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

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

STARVONNA HARRIS, et al.,

Plaintiffs,

v.

BEST BUY STORES, L.P.,

Defendant.

Case No. 17-cv-00446-HSG 

ORDER GRANTING DEFENDANT'S 

MOTION FOR SUMMARY JUDGMENT 

ON PLAINTIFF JONATHAN 

STRICKLAND'S CLAIMS AND 

GRANTING DEFENDANT'S MOTION 

TO DISMISS PLAINTIFF STARVONA 

HARRIS'S PAGA CAUSE OF ACTION

BASED ON OVERTIME WAGES

Re: Dkt. No. 91, 58

Pending before the Court are Defendant Best Buy Stores, L.P.’s motion for summary 

judgment on Plaintiff Jonathan Strickland’s claims, and Defendant’s motion to dismiss Plaintiff 

Starvona Harris’s seventh cause of action from Plaintiffs’ second amended complaint. See Dkt. 

Nos. 91 (“Mot. Summ. J.”), 58 (“Mot. Dismiss”); see also Dkt. No. 55 (“SAC”). Briefing on both 

motions is complete, revealing substantial overlap. See Dkt. Nos. 96 (“Opp. Summ. J.”), 101 

(“Reply Summ. J.”); Dkt. Nos. 63 (“Opp. Dismiss”), 66 (“Reply Dismiss”). In view of that 

overlap, the Court heard argument on both motions on January 25, 2018. For the reasons below, 

the Court GRANTS Defendant’s motion for summary judgment of Strickland’s claims, and 

GRANTS Defendant’s motion to dismiss Harris’s seventh cause of action under the Private 

Attorneys General Act (“PAGA”) to the extent that Harris’s PAGA cause of action is based on her

claim to overtime wages. 

I. BACKGROUND

This is Plaintiff Harris’s second action against Defendant in this Court. Harris filed a 

putative class action against Defendant on February 11, 2015, asserting various wage and hour 
2

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

United States District Court

Northern District of California

claims under California and federal law. See Case No. 4:15-cv-00657-HSG (“the Prior Federal 

Action”), Dkt. No. 1 (“Harris Compl.”).1 On August 1, 2016, the Court granted in part and denied 

in part Defendant’s motion for summary judgment. Dkt. No. 102 (“the Prior Summary Judgment 

Order”). Specifically, the Court denied Defendant’s summary judgment motion as to Harris’s 

claim for failure to pay all overtime wages owed, insofar as that claim was based on Defendant’s 

failure to properly calculate overtime on two of its employee bonus programs. See id. at 8. 

Defendant subsequently moved for reconsideration of the Prior Summary Judgment Order, 

arguing that Harris’s overtime wage claim failed as a matter of law. See Dkt. No. 106. On 

reconsideration, the Court granted Defendant’s motion for summary judgment as to Harris’s claim 

for failure to pay overtime wages, dismissing that claim with prejudice. Dkt. No. 124.2 Several of 

Harris’s other claims, however, survived summary judgment.

Harris, now joined by Plaintiff Strickland, filed this action against Defendant on January 

27, 2017. See Dkt. No. 1-1 (“Compl.”). On April 13, 2017, Defendant moved to dismiss the first 

amended complaint (“FAC”), or alternatively, for judgment on the pleadings. See Dkt. No. 24. 

The Court granted Plaintiffs’ motion for leave to amend the complaint, and Plaintiffs filed the 

SAC on July 13, 2017. See Dkt. Nos. 54, 55. The SAC asserts seven claims for: (1) failure to pay 

overtime wages; (2) failure to make payments within the required time; (3) failure to provide 

proper itemized wage statements; (4) failure to provide reimbursements; (5) unfair competition; 

(6) failure to provide personnel file and employment records; and (7) violations of PAGA. Only 

Strickland asserts claim one for failure to pay overtime wages. See SAC at 14–15 & 14 n.1. Only 

Harris asserts claims four, six, and seven. See id. at 18–19, 21–14. Plaintiffs both assert claims 

two, three, and five. See id. at 15–18, 19–20. Following the filing of the SAC, Defendant filed a 

motion to dismiss or strike Harris’s seventh claim under PAGA, and moved for summary 

 

1 Any docket references to litigation events from the Prior Federal Action pertain to Case No. 

4:15-cv-00657-HSG.

2

The relevant factual background relating to Plaintiff Harris’s claims remains unchanged from the 

Prior Federal Action. The Court set forth that background in the Prior Summary Judgment Order, 

and incorporates from that order the unchanged facts and legal analysis. In this order, the Court 

only discusses the facts and legal standards as necessary to address the new issues raised in the 

renewed motion to dismiss Harris’s claims. 
3

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

United States District Court

Northern District of California

judgment on Strickland’s claims. 

II. DISCUSSION

A. Summary Judgment on Strickland’s Claims

i. Relevant Facts

The basic facts are not in dispute. Strickland worked at a California Best Buy location

from about September 29, 2013 to about October 15, 2014, when his employment was terminated. 

See Dkt. No. 91-2, Evidence Appendix (“EA”) at 106, 204. While employed by Defendant, 

Strickland earned $13.00 per hour. Id. In addition to paying Strickland a higher hourly rate for 

overtime hours worked, Defendant maintained two bonus programs that pertain to the claims that 

Strickland asserts here. The first is a Monthly Short Term Incentive (“STI”) Plan. The second is a 

Path To Excellence (“PTE”) program, which gave employees points based on their performance. 

a. Strickland’s Monthly STI Bonus

Beginning in Defendant’s Fiscal Year 2015, Strickland became eligible for Defendant’s

Fiscal Year 2015 Short Term Incentive (“STI”) Plan. Id. at 257. The STI Plan calculated nondiscretionary employee bonuses using the following formula: 

= ([The Employee’s] Monthly Eligible Earnings) x (Store All 

Channel Revenue Incentive Target %) x (Store All Channel 

Revenue Score).

