35 F. Supp. 3d 1116, 1128 (N.D. Cal. 2014). IPC asserts that Arroyo 

cannot establish any of these elements. First, IPC contends that Arroyo cannot show a violation of 

§ 226(a)(2) or (a)(9) because the wage statements contain all required information. Second, IPC 

argues that any violation of § 226 was not “knowing and intentional.” Third, IPC contends that 

Arroyo cannot show that the asserted violations of § 226(a) caused injury to her or class members. 

Arroyo argues that the record evidence is sufficient to preclude a finding for IPC on each of the 

three elements. 

Before turning to the parties’ arguments with respect to these elements, the Court 

addresses IPC’s more general argument that its wage statements satisfy the statute’s purpose. 

“The Legislature enacted section 226 to ensure an employer documents the basis of the employee 

compensation payments to assist the employee in determining whether he or she has been 

compensated properly.” Soto v. Motel 6 Operating, L.P., 4 Cal. App. 5th 385, 390 (2016). IPC 

argues that Soto illustrates that § 226 is not a “labeling” statute, and that there is no single way to 

satisfy its requirements. See Def.’s Motion at 13, ECF 51. As Soto recognized, however, § 226(a) 

contains “nine separate categories that must be included on wage statements.” Id. at 391. It is 

Arroyo’s contention that two of those nine categories are not included in IPC’s wage statements. 

The Court’s first step in evaluating IPC’s summary judgment motion with respect to § 226, then is 

to determine whether IPC has established that its wage statements contain the two categories 

Arroyo claims are not included in the wage statements – § 226(a)(2) and (a)(9). 

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a. Statutory Violation

i. § 226(a)(2) – Total Hours Worked

As stated above, § 226(a)(2) requires that an employer provide “an accurate itemized 

statement in writing showing . . . (2) total hours worked by the employee.” Arroyo asserts that 

IPC’s wage statements do not satisfy § 226(a)(2), because it would not be apparent to an employee 

viewing IPC’s wage statements how many hours were worked during the pay period. Arroyo 

argues that it would be natural for an employee to think that adding the number of regular hours 

shown in the “HRS. CURR” column with the number of overtime hours shown in that column 

would result in the total hours worked. That would be incorrect, however, because the “Regular 

Hours” shown in the “HRS. CURR” column are the total hours worked. Arroyo argues that 

because it is not clear from the face of the wage statements that “Regular Hours” worked is the 

same as the total hours worked, the wage statements do not show the total hours worked as 

required by § 226(a)(2).

Both parties treat the issue of compliance as a legal question for the Court. That approach 

is consistent with the cited decisions, in which courts addressing § 226(a) claims determined as a 

matter of law whether the wage statements contained the information required by the statute. See, 

e.g., Willner, 35 F. Supp. 3d at 1128 (“Upon review of the materials submitted by Manpower, the 

Court concludes that the statements at issue do not contain the requisite [information required by §

226(a)].”); McKenzie v. Fed. Exp. Corp., 765 F. Supp. 2d 1222, 1229 (C.D. Cal. 2011)

(“Accordingly, the Court finds that FedEx violated Section 226(a)(2) by failing to state the ‘total 

hours worked by [an] employee’ in its wage statements.”). 

IPC contends that its wage statements comply with § 226(a)(2), relying on Morgan v. 

United Retail Inc., 186 Cal. App. 4th 1136 (2010). The issue presented in Morgan was whether §

226(a)(2) was satisfied by a wage statement that separately listed the regular and overtime hours 

worked during a pay period, but did not list the total hours worked during the pay period. The 

court found that the statute does not define the terms “showing” or “total hours worked” and 

therefore that the terms should be given their ordinary meaning. Id. at 1146. The court turned to 

the dictionary to ascertain that the ordinary, usual meaning of the verb “show” is “‘to cause or 

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permit to be seen,’ ‘to offer for inspection,’ or ‘to make evident or apparent: serve as the means to 

reveal or make visible.’” Id. Similarly, the court determined that the ordinary, usual meaning of 

the adjective “total” is “‘of or relating to something in its entirety,’ ‘viewed as an entity: complete 

in all details,’ or ‘constituting an entire number or amount.’” Id. “Based on the plain and 

commonsense meaning of these words,” the court concluded that § 226(a)(2) was satisfied where 

the defendant’s “wage statements accurately listed the total number of regular hours and the total 

number of overtime hours worked by the employee during the pay period.” Id. at 1147. 

The Morgan court rejected the plaintiff’s argument that the wage statements were noncompliant because they did not contain a separate line showing the total of all hours worked, 

concluding that “[t]he employee could simply add together the total regular hours figure and the 

total overtime hours figure shown on the wage statement to arrive at the sum of hours worked.” 

Morgan, 186 Cal. App. 4th at 1147. The court determined that “[t]here is nothing in the plain 

language of section 226 to support Morgan’s argument that wage statements which accurately list 

the total regular hours and overtime hours worked during the pay period must also contain a 

separate category with the sum of those two figures.” Id. 

Morgan is distinguishable from the present case in a critical respect. In Morgan it was 

apparent from the face of the wage statements that the total hours worked was the sum of the 

regular and overtime hours worked, such that an employee easily could determine the total hours 

worked during the pay period by doing simple math. In that circumstance, the Morgan court held, 

the absence of a separate line doing the math – that is, providing the sum of the regular and 

overtime hours – did not render the wage statements non-compliant. In the present case, however, 

the total hours worked is not the sum of the regular hours and overtime hours shown in the “HRS. 

