F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

D E V A N A N D O M A N ; T O D D E I C H M A N N ; M I C H A E L L E H R ; A L B E R T F L O R E S , individually

, on behalf of others similarly

situated, and on behalf of the g eneral public, Plaintiffs-Appellants

,

v.

D E L T A A I R L I

N E S , I N C ., Defendant-Appellee. No. 17-15124

D.C. No. 3:15-cv-00131-W HO

ORDER CERTI F YI

NG QUESTI ONS TO THE SUPREME COURT OF CAL I F ORNI A

F iled May

9, 2018

B efore: Paul J . W atford and Michelle T. F r iedland, Circuit J udg es, and J ed S. Rakoff, * Senior District J udg e.

* T h e Ho n o rab le J ed S. Rak o f f

, Sen i o r Un ited States District J u dg e f o r th e So u th ern District o f New Yo rk , sittin g b y

d esig n atio n

.O M A N V

. D E L T A A I R L I

N E S 2

SUMMARY * *

C ertif ied Questions to Calif

ornia Suprem e Court

The panel certified the f

ollowing questions of state law to the Supreme Court of California:

(1) Do California L abor Code §§ 204 and 226 apply to wag e pay

ments and wag e statements provided by an o ut-of-state e mploy er to an employ ee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does California minim um wag e law apply to all work performed in Cal i fornia for

an out-of-state e mploy er by a n employ ee who works in California only episodically a n d for less than a d ay a t a time? See Cal. L abor Code §§ 1 182.12, 1194; 8 C.C.R. § 11090(4).

(3) Does the Arm e nta / Gonzalez bar on

a v e rag ing wag es apply to a pay formula th at g enera l l y awards credit for all hours on duty

, but which, in certain situations r e s ulting in hig her pay , does n ot award credit for all hours

on d u t y ? See Gonzalez v. Downtown LA Motors, LP
, 155 Cal. Rptr. 3d 1 8
, 20 (Ct. App. 2013); Armenta v

. Osmose, Inc.
, 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005)?

* * T h is su m m ary co n s titu tes n o p art o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.O M A N V

. D E L T A A I R L I

N E S 3

ORDER

W e respectfully ask the Supreme Court of Ca l i f o r n ia to

ex e r cise its discretion to decide the c e rt i fied questions set forth in section I I of this order.

I. Adm inistrative Inf

orm ation

W e provide the following information in accordance with California Rule of Court 8.548(b)(1). T he caption of this case is:

No. 17-15124

DEV ANAND O MAN; TODD EI CHMANN; MI CHAEL L E H R; AL B E RT FL ORES, individually

, on behalf of others similarly situated, and on b ehal f of the g eneral public, Plaintiffs-Appellants,

v.

DEL TA AI R L I

N ES, I NC., DefendantAppellee.

The names and addresses of counsel for the parties are:

F or Plaintiffs-Appellants Dev Anand O man, Todd Eichmann, Mic h ael L ehr, and Albert F lores: Daniel S. B rome an d Matthew C. H e l l a n d

, N i c h o l s K a s t e r , L L P
, 235 Montg omer y Street, Suite 810, San F rancisco, CA 94104.O M A N V

. D E L T A A I R L I

N E S 4

F or Defendant-Appellee Delta Air L ines, I nc.: Andrew P. F rederick, Robert J on Hendricks, and Thomas M. Peterson, Morg an L ewis & B o ckius L L P, One Market Street, Spear Street Tower, San F r ancisco, CA 94105.

W e desig n ate De v Anand Oman, Todd Eichmann, Michael L ehr, and Albert F l o r es a s the petitioners if our request for certification is gr a n ted. They are the appellants before our court.

II. Certif ied Questions

W e certify to the S u p reme Court of California the following three questions of state law:

(1) Do California L abor Code §§ 204 and 226 apply to wag e pay

ments and wag e statements provided by an o u t -of-state employ er to an employ ee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does Cali fornia minimum wag e law
ap p ly to all work performed in California for

an o ut-of-state employ er b y an employ ee who works i n California o nly episodically and for le s s t han a day a t a time? See Cal. L abor Code §§ 1 182.12, 1194; 8 C.C.R. § 11090(4).