Id. at 257–58, 267, 271. An employee’s monthly STI bonus was “tied to individual, store and 

Company performance.” Id. at 261. The “employee’s eligible earnings” component of that 

formula factored in both an employee’s hourly pay and overtime pay for any overtime hours 

worked. Id. at 91–92, 267, 271. Defendant did not include PTE points in calculating the STI 

bonus’s “eligible earnings” figure. Id. at 93. For FY 2015, the “Store All Channel Revenue 

Incentive Target Percentage” was 5% for Strickland’s position. Id. at 257–58, 267, 271. 

Strickland earned STI bonuses for the months of March, May, and June. Id. Strickland’s STI 

bonus for fiscal June 2015 was 5% of straight time pay and overtime premiums. See id. at 91–92, 

258, 314–15. Strickland’s June 2015 STI bonus was paid on August 8, 2014. Dkt. No. 96, Ex. C 

(“Strickland Decl.”). 
4

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

United States District Court

Northern District of California

b. Strickland’s Path to Excellence (“PTE”) Points

Pursuant to Defendant’s PTE Points program, managers had discretion to recognize 

employees by awarding them “points.” Employees could then use points to purchase gift cards, 

merchandise, and other items from a variety of vendors. SAC ¶ 17. Managers allotted PTE points 

to employees based on a range of factors, including length of service, discretionary on-the-spot 

recognition by managers, and completion of trainings. EA at 152, 163. Best Buy did not “force 

employees to either receive or redeem points.” Id. at 152. Best Buy contracted with a vendor, 

BIG, to administer the PTE program. Id. Best Buy paid BIG $.05 for each point awarded. Id. 

Best Buy paid the taxes on the point awards, so that the tax on the value of PTE points did not 

decrease an employee’s wages. Id. at 205. Strickland’s wage statements explained: “taxes owed 

on the ‘Points Rcvd GU’ earnings are being paid for you, by Best Buy.” Id. at 119. As of May 

2014, Defendant stopped keeping track of which points were overtime-eligible and those that were 

not. Id. at 85–86. For the pay period of May 25, 2014 to June 7, 2014, Best Buy paid Strickland 

“$33.47 in points plus a gross up for tax purposes (‘Points Revd GU’) for that pay period,” and 

“$1.31 in overtime for those points received (‘Points Rcvd OT’).” Id. at 205; see also Mot.

Summ. J., Ex. A. The only week in which Strickland (1) qualified for the monthly STI bonus; (2) 

earned points; and (3) worked overtime hours was the week of June 1 to June 7, 2014. EA at 153. 

Following Strickland’s termination in October 2014, Strickland filed a state court lawsuit 

against Defendant. See Dkt. No. 24-1 at 13–14 (“the State Action”).3 Strickland brought the State 

Action in April 2015, asserting violations of Cal. Lab. Code §§ 203, 204, 212, 226(a), 450, 510, 

1194, and 1199 for failure to: (1) “pay wages and/or overtime to plaintiff and all aggrieved 

employees”; (2) “provide accurate itemized wage statements”; (3) “set forth on employees’ wage 

statements all applicable hourly rates in effect during the pay period”; and (4) timely pay a “sum 

certain at the time of termination or within seventy-two (72) hours of their resignation, and [] 

fail[ure] to pay those sums for thirty (30) days thereafter.” See id. at 5–6, ¶¶ 23–25. The 

 

3

The Court GRANTS Defendant’s request for judicial notice of the existence of Strickland’s 

complaint and the judgment from the State Action. See Dkt. No. 24-1; Lee v. City of Los Angeles, 

250 F.3d 668, 689 (9th Cir. 2001). Defendant does not seek to prove any disputed fact relating to 

the content of these documents. See id. 
5

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

United States District Court

Northern District of California

California Superior Court granted summary judgment as to all of Strickland’s claims, dismissing 

those claims with prejudice in favor of Defendant. See id. at 13–14. 

ii. Legal Standard

Summary judgment is proper when a “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.” Fed. R. Civ. P. 56(a). 

A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson 

v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is “genuine” if there is evidence in the 

record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. The 

Court views the inferences reasonably drawn from the materials in the record in the light most 

favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 

574, 587–88 (1986), and “may not weigh the evidence or make credibility determinations,” 

Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v. 

Schriro, 514 F.3d 878, 884–85 (9th Cir. 2008). 

The moving party bears both the ultimate burden of persuasion and the initial burden of 

producing those portions of the pleadings, discovery, and affidavits that show the absence of a 

genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the 

moving party will not bear the burden of proof on an issue at trial, it “must either produce 

evidence negating an essential element of the nonmoving party’s claim or defense or show that the 

nonmoving party does not have enough evidence of an essential element to carry its ultimate 

burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 

(9th Cir. 2000). Where the moving party will bear the burden of proof on an issue at trial, it must 

also show that no reasonable trier of fact could not find in its favor. Celotex Corp., 477 U.S. at 

325. In either case, the movant “may not require the nonmoving party to produce evidence 

supporting its claim or defense simply by saying that the nonmoving party has no such evidence.” 

Nissan Fire & Marine Ins. Co., 210 F.3d at 1105. “If a moving party fails to carry its initial 

burden of production, the nonmoving party has no obligation to produce anything, even if the 

nonmoving party would have the ultimate burden of persuasion at trial.” Id. at 1102–03. 
6

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

United States District Court

Northern District of California

“If, however, a moving party carries its burden of production, the nonmoving party must 

produce evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party 

“must do more than simply show that there is some metaphysical doubt as to the material facts.” 

