Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-04440/USCOURTS-cand-4_04-cv-04440-3/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1441 Petition for Removal- Labor/Mgmnt. Relations

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

GUITA BAHRAMIPOUR, on behalf of

herself, the general public, and all

others similarly situated,

Plaintiff,

v.

CITIGROUP GLOBAL MARKETS, INC.

formerly known as SALOMON SMITH

BARNEY,

Defendant.

 /

No. C 04-4440 CW

ORDER DENYING

DEFENDANT'S

MOTION FOR

PARTIAL SUMMARY

JUDGMENT

Defendant Citigroup Global Markets, Inc. moves for partial

summary judgment of the first cause of action brought by Plaintiff

Guita Bahramipour under the California Unfair Competition Law, Bus.

& Prof. Code § 17200 et seq. (UCL), based upon violations of the

Fair Labor Standards Act (FLSA), 29 U.S.C. § 200 et seq. Plaintiff

seeks to recover restitutionary damages for any of Defendant's wage

and hour violations which fell within the UCL's four-year statute

of limitations. Plaintiff also indicates that she will move to

certify an "opt-out" class pursuant to Rule 23 of the Federal Rules

of Civil Procedure. Defendant argues that the four-year statute of

limitations and the "opt-out" class certification procedure sought

by Plaintiff in her UCL claim are preempted by the FLSA and,

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alternatively, that Plaintiff's UCL remedies should be limited to

those available under the FLSA. Plaintiff opposes this motion. 

The matter was heard on December 2, 2005. Having considered all of

the papers filed by the parties and oral argument, the Court DENIES

Defendant's motion.

BACKGROUND

On September 16, 2004, Plaintiff, a former securities broker

for Defendant, filed a class action suit in State court, alleging

that Defendant engaged in various illegal pay practices. 

Plaintiff's first cause of action alleges that Defendant

misclassified securities brokers as "exempt" employees under the

FLSA, thereby denying them overtime pay in violation of the FLSA,

which constitutes unfair competition under the UCL. On October 20,

2004, alleging federal question jurisdiction under 28 U.S.C. 

§ 1331, Defendant removed the action to federal court pursuant to

28 U.S.C. § 1441. On October 28, 2005, Defendant moved for partial

summary judgment.

DISCUSSION

I. Legal Standard

A. Summary Judgment

Summary judgment is properly granted when no genuine and

disputed issues of material fact remain, and when, viewing the

evidence most favorably to the non-moving party, the movant is

clearly entitled to prevail as a matter of law. Fed. R. Civ. P.

56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

1987). 

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The moving party bears the burden of showing that there is no

material factual dispute. Therefore, the court must regard as true

the opposing party's evidence, if supported by affidavits or other

evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815

F.2d at 1289. The court must draw all reasonable inferences in

favor of the party against whom summary judgment is sought. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d

1551, 1558 (9th Cir. 1991). 

B. Preemption

Under the Supremacy Clause, State law that conflicts with

federal law has no effect. Cipollone v. Liggett Group, Inc., 505

U.S. 504, 516 (1992) (citing U.S. Const. art. VI, cl. 2). Federal

preemption of State law may be express or implied. Shaw v. Delta

Airlines, Inc., 463 U.S. 85, 95 (1983). Absent explicit preemptive

language, there are two types of implied preemption: field

preemption and conflict preemption. Crosby v. Nat'l Foreign Trade

Council, 530 U.S. 363, 372 (2000). 

 Where Congress has not entirely displaced State regulation in

a specific field, "State law will still be preempted to the extent

that it actually conflicts with federal law." Pac. Gas & Elec. Co.

v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 190, 204

(1983). There are two reasons courts will find State law conflictpreempted. First, State law will be conflict-preempted where it is

"impossible for a private party to comply with both state and

federal requirements." English v. Gen. Elec. Co., 496 U.S. 72, 79

(1990). Second, State law will be conflict-preempted where that

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law "stands as an obstacle to the accomplishment and execution of

the full purposes and objectives of Congress." Hines v.

Davidowitz, 312 U.S. 52, 67 (1941). 

 Congressional intent is the "ultimate touchstone" of any

preemption analysis, express or implied. Gade v. Nat'l Solid

Wastes Mgmt. Ass'n, 505 U.S. 88, 96, 98 (1992). In determining

Congressional intent to preempt, a court must "begin with the

language employed by Congress and the assumption that the ordinary

meaning of the language accurately expresses the legislative

purpose," Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383

(1992), because "[t]he first and most important step in construing

a statute is the statutory language itself." Royal Foods Co., Inc.

v. RJR Holdings, Inc., 252 F.3d 1102, 1106 (9th Cir. 2001) (citing

Chevron USA v. Natural Res. Def. Council, 467 U.S. 837, 842-44

(1984)). 

