Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02056/USCOURTS-cand-4_06-cv-02056-4/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal- Civil Rights Act

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United States District Court

For the Northern District of California

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Automatic Data Processing, Inc. (ADP) is a co-defendant in

this case and has filed a concurrent motion to dismiss for lack of

personal jurisdiction. The Court grants that motion in a separate

order. Summary judgment would be appropriate for Plaintiff's

claims against ADP as well.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

VINCENT REYNOV, an individual, on

behalf of himself, and on behalf of

all persons similarly situated,

Plaintiff,

v.

ADP CLAIMS SERVICES GROUP, INC.,

AUTOMATIC DATA PROCESSING, INC., and

DOES 1 through 100,

Defendants.

 /

No. C 06-2056 CW

ORDER GRANTING

SUMMARY JUDGMENT FOR

DEFENDANTS

Defendant ADP Claim Services Group (CSG) has filed a motion

for summary judgement pursuant to Federal Rule of Civil Procedure

56(b).1 Plaintiff Victor Reynov opposes the motion. The matter

was heard on April 26, 2007. Having considered all of the papers

filed by the parties and oral argument on the motion, the Court

GRANTS summary judgment for Defendants. 

BACKGROUND

This case arises out of a dispute regarding the exempt

classification of Reynov and other senior software quality

assurance (QA) engineers. Reynov worked as a senior software QA

engineer for CSG in San Ramon, California from November, 2003

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through May 20, 2005. Ware Decl. ¶ 5, 8. At that time, CSG was a

wholly-owned corporate subsidiary of ADP. CSG classified Reynov as

an exempt employee and paid him an annual salary of approximately

$76,000. Id. According to CSG, Reynov was properly classified as

an exempt employee because he performed specialized and technical

work which required special training, experience and knowledge. 

Blazquez Decl. ¶ 9. Further, CSG argues that Reynov regularly

exercised independent judgment and was only under general

supervision. Id. at ¶ 8, 10. 

During the first quarter of 2005, Reynov complained to

attorney Scott Miller of "a number of California Labor Code

Violations" related to his employment with CSG, and sought his

representation. Miller Decl. ¶ 4, 5. On April 20, 2005, Reynov

signed an agreement to retain Miller to represent him "in all

claims for violations of the Labor Code and any other related laws

against Automatic Data Processing, Inc." Meckley Decl. ¶ 4, Ex. 6. 

On May 20, 2005, one month after hiring Miller to represent

him, Reynov quit his job with CSG. Ware Decl. ¶ 8. On May 26,

2005, Reynov signed a "Letter Agreement and Release" (Letter

Agreement) concerning his employment separation from CSG. Ex. 9. 

The cover letter stated that the purpose of the Letter Agreement

was to provide Reynov with "certain benefits that you would not

otherwise receive, and resolve any remaining issues between you and

CSG." Id. According to CSG, Reynov received substantial

compensation to which he was not otherwise entitled, including a 

severance payment in excess of $29,000. Ware Decl. ¶ 12; Ex. 9. 

The release in the Letter Agreement relieved CSG and its affiliates

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from "all claims, actions, and causes of action, of every kind,

nature, and description, which exist as of the date you sign this

Letter Agreement, arising out of or related to your employment." 

Id. The release advised Reynov to consult with his attorney before

signing, and granted him seven days after signing to revoke his

acceptance of the agreement. Id. The release also contained an

express waiver of all rights under California Civil Code § 1542. 

Id. Reynov does not dispute that he signed the Letter Agreement

and Release. 

CSG also paid Reynov his outstanding salary, unused vacation,

and other wages owed him. Ware Decl. ¶ 10, 11; Ex. 1. This

payment was not conditioned on his signing the Letter Agreement or

Release. Id. 

Miller associated other attorneys to assist him with Reynov's

case. The attorneys drafted a complaint alleging violations of

several California statutes based on an alleged misclassification

of Reynov, and all others with his job title, as salaried exempt

employees. The complaint was filed in Contra Costa County Superior

Court on January 31, 2006. The case was removed to this Court on

March 17, 2006. CSG now moves for summary judgment, arguing that

the release waives all the claims that Reynov brought against it. 

LEGAL STANDARD

Under Rule 56, 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);

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2Although the parties focus on section 206.5, Reynov also

cites California Labor Code sections 219 and 1194(a). Section 219

provides that the provisions of Article 1 of Chapter 1 of Part 1 of

Division 2 of the Labor Code, which includes § 206.5, cannot be set

aside by private agreements. Section 1194(a) renders unenforceable

prospective agreements to waive overtime compensation. Neither

section is relevant here because the Letter Agreement does not set

aside § 206.5 or waive prospective overtime compensation. 

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

1987). 

DISCUSSION

CSG argues that when Reynov signed the Letter Agreement, he

executed a valid and enforceable release of all claims, including

his claim for unpaid overtime. Reynov counters that the subject of

overtime pay was neither discussed nor addressed in the Letter

Agreement, and therefore cannot be considered a good faith dispute

that the parties compromised. Reynov also contends that he was

unaware of his potential overtime claims when he signed the Letter

Agreement. Finally, Reynov asserts that the release he signed was

a general release that is not legally enforceable under California

Labor Code § 206.5.2

California Labor Code § 206.5 provides:

No employer shall require the execution of any release of

any claim or right on account of wages due, or to become

due, or made as an advance on wages to be earned, unless

payment of such wages has been made. Any release

required or executed in violation of the provisions of

this section shall be null and void as between the

employer and the employee and the violation of the

provisions of this section shall be a misdemeanor.