Matsushita Elec. Indus. Co., 475 U.S. at 586. A nonmoving party must also “identify with 

reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 

F.3d 1275, 1279 (9th Cir. 1996). If a nonmoving party fails to produce evidence that supports its 

claim or defense, courts enter summary judgment in favor of the movant. Celotex Corp., 477 U.S. 

at 323.

iii. Analysis

Defendant moves for summary judgment on Strickland’s claims on two primary grounds. 

First, Defendant argues that the doctrine of res judicata bars Strickland from reasserting claims 

that he unsuccessfully raised in the State Action. See Mot. Summ. J. at 1–2. Second, Defendant 

argues that Strickland’s first claim for failure to pay overtime fails because Defendant properly 

calculated Strickland’s regular rate of pay, and thus paid Strickland all the overtime he was owed. 

See id. at 9–18. Defendant contends that Strickland’s other claims are derivative of his overtime 

wage claim, and thus fall with that claim. See id. at 18–23. The Court agrees with Defendant as to 

each ground.

a. Res Judicata Precludes Strickland From Reasserting the Same Claims 

That He Raised in the State Action

Defendant argues that res judicata bars all of Strickland’s claims, as these claims are 

substantively identical to those that Strickland asserted in the State Action. See Mot. Summ. J. at 

1–2, 8–9.4 Defendant claims that, at the very least, Strickland is precluded from bringing his 

federal claims because he had the opportunity to raise those claims in the State Action. See Dkt. 

No. 24 at 5. In response, Plaintiffs argue that Strickland’s federal and state claims are sufficiently 

distinct for the purposes of res judicata. See Opp. Summ. J. at 5. 

 

4 Both Defendant and Plaintiffs incorporate arguments made in prior briefing on an earlier-filed 

motion to dismiss all of Strickland’s claims. See Mot. Summ. J. at 1 (citing Dkt. No. 24); Opp. 

Summ. J. at 5.
7

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

United States District Court

Northern District of California

Neither party disputes that California law controls. Adam Bros. Farming v. Cty. of Santa 

Barbara, 604 F.3d 1142, 1148 (9th Cir. 2010). “Under California law, res judicata precludes a 

party from relitigating (1) the same claim, (2) against the same party, (3) when that claim 

proceeded to a final judgment on the merits in a prior action.” Id. at 1148–49 (citing Mycogen 

Corp. v. Monsanto Co., 51 P.3d 297, 301 (Cal. 2002)). Defendant here was named in Strickland’s 

State Action, and the State Action terminated with a final judgment on the merits: summary 

judgment in favor of Defendant, and a dismissal of Strickland’s claims with prejudice. See Dkt. 

No. 24-1 at 13–14.

“Two different causes of action are the same claim if they rise from the same invasion of a 

primary right. A plaintiff’s primary right is the right to be free from a particular injury, regardless 

of the legal theory on which liability for the injury is based.” Adam Bros. Farming, 604 F.3d at 

1149 (internal quotations and citations omitted). California courts have broadly construed the 

concept of a “primary right,” finding: 

The fact that different forms of relief are sought in the two lawsuits 

is irrelevant. . . If the matter was within the scope of the action, 

related to the subject-matter and relevant to the issues, so that it 

could have been raised, the judgment is conclusive on it despite the 

fact that it was not in fact expressly pleaded or otherwise urged . . . 

An issue may not be thus split into pieces.

Villacres v. ABM Indus. Inc., 117 Cal. Rptr. 3d 398, 409 (Ct. App. 2010) (quotations and 

alterations omitted). It is this indivisibility that is “[t]he most salient characteristic of a primary 

right.” Crowley v. Katleman, 881 P.2d 1083, 1090 (Cal. 1994). In identifying a primary right, the 

Court’s focus is on “the facts pleaded and injuries alleged. . . without regard to [Plaintiffs’] 

asserted theories of recovery.” Adam Bros. Farming, 604 F.3d at 1149.

Strickland’s federal and state court claims concern the same primary right. Strickland’s

state court complaint broadly asserted wage and hour violations that are substantively identical to 

those he now raises in the instant action. These violations include Defendant’s failure to pay all 

overtime wages owed, to provide accurate wage statements, and to timely pay wages. Compare 

Dkt. No. 24-1 at 5–6, ¶¶ 23–25, with SAC ¶¶ 17, 19–20, 25, 31, 34–35. For instance, with regard

to overtime, Strickland broadly pled in his state court complaint:
8

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

United States District Court

Northern District of California

Defendant has had a consistent policy of failing to pay wages and/or 

overtime to Plaintiff and all aggrieved employees. These employees 

were not paid at the proper overtime rate when they were working 

more than eight (8) hours in one day or forty (40) hours in one week, 

because Defendant failed to include all compensation earned during 

a pay period when calculating the regular rate of pay for overtime 

purposes.

Dkt. No. 24-1 at 9 ¶ 23. As here, that allegation pertains to Defendant’s wrongful exclusion of all 

compensation earned from Defendant’s calculation of the regular rate of pay. See, e.g., SAC ¶ 17 

(“Although the bonuses and incentives should have been taken into account when determining the 

regular rate of pay for overtime purposes, on information and belief Defendant failed to do so. 

This resulted in Plaintiff Jonathan Strickland [and other employees] not receiving all overtime 

compensation due to them.”). Strickland pled with similar breadth his state court claims for 

failure to provide accurate itemized wage statements and failure to timely pay wages. See Dkt. 