CURR” column of IPC’s wage statements. Instead, the “Regular Hours” hours worked include

the overtime hours worked. Thus, in the exemplar provided above, an employee taking the 

approach described in Morgan – adding 64.7 regular hours and 0.75 overtime hours to obtain the 

total hours worked – would double-count the 0.75 overtime hours. IPC does not explain how an 

employee would be able to tell from the face of its wage statements that the “Regular Hours” 

worked includes the overtime hours worked, or that the “Regular Hours” worked equals the total 

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hours worked. Thus, IPC’s reliance on Morgan is misplaced. 

Arroyo argues that McKenzie v. Fed. Exp. Corp. is a more analogous case. In McKenzie, 

the defendant’s wage statements listed three categories of hours: “OvrTimePrm,” “Overtime,” and 

“Reg Earn,” and did not list the total hours worked during the pay period. The number of 

overtime hours was listed twice, once in the “OvrTimePrm” category and once in the “Overtime”

category. The defendant argued that the wage statements complied with § 226(a)(2), citing 

Morgan for the proposition that the failure to include a separate line for total hours worked did not 

render the wage statements non-compliant. McKenzie, 765 F. Supp. 2d at 1229. The McKenzie

court pointed out that “[u]nlike Morgan, the total regular and overtime hours listed in FedEx’s 

wage statements, when added together, do not sum up to the total hours worked by the employee 

during the pertinent time period.” Id. The district court found that without the additional 

information, not disclosed on the wage statements, that overtime hours were listed twice, “an 

employee cannot simply arrive at the sum of hours worked.” Id. (internal quotation marks and 

citation omitted). The district court concluded: “Thus, the Morgan rationale, which contemplates 

that an employee can determine his or her total hours worked by summing up the figures on a 

wage statement without need to reference any other time records or other documents, does not 

apply to FedEx’s somewhat idiosyncratic wage statement.” Id.

This Court agrees with Arroyo that the present case is more like McKenzie than Morgan. 

An employee viewing IPC’s exemplar wage statement could not determine the total number of 

hours worked during the pay period without the additional information, not disclosed on the wage 

statement, that the “Regular Hours” figure includes the separately listed “Overtime Premium” 

hours such that the “Regular Hours” worked are the total hours worked.

IPC asserts that the Ninth Circuit “declined to apply the analysis of McKenzie” in 

Hernandez v. BCI Coca-Cola Bottling Co., 554 F. App’x 661 (9th Cir. 2014). In Hernandez, the 

Ninth Circuit affirmed the district court’s grant of summary judgment for the defendant, 

concluding that an employee could determine the number of overtime hours worked during the 

pay period by subtracting regular hours from total hours. Id. at 662. Similarly, the Ninth Circuit 

concluded that an employee could add the two component overtime rates on the wage statements

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to determine his overall overtime rate. Id. The Ninth Circuit distinguished McKenzie, noting that 

the McKenzie wage statements did not provide a line item for total hours worked, whereas the 

wage statements in the case before it “provided such a line item, allowing Hernandez to do the 

math to determine the § 226(a)-required information.” Id. This Court does not read Hernandez as 

declining to apply McKenzie, but rather as distinguishing McKenzie. The present case is not 

distinguishable from McKenzie on the same grounds found in Hernandez. The wage statements in 

the present case do not provide a line item for total hours worked or otherwise indicate that that 

the “Regular Hours” figure represents the total hours worked.

After reviewing Morgan, McKenzie, Hernandez, and the other cases cited by the parties, 

the Court concludes that IPC has failed to establish as a matter of law that its wage statements 

show the total hours worked as required by Cal. Lab. Code § 226(a)(2).

ii. § 226(a)(9) – Hourly Rates

Under § 226(a)(9), an employer must provide “an accurate itemized statement in writing 

showing . . . (9) all applicable hourly rates in effect during the pay period and the corresponding 

number of hours worked at each hourly rate by the employee.” Cal. Lab. Code § 226(a). Arroyo 

asserts that IPC’s wage statements do not satisfy § 226(a)(9) because it lists the overtime rate as 

one-half the hourly rate instead of one and one-half times the hourly rate. As reflected in the 

exemplar set forth above, IPC’s wage statements contain lines identifying the rate for “Regular 

Hours” as $20.37 per hour, and identifying the “Overtime Premium” as $10.185 per hour. 

IPC argues that its wage statements comply with § 226(a)(9), citing publications of the 

U.S. Department of Labor and California Department of Industrial Relations indicating that the 

overtime rate properly may be displayed as a “premium” equaling one-half the regular rate of pay.

See Def.’s Compendium Exhs. 3-5, ECF 51-2. IPC also argues that it is appropriate to calculate 

overtime hours by applying the regular (base) rate of pay to all hours worked and then adding an 

“Overtime Premium” of one-half the regular (base) rate for overtime hours worked.

Arroyo argues that a federal district court in this Circuit rejected identical arguments in 

Wright v. Renzenberger, Inc., No. CV 13-6642 FMO (AGRx), 2018 WL 1975076 (C.D. Cal. Mar. 