(3) Does the Armenta / Gonzalez bar on averag in g wag e s apply to a p ay formula that
ge n erally awards credit f

o r all hours on duty

, bu t which, in certain situations resulting inO M A N V

. D E L T A A I R L I

N E S 5

hig her pay , does not award credit for all hours

on d u t y ? See Gonzalez v. Downtown LA Motors, LP
, 155 Cal. Rptr

. 3 d 18, 20 (Ct. App. 2013); Armenta v

. Osmose, Inc.
, 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005).

W e certify these questions p ursuant to California Rule o f Court 8.548. The answers to these questions will determine the o utcome of the appeal currently pending in our c ourt. W e will accept a

nd follow the decision of the California Supreme Court o n these q u e s tions. Our phrasing of the questions should not restrict the California Supreme Court’s consideration of the issues involved.

III. Statem ent of

F acts

I n this case, flig ht attendants have s u e d their employ er, Delta Air L ines, I nc. ( Delta), for al l e g ed violations o f California labor law. Delta is a major pa s s en g er and c arg o airline that operates throug hout the U n i t e d States and the world. I t is a Delaware corporation, h eadquartered in Atlanta, Georg ia. F rom 2012 to 2015, approx imately 7% of its almost 22,000 United States-based fli gh t attendants were based out of California airports.

The plaintiffs are four Delta f lig h t attendants, only two o f whom reside in California. D ev A nand Oman was a flig ht attendant for Delta from 2 011 to 2014, during which time he lived in N ew Y ork and was based out of New York’s J ohn F

. Kennedy Airport. T o d d Eichmann a nd Michael L ehr b eg an working for Delta in 2 009, when Delta a c q uired their previous employ er. Ei c h m ann has lived in California a nd been based out of California’s L os Ang eles I nternational Airport ( L AX) since 2014. L ehr has lived in Nevada a ndO M A N V

. D E L T A A I R L I

N E S 6

been based out of California’s San F rancisco I nternational Airport throug hout h is time with Delta. Albert F lores h a s been a flig ht attendant for Delta since around 2008. He has lived in California and b e en based out of L AX since 2010. The plaintiffs proposed a c lass of Delta flig ht attendants “who have performed work” in California, but they never soug ht to certify it.

D u ring a sample of the time period in question

, t h e plaintiffs spent at most 14% of their “ flig ht-related w orking hours” in California. F rom J anuary 2014 to J une 2016, Oman worked 3% of his t i m e i n California; Eichmann, 9%; L ehr, 14%; and F lores, 11%. These percentag es are not in dispute.

The plaintiffs were p ai d according to a complicated credit-based pay formula that is e x plained in the Delta W ork Rules. (B ecause Delta flig ht attendants are not unioniz ed, the W o rk Rules, rather than a collective b ar gaining ag r eement, g overn their pay .) The pay formula calculates a flig ht attendant’s pay by “rotation,” which is a set of flig hts that can include lay overs. The p ay f ormula incorporates four different credit c alculations. The credit calculations award credits based on different criteria. F or ex ample, the F lig h t Pay calculation awards o ne credit p er h our flown or scheduled to be flown, w hile the Duty Period Credit calcu l a t ion awards

one credit p er two hours on duty

. The pay formula compares t h e re sult of the four credit calculations to determine whi c h
y ields the most credits per rotation. D elta then multiplies the hig hest number of credits b y t h e f l ig ht attendant’s hourly
wag e rate (plus additions not relevant here) to determine the flig ht attendant’s pay

.

The pay formula at times fails to awa r d credit f or all hours on d u t y , b u t it n ever results in an hourly r ate that isO M A N V

. D E L T A A I R L I

N E S 7

below California’s minimum wag e

. The pay formula can fail
to award cre d i t f

o r all hours on duty b ecause the F lig ht Pay calculation provides credit only for h ours flown or scheduled
to be flown, not for hour s p r e paring the airplane for
passeng ers, f

o r ex ample. Stil l

, a f

lig ht attendant is alway s paid an a bove-minimum-wag e hourl y rate because the Duty Period Credit calculation, i n e f fect, g uarantees a flig ht attendant half her hourly wa g e rate p er hour o n duty

, a nd

even the lowest flig ht attendant w ag e rate is more than double California’s minimum wag e

. The plaintiffs canno t i d e n tify

a rotation in w hich they were paid an averag e hourly w ag e below California’s minimum wag e

.