No. 24-1 at 10 ¶ 24 (“Defendant . . . fail[ed] to accurately set forth on employees’ wage 

statements all applicable hourly rates in effect during the pay period and the corresponding 

number of hours worked at each hourly rate by the employee. . .”), ¶ 25 (“Defendant has failed to 

pay Plaintiff and other aggrieved employees a sum certain at the time of termination or within 

seventy-two (72) hours of their resignation, and have failed to pay those sums for thirty (30) days 

thereafter.”). Those allegations mirror Strickland’s identical claims in this action. See SAC ¶ 19

(“Defendant did not provide proper wage statements. . . the wage statements did not list the correct 

gross and net wages due, the correct hourly rates of pay, and the number of hours worked at those 

rates of pay. . .”), ¶ 20 (“[W]hen Plaintiffs. . . were discharged or resigned, Defendant did not pay

them all wages due including, but not limited to, regular and/or unpaid overtime wages. ”).

Plaintiffs fail to distinguish Strickland’s federal and state court claims. To begin, a plain 

reading of Strickland’s state court pleading belies Plaintiffs’ portrayal of the State Action as 

pertaining to the sole issue of Defendant’s wrongful award of PTE points instead of cash. See 

Opp. Summ. J. at 6–7. Strickland pled his prior allegations far more broadly than Plaintiffs 

suggest. In addition to claiming that the State Action raised a different harm, Plaintiffs also 

characterize the State Action as pertaining to a different time period (i.e., violations occurring on a 

weekly basis as opposed to a monthly one), and to a different actor (the specific individual “who 
9

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

United States District Court

Northern District of California

decided to pay points instead of cash”). See Opp. Summ. J. at 5–6. Again, Strickland’s state court 

complaint on its face contravenes these claims. But even if Plaintiffs were correct, these fine 

factual distinctions do not create a meaningful legal difference. See Villacres, 117 Cal. Rptr. at 

409. While Plaintiffs rely on Brodheim v. Cry for that proposition, that court considered facts far 

different from those presented here. See 584 F.3d 1262, 1268 (9th Cir. 2009). In Brodheim, the

Ninth Circuit held that res judicata did not preclude the plaintiff from asserting a “procedural 

harm” distinct from an earlier alleged substantive injury, where the harms occurred respectively in 

2001 and 2003, and the entities inflicting those harms were distinct individuals: a prison warden 

on the one hand, and a prison appeals coordinator on the other. See id. 

Here, in contrast, both of Strickland’s lawsuits identify the same harm (Defendant’s

wrongful and untimely overtime payments, and provision of inaccurate wage statements), that 

occurred within the same time period (Strickland’s employment); by the same actor (Defendant). 

In addition, the Court in Brodheim stated that “if two actions involve the same injury to the 

plaintiff and the same wrong by the defendant, then the same primary right is at stake even if in 

the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief

and/or adds new facts supporting recovery.” Id. at 1268 (quoting Eichman v. Fotomat Corp., 197 

Cal. Rptr. 612 (Ct. App. 1983)). Plaintiffs’ instant claims are thus appropriately viewed as

additional factual allegations that would otherwise support Strickland’s earlier claims to relief. 

Notably, Plaintiffs at no point dispute that Strickland could have asserted the instant 

claims in the State Action. See Dkt. No. 33 at 4; Panos v. Great W. Packing Co., 134 P.2d 242, 

243 (Ct. App. 1943) (“[R]es judicata rests upon the ground that the party to be affected, or some 

other with whom he is in privity, has litigated, or had an opportunity to litigate the same matter in 

a former action . . . and should not be permitted to litigate it again to the harassment and vexation 

of his opponent.”). Defendant terminated Strickland six months before he filed his state court 

lawsuit. See EA at 106. Thus, Strickland had ample opportunity to raise the instant claims against 

Defendant. 

At oral argument, Plaintiffs contended that Strickland was unable to bring his instant 

claims in the State Action because he unaware at that time that Defendant wrongfully withheld his 
10

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

United States District Court

Northern District of California

monthly STI bonus. Plaintiffs at no point presented evidence to support that claim. Even if 

Plaintiffs had done so, the Ninth Circuit rejected a similar argument in Adam Bros. Farming, 604 

F.3d at 1149. In that case, the Ninth Circuit found it unimportant that the plaintiff’s claim “could 

not have been brought and did not exist” until after the plaintiff’s prior state court action. Rather, 

the court found that “[t]he particularities” of the plaintiff’s federal and state claims were 

“irrelevant” because those claims were “still based on the same underlying factual circumstances.” 

Id. 

Plaintiffs cite several federal district court cases for the proposition that res judicata does 

not bar a second wage and hour claim “where different primary rights are involved.” The Court’s 

finding—that Strickland’s federal and state claims concern the same primary right—distinguishes

those decisions. See, e.g., Prieto v. U.S. Bank Nat’l Ass’n, 2012 U.S. Dist. LEXIS 141891, *24–

26 (E.D. Cal. Sept. 30, 2012). Moreover, those cases are either factually distinguishable or

unpersuasive under the circumstances. Accord Cancilla v. Ecolab Inc., No. C 12-03001 CRB, 

2014 WL 2943237, at *4 (N.D. Cal. June 30, 2014) (explaining that the Ninth Circuit has more 

broadly construed wage and hour claims for purposes of res judicata as compared to several

California district courts). Res judicata therefore precludes Strickland from bringing the currentlyasserted claims in federal court.

b. There Is No Dispute of Material Fact Underlying Strickland’s Overtime 

Wage Claim

Separately, Defendant moves for summary judgment on Strickland’s second claim for 

failure to pay overtime wages. Defendant argues that, as a matter of law, it properly excluded 

from its calculation of the regular rate several “overtime premiums” earned by Strickland during 

the week of June 1 to June 7, 2014, including: (1) a premium earnings payment for overtime hours

worked, for which Strickland received $4.745; (2) two meal break premiums, for which 

Strickland received $1.02; (3) overtime on the PTE points received, for which Strickland received 

$1.31; 5and (4) a monthly STI bonus of 5% of Strickland’s $4.745 overtime earnings, for which 

 

5

These meal and points premiums are coded respectively as “Meal Break OT” and “Points Rcvd 

OT” on Strickland’s wage statement for the pay period running from May 25, 2014 through June 
11

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

United States District Court

Northern District of California

Strickland received $0.237. See Mot. Summ. J. at 6–7, 11–12. The parties’ primary dispute 

concerns this last payment—specifically, whether Defendant properly excluded the $0.237 

attributable to Strickland’s monthly STI bonus in calculating the regular rate. See id.; 29 C.F.R. §

778.202(a). 