8, 2018). In Wright, the plaintiffs asserted that the defendant’s wage statements violated §

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226(a)(9) because they listed the overtime rate as “one-half of the effective hourly rate, even 

though the rate at which overtime hours were actually paid was one and one-half times the regular 

hourly rate.” Id. at *9. “The wage statements also included overtime hours worked in the 

‘regular’ earnings line.” Id. The defendant argued that it properly could calculate overtime pay by 

calculating the regular rate of pay for all hours worked, and then adding an overtime premium of 

one-half the regular rate of pay for overtime hours worked. See id. While the district court agreed 

that the defendant properly could calculate overtime pay under the method described, the court 

noted that “plaintiffs do not challenge defendant’s method of calculating overtime pay.” Id. at 

*10. “Rather, plaintiffs challenge[d] defendant’s method for displaying the workers’ rates on their 

pay stubs as required by Labor Code § 226(a)(9).” Id. The district court found that the wage 

statements neither showed the accurate overtime rate of pay nor showed the accurate number of 

hours worked at the regular rate of pay. See id. at *11.

IPC asserts that Wright is distinguishable because the employer in that case compensated 

workers using both a base pay rate and a piece rate. IPC contends that that unique way of 

compensating employees resulted in wage statements that did not accurately show the hourly rates 

or the piece rates. That distinction did not play into the Wright court’s analysis of the § 226(a)(9) 

issue discussed above. See Wright, 2018 WL 1975076, at *11. The Wright court concluded in a 

straightforward fashion that the defendant “failed to meet the requirements of Labor Code § 226 

because its pay stubs do not make the overtime rate or actual number of hours worked at the 

regular hourly rate ‘evident or apparent’ to the employee.” 

However, this Court disagrees with the Wright court’s conclusion that the overtime rate is 

unclear where the statements list an “Overtime Premium” of one-half the regular rate of pay, 

rather than an “Overtime Rate” of one and one-half the regular rate of pay. The exemplar wage 

statement clearly states the “Regular Hours” rate of $20.37 per hour, and directly underneath that 

states the “Overtime Premium” of $10.185 per hour. The Court finds as a matter of law that this 

information is sufficient to show the overtime rate as required by § 226(a)(9). 

IPC cites Maldonado v. Epsilon Plastics, Inc., 22 Cal. App. 5th 1308 (2018) for the 

proposition that listing an incorrect overtime rate does not constitute a violation of § 226(a)(9). In 

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Maldonado, the defendant employer adopted an alternative workweek schedule under which 

employees worked a 12-hour day and were paid for 10 hours at the regular rate of pay and 2 hours 

of overtime. See Maldonado, 22 Cal. App. 5th at 1312. After a bench trial, the trial court 

concluded that the alternative work schedule had not been properly adopted, and that the 

employer’s failure to pay overtime for the 9th and 10th hours of work subjected it to liability for 

unpaid overtime, interest, waiting time penalties, inaccurate wage statement penalties, and 

attorney’s fees. See id. The state appellate court reversed the inaccurate wage statement penalties, 

noting that “the pay stubs were accurate in that they correctly reflected the hours worked and the 

pay received.” Id. at 1336. The appellate court held that the fact that the employer’s pay scheme 

“ultimately turned out to be invalid mandates that the employees receive unpaid overtime, interest, 

and attorney’s fees,” but “does not mandate that they also receive penalties for the wage 

statements which accurately reflected their compensation under the rates at which they had 

worked at the time.” Id. at 1337. Maldonado has no bearing on the present case. Arroyo does not 

claim that she was paid the wrong rate. Her claim is that the pay statement did not accurately 

reflect the correct overtime rate. However, as discussed above, that claim is without merit for 

reasons unrelated to Maldonado. 

The Court concludes as a matter of law that IPC’s wage statements show the applicable 

overtime rate as required by Cal. Lab. Code § 226(a)(9). 

b. “Knowing and Intentional”

Liability arises under § 226(e) only where an employee suffers “injury as a result of a 

knowing and intentional failure by an employer to comply with subdivision (a).” Cal. Lab. Code §

226(e)(1) (emphasis added). IPC asserts that any violations of § 226(a) were not knowing and 

intentional, because IPC had a good faith belief that its Workbrain wage statements were in 

compliance with § 226(a). Arroyo contends that there is no good faith defense to liability under §

226(e), and that IPC’s violations of § 226(a) were knowing and intentional within the meaning of 

the statute. 

i. Legal Standard

“Courts have diverged over the degree of intentionality required to establish a violation of 

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§ 226.” Stafford v. Brink’s, Inc., No. CV-14-1352-MWF (PLAx), 2014 WL 12586066, at *5 

(C.D. Cal. Aug. 5, 2014). The statute itself provides little guidance, stating: “For purposes of this 

subdivision, a ‘knowing and intentional failure’ does not include an isolated and unintentional 

payroll error due to a clerical or inadvertent mistake.” Cal. Lab. Code § 226(e)(3). The statute 

also directs that “[i]n reviewing for compliance with this section, the factfinder may consider as a 

relevant factor whether the employer, prior to an alleged violation, has adopted and is in 

compliance with a set of policies, procedures, and practices that fully comply with this section.” 

Id. Two lines of cases have developed regarding the correct interpretation of the “knowing and 

intentional” language in § 226(e), as discussed below.

In one of the most recent decisions to address the issue, Magadia, the court concluded that 

“[t]he majority view is that an employer’s good faith belief that it is not violating the California 

Labor Code precludes a finding of a knowing and intentional violation.” Magadia v. Wal-Mart 

Assocs., Inc., 384 F. Supp. 3d 1058, 1082 (N.D. Cal. 2019) (collecting cases). The Magadia court, 

as well as several other courts in this district, have found the “knowing and intentional”

requirement of California Labor Code § 226 to be akin to the “willfulness” requirement of 

California Labor Code § 203. See Utne v. Home Depot U.S.A., Inc., No. 16-CV-01854-RS, 2019 

WL 3037514, at *6 (N.D. Cal. July 11, 2019) (“[T]he ‘knowing and intentional’ standard 

applicable to Section 226 is closely related to the ‘willfulness’ standard which governs Section 

203.”); Magadia, 384 F. Supp. 3d at 1081 (discussing relationship between “knowing and 

intentional” standard under § 226 and “willful” standard under § 203); Woods v. Vector Mktg. 