 There is a presumption against implied preemption of State law

in areas traditionally regulated by the States. California v. ARC

Am. Corp., 490 U.S. 93, 101 (1989). In addressing the question of

preemption in a field traditionally occupied by the States, a court

must "start with the assumption that the historic police powers of

the States were not to be superseded by the Federal Act unless that

was the clear and manifest purpose of Congress." Id. (quoting Rice

v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)); Hillsborough

County Florida v. Automated Med. Lab, Inc., 471 U.S. 707, 715

(1985). "In other words, we are not to conclude that Congress

legislated ouster of [a State] statute . . . in the absence of an

unambiguous congressional mandate to that effect." Florida Lime

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and Avocado Growers, Inc. v. Paul, 373 U.S. 132, 146-47 (1963). 

II. The UCL and the FLSA

The UCL prohibits any "unlawful, unfair or fraudulent business

act or practice." Cal. Bus. & Prof. Code § 17200. The UCL

incorporates other laws and treats violations of those laws as

unlawful business practices independently actionable under State

law. Chabner v. United Omaha Life Ins. Co, 225 F.3d 1042, 1048

(9th Cir. 2000). Violation of almost any federal, State, or local

law may serve as the basis for a UCL claim. Saunders v. Super.

Ct., 27 Cal. App. 4th 832, 838-38 (1994). 

In 1938, finding that the existence of labor conditions

"detrimental to the maintenance of the minimum standard of living

necessary for health, efficiency, and general well-being of

workers" burdened interstate commerce, Congress passed the FLSA. 

29 U.S.C. § 202(a). Absent an exclusion for "exempt" employees,

the FLSA requires employers to pay employees overtime at the rate

of one-and-one-half times their normal pay. 29 U.S.C. § 207(a)(1). 

The original provision had no statute of limitations and courts

applied varying statutes of limitation borrowed from the States in

which claims were brought. Arrington v. Nat'l Broad. Co., 531 F.

Supp. 498, 500-502 (D.D.C. 1982) (discussing history of the Portalto-Portal Act). 

In 1947, in response to the Supreme Court's decision in

Anderson v. Mount Clemens Pottery Co., 328 U.S. 680, 692 (1946)

(extending compensable "work" under the FLSA to preliminary

activities of the employee, regardless of contrary custom or

contract), Congress passed the Portal-to-Portal Act, amending the

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FLSA. Arrington, 531 F. Supp. at 500-502. The amendments included

a limitation on retroactive relief and a statute of limitations. 

As amended, the FLSA places a two-year statute of limitations on

wage and hour claims, although the period may be increased to three

years where there is a finding of "willful" statutory violations. 

29 U.S.C. § 255(a). Moreover, as amended, the FLSA prohibits any

employee from pursuing an FLSA claim "unless he gives his consent

in writing to become such a party and such consent is filed in the

court in which such action is brought." 29 U.S.C. § 216(b).

III. Conflict Preemption

Defendant does not assert that the FLSA expressly preempts

State law, that the FLSA preempts the entire field of wage and hour

protections, or that a party could not comply with both State and

federal requirements. Instead, Defendant relies on the theory of

conflict preemption that the UCL, as applied in Plaintiff's claim,

stands as an obstacle to the congressional purposes embodied by the

FLSA.

A. Identification of a Conflict

Under California law, there is a four-year statute of

limitations for UCL claims. Cortez v. Purolator Air Filtration

Prods., Co., 23 Cal. 4th 163, 178-79 (2000). Moreover, California

law allows a UCL class to be certified as an "opt-out" class. SavOn Drug Stores, Inc. v. Super. Ct., 34 Cal. 4th 319, 340 (2004)

(affirming trial court's certification of "opt-out" class for UCL

claims predicated upon allegedly improper overtime exemptions). 

As noted above, under the FLSA there is a two-year statute of

limitations which may be extended to three years only upon a

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showing of willful statutory violations. Moreover, in FLSA class

actions, all individual plaintiffs must affirmatively "opt-in" by

providing their written consent to participating in the class. 29

U.S.C. § 216(b); see also Kinney Shoe Corp. v. Vorhes, 564 F.2d

859, 862 (9th Cir. 1977) (parties cannot pursue Rule 23 "opt-out"

certification for claims falling under section 216(b)), overruled

on other grounds by Hoffmann-La Roche Inc. v. Sperling, 493 U.S.

165 (1989). Defendant argues that these procedural differences

between the FLSA and the UCL result in conflict preemption. 

However, these differences would result in conflict preemption only

if the UCL procedures stand as an obstacle to the "accomplishment

and execution of the full purposes and objectives of Congress." 

Williamson v. General Dynamics Corp., 208 F.3d 1144, 1152 (9th Cir.

2000). 