In arguing that Defendant incorrectly calculated the regular rate, Plaintiffs contend that 

Defendant’s claim improperly relies on federal interpretations of the Fair Labor Standards Act 

(“FLSA”). According to Plaintiffs, California law controls. See Opp. Summ. J. at 10–11. And 

even if the FLSA standard governs, Plaintiffs argue that non-discretionary production incentive 

bonuses, like Defendant’s Monthly STI Plan, must be considered in calculating the regular rate. 

Plaintiffs contend that Defendant accordingly erred by excluding that portion of the monthly STI 

bonus that Defendant identifies as an “overtime premium.” Id. at 11. 

As set forth in the Prior Summary Judgment Order, California courts look to the FLSA in 

determining the standard for calculating overtime owed. See Dkt. No. 102 at 4–5. Under the 

FLSA, the regular rate is “the hourly rate actually paid for the normal, non-overtime workweek, 

and is obtained by dividing the weekly wage payable for the working of the scheduled workweek 

by the number of hours in such scheduled workweek.” Id. at 5. “Bonuses which do not qualify 

for [statutory] exclusion. . . must be totaled in with other earnings to determine the regulate rate on 

which overtime pay must be based.” Id. at 5 (quoting § 29 C.F.R. § 778.208).

6

 29 U.S.C.§

207(e), sets forth these statutory exemptions, which include:

(5) extra compensation provided by a premium rate paid for certain 

hours worked by the employee in any day of workweek because 

such hours are hours worked in excess of eight in a day or in excess 

of the maximum workweek applicable to such employee under 

 

7, 2014. See EA 225. The premium overtime earnings payment is coded as “Overtime.” Id.

6

29 C.F.R. § 778.202 states in relevant part that: “(a) Hours in excess of 8 per day or statutory 

weekly standard. Many employment contracts provide for the payment of overtime compensation 

for hours worked in excess of 8 per day or 40 per week. Under some contracts such overtime 

compensation is fixed at one and one-half times the base rate; under others the overtime rate may 

be greater or less than one and one-half times the base rate. If the payment of such contract 

overtime compensation is in fact contingent upon the employee’s having worked in excess of 8 

hours in a day or in excess of the number of hours in the workweek specified in section 7(a) of the 

Act as the weekly maximum, the extra premium compensation paid for the excess hours is 

excludable from the regular rate under section 7(e)(5) and may be credited toward statutory 

overtime payments pursuant to section 7(h) of the Act.”
12

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

United States District Court

Northern District of California

subsection (a) or in excess of the employee’s normal working hours 

or regular working hours, as the case may be. . . .

1. Strickland’s Overtime Wage Claim

The key inquiry is whether Defendant improperly excluded from the regular rate that 

portion of the monthly STI bonus that is itself based on overtime earnings. Mot. Summ. J. at 7; 

Opp. Summ. J. at 13. Defendant contends that it need not include that “overtime premium” in 

calculating Strickland’s regular rate of pay under the FLSA. Mot. Summ. J. at 7. Arguing that 

“the entire Monthly STI bonus must be included in the regular rate of pay,” Opp. Summ. J. at 13, 

Plaintiffs rely primarily on the Ninth Circuit’s holding in Brennan v. Valley Towing Co., 515 F.2d 

100, 107–08 (9th Cir. 1975). In Brennan, the Ninth Circuit evaluated an overtime compensation 

arrangement where employees remaining on duty “after regular working hours would be 

compensated either by a flat rate payment of $3.00 per hour, or by being permitted to retain 25%” 

of any gross earnings. 515 F.2d 100 at 103–04. Employees could choose which of these two 

forms of compensation they preferred. The district court upheld the employer’s compensation 

plan as valid under the FLSA, and excluded the extra compensation paid under the plan in its 

calculation of the regular rate. See id.

On appeal, the Brennan court affirmed the district court’s exclusion of the overtime 

arrangement from its calculation of the regular rate under 29 U.S.C. § 207(e). See id. at 104, 107. 

So doing, the Ninth Circuit defined the key inquiry as whether, in “the district court’s discretion,” 

the “agreements providing for higher hourly pay for afterhours work were primarily in the nature 

of overtime pay agreements rather than production incentive arrangements or night shift 

differentials more properly thought of as part of normal pay.” Id. at 108. The Ninth Circuit 

continued: 

We believe that there was sufficient evidence in the record for the 

district judge to conclude that the higher hourly pay for afterhours 

work was both conceived by the company and perceived by the 

employees as a reward for putting in hours beyond the established 

workweek. Consequently, the court below properly failed to include 

pay under these afterhours compensation agreements as part of 

normal, regular pay to be considered in computing the regular 

hourly rate.