Corp., No. C-14-0264 EMC, 2015 WL 2453202, at *4 (N.D. Cal. May 22, 2015) (“The similarity 

between ‘knowingly and intentionally’ under Section 226 and ‘willfully’ under Section 203 with 

respect to their incorporation of a good faith dispute defense is consistent with the Labor Code 

generally for several reasons.”). 

Section 203 imposes waiting time penalties when an employer “willfully fails to pay” 

wages upon termination of employment. Cal. Lab. Code § 203(a). The California Code of 

Regulations provides that “a good faith dispute that any wages are due will preclude imposition of 

waiting time penalties under Section 203.” Cal. Code Regs. tit. 8, § 13520. In Utne, the court 

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observed that, “Given the similarity between these two governing standards, it is only logical that 

the good faith defense would apply to both Sections, not merely to Section 203.” Utne, 2019 WL 

3037514, at *6. In Woods, the court opined that “[i]t would seem ironic if the good faith dispute 

defense applied to Section 203, which involves failure to timely pay wages, but not to Section 226, 

which involves inaccurate wage statements.” Woods, 2015 WL 2453202, at *4 n.3. The Woods

court reasoned that “[i]f anything, failure to pay wages would seem to warrant lesser tolerance of 

defenses than failing to provide accurate wage statements.” Id.

Courts finding that a good faith belief in compliance precludes liability under § 226 also 

have relied on “the general understanding of ‘knowing and intentional.’” Magadia, 384 F. Supp. 

3d at 1083. Citing dictionary definitions for the words “knowing” and “intentional,” the Magadia

court concluded that “[k]nowingness and intentionality are scienter requirements.” Id. The 

Magadia court reasoned that “[t]o adopt an interpretation that would essentially read out any 

scienter requirement from ‘knowing and intentional”’ would create tension with the commonlyunderstood legal meanings of these words.” Id. In Boyd, the court concluded that “[p]enalizing 

employers who, in good faith but ultimately incorrectly, believe that their employees are exempt, 

and on this basis do not comply with § 226, is inconsistent with the requirement that a violation be 

‘knowing and intentional.’” Boyd v. Bank of Am. Corp., 109 F. Supp. 3d 1273, 1308-09 (C.D. 

Cal. 2015); see also Stafford, 2014 WL 12586066, at *5 (“This good faith dispute precludes a 

finding that any injury was knowing and intentional.”).

The other line of cases has “adopted [the view] . . . that the knowing and intentional 

requirement can be satisfied by simply showing that an employer provided an inadequate wage 

statement not as a result of clerical error or inadvertent mistake.” Magadia, 384 F. Supp. 3d at 

1082. “To establish that Defendants’ violation of § 226(a) was ‘knowing and intentional’” under 

this alternate approach, the plaintiff must demonstrate only that the defendant was “aware of the 

factual predicate underlying the violations.” Cabardo v. Patacsil, 248 F. Supp. 3d 1002, 1010 

(E.D. Cal. 2017) (internal quotation marks, citation, and alteration omitted). In Willner, the court 

described and applied that approach as follows: “a ‘knowing and intentional’ violation requires a 

showing that the defendant knew that facts existed that brought its actions or omissions within the 

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provisions of section 226(a) – i.e., that Manpower knew that its wage statements did not contain 

the inclusive dates of the period for which its employees were paid, and knew that they did not 

contain Manpower’s address.” Willner, 35 F. Supp. 3d at 1131. The Willner court opined that the 

plaintiff was “not required to demonstrate that Manpower knew that this conduct, if otherwise 

proven, was unlawful.” Id.; see also Cabardo, 248 F. Supp. 3d at 1010 (“However, Plaintiffs are 

not required to demonstrate that Defendants knew their conduct was unlawful.”). 

Courts adopting this approach have found that “[w]hether the employer knew it was

violating section 226(a) is irrelevant.” Novoa v. Charter Commc’ns, LLC, 100 F. Supp. 3d 1013, 

1027-28 (E.D. Cal. 2015) (internal quotation marks and citation omitted) (collecting cases). Those 

courts have characterized arguments based on good faith as “a mistake of law defense” that 

“stands contrary to the often repeated legal maxim: ignorance of the law will not excuse any 

person, either civilly or criminally.” Id. (internal quotation marks and citation omitted); see also

Cabardo, 248 F. Supp. 3d at 1010. They also reasoned that considering the employer’s good faith 

is “not consistent with the text of § 226(e) itself,” noting that under § 226(e)(3) factfinders may 

consider whether the employer has adopted a set of policies that comply with § 226. Cabardo, 

248 F. Supp. 3d at 1010; see also Troester v. Starbucks Corp., 387 F. Supp. 3d 1019, 1030 (C.D. 

Cal. 2019), order clarified on reconsideration, No. CV 12-07677-CJC (PJWx), 2019 WL 2902487 

(C.D. Cal. May 21, 2019); Novoa, 100 F. Supp. 3d at 1028. This statutory language would be 

irrelevant, the argument goes, if an employer could avoid liability by establishing a good faith 

belief in compliance with the statute. See Troester, 387 F. Supp. 3d at 1030; Cabardo, 248 F. 

