Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02309/USCOURTS-cand-3_15-cv-02309-8/pdf.json

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

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CHARLES E. WARD, individually, and on

behalf of all others similarly situated,

Plaintiff,

 v.

UNITED AIRLINES, INC.,

Defendant. /

No. C 15-02309 WHA

ORDER RE CROSS-MOTIONS

FOR SUMMARY JUDGMENT

INTRODUCTION

In this certified class action involving alleged deficiencies on pay stubs for airline pilots,

both sides move for summary judgment. To the extent stated below, defendant’s motion for

summary judgment is GRANTED. Plaintiff’s is DENIED.

STATEMENT

At all relevant times, plaintiff Charles E. Ward worked as a pilot for defendant United

Airlines, Inc., a major passenger airline serving destinations all over the world. Ward resided

(and continues to reside) in Marin County. A prior order certified a class defined as follows

(Dkt. No. 44 at 14):

All persons who are or were employed by United Airlines, Inc., as

pilots for whom United applied California income tax laws

pursuant to 49 U.S.C. 40116(f)(2) at any time from April 3, 2014

up to April 3, 2015.

Section 40116(f)(2) of Title 49 of the United States Code provides two means for determining

which state’s income tax laws applies to an airline worker: (i) the state of the employee’s

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 1 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 Ward objects to evidence of pilots’ time spent in California on relevance grounds because he

contends the pilots’ place of residence is dispositive of the issues herein without regard to the location of the

work. As discussed in greater detail below, the applicability of California’s wage-statement statute depends on

the location of the work performed. Thus, this evidence is highly relevant. Ward’s relevance objection

incorrectly assumes that his legal arguments prevail. Accordingly, that objection is OVERRULED.

2

residence, or (ii) the state in which the employee earned more than fifty percent of his or her

pay. United applied California tax laws to the class members (and all pilots nationally) based

on their place of residence, because its pilots rarely, if ever, performed more than half their

work in any one state (Spars Decl. ¶ 5).

All agree that the class members have been fully paid their compensation; the

disagreement is over the form of statement of wages. All got a statement but class counsel

insists the statement should have followed the California-prescribed form of statement. This

order disagrees.

Class members spent less than an average of twelve percent of their total work time

within California, which broke down to approximately three percent of the total work time on

flights entirely within California and eight-and-a-half percent of the time on flights within the

geographical bounds of California on flights in or out of California. The record does not,

however, reflect the range of the class members’ time in California nor whether any pilot spent

a majority of his or her flight time in California during any bid period. Of the examples

provided by United, the greatest amount of work time spent in California in a single bid period

was forty-two percent. Ward himself spent a maximum of thirty-six percent of his work time in

California, though he averaged twenty percent in 2014 and fifteen percent in 2015 (Baker Decl.

¶¶ 8, 11, 20–21).1

United assigned routes to pilots according to schedules that roughly equated to calendar

months called “bid periods” (so called because pilots could bid for particular routes, which

United assigned according to seniority). In a given bid period, a pilot could work as a

lineholder pilot, meaning United assigned him or her a predetermined flight schedule, or a

reserve pilot, meaning he or she remained on call to fly segments as-needed. A collective

bargaining agreement between United and the Air Line Pilots Association, established pursuant

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 2 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

to the Railway Labor Act, governed the terms and conditions of employment for United’s

pilots, including the scheduling procedure and compensation structure (White Decl. ¶¶ 2–3).

United paid its pilots twice monthly, on the first and the sixteenth day of each month. 

The collective bargaining agreement set forth three methods for calculating a pilot’s total pay

for a bid period: (i) line-pay value, (ii) minimum-pay guarantee, and (iii) protected-time credit

(available only to lineholder pilots). A pilot’s total compensation for a bid period would be the

largest of the three measures. United, however, calculated the amount of the first payment in a

bid period (on the first of the month) based on a formulaic estimate of the total hours it

anticipated the pilot would work during the pay period. United called this first payment a

“Flight Advance.” The second payment (on the sixteenth of the month) amounted to the

difference between the Flight Advance and the total compensation owed to the pilot for that pay

period (again, the greater of the three measures identified above) plus certain bonuses (called

“add pay”) (KohSweeny Decl., Exh. G; White Decl. ¶ 4).

The line-pay value constituted the primary means of calculating each pilot’s

compensation, and United calculated it as the pilot’s time spent performing various work

activities (such as piloting, co-piloting, taxiing, training, or flying as a passenger on a flight in

order to start an assignment from a different city) multiplied by the applicable rates for each

respective activity as set forth in the collective bargaining agreement. The determination of the

applicable rates depended not only on the nature of the activity, but also the type of aircraft, the

pilot’s title, and the pilot’s seniority. The minimum-pay guarantee (available to all pilots) and

the protected-time credit (available only to lineholder pilots) each calculated total pay based on

a formula relating to a pilot’s assignments, rather than his or her actual hours worked. This

ensured that pilots did not get penalized for accepting shorter flight segments (which yielded

lower compensation) or for unavoidable circumstances such as flight cancellations or schedule

changes. In other words, the latter measures could only be triggered if a pilot’s actual time

worked during a bid period fell short of the amount expected based on his or her assignment for

that period (White Decl. ¶¶ 7–8).