Id. at 108–09 (defining the inquiry as whether “under the actual facts of the company’s 

compensation plan, [] certain payments [should] be viewed as normal income or overtime 
13

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

United States District Court

Northern District of California

compensation”). The Brennan court accordingly rejected an interpretation of the FLSA that would 

“require the company to pay overtime not only on what the district court found to be regular salary 

payments but also on payments found already to include an overtime premium element.” Id. The 

Ninth Circuit concluded that the statutory scheme would not be served by requiring employers to 

pay overtime on payments already including an overtime component. 

Brennan therefore supports Defendant’s contention that it properly excluded from its 

regular rate calculation that portion of the monthly STI bonus based expressly on overtime. See 

Reply Summ. J. at 4–6. Defendant’s interpretation of the FLSA also aligns with the U.S. Supreme 

Court’s holding in Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 464 (1948). The Bay Ridge

Court read the FLSA as reflecting Congress’s intent “to exclude overtime premium payments from 

the computation of the regular rate of pay.” 334 U.S. at 464. The Bay Ridge Court reasoned that 

including these premiums would “allow overtime premium on overtime premium—a pyramiding 

that Congress could not have intended.” Id. The Court explained that an “overtime premium” 

constitutes “extra pay for work because of previous work for a specified number of hours in the 

workweek or workday,” which “Congress intended should be excluded from computation of 

regular pay.” Id. at 465. 

As in Brennan and Bay Ridge, obligating Defendant to pay overtime on that portion of the 

monthly STI bonus linked to overtime would not serve the purposes underlying the FLSA, and by 

analogy, those sections of the California Labor Code governing payment of overtime wages. 

Plaintiffs do not dispute that the excluded portion of Strickland’s monthly STI bonus was 

expressly predicated on his earned overtime wages. Nor do Plaintiffs set forth evidence that 

Strickland understood that component of his STI bonus to be independent of overtime earnings. 

To the extent that a dispute of fact exists, it relates to Plaintiffs’ expert having calculated the 

overtime premium component of Strickland’s monthly STI bonus as amounting to $0.217, as 

opposed to Defendant’s value of $0.237. See Opp. Summ. J. at 9. As even Plaintiffs recognized 

at oral argument, any factual dispute regarding this approximate two cent difference is not 

material. Because Plaintiffs’ expert found that Strickland was owed less than Defendant’s expert, 

accepting Defendant’s calculation would still award Strickland more than he was owed for 
14

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

United States District Court

Northern District of California

overtime under the statutory scheme. 

The Court does not find persuasive the cases Plaintiffs cite in arguing for a contrary 

conclusion. As Defendant stresses, these decisions do not consider bonuses that are intrinsically 

linked to overtime hours worked. See Reply Summ. J. at 5–6. While Plaintiffs rely on Marin v. 

Costco Wholesale Corp., that California case is inapposite. See 87 Cal. Rptr. 3d 161, 169 (Ct. 

App. 2008). In Marin, the California Court of Appeal did not address the question presented here: 

whether an employer improperly excluded from its regular rate calculation an overtime bonus 

premium. See 87 Cal. Rptr. 3d at 169. Rather, that court affirmed a bonus plan that already 

included an overtime premium payment. See id. Marin also supports that California courts 

typically look to federal law, since “no California court decision, statute, or regulation governs 

bonus overtime, the DLSE Manual sections on the subject do not have the force of law, and the 

DLSE advice letters on the subject are not on point.” Id. The court in Marin concluded that there 

was “no controlling California authority” apart from general directives. Id. Turning then to 

whether the employer’s arrangement violated federal law principles, the court noted that “nothing 

in the regulation. . . prohibits the defendant’s method of calculating bonus overtime.” Id. at 173 

(emphasis in original). 

The Court therefore concludes that, as a matter of law, Defendant correctly excluded that 

component of Strickland’s monthly STI bonus directly attributable to overtime earnings. Because 

there is no material factual dispute underlying Strickland’s claim for overtime wages, summary 

judgment is appropriate as to that claim.

7

2. Strickland’s Derivative Claims

Defendant next contends that, if the Court grants summary judgment of Strickland’s claim 

for failure to pay overtime wages, the Court should dismiss Strickland's “derivative” second, third, 

and fifth claims for failure to make payments within the required time, failure to provide proper 

itemized wage statements, and for unfair competition. See Mot. Summ. J. at 18, 21, 23. 

 

7 Given this conclusion, the Court need not resolve Defendant’s argument in the alternative that 

Defendant can properly credit employee overtime from one workweek to another. See Mot.

Summ. J. at 16–18. 
15

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

United States District Court

Northern District of California

The Court agrees. To begin, Plaintiffs label these claims as “derivative wage statement 

and failure to timely pay wage claims” in distinguishing Strickland’s overtime wage claims here 

from those asserted in Strickland’s State Action. See Opp. Summ. J. at 5–6 (emphasis added). 

Plaintiffs do not attempt to argue that Strickland’s second or fifth claims can somehow exist apart 

from Strickland’s overtime wage claim. See id. at 19–21. 

Plaintiffs do assert that Strickland’s third claim for inaccurate wage statements is 

independent of Defendant’s failure to pay overtime. Plaintiffs, however, merely refer back to 

Defendant’s intentional failure to “issue separate overtime payments relating to the Monthly STI 

bonus.” Id. at 18. And the only cases that Plaintiffs present concern wages that are, in fact, 

unpaid. See id. at 17. Plaintiffs do not argue that anything in California Labor Code § 226, the 

operative provision, requires Defendant to separate on Strickland’s wage statement that portion of 

the monthly STI bonus based on Strickland’s overtime earnings. Rather, section 226 requires an 

employer to provide an itemized wage statement showing nine enumerated categories of 

information, including: gross wages earned, total hours worked, all deductions, net wages, the 

inclusive dates of the pay period, and all “applicable hourly rates in effect during the pay period 

and the corresponding number of hours worked at each hourly rate by the employee.” Plaintiffs 

do not posit, nor is it likely, that the overtime component of Strickland’s monthly STI bonus 

would fall into this last category: that calculation is not itself an “hourly rate,” even though it

corresponds to one. 