Supp. 3d at 1010. The courts that have found an employer’s good faith irrelevant to the “knowing 

and intentional” element also have noted that while the California Code of Regulations expressly 

provides that a good faith belief in compliance precludes liability under § 203, no such provision 

exists with respect to § 226. See Troester, 387 F. Supp. 3d at 1030.

This Court finds persuasive those decisions holding that an employer’s good faith belief 

that it is in compliance with § 226 precludes liability under that statute. While courts adopting the 

contrary view disapprove of “read[ing] a good faith defense into” § 226(e), see Novoa, 100 F. 

Supp. 3d at 1029, it appears to this Court that failing to consider the employer’s good faith belief 

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would read out of § 226(e) the mental state implicated by the phrase “knowing and intentional.” 

ii. Analysis

IPC contends that its good faith belief that its wage statements complied with § 226 

precludes liability under the statute. IPC submits the declaration of Jan Scharff, who worked for 

IPC in various payroll capacities from 1998 to 2018, when she retired. Scharff Decl. ¶ 2, Def.’s 

Compendium Exh. 9, ECF 51-2. From April 2017 to November 2018, Scharff was IPC’s Global 

Payroll, Compliance and Project Lead. Id. Her responsibilities included ensuring that employees 

were paid correctly. Scharff Decl. ¶ 3. To that end, Scharff purchased a copy of the American 

Payroll Association’s text book and desk reference; signed up to receive newsletters and email 

alerts from the American Payroll Association about changes to payroll requirements; and received 

legal updates regarding wage statements from IPC’s third party payroll vendor. Scharff Decl. ¶ 4. 

In 2011, Scharff organized an internal audit of IPC’s compliance with wage statement 

requirements for California and New York. Scharff Decl. ¶¶ 7-11. Scharff and other IPC 

employees attended a meeting on March 30, 2011 to discuss those states’ requirements, including 

requirements found in California Labor Code § 226. Scharff Decl. ¶ 7. Scharff and the other 

meeting members compared each requirement of § 226 to IPC’s Workbrain wage statements to 

determine whether IPC’s Workbrain wage statements were in compliance. Scharff Decl. ¶ 8. 

Scharff had a printed copy of § 226 at the meeting, and she added a hand-written checkmark to 

each requirement as the meeting members determined that it was satisfied by the Workbrain wage 

statements. Scharff Decl. ¶ 10; Scharff Notes, Def.’s Compendium Exh. 10, ECF 51-2. The 

meeting members determined that the Workbrain wage statements were not in compliance with §

226(a)(6), after which Scharff worked with IPC’s third party payroll provider to bring the wage 

statements into compliance by including the pay period start and end dates. Scharff Decl. ¶ 8; 

Scharff Notes. The meeting members determined that the Workbrain wage statements complied 

with all other requirements of § 226. Scharff Decl. ¶ 9. Scharff believed, and still believes, that 

the Workbrain wage statements comply with § 226(a)(2) by including the total number of hours 

worked in the box at the intersection of “Regular Hours” and “HRS. CURR.” Id. Scharff also 

believed, and still believes, that the Workbrain wage statements comply with § 226(a)(9) by 

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showing the overtime rate as an extra one-half rate on top of the regular hourly rate. Scharff Decl. 

¶ 10.

Scharff states that as far as she knows, there were never any complaints from IPC 

employees claiming that they did not understand “Regular Hours” to equal the total hours worked, 

or claiming that they did not understand their overtime rate. Scharff Decl. ¶¶ 9-10. Scharff 

indicates that “to the extent Ms. Arroyo is now complaining that she did not understand” her wage 

statements, “she would be the only person I have ever heard make that complaint.” Scharff Decl. 

¶¶ 9-10. Scharff states that to her knowledge, Arroyo never made any such complaints during her 

employment at IPC. Scharff Decl. ¶¶ 9-10. Scharff represents that in all of her experience doing 

payroll, she has never seen any indication in a text book, treatise, newsletter, or legal alert 

suggesting that the way IPC shows the total hours worked and the overtime rate of pay is improper 

for California. Scharff Decl. ¶ 12. Likewise, the third party payroll vendors that IPC used never 

raised concerns regarding IPC’s compliance with § 226. Id. 

Scharff’s declaration and meeting notes are sufficient to meet IPC’s initial burden on 

summary judgment to show that it had a good faith belief that it was in compliance with § 226. As 

discussed above, a good faith belief that it was in compliance would preclude IPC’s liability under 

§ 226. The burden thus shifts to Arroyo to come forward with evidence that IPC did not have a 

good faith belief that it was in compliance with § 226. Arroyo has not satisfied this burden. As 

discussed above in connection with Arroyo’s motion for a continuance pursuant to Rule 56(d), 

Arroyo took no merits discovery prior to the summary judgment hearing date even though she had 

one and one-half years to conduct discovery in anticipation of IPC’s summary judgment motion. 

See Case Management Order, ECF 21 (reflecting that on March 29, 2018 the Court issued a case 

schedule setting the last day for summary judgment hearing on November 7, 2019). Because 

Arroyo has no evidence to controvert IPC’s showing of good faith, IPC is entitled to summary 

judgment on Arroyo’s wage statement claims on the basis that any violation of § 226 was not 

“knowing and intentional.”

c. Resulting Injury

The third element of a claim under § 226 is injury resulting from the statutory violation. 