B. The Purpose of FLSA

The purpose of the FLSA is to protect employees. Williamson,

at 1154; (citing Barrantine v. Arkansas-Best Freight Sys., Inc.,

450 U.S. 728, 739 (1981)). Defendant argues that, in light of the

Portal-to-Portal Act amendments, the FLSA is meant to protect

employers as well as employees. However, the Ninth Circuit, in

Williamson, considered the Portal-to-Portal Act amendments and

concluded: "Despite the [Portal-to-Portal Act] amendments, . . .

the central purpose of the FLSA is to enact minimum wage and

maximum hour provisions designed to protect employees." 

Williamson, 208 F.3d at 1052.

Defendant also contends that Williamson requires preemption of

UCL claims predicated upon violations of the FLSA because of the

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court's statement that "[c]laims that are directly covered by the

FLSA (such as overtime and retaliation disputes) must be brought

under the FLSA." 208 F.3d at 1154. Defendant's interpretation of

Williamson, however, is incorrect. 

Barnett v. Washington Mut. Bank, FA, 2004 WL 2011462 (N.D.

Cal. 2004) addressed the same issue presented here, and held that

the FLSA did not preempt a UCL claim premised upon violations of

the FLSA. The court looked at the very statement in Williamson

relied upon by Defendant and concluded that this statement was

dicta because the Ninth Circuit had stated earlier in the opinion

that the lower court's assumption that "the FLSA is the exclusive

remedy for claims duplicated by or equivalent of rights covered by

the FLSA" was incorrect. Id. at *6 (quoting Williamson, 208 F.3d

at 1152). 

Another district court in this circuit, also holding that the

FLSA did not preempt a UCL claim based on the wrongful refusal to

provide overtime pay, looked at the conflicting statements in

Williamson and concluded that, in light of the Williamson court's

extensive preemption analysis and the general purpose of the FLSA,

the second statement "did not relate to any issue actually decided

in that case, but was made in passing as an example of what the

case was not deciding." Willis v. Cal-Western Transport, CV F 00-

5695 AWI LJO at 23 (E.D. Cal. 2000) (emphasis in original).

The Court agrees with the conclusion in Barnett and Willis

that the second statement in Williamson, upon which Defendant

relies, is dicta and does not relate to any issue decided in the

case. Therefore, Defendant's argument that FLSA preempts

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Plaintiff's UCL claim based on Williamson is unpersuasive.

C. The UCL Procedures In Question Do Not Conflict With 

Congressional Purpose

Even if the Portal-to-Portal Act amendments were enacted to

balance the interests of employers and employees, the evidence

cited by Defendant fails to show that the procedures of the UCL at

issue stand as an obstacle to the congressional purpose in enacting

the FLSA, as amended by the Portal-to-Portal Act.

1. Opt-out certification 

Defendant relies primarily on congressional statements in 29

U.S.C. § 251 to argue that the purpose of the Portal-to-Portal Act

amendments, which limit FLSA claims to "opt-in" certifications, 

would be frustrated by Plaintiff's intention to seek an "opt-out"

UCL class. However, because congressional concern in enacting the

"opt-in" provision was directed towards “windfall payments,

including liquidated damages,” absent in a UCL action limited to

restitution, there is "no reason to believe that Congress

considered whether plaintiffs who are limited to restitution [under

the UCL] should have to comply with the opt-in requirement of

Section 216(b)." Tomlinson v. Indymac Bank, FSB, 359 F. Supp. 2d

898, 901 (C.D. Cal. 2005) (quoting 29 U.S.C. § 251(a)). More

broadly, the Portal-to-Portal Act was "enacted in response to

judicial interpretations of the FLSA--not in response to a

proliferation of state wage claims." Barnett, 2004 WL 2011462 at

*6. 

Although not addressing the issue of preemption, in a previous

case, this Court held that the same State law claim as that brought

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by Plaintiff could proceed with an "opt-out" class certification. 

Kelly v. SBC, Inc., 1998 U.S. Dist LEXIS 18643, *38 (N.D. Cal.

1998) (FLSA not a bar to a Rule 23 "opt-out" class certification of

UCL claims predicated on FLSA violations). The courts in Tomlinson

and Barnett arrived at the same conclusion. Tomlinson 359 F. Supp.

2d at 901; Barnett, 2004 WL 2011462 at *6-*7. 

The cases cited by Defendant are inapplicable. In Leuthold v.

Destination Am., Inc, 224 F.R.D. 462, 469-70 (N.D. Cal. 2004), the

court declined to certify an "opt-out" class to pursue claims based

on California's fair labor standards and the UCL because it had

approved conditional certification of an "opt-in" class under the

FLSA and it was concerned that (1) confusion would result in asking

potential plaintiffs both to opt in and opt out of the two classes

and (2) because the State claims were pendant to the FLSA claim,

the court might lack jurisdiction over the State law claims if a

large number of plaintiffs in the State law class chose not to

prosecute their federal claims. Because there will only be one

class in this case, the court's concerns in Leuthold are not

present here. 