The plaintiffs sued Delta in federal court, alleg ing that the F lig ht Pay calculation violates California minimum w a g e law by failing to pay the minimum wag e “per ho u r f or all hours worked.” 8 C.C.R. § 11090(4)(A); see Armenta
, 37 Cal. Rptr. 3d at 468. They arg ue t h a t t he F lig ht Pay formula impermissibly averag es a flig ht attendant’s wag es f o r paid, productive time and unpaid, unproduc t i ve time. See Gonzalez

, 155 Cal. Rptr. 3d at 2 0. T h e y a l s o contend that Delta f a iled to pay their wag es on time, in v iol a t i o n o f California L abor Code § 204, and fa i l e d to issue them w ag e statements that complied with California L abor Code § 226. The plaintiffs demand damag es and u npaid wag es under California L a b o r Code § § 1 194 and 1194.2; damag es a nd statutory penalties under California L abor Code § § 2 0 3 and 226; c ivil penalties under the Private Attorney s General Act (PAGA), Cal. L abor Code § 2699; a n d restitution a nd attorney ’s fees under California B u siness & Professions Code § 17200.

The p laintiffs seek to apply California law to their c laims based solely on the location of their work. They seek toO M A N V

. D E L T A A I R L I

N E S 8

apply California law to work that las t e d o n l y for hours a nd minutes, not d ay s, in California. T hey arg u e that C a l i f ornia L abor Code § § 204 and 226 apply to any pay period in which they performed work in Ca l ifornia and that California minimum w age law a

p plies to a

ny work performed in California, however short the duration.

The district court g ranted summary judg ment to Delta a nd denied it to the plaintiffs in two orders. F irst, the district
court held that D elta complied with Ca l i f ornia minimum
wag e law. Oman v. Delta Air L i n e s , Inc.
, 153 F

. Supp. 3d 1094, 1095 (N.D. C a l

. 2 015). Second, the district court g ranted summ a r y judg ment on the § 204, § 226, and other remaining claims. O man v

. D e l t a Air Lines, Inc.
, 230 F

. Supp. 3 d 986, 994 (N.D. Cal. 2017). I t held that California labor law does not apply to the four plaintiffs because they worked only a de minimis amount of time in Calif o rn i a

. Id. at 993–94. The plaintiffs appealed both orders.

W e h eard oral arg ument on March 16, 2018. The Air Transport Association of America, I n c., f iled a n amicus brief in s u p p ort o f Delta. The California Employ ment L awy ers Association filed an amicus b rief in support of the plaintiffs.

On the same day that we heard oral arg ument in this c ase,

we also h e ard oral arg u ment in two related ca s e s , W a rd v

. United Airlines, Inc.
, N o. 16-16415, and Vidri o v. United Airlines, Inc.
, No. 17-55471. Those cases raise questions about the ex traterritoriality o f California L abor Code § 226 that a re similar to the questions raised here. W e are also certify ing the state-law questions in W ard and V

i d r i o to the California Supreme Court, in a separate certification order.O M A N V

. D E L T A A I R L I

N E S 9

IV. Explanation of

Certif ication Request

No c ontrolling California precedent a nswers the c ertified questions o n the proper terr i torial reach of the California L abor Code provisions at issue, or on the application o f California minimum wag e law to a c redit-based pay formula. B ecause the f

irst two certified questions both c onc e r n t h e

ex traterritorial application of the L a b or Code, w e e x plain our certification of those two questions tog ether in section I V.A. W e e x plain our certification o f t he third question, which arises out of Armenta and Gonz a lez

, in section I V .B

. The

answers to these certified questions matter g r e a t l y to the
many out-of-state employ e rs whose employ ees wor k i n California for only

brief periods of time.

A.

There is n o controlling California precedent on the question whether California labor law applies to an employ ee who works for an out-of-state employ er and does not work principally

, or even for day s at a time, in California. The three principles that g enerally gu i de our evaluation of the propriety of a potentially ex traterr i torial application o f California l aw, and the California Supreme Court’s application of those principles, d o n ot provide sufficient
g uidance here.