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An employee is deemed to suffer injury if the employer fails to provide accurate and complete 

information as required by § 226(a) and “the employee cannot promptly and easily determine” the 

required information from the wage statement alone. Cal. Lab. Code § 226(e)(2)(B). The statute 

defines “promptly and easily determine” to mean “a reasonable person would be able to readily 

ascertain the information without reference to other documents or information.” Cal. Lab. Code §

226(e)(2)(C). “For purposes of section 226(e), a plaintiff is ‘injured’ if the accuracy of any of the 

items enumerated in § 226(a) [including the hourly rate] cannot be ascertained from the four 

corners of the wage statement.” Raines v. Coastal Pac. Food Distributors, Inc., 23 Cal. App. 5th 

667, 676 (2018) (internal quotation marks and citation omitted). “An actual injury is shown where 

there is a need for both additional documentation and additional mathematical calculations in 

order to determine whether Plaintiffs were correctly paid and what they may be owed.” Id.

(internal quotation marks and citation omitted). “In contrast, where the deficiency in the wage 

statement could be corrected by ‘simple math,’ there is no actual injury.” Id.

i. § 226(a)(2)

IPC contends that a reasonable employee viewing its wage statements easily could 

determine the total number of hours worked as required under § 226(a)(2). As discussed above in 

section II.C.2.a, the total hours worked is not readily ascertainable from the four corners of the 

wage statement. The wage statements in the present case do not provide a line item for total hours 

worked or otherwise indicate that that the “Regular Hours” figure represents the total hours 

worked. 

IPC submits declarations of numerous class members stating that they were able to read 

and understand their wage statements. See Declarations, Def.’s Compendium Exh. 15. IPC also 

points to Arroyo’s deposition testimony, in which she initially stated that she understood the 64.7 

“Regular Hours” shown on the exemplar wages statement to represent the total hours worked 

during the pay period. See Arroyo Dep. 39:2-40:25, Def.’s Compendium Exh. 8, ECF 51-2. After 

a break in the deposition, however, Arroyo testified that she did not understand the “Regular 

Hours” to be the total hours worked. See Arroyo Dep. 56:4, 58:7-59:13, 60:15-17, Def.’s 

Compendium Exh. 8, ECF 51-2. IPC acknowledges that injury is measured by a reasonable 

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person standard, but it argues that the ability of class members to understand the wage statements 

is evidence of what a reasonable employee would understand. Arroyo argues that because the 

standard is an objective one, evidence of what she and class members understood is irrelevant.

“[T]he standard to establish ‘injury’ under section 226(e) is whether ‘a reasonable person

would be able to readily ascertain the information without reference to other documents or 

information,’ and not whether the plaintiff or each putative class member was able to readily 

ascertain the information without reference to other documents or information.” Stafford, 2015 

WL 12699458, at *7 (citing Cal. Labor Code § 226(e)(2)(C), emphasis in original). “Naturally, 

the more that Defendant is able to offer to demonstrate that most employees were not confused 

about the pay period start date, the more likely a factfinder is to conclude that a reasonable person 

would have been able to readily ascertain the relevant pay period start date from the wage 

statement.” Id. at *10. Under this standard, the Court finds IPC’s evidence that numerous 

employees understood the wage statements to be relevant to the issue of injury. However, given 

Arroyo’s testimony that she did not understand the wage statements to show total hours worked, 

and the Court’s conclusion that IPC has not established that the total number of hours worked is 

readily ascertainable from the four corners of the wage statement, there is at least a factual dispute 

whether the asserted violations of § 226(a)(2) resulted in injury to Arroyo and the class within the 

meaning of the statute.

ii. § 226(a)(9)

There is no such factual dispute with respect to the asserted violations of § 226(a)(9), 

however. An employee easily could add the regular rate of pay, displayed as $20.37 per hour, 

with the overtime premium, displayed as $10.185, to determine that the overtime rate of pay is 

$30.555. The Court concludes no reasonable trier of fact viewing this wage statement could find 

that a reasonable employee would not understand that the overtime rate is one and one-half times 

the regular rate of pay. 

d. Conclusion re Wage Statement Claims

IPC has demonstrated that it is entitled so summary judgment on Arroyo’s claims for 

violations of § 226(a)(2) and (a)(9) because IPC had a good faith belief that it was in compliance 

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with § 226 and therefore it could not have committed a knowing and intentional violation of the 

statute. IPC has demonstrated its entitlement to summary judgment on the § 226(a)(9) claim on 

the additional grounds that Arroyo cannot establish a statutory violation or resulting injury.

IPC’s motion for summary judgment on Claim 2, asserting violations of Cal. Lab. Code §

226(a)(2) and (a)(9) on behalf of the class, is GRANTED. 

3. Individual Claims for Failure to Reimburse (Claims 1 and 4)

Claim 1 alleges that IPC failed to reimburse Arroyo for uniform expenses in violation of 

Cal. Lab. Code § 2802. Claim 4 alleges violations of California’s UCL based on the asserted 

failure to reimburse. The Court denied class certification for these claims, so they are individual 

claims asserted only on behalf of Arroyo.

i. Claim 1 – Violation of Cal. Labor Code § 2802

California Labor Code § 2802 provides in relevant part that “[a]n employer shall

indemnify his or her employee for all necessary expenditures or losses incurred by the employee 

in direct consequence of the discharge of his or her duties.” Cal. Lab. Code § 2802(a). “The 

elements of a claim under Section 2802 are: (1) the employee made expenditures or incurred 

losses; (2) the expenditures or losses were incurred in direct consequence of the employee’s 

discharge of his or her duties, or obedience to the directions of the employer; and (3) the 

expenditures or losses were reasonable and necessary.” McLeod v. Bank of Am., N.A., No. 16-CV03294-EMC, 2017 WL 6373020, at *5 (N.D. Cal. Dec. 13, 2017). “[A]n employee’s failure to 

submit a request for reimbursement does not waive his or her rights under Section 2802.” Id. 