In sum, summary judgment as to Strickland’s claims is appropriate based either on res 

judicata, or alternatively, because no dispute of material fact exists as to whether Defendant 

properly paid Strickland overtime wages owed. The Court therefore GRANTS Defendant’s 

motion for summary judgment as to Plaintiff Strickland’s claims. 

B. Dismissal of Plaintiff Harris’s Seventh Cause of Action under PAGA

Defendant also moves to dismiss Harris’s seventh cause of action under PAGA. 

Specifically, Defendant argues that Harris is collaterally estopped from relitigating her PAGA 

claim to the extent that it is based on “the same alleged overtime compensation practices” 
16

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

United States District Court

Northern District of California

dismissed with prejudice in the Prior Federal Action. See Mot. Dismiss at 14–15.8 

i. Legal Standard

A defendant may move to dismiss a complaint for failing to state a claim upon which relief 

can be granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 

complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 

Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 

12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on 

its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 

when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 

the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 

In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as 

true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. 

St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, courts do not 

“accept as true allegations that are merely conclusory, unwarranted deductions of fact, or 

unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

ii. Analysis

The Court applies California’s collateral estoppel doctrine. See Semtek Int’l Inc. v. 

Lockheed Martin Corp., 531 U.S. 497, 508 (2001). For that doctrine to apply: 

(1) the issue must be identical to that decided in the prior 

proceeding; (2) the issue must have been actually litigated in the 

prior proceeding; (3) the issue must have been necessarily decided 

in the prior proceeding; (4) the decision must have been final and on 

the merits; and (5) preclusion must be sought against a person who 

was a party or in privity with a party to the prior proceeding.

Alvarez v. May Dep’t Stores Co., 49 Cal. Rptr. 3d 892, 897 (Ct. App. 2006). Plaintiffs do not 

dispute that Harris’s own overtime wage claim was dismissed with prejudice in the Prior Federal 

Action. See Opp. Dismiss at 15 & n.6 (disclaiming that Harris seeks to “relitigate her own 

 

8 Defendant also moves to dismiss Harris’s PAGA claim based on res judicata, Harris’s failure to 

meet PAGA’s administrative exhaustion requirements, and failure to state a claim under Rule 

12(b)(6). The Court need not address these arguments to resolve Defendant’s motion. 
17

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

United States District Court

Northern District of California

overtime wage claim”). Rather, Plaintiffs contend that “the Court only decided Harris’s individual 

overtime claim, not the claims of other aggrieved employees.” Id. at 15 n.6. Plaintiffs assert that 

Harris is not estopped from “asserting a PAGA claim that alleges unpaid overtime on behalf of 

others.” Id.; see SAC ¶¶ 57–59. The key issue is consequently whether a plaintiff can bring a 

PAGA action where she did not personally suffer the alleged underlying labor code violation. The 

parties do not present any on-point California authority addressing that issue. 

Nonetheless, the Court concludes that Harris cannot bring PAGA claims based on labor 

code violations that she did not personally suffer. Rather, Harris can pursue only those claims that 

are based on alleged labor code violations that she may have suffered, i.e. those claims that 

survived summary judgment in the Prior Federal Action. Both the plain text of PAGA and judicial 

constructions of that statute support that conclusion. PAGA’s operative provision, California

Labor Code § 2699, allows an “aggrieved employee” to bring a PAGA claim “on behalf of himself 

or herself and other current employees” pursuant to certain statutorily specified procedures. Cal. 

Lab. Code § 2699(a) (emphasis added). Subsection (c) of that provision defines an “aggrieved 

employee” as “any person who was employed by the alleged violator and against whom one or 

more of the alleged violations was committed.” Taken together, the Court reads these provisions 

as requiring an employee bringing a representative PAGA action to have experienced the labor 

code violation of which she complains.

While not cited by the parties, the Court finds instructive Kim v. Reins Int’l California, 

Inc., 227 Cal. Rptr. 3d 375 (Ct. App. Dec. 29, 2017). Less than two months ago, the California 

Court of Appeal in Kim addressed whether the plaintiff “continued to have standing under the 

PAGA as an ‘aggrieved employee’” after his individual claims were dismissed with prejudice. 

See 227 Cal. Rptr. 3d at 375. Rejecting that construction of the statute, the court held: 

[W]here an employee has brought both individual claims and a 

PAGA claim in a single lawsuit, and then settles and dismisses the 

individual employment causes of action with prejudice, the 

employee is no longer an ‘aggrieved employee’ as that term is 

defined in the PAGA, and therefore that particular plaintiff no 

longer maintains standing under PAGA.

Id. Drawing on the statute’s legislative history, the Kim court found that PAGA was “not intended 
18

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

United States District Court

Northern District of California

to allow an action to be prosecuted by any person who did not have a grievance against his or her 

employer for Labor Code violations.” Id. The Kim court also relied for its holding on the 

California Supreme Court’s earlier decision in Arias v. Superior Court, 209 P.3d 923, 930 (Cal. 

2009). In Arias, the California Supreme Court explained that actions brought under PAGA are 

“fundamentally” in the nature of “law enforcement. . . designed to protect the public and not to 

benefit private parties.” 209 P.3d at 930. Accordingly, because “an aggrieved employee’s action 

under [PAGA] functions as a substitute for an action brought by the government itself, a judgment 

in that action binds all those, including nonparty aggrieved employees, who would be bound in a 

judgment in an action brought by the government.” Id. at 933. 