The f irst princ i p l e is that “[ o ] rdinarily the statutes of a state have no f

orce bey o nd its boundaries.” N. Alaska Salmon Co. v

. P illsbury

, 162 P. 9 3, 94 ( Cal. 1 916). To e v aluate whethe r a cl a im seeks to apply the force of a state statute bey ond the state’s boundaries, c ourts consider w here the conduct that “ creates lia b ility ” under the statute occurs. Sullivan v. O racle Corp.
, 254 P.3d 237, 248 (Cal. 2 011); seeO M A N V

. D E L T A A I R L I

N E S 10

a lso RJR Nabisco, I

nc. v. European Cmty.
, 136 S. Ct. 2090
, 2101 (2016) (where th e “conduct r elevant to the statute’s focus occur[ s] ” ). I f the conduct that “creates liability ” occurs in C al i fornia, California law properly g overns that conduct. Sullivan

, 254 P.3d at 2 48; see a lso Diamond Multimedia Sys., Inc. v. Superior Court
, 968 P.2d 539, 554 (Cal. 1999 ). B y contrast, if the liability -creating conduct occurs outside o f California, Cali f

ornia law g enerally should not g overn that conduct (unless the L eg islature ex plicitly indicates other wise, which it did not in the L a b o r Co d e )

. See Sullivan

, 254 P.3d at 248.

The s e c o n d principle is that the proper reach of L abor Code p rovisions can differ because the provi sions reg ulate different conduct and implicate different state interests. See id. at 2 43–44. F or ex ample, b ecause “ California’s interest in the content of an out-of-state b usiness’s pay st u b s” may be weaker than its interest in the pay ment o f overtime wag es, wag e statement provisions may apply more narrow l y than overtime provisions do. See id. at 243.

The third pri n c iple is that c ourts must balance California’s interest in apply ing its law with considerations o f “interstate comity ,” in order to avoid unnecessary c onflicts o f
state law. See id. at 242–43. For ex ample, courts should consider w hether the proposed use of Californ i a l a w would displace another state’s law o r w ould protect a n em ploy ee wh o i s o t h e r wise n ot protected by a ny state law. S

ee id. at 243 ( citing Bostain v. Food Express, Inc
., 1 53 P.3d 846 (W ash. 2007)).

The California Supreme Court has applied the se principles twice to the L abor Code. Tidewater held that w ag e orders a p p l y to an employ ee who “resides in California,O M A N V

. D E L T A A I R L I

N E S 11

receives pay in California, and works ex clusively

, o r p r i ncipally

, in California.” Tidewater Marine W

., Inc. v. Bradshaw

, 927 P.2d 296, 309 (Cal. 1996). Sullivan held that overtime provisions ap p l y t o day -long or week-long work performed in California f or a California employ er by an outof-state resident. 254 P.3d at 243, 247.

B u t with reg a

rd to the required streng th of the California connection, Tidewater did not address whether California law applies to C a lifornia residents “who work primarily outside California[ ] ,” as the California-resident plaintiffs in this case do. 92 7 P

. 2 d a t 309. S ullivan did not resolve whether California law applie s t o nonresident employ ees who work less than a full day in California, as the nonresident plaintiffs do. See 254 P.3d at 242–43. Neither case discussed how to balance California’s interest in apply ing its law to its residents with California’s interest in avoiding i nterstate

c onflict by not apply ing its law to a n out-of-state employ er, such as Delta.

W ith reg a

rd to the different L abor Code provisions, Sullivan confined its holding to overtime provisions, leaving uncertain whether it applies to similar minimum wag e claims. N e ither Tidewater nor Sullivan considered a statute th at focused on an employ ee’s receipt of pay and information about her pay , as § 204 and § 2 2 6 d o

. See Cal. L abor Code §§ 2 0 4(a), 226(e)(2); see also Lopez v. Friant & A s socs., LL C
, 224 Cal. Rptr. 3d 1
, 6 (Ct. A pp. 2017); Morgan v

. United Retail, Inc.
, 113 Cal. Rptr. 3d 10, 19 (Ct. App. 2010). I f that focus makes the relevant location for a § 204 or § 226 claim the place where the employ ee receives her pay , does an employ e e’s C a l i fornia residence and receipt of pay in California streng then California’s interest in the content o f an out-of-state e mploy er’s w ag e statement? Cf. S u l livan

,O M A N V

. D E L T A A I R L I

N E S 12

254 P.3d at 243. Does an employ ee’s out-of-state residence preclude app l i cation of California wag e-timing or wag estatement law to her?