Section 206.5 must be interpreted in conjunction with section

206(a), which states:

In case of a dispute over wages, the employer shall pay,

without condition and within the time set by this article, all

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wages, or parts thereof, conceded by him to be due, leaving to

the employee all remedies he might otherwise be entitled to as

to any balance claimed.

Accordingly, "in a dispute over wages the employer may not

withhold wages concededly due to coerce settlement of the disputed

balance. An employer and employee may of course compromise a bona

fide dispute over wages but such a compromise is binding only if it

is made after the wages concededly due have been unconditionally

paid." Reid v. Overland Machined Products, 55 Cal. 2d 203, 207

(1961); Sullivan v. Del Conte Masonry Co., 238 Cal. App. 2d 630,

634 (1965). In Reid, the California Supreme Court rejected an

argument that accord and satisfaction was shown when an employee

cashed his employer's check for "concededly due" wages. Id. at

208. The court implied that acceptance of payment beyond the

indisputably owed amount would have constituted a legally binding

settlement of the controversy. 

As this Court found in Kelley et. al. v. Pacific Telesis, et.

al., No. 97-CV-02729, "nothing in § 206.5 purports to limit its

scope to actions filed directly under the Labor Code. A UCL claim

based on an unlawful failure to pay wages due is a claim 'on

account of wages due.'" Thus, § 206.5 applies to Reynov's claims

under the California Labor Code and to those under California

Business and Professions Code § 17200. 

Nonetheless, the release contained in the Letter Agreement is

enforceable as a matter of law. The release contained an express

waiver of all rights under California Civil Code § 1542, which

prevents a "general release" from extending to claims unknown to

the creditor at the time the release is signed. In the absence of

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The Court grants CSG's request for judicial notice of the

legislative history of Labor Code § 206.5. Because the legislative

history cited is easily verifiable and the content of the sources

cannot reasonably be questioned, judicial notice is appropriate

under FRE 201. 

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actual fraud, an express waiver of § 1542 rights is valid. Pacific

Greyhound Lines v. Zane et al., 160 F.2d 731, 736 (9th Cir. 1947). 

Further, section 206.5 voids releases of claims "on account of

wages due." Based on the abovementioned authorities, the Court

finds that wages are not "due" if there is a good faith dispute as

to whether they are owed. Because CSG's defense that Reynov was an

exempt employee under California law would, if successful, preclude

any recovery for Reynov, a bona fide dispute exists and the

overtime pay cannot be considered "concededly due." Sullivan, 238

Cal. App. 2d at 634; see also 8 C.C.R. § 13520 (defining a "good

faith dispute" concerning wages as a dispute that occurs "when an

employer presents a defense, based in law or fact which, if

successful, would preclude any recovery on the part of the

employee.") 

As the legislative history submitted by CSG demonstrates,3 the

purpose behind § 206.5 was to prevent "unscrupulous employers,"

particularly in the construction industry, from withholding a

worker's paycheck unless he signed a release waiving all rights to

additional compensation owed. The legislation was intended to

cover situations where payments in exchange for a complete release

of claims were not only indisputably owed, they were often far less

than the indisputably owed amount. 

In this case, CSG unconditionally paid Reynov all outstanding

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The Court nonetheless notes that Reynov has provided evidence

in a sworn declaration to this Court that he was aware of his

potential overtime claims when he signed the Letter Agreement. 

5The complaint requests penalties under California Labor Code

§ 558. However, it appears that Plaintiff has not complied with

the administrative requirements for bringing a civil action under

§ 558. These requirements include notifying the employer by

certified mail and giving the state a formal opportunity to

investigate, among others. California Labor Code § 2699.3. 

Accordingly, Plaintiff cannot recover penalties under § 558. 

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wages owed to him. Additionally, he was given nearly $30,000,

compensation to which he was not otherwise entitled, as

consideration for releasing CSG from any and all claims he might

bring. Reynov has not raised a genuine issue of material fact

suggesting that he was legally entitled to the nearly $30,000

compensation above his remaining salary and unused vacation pay,

and therefore his acceptance of that payment satisfied whatever

legal claims he might otherwise have brought against CSG. 

Contrary to Reynov's assertions, it is irrelevant that CSG did

not specify his potential overtime claims in the language of the

release. The release also failed to specify the alleged age

discrimination claim which Reynov argues was the only claim

actually waived by the release. Likewise, Reynov's argument that

he was unaware of his potential overtime claims when he signed the

Letter Agreement is unavailing.4 Rather, the crucial fact is that

Reynov accepted substantial compensation to settle a bona fide

dispute. 

Because the release Reynov signed is legally enforceable,

Reynov's claims for compensation for overtime, waiting time, meal

and rest periods and civil penalties must fail.5

 Likewise, his

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second cause of action alleging that CSG engaged in unfair business

practices must be dismissed. 

CONCLUSION

For the foregoing reasons, the Court GRANTS CSG's motion for

summary judgment (Docket No. 50). Judgment shall be entered

accordingly. Each party shall bear its own costs. 

IT IS SO ORDERED.

4/30/07

Dated: ________________________ 

CLAUDIA WILKEN

United States District Judge

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