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 3 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

As stated, the amount of a pilot’s first paycheck in a bid period (the Flight Advance)

never related to the hours the pilot actually worked during that bid period. The second

paycheck in a bid period only related to the hours the pilot actually worked if the greatest of the

three measures identified above was the line-pay value. 

United issued a “pay advice” to each pilot, which detailed the pilot’s wages for the given

pay period. For pilots who received paper paychecks, United issued pilots’ pay advices

appended to the checks. For pilots who received payment via direct deposit, United delivered

the pay advices through its internal website and offered pilots the option to receive a paper copy

in the mail. The pay advices did not list pilots’ hours worked or the applicable rates, regardless

of the applicable method of compensation. United listed a post office box maintained by its

payroll department as the address on its pay advices. 

United also maintained a real-time register of each pilot’s work activities during a bid

period, including the hours worked and applicable rate for each such activity. Each pilot could

access his or her respective pay register (including archives of prior bid periods) via United’s

internal website. Although neither the Railway Labor Act nor the collective bargaining

agreement required United to use this particular design to issue wage statements, the format

used by United was nevertheless influenced by the complexity of the collective bargaining

agreement. For uniformity nationwide, United used the same format across the country (and

still does) (Spars Decl. ¶¶ 2–3; Spars Dep. at 17–19; White Decl. ¶ 10; White Dep. at 18–19,

22–23).

Ward commenced this action in state court in San Francisco in April 2015, and United

removed it to federal court pursuant to the diversity jurisdiction provision of the Class Action

Fairness Act. Ward claims that United violated various provisions of Section 226(a) of the

California Labor Code, which requires employers to provide certain information on wage

statements issued to employees. Ward also asserts claims under the Private Attorneys General

Act. In March 2016, an order certified a class for all claims. Both sides now move for

summary judgment. The opt-out period has closed. This order follows full briefing and oral

argument.

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 4 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

ANALYSIS

Section 226(a) of the California Labor Code provides, in pertinent part:

Every employer shall, semimonthly or at the time of each payment

of wages, furnish each of his or her employees . . . an accurate

itemized statement in writing showing . . . (8) the name and

address of the legal entity that is the employer . . . 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 . . . .

Ward contends that United violated Section 226(a) because it provided only a post office

box as its address and because it failed to itemize the applicable rates and hours worked at each

rate when it issued pay advices (applicable only to pay periods for which a pilot received

payment via the line-pay value). United responds that Section 226(a) does not apply to the

wage statements because, although all class members reside in California (at least for payroll

tax purposes), they did not work principally in California. Thus, United contends, because the

California legislature did not “clearly express” an intention for Section 226(a) to apply to work

performed primarily outside the state, nor could such an intention be reasonably inferred “from

the language of the act or from its purpose, subject matter or history,” it cannot apply to the

wage statements United issued to its pilots. Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 1207

(2011) (citations omitted). Further, United argues, to the extent any class member worked

principally in California for a given bid period, the application of Section 226(a) in those

circumstances would run afoul of dormant commerce clause preemption. Each issue is

addressed in turn.

1. SCOPE OF SECTION 226(a).

Both sides agree that Section 226(a) does not apply extraterritorially (Pl.’s Opp. at 4). 

Ward does not dispute that the class members did not work principally in California. The

dispute herein is whether the application of Section 226(a) to wage statements issued to

California residents for work primarily performed out of state constitutes extraterritorial

application of the law. Ward contends this would not constitute extraterritorial application

because the issuance of the wage statement itself occurred in California.

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 5 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

No decision has directly addressed whether Section 226 applies to wage statements

issued to California residents who worked principally out of state. The few decisions that have

evaluated whether California’s wage-and-hour laws and workplace-discrimination laws apply to

out-of-state work performed by California residents uniformly rejected that proposition. 

Instead, those decisions focused on the “job situs test,” which considers where an employee

“principally” worked. See Anderson v. CRST Int’l, Inc., 2015 WL 1487074 (C.D. Cal. Apr. 1,

2015) (Judge Dale S. Fischer); Priyanto v. M/S Amsterdam, 2009 WL 175739 (C.D. Cal.

Jan. 23, 2009) (Judge Howard Matz); Taylor v. Lockheed Martin Corp., 78 Cal. App. 4th 472,

478 (2000); Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal. 4th 557 (1996). Indeed, that

test has long governed the scope of federal labor law. See Oil, Chemical, and Atomic Workers

Int’l Union v. Mobil Oil Corp., 426 U.S. 407, 418–20 (1976).