I n s h o r t, Tidewater and Sullivan

, even informed by the principles of ex traterritoriality

, do not a llow us to confidently resolve the plaintiffs’ California law claims. The c laims implicate the proper reach of California l a b o r law, which in
turn implicates the wag e -and-ho ur protections g iven to traveling w orkers. F or this reason, we certify these important questions.

B.

There is also no directly c ontrolling California p recedent that determines whether Delta’ s credit-based pay formula implicates California’s bar on averag ing w a g es. The California Court of Appeal has held that the “F L SA model o f
averag ing all hours worked in any work week to compute an employ e r’s minimum w ag e oblig ation under California law is inappropriate.” Armenta
, 3 7 Cal. Rptr. 3d at 468 (internal quotation marks omitted). I n stead, the “minimum w ag e standard a

pplies to each hour worke d .” Id. ; see G onzalez

, 155 Cal. Rptr. 3d a t 2 8. The plaintiffs arg ue that the F lig ht Pay calculat i o n violates this rule because, as they correctly note, the calculation does not award credits for “each hour worked.” B ut the plaintiffs’ proposed application raises two unresolved issues reg arding the proper interpretation of when the bar applies (assuming that it applies at all).

F irst, Gonzalez stated that the bar applies “whenever an employer and e mployee have agreed that certain work will be

co m p e n sated at a r ate that ex ceeds the minimum wag e a nd other work time will be compen s a ted at a lower rate.”O M A N V

. D E L T A A I R L I

N E S 13

Gonzalez

, 155 Cal. R p t r. 3 d at 29 (emphasis added). B oth Armenta and G o nzalez premised their holding s in p art on California L a

bor Code §§ 221, 222, and 223, which articulate the principl e t h at “all hours must be paid at the statutory or

a g r ee d rate and no part of this rate may be used as a cre d i t ag ainst a minimum wag e oblig ation.” Armenta
, 37 Cal. Rptr. 3d at 467–68 (emphasis a dded); see Gonzalez

, 1 55 Cal. Rptr. 3d at 28. The references to a p ay ag reement leave unresolved how directly that ag reement must link certain work to c ertain
pay to implicate the A rmenta / Gonzalez bar. Does i t matter that the Delta W ork Rules state that Delta awar ds credits, rather than hourly

pay , for certain work? Does it matter that the W ork Rules award credits n ot o n l y f o r the ex act hours flown, b ut also for the hours sch e d u l e d to be flown, thus somewhat severing the link between certain work and c ertain
pay ?

Second, the A rmenta / Go n z a lez bar applies when
averag ing w ag es “effectively reduces [ an employ ee’s] contractual h ourly rate” a nd “results in u n d e r

p a y ment o f employ ee wag es.” Armenta
, 37 Cal. Rptr. 3d at 467–68; Gonzalez

, 155 Cal. Rptr. 3d a t 2 8

. I n this case, the challeng ed F lig ht Pay calculation operates only to increase a flig ht attendant’s h ourly wag e above t h e g u aranteed minimum rate promised under t h e Duty Period Credit calculation

. D o es the bar a p ply to a pay sy stem that effectively

increases an employ

ee’s hourly

rate?

B e cause ex isting California precedent does not establish whether the A rmenta/Gonzalez bar properly applies here, we certify the question. Althoug h the q uestion is somewhat f

actintensive, it implicat e s C alifornia’s strong interest in enforcing its minimum wag e law.O M A N V

. D E L T A A I R L I

N E S 14

V. Accom panying Materials

The clerk of this court is hereby directed to file in the Supreme Court of California, under official seal of the United S t a tes Court of A ppeals for the Ninth Circuit, copies of a l l relevant briefs and e x cerpts of the record, and an orig inal a nd
ten copies of th i s order and request for certification, along with a certification of service on the parties, pursuant to California Rule of Court 8.548(c), (d).

This case is wi t h drawn from submission. F urther proceeding s before us are stay ed pending final action by the S u p r eme Court of California. The Clerk is d irected to administratively close this d ocket, pending further order. The parties shall notify the clerk of thi s court within seven day s after the Supreme Court of Cal i f o r nia accepts or rejects certification, and ag ain within seven day s if that court accepts certification and subsequently r enders an opinion. The panel retains jurisdiction over further proceeding s.

IT IS SO ORDERED.