“Rather, when the employer knows or has reason to know that the employee has incurred an 

expense, then it has the duty to exercise due diligence and take any and all reasonable steps to 

ensure that the employee is paid for the expense.” Id. (internal quotation marks, citation, and 

alteration omitted).

It is undisputed that the first element is satisfied, as a $7.50 deduction for uniform service 

was made from Arroyo’s paychecks. IPC’s motion thus turns on the second element, whether 

Arroyo’s expenditures on uniform service were incurred in direct consequence of the discharge of 

her duties or obedience to the directions of IPC; and the third element, whether the expenditures

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were reasonable and necessary. 

With respect to the second element, IPC presents evidence that it did not require Arroyo to 

wear a uniform. Several other employees at the Salinas facility where Arroyo worked stated that 

they were not required to wear a uniform for work and therefore wore their own clothes or 

voluntarily paid for uniform services from Cintas. See Declarations, Def.’s Compendium Exhs. 

13-20, ECF 51-2. Arroyo testified that one of her coworkers did not wear a uniform when he 

worked on the Cascader. Arroyo Dep. 31:23-34:1, Def.’s Compendium Exh. 8, ECF 51-2. This 

evidence goes only to the issue of whether Arroyo’s uniform expenditures were incurred in 

obedience to the directions of IPC. The evidence does not speak to the alternative aspect of the 

second element, whether Arroyo’s uniform expenditures “were incurred in direct consequence of 

the discharge of her duties.” Arroyo testified that she wore a uniform to prevent her street clothes 

from being covered with wax and to prevent getting burned. See Arroyo Dep. 24:12-24, 33:11-

34:12, Def.’s Compendium Exh. 8, ECF 51-2. IPC dismisses this testimony as evidence that 

Arroyo merely preferred to wear a uniform without disputing Arroyo’s statements that had she not 

worn a uniform she risked being burned or having her clothing ruined. IPC thus has failed to meet 

its initial burden on summary judgment. IPC has not demonstrated that Arroyo’s uniform 

expenses were not incurred in direct consequence of the discharge of her duties.

With respect to the third element, that the expenditures or losses were reasonable and 

necessary, “California courts have found that necessity is by nature a question of fact and that the 

reasonableness of any given expenditure must turn on its own facts.” Nguyen v. Wells Fargo 

Bank, No. 15-CV-05239-JCS, 2016 WL 5390245, at *9 (N.D. Cal. Sept. 26, 2016) (internal 

quotation marks, citation, and alteration omitted). “Consequently, summary judgment on the 

question of whether an expenditure is necessary for the purposes of section 2802 is only 

appropriate where the facts are undisputed and no conflicting inferences are possible.” Id. That is 

not the case here. Arroyo’s testimony that she wore a uniform to avoid getting burned or having 

her clothing caked with hot wax gives rise to a reasonable inference that the uniform was a 

necessary and reasonable expenditure. 

IPC’s motion appears to be based on a view that Arroyo is entitled to reimbursement of 

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uniform expenses only if IPC required her to wear a uniform. However, the “argument that there 

is a bright-line rule that only expenses that are officially required can be considered ‘necessary’

does not square with the case law.” Nguyen, 2016 WL 5390245, at *9. Thus, it is appropriate to 

deny “summary judgment on the question of whether the expenses were ‘necessary,’ even though 

there was no express policy requiring employees to incur these expenses.” Id.

Because IPC has failed to meet its initial burden, IPC’s motion for summary judgment on

Claim 2, asserting violation of Cal. Lab. Code § 2802 on behalf of Arroyo individually, is 

DENIED.

ii. Claim 4 – Violation of California’s UCL

Claim 4 asserts that IPC engaged in unfair and unlawful business practices in violation of 

California’s UCL, Cal. Bus. & Prof. Code §§ 17200, et seq. The UCL claim is based on IPC’s 

alleged failure to reimburse uniform expenses in violation of Cal. Lab. Code § 2802 and related 

statutory sections. 

IPC contends that because it is entitled to summary judgment on Arroyo’s individual claim 

for violation of Cal. Lab. Code § 2802, it likewise is entitled to summary judgment on her 

derivative UCL claim. See Aleksick v. 7-Eleven, Inc., 205 Cal. App. 4th 1176, 1185 (2012)

(“When a statutory claim fails, a derivative UCL claim also fails.”). As discussed above, IPC is 

not entitled to summary judgment on Arroyo’s § 2802 claim.2

Accordingly, IPC’s motion for summary judgment on Claim 4, asserting violation of 

California’s UCL on behalf of Arroyo individually, is DENIED.

4. PAGA Claim (Claim 3)

Claim 3 is a representative action under PAGA seeking civil penalties for IPC’s alleged 

failure to provide accurate wage statements in violation of Cal. Lab. Code § 226 and alleged 

failure to reimburse business expenses in violation of Cal. Lab. Code § 2802. IPC argues that 

because the PAGA claim is derivative of substantive Claim 1 (business expenses) and Claim 2 

2

IPC also argues that it is entitled to summary judgment on Arroyo’s UCL claim to the extent it is 

asserted on behalf of the class based on alleged violations of Cal. Lab. Code § 226. Arroyo 

clarifies in her opposition that she does not assert a UCL claim based on § 226. See Opp. at 26, 

ECF 52.