Ward argues that the decisions applying the job situs test are distinguishable because

our case does not involve laws that govern the nature of the work performed but rather the

form of the wage statements. The only authority he cites for his position is a dictum in

Sarviss v. Dynamics Information Technology, 663 F. Supp. 2d 883, 899–900 (C.D. Cal. 2009)

(Judge Dean D. Pregerson). In Sarviss, the plaintiff resided in California and trained helicopter

pilots in Pakistan. The plaintiff spent only brief periods of time working in California and

performed the bulk of his work abroad. He sought overtime pay and premium wages for missed

meal periods and rest breaks solely for the work performed outside the state. Judge Pregerson

rejected the plaintiff’s argument that his place of residence determined whether the wage orders

should apply, electing instead to focus on the “situs of the employee’s work . . . .” Id.

Accordingly, Judge Pregerson granted summary judgment for the employer on those claims. 

Ward focuses on a separate discussion in Sarviss, which addressed a motion to certify a

class based on violations of Section 226 arising from the employer’s failure to include its name

and address on its wages statements. Judge Pregerson did not certify the class because plaintiff

failed to provide evidence that his employer used the same format for all wage statements

across the putative class. Nevertheless, Judge Pregerson’s separate discussion of the wagestatement claim (rather than together with the discussion of the merits of the other claims)

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 6 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

carried the implicit assumption that, unlike the overtime, meal period, and rest break claims,

Section 226 could apply to at least some of the plaintiff’s wage statements, even if the plaintiff

principally worked outside of California. The decision in Sarviss, however, never addressed

that problem directly. (Nor, for that matter, did the briefs on the motion for summary judgment

therein.)

Ward argues, relying on that separate discussion in Sarviss, that Section 226 governs the

form of the wage statements issued by United to its employees residing in California regardless

of where the work occurred. The order certifying the class herein acknowledged that Sarviss

appeared to rely on the implicit assumption that Section 226 could apply to wage statements

issued to California residents even if the employees did not principally work in California. 

Contrary to Ward, however, our class certification order did not hold that Sarviss conclusively

supported his position. Rather, it held that Ward’s theory could be evaluated on a class-wide

basis, but it expressly noted, “United may ultimately persuade the Court that California’s wagestatement laws should only apply when a pilot principally worked in California, as

contemplated by the discussion in Sarviss regarding breaks and overtime” (Dkt. No. 44 at 8). 

Ward omits that statement in his citations to the class certification order.

Ultimately, the fact that our case concerned wage statements, while the substantive

aspect of Sarviss concerned the actual performance of work (and compensation therefor) is a

distinction without a difference. Indeed, the principal purpose of Section 226 is to enable

employees to vet the accuracy of their compensation. See Morgan v. United Retail, Inc.,

186 Cal. App. 4th 1136, 1149 (2010) (citations omitted). That is, Section 226 is in place to

enable employees to verify that they have received the protections of California’s wage-andhour laws that all agree are subject to the job situs test, so it serves as an extended form of

protection. Thus, this order holds Section 226 must be subject to the same jurisdictional limits

as the wage-and-hour statutes and regulations to which it relates.

Ward’s interpretation would yield absurd results. An employer in Nevada would need

to apply Nevada wage-and-hour law to all paychecks, but it would need to comply with the

wage-statement laws of each state of residence of its employees. Similarly, a California wage

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 7 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 2

 United identified thirty-seven states plus Washington, D.C., with different wage-statement laws

(Def.’s Mtn. at 13 n.9).

8

earner who resides elsewhere would not be entitled to the added protections guaranteed by

California’s wage-statement statute. The California Legislature could not have intended for its

wage-statement laws to cause such confusion for out-of-state workers while the substantive

protections for workers remained confined to the work within state borders. Nor could it have

intended to deprive California wage earners of the protection offered by the wage-statement law

simply based on their place of residence.2

Thus, at least for class members who worked primarily outside of California, Section

226 — like the rest of California’s labor laws — does not apply.

2. DORMANT COMMERCE CLAUSE PREEMPTION.

The evidence submitted by United speaks to the average time spent worked in California

by the class as a whole, except for a single statement that United applied state-law tax based on

pilots’ residence, because few, if any, pilots work more than fifty percent of the time in a single

state. Ward does not dispute United’s assertion that none of the class members principally

worked in California in any given bid period, but even United’s own evidence indicates that

certain pilots worked in California for more than a third of a particular bid period. 

Nevertheless, this possibility is not fatal to United’s motion, inasmuch as requiring United to

comply with Section 226 in those limited circumstances would unduly burden interstate

commerce.