In Rodriguez v. The Texan, Inc. 2001 WL 1829490, *2 (N.D. Ill.

2001), the plaintiff also sought an "opt-in" class under the FLSA

and an "opt-out" class for supplemental State labor claims. 

Although the court was concerned that the policy underlying the

Portal-to-Portal Act's "opt-in" requirement would be thwarted if

claims for violations of similar State labor laws were allowed to

be brought in an "opt-out" class action, the court was also

concerned that an "opt-out" class would affect its supplemental

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jurisdiction over the State claims. Id. As discussed in Leuthold,

a request for an "opt-in" and an "opt-out" class presents unique

concerns which do not apply here. In La Chappelle v. OwensIllinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975), although the

court stated that "opt-out" and "opt-in" classes are mutually

exclusive and irreconcilable, it made this statement in determining

whether a suit brought under the Age Discrimination in Employment

Act (ADEA) may be an "opt-out" class action. Cases in which

plaintiffs attempt to circumvent the "opt-in" requirement of 29

U.S.C. § 216(b) for other federal claims, like the ADEA, are

inapplicable to State law claims such as the one at issue here. 

Kelly, 1998 U.S. Dist LEXIS at *37. 

Defendant also relies on Lerwill v. Inflight Motion Pictures,

Inc. 343 F. Supp. 1027 (N.D. Cal. 1972) and Madrigal v. Green Giant

Co., 1981 WL 2331, (E.D. Wash. 1981). However, Lerwill, the sole

authority cited by Madrigal, was referred to as "weak precedent"

and "dubious authority" by the Ninth Circuit in Williamson. 208

F.3d at 1051. Therefore, the Court does not rely on these courts'

analysis.

Plaintiff did not bring an FLSA claim; she brought a State law

claim in State court. Therefore, the purpose of the FLSA's "optin" requirement, to limit the enormous liability for employers

which had been threatened by the thousands of federal wage and hour

claims filed in the wake of the Anderson decision, is not directly

implicated by Plaintiff's claim. Accordingly, the Court finds that

the UCL's opt-out procedure does not stand as an obstacle to the

congressional purpose in enacting the FLSA, as amended.

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2. Statute of Limitations

Defendant cites provisions of the FLSA and its legislative

history as evidence of congressional intent to limit, through the

statute of limitations in the Portal-to-Portal Act, the period of

time during which claims can be brought for wage and hour

violations under State statutes premised on violations of FLSA. 

See 29 U.S.C. § 251(a) ("the varying and extended periods of time

for which, under the laws of the several States, potential

retroactive liability may be imposed upon employers, have given and

will give rise to great difficulties in the sound and orderly

conduct of business and industry"); see also 93 Cong. Rec. H2183

(1947) (statement of Rep. Donnell) (discussing unfairness to

similarly situated workers and employers created by borrowing

statutes of limitations from different State laws for FLSA claims). 

However, these statements of congressional purpose refer only to

the problems engendered by the fact that the absence of a statute

of limitations in the original FLSA resulted in non-uniform

statutes of limitation for a nation-wide federal law. As noted by

the sponsor of the bill in the House of Representatives:

[W]e believe that the reasons for a uniform statute of

limitations are clear. In the administration of a

Federal law which applies all over the United States, no

difference should exist with respect to the time within

which a plaintiff may file suit under that law. 

Id. The motivation for the two-year statute of limitations was not

simply to protect employers, but to ensure uniformity. In fact, in

the interest of uniformity, Congress rejected the suggestion that

States utilizing a one-year statute of limitations period for FLSA

claims be allowed to retain it. Id. at 2184. 

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The UCL is a State law and therefore does not present the

problems of uniformity addressed by Congress in administering the

FLSA. Moreover, when discussing the federal statute of limitations

Congress "expressly state[d] that this limitation does not apply to

actions for the recovery of wages brought under state law. . . .

[and] envisioned not only that state based claims for wages could

be asserted, but that they could be governed by separate

procedures." Aragon v. Bravo, 1993 WL 432402, *6 (D. Ariz. 1993)

(citing U.S. Code and Cong. Service, 80th Cong., 1st Session, at

1035 (1947)). In sum, a longer statute of limitations for a State

law claim does not stand as an obstacle to congressional purpose.

By allowing "opt-out" class actions and longer statute of

limitations for UCL claims, California provides increased

protections for its workers, furthering the central purpose of the

FLSA. The UCL as invoked in Plaintiff's claim does not stand as an

obstacle to the purposes of the FLSA.

CONCLUSION

Based on the foregoing, Defendant's motion for partial summary

judgment is DENIED.

IT IS SO ORDERED.

Dated: 2/22/06

 

CLAUDIA WILKEN

United States District Judge

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