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(wage statements), summary judgment on the PAGA claim is appropriate to the same extent that 

summary judgment is appropriate on the substantive claims. IPC also argues that it is entitled to 

summary judgment on the PAGA claim to the extent it is based on failure to reimburse business 

expenses under § 2802, because Arroyo has not identified a group of aggrieved employees with 

respect to that claim. Arroyo argues that certain elements of a direct claim under § 226 need not 

be proved to maintain a PAGA claim for violation of § 226, and that she is not required to identify 

a group of aggrieved employees to survive summary judgment on her PAGA claim for violation of 

§ 2802.

a. PAGA Claim for Violation of § 226

As discussed above, IPC is entitled to summary judgment on Arroyo’s § 226(a)(2) claim 

only because IPC has established a good faith belief that it complied with § 226, which precludes 

a finding that any violation of the statute was “knowing and intentional.” The grant of summary 

judgment based on a determination that Arroyo cannot establish a “knowing and intentional” 

violation of § 226 does not entitle IPC to summary judgment on Arroyo’s PAGA claim for 

violation of § 226(a)(2), however. “[A] representative PAGA claim for civil penalties for a 

violation of section 226(a) does not require proof of injury or a knowing and intentional 

violation.” Raines, 23 Cal. App. 5th at 670; see also Lopez v. Friant & Assocs., LLC, 15 Cal. App. 

5th 773, 784 (2017) (“Because section 226(e)(1) sets forth the elements of a private cause of 

action for damages and statutory penalties, its requirement that a plaintiff demonstrate ‘injury’ 

resulting from a ‘knowing and intentional’ violation of section 226(a) is not applicable to a PAGA 

claim for recovery of civil penalties.”).

IPC is entitled to summary judgment on Arroyo’s § 226(a)(9) claim on the additional 

grounds that Arroyo cannot establish a statutory violation or resulting injury. Because Arroyo 

cannot establish a statutory violation of § 226(a)(9), she cannot maintain a PAGA claim under §

226(a)(9).

Accordingly, IPC’s motion for summary judgment on the PAGA claim is GRANTED to 

the extent the claim is based on violation of § 226(a)(9) but DENIED to the extent the claim is 

based on violation of § 226(a)(2). 

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b. PAGA Claim for Violation of § 2802

IPC has not established its entitlement to summary judgment on Arroyo’s § 2802 claim 

and thus its argument that judgment on the § 2802 claim requires judgment on the PAGA claim

does not apply. With respect to IPC’s alternative argument that it is entitled to summary judgment 

because Arroyo has not identified a group of aggrieved employees, IPC has not cited any case 

holding that a PAGA representative must identify a group of aggrieved employees to survive 

summary judgment. 

IPC argues that the PAGA claim for violation of § 2802 would be unmanageable because it 

would require individualized determinations whether each employee is entitled to reimbursement. 

IPC relies on cases dismissing or striking PAGA claims as unmanageable. See, e.g., Ortiz v. CVS 

Caremark Corp., No. C-12-05859 EDL, 2014 WL 1117614, at *4 (N.D. Cal. Mar. 19, 2014)

(dismissing PAGA claim as unmanageable); Amiri v. Cox Commc’ns California, LLC, 272 F. 

Supp. 3d 1187, 1194 (C.D. Cal. 2017) (striking PAGA claim as unmanageable). While it 

ultimately may determine that the PAGA claim for violation of § 2802 is unmanageable, IPC has 

not shown that is an appropriate issue for summary judgment, and the Court is not prepared to 

make that decision based on the single page of briefing IPC devoted to the issue in its motion. 

The Court therefore will deny IPC’s motion for summary judgment on the PAGA claim without 

prejudice to reassertion of the manageability argument at trial. 

The Court notes that at the hearing, Arroyo’s counsel asked the Court to consider the case 

Williams v. Superior Court, 3 Cal. 5th 531 (2017), which was not cited in the briefs, on the issue 

of manageability. Williams addressed the appropriate scope of discovery in a PAGA claim and 

therefore is not relevant to the issues before this Court on summary judgment. 

IPC’s motion for summary judgment on the PAGA claim, to the extent based on violation 

of § 2802, is DENIED.

//

//

//

//

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III. ORDER

For the foregoing reasons,

(1) Arroyo’s motion for a continuance pursuant to Federal Rule of Civil Procedure 

56(d) is DENIED.

(2) IPC’s motion for summary judgment is GRANTED as to Claim 2 (class claim), 

GRANTED IN PART AND DENIED IN PART as to Claim 3 (PAGA claim), and 

DENIED as to Claims 1 and 4 (individual claims).

(3) Following this ruling, the claims remaining for trial are: 

a. Claim 1 for failure to reimburse business expenses in violation of Cal. Lab. 

Code § 2802 (individual claim);

b. Claim 3 for PAGA penalties based on alleged violations of Cal. Lab. Code 

§§ 226(a)(2) and 2802; and

c. Claim 4 for violation of California’s UCL based on alleged violation of Cal. 

Lab. Code § 2802 and related code sections (individual claim).

(4) This order terminates ECF 51.

Dated: February 24, 2020

______________________________________

BETH LABSON FREEMAN

United States District Judge

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