The United States Constitution affirmatively grants the federal legislature the power to

regulate interstate commerce. It is a long recognized principle that this grant limits “the power

of states to enact laws imposing substantial burdens on [interstate] commerce.” South-Central

Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87 (1984). A state law that places an undue burden

such that it exceeds the local benefits of the law, therefore, runs afoul of so-called “dormant

commerce clause” preemption. Pike v. Bruch Church, Inc., 397 U.S. 137, 142 (1970). 

As discussed above, the benefit conferred by Section 226(a) is to ensure that California

wage earners are informed about their compensation in order to enable them to defend their

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 8 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

substantive rights. That local benefit, however, is outweighed and even undermined by the

burden that would result from the application of Section 226(a) and comparable laws in other

states to this class of pilots. To be clear, the burden in question is not simply caused by

requiring United to list the rate and hours worked on the wage statements. Rather, the concern

is the administrative burden of complying with the patchwork of state wage-statement statutes

and regulations (and subsequent interpretations and developments thereof). If Section 226(a)

and equivalent state laws applied to this class, United could be required to give an individual

pilot a different form of wage statement in each bid period, depending on whether that pilot

worked principally in California or some other state. United would need to monitor the pilot’s

precise hours spent working in each state and determine which state’s laws applied in that bid

period. Indeed, multiple states’ laws could apply simultaneously. Beyond the administrative

challenge, this would also cause frequent confusion among the pilots who would be unable to

make sense of the inconsistent formats of the wage statements — the very problem sought to be

solved by Section 226(a). This order holds that such a burden outweighs the local benefits, and

thus cannot be applied to this class. 

In United Air Lines, Inc. v. Indus. Welfare Commn., 211 Cal. App. 2d 729, 748–49

(1963), disapproved of on other grounds by Indus. Welfare Com. v. Super. Ct., 27 Cal. 3d 690

(1980), the California Court of Appeal considered a state regulation requiring employers to

reimburse employees for the cost of their uniforms as applied to flight attendants. Because the

statute as applied would have caused “a most anomalous situation” — flight attendants based in

different states might receive different compensation even as they worked side-by-side on the

same flight — the California Court of Appeal held it triggered dormant commerce clause

preemption.

Ward counters that United v. IWC is inapposite, inasmuch as it concerned the

differences in compensation among flight attendants who resided in different states and

“personnel troubles” that would result from those differences, while our case does not involve

any personnel troubles. Ward is correct that United v. IWC concerned a different type of burden

on interstate commerce from the burden herein. That is, our case does not involve

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 9 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

compensation differences among employees, but rather administrative burdens. Although our

case would not result in personnel disputes, the burden imposed by applying Section 226(a) and

equivalent statutes in other states is no less substantial.

Ward also argues that the California Labor Code has been routinely applied to

nationwide corporations as well as transportation workers without triggering any dormant

commerce clause preemption. Ward’s argument misses the point. None of Ward’s citations

involved employees who themselves worked in a patchwork of states on a regular basis. Rather,

they involved employees who regularly worked in a single state, even if the employers also

employed individuals in other states. 

For example, Ward notes that in Angeles v. U.S. Airways, Inc., No. 12-5860, 2013 WL

622032, at *10 (N.D. Cal. 2013) (Judge Charles R. Breyer), Section 226 applied to employees

of an airline company that operated flights across the country. He conveniently ignores the fact

that the plaintiff and the members of the putative class therein were ramp agents each of whom

who worked at a single airport — avoiding the need to consider issues of extraterritoriality or

burdens on interstate commerce.

Similarly, Ward cites Cicairos v. Summit Logistics, Inc., 133 Cal. App. 4th 949, 955,

960 (2011), in which the California Court of Appeal held that Section 226 applied to employees

of a warehousing business that delivered groceries to stores. The employer offered its services

in California, Nevada, and Hawaii, but that decision never addressed whether the plaintiffs

themselves ever worked outside of California.

Ward does not cite a single decision addressing the problem herein — the application of

California labor law to individual employees each of whom performed work in a patchwork of

states, with rare instances of pay periods in which the employees worked in California for a

majority of their time. Nor can he. Ward’s arguments might have legs if we were dealing with

a regional airline that flew exclusively or primarily in California, or a class of pilots within

United who exclusively took limited assignments primarily in California, but that is not our

case. To the extent any pilot worked principally in California for any bid period, the application

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 10 of 11
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

of Section 226(a) and equivalent state laws in these circumstances would impose too great an

administrative burden on United’s interstate and international airline business.

Accordingly, United is entitled to summary judgment on all claims.

CONCLUSION

To the extent stated above, defendant’s motion for summary judgment is GRANTED, and

plaintiff’s motion for summary judgment is DENIED. To be clear, this is a holding against the

entire class. Final judgment will follow.

IT IS SO ORDERED.

Dated: July 19, 2016. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:15-cv-02309-WHA Document 78 Filed 07/19/16 Page 11 of 11