Considering the sweeping preclusive effect of PAGA as set forth in Arias, it would raise 

serious fairness and justiciability concerns to allow an employee to bind future individuals by 

asserting, on a representative basis, a harm that she did not personally suffer. See Susan B. 

Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (explaining that the standing doctrine’s 

injury in fact requirement “helps to ensure that the plaintiff has a personal stake in the outcome of 

the controversy”) (internal quotation omitted). While Plaintiffs assert that this hypothetical

litigant would still have “skin in the game,” common sense belies that claim. That employee 

would be unable to recover penalties for the alleged violation of the labor code that she did not 

experience. See Soto v. Motel 6 Operating, L.P., 208 Cal. Rptr. 3d, 618, 621 (Ct. App. 2016) (“A 

court’s overriding purpose in construing a statute is to give the statute a reasonable construction 

conforming to the Legislature’s intent. . .”) (quotations and alterations omitted). So construing 

PAGA would undermine the statute’s purpose to provide relief for genuinely aggrieved 

employees. 

Another court in this District has—under nearly identical circumstances—invoked that 

reasoning to reach the same conclusion. See Fobroy v. Video Only, Inc., No. C-13-4083 EMC, 

2014 WL 6306708, at *5 (N.D. Cal. Nov. 14, 2014). As here, the court in Fobroy previously 

granted summary judgment on several of the plaintiff’s wage and hour claims, and denied 

summary judgment as to others. Reasoning that “a plaintiff must properly state a viable Labor 

Code claim” in a PAGA action, the court held that the plaintiff could not assert PAGA claims 
19

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

United States District Court

Northern District of California

based on labor code violations that the court dismissed on summary judgment. Id. (citing Arias,

46 Cal.4th 969 at 987). Nevertheless, the court allowed the plaintiff to pursue PAGA claims based 

on alleged harms that she may have experienced, i.e. those based on underlying labor code 

violations that survived summary judgment. Id.

Other California federal courts have found similarly. In Alvarez v. Autozone, the district 

court stayed the plaintiff’s representative PAGA claims to allow arbitration of his individual wage 

and hour claims. No. 5:14-cv-02471-VAP-SP (C.D. Cal. Apr. 13, 2015), Dkt. No. 35 at 4–5. The 

Alvarez court reasoned: 

If some of Plaintiff’s individual claims were dismissed during 

arbitration, a different representative would need to bring the

dismissed claims under PAGA because Plaintiff could not assert to 

be an ‘aggrieved employee’ with respect to those claims as required 

by the statue.

Id. (citing Cal. Lab. Code 2699(a)). And in Wassnick v. Affiliated Computers Servs., the court 

held that the plaintiff could not base his PAGA claim on labor code violations that he did not 

experience, even if the plaintiff “ha[d] standing to bring a PAGA claim for other Labor Code 

violations.” 2011 WL 13077358, at *3 (C.D. Cal. Dec. 21, 2011).

While Plaintiffs cite to Molina v. Dollar Tree Stores, Inc. as supporting the opposite 

conclusion, Molina aligns with the Court’s reasoning. See No. CV1201428BROFFMX, 2013 WL 

12114758, at *9 (C.D. Cal. Aug. 9, 2013). In Molina, the court denied summary judgment as to 

several of the plaintiff’s PAGA claims, finding that there remained “triable facts as to whether or 

not” the plaintiff was an “aggrieved employee” within the meaning of PAGA. Id. Only then did 

the court state that the plaintiff was not required to “have suffered all PAGA violations for which 

he seeks to pursue civil penalties.” Id. (quotation and alterations omitted). The Molina court did 

not provide additional analysis that would favor reading that court’s holding more broadly. The 

other cases on which Plaintiffs primarily rely likewise align with this view, or lack reasoning that 

favors the opposite result. See Rope v. Auto-Chlor Sys. of Washington, Inc., 163 Cal. Rptr. 3d 

392, 406 (Ct. App. 2013) (finding that the plaintiff could not bring a PAGA representative action 

because not “one violation had been committed against the representative plaintiff”); Holak v. K 

Mart Corp., No. 1:12-CV-00304-AWI-MJ, 2015 WL 2384895, at *5 (E.D. Cal. May 19, 2015)
20

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

United States District Court

Northern District of California

(concluding that the plaintiff was “not an aggrieved employee for purposes of prosecuting [the] 

action because none of the violations properly alleged in the [plaintiff’s] PAGA claim . . . were 

committed against her”); Jeske v. Maxim Healthcare Servs., Inc., No. CV F 11-1838 LJO JLT, 

2012 WL 78242, at *13 (E.D. Cal. Jan. 10, 2012). 

The Court accordingly concludes that Harris can assert her PAGA claim based only on 

those harms that she may have personally experienced: that is, only those based on underlying 

labor code violations that survived summary judgment in the Prior Federal Action. 

III. CONCLUSION 

For these reasons, the Court GRANTS Defendant’s motion for summary judgment as to

Strickland’s claims, and GRANTS Defendant’s motion to dismiss Harris’s seventh cause of action 

under PAGA insofar as Harris’s PAGA cause of action is based on her claim to overtime wages. 

As to Harris’s PAGA cause of action, the Court’s resolution of Harris’s overtime wage claim in 

the Prior Federal Action shows that any corresponding amendment to her PAGA claim would be 

futile. See Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). To the extent that Harris’s 

PAGA claim is based on Defendant’s failure to pay overtime wages, that claim is therefore 

dismissed WITHOUT LEAVE TO AMEND. 

Because this order alters the bases for Plaintiffs’ motion for class certification, Dkt. No. 

85, the Court SETS that motion for a hearing on Thursday, April 5, 2018 at 2:00 p.m. 

IT IS SO ORDERED.

Dated:

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

2/20/2018