Court Opinion

ID: 2760860
Source: CourtListenerOpinion
Date Created: 2014-12-15 22:02:09.831763+00
Date Added: 2024-06-11T11:26:14.022163
License: Public Domain

Filed 12/15/14 Salazar v. Victory Entertainment CA2/7
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                DIVISION SEVEN

STACY SALAZAR,                                                       B249888

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                     Super. Ct. No. BC445154)
         v.

VICTORY ENTERTAINMENT, INC.,

         Defendant and Respondent.

         APPEAL from an order of the Superior Court of Los Angeles County, Jane L.
Johnson, Judge. Reversed and remanded.
         Murray M. Sinclair & Associates, Murray M. Sinclair, Ryan C. McKim; Manuwal
& Manuwal, Robert I. Manuwal; Cohon & Pollack and Jeffrey M. Cohon, for Plaintiff
and Appellant.
         No appearance for Defendant and Respondent.
                                       __________________________
       Stacy Salazar, an exotic dancer, sued Victory Entertainment, Inc. (doing business
as VIP Showgirls) (VIP), an adult entertainment club in North Hollywood, alleging wage
and hour violations arising from the club’s misclassification of dancers who performed at
the club as independent contractors. Salazar appeals from the trial court’s order denying
her motion to certify a class of all dancers who have worked at VIP; the court ruled
common issues did not predominate over individual issues. We reverse.
                  FACTUAL AND PROCEDURAL BACKGROUND
       Salazar filed a class action complaint against VIP in September 2010 alleging
causes of action for illegal wage deductions; conversion (illegal tip collection); failure to
provide uniforms, itemized wage statements, rest periods and meal breaks; and unfair
business practices. She sought declaratory and injunctive relief, damages in the form of
restitution and reimbursement, penalties, punitive damages and attorney fees. VIP filed a
general denial to the complaint and asserted multiple affirmative defenses, including the
allegation the dancers were independent contractors.
       In November 2012 Salazar moved to certify a class of “[a]ll persons who are
employed or have been employed and who have worked one or more shifts as a ‘dancer’
for [VIP] in the State of California from four (4) years prior to the filing of this action
until the present.” In a declaration submitted in support of her motion to certify, Salazar
stated her job required her to dance on stage and to sell private dances while other
dancers performed. She was not paid a wage; she received tips and a portion of the
money customers spent on private dances. As a prerequisite to performing on stage, she
paid a $30 fee, which was deducted from the money due at the end of a shift. Each shift
she was also required to tip the manager, bartender and DJ a percentage of her earnings
(5 to 10% each). To enforce tip sharing, management personnel confiscated her car keys
when she checked into her shift and did not return them until she “tip[ped] out” at the end
of the shift. The club controlled her schedule and required her to work some week nights
in order to be scheduled for a weekend shift. She understood she was required to show
up and would have been punished if she missed a shift. She was required to wear bikini
dance wear, high heels and underwear that she provided herself without reimbursement.

                                               2
She was not given any breaks and was not allowed to eat during her shift. VIP treated
her as if she were an independent contractor and did not pay payroll taxes, state
unemployment and disability insurance or workers’ compensation insurance on her
behalf.
          VIP did not timely oppose the motion to certify the class. In considering the
motion, however, the trial court noted evidence in the record suggested VIP had dancers
sign a standard agreement to work at the club that identified them as independent
contractors. The agreement provided either party could terminate the agreement at will.
          Notwithstanding the lack of opposition to the motion, the trial court concluded
Salazar had failed to carry her burden of demonstrating class certification was proper. In
particular, the court applied the common law test for whether an employee relationship
existed between Salazar and VIP (see Ayala v. Antelope Valley Newspapers, Inc. (2014)
59 Cal.4th 522, 531-532 (Ayala)) and found the evidence raised disputed issues about the
dancers’ relationships with VIP that would require individual inquiries at trial. Because
Salazar’s motion failed to establish that common issues predominated over individual
issues, the motion was denied. Salazar’s motion for reconsideration based on evidence
VIP had lied in stating dancers had been required to execute independent contractor
agreements was denied.
                                         DISCUSSION
          1. Standard of Review
          To prevail on a motion to certify a class, “[t]he party advocating class treatment
must demonstrate the existence of an ascertainable and sufficiently numerous class, a
well-defined community of interest, and substantial benefits from certification that render
proceeding as a class superior to the alternatives. [Citations.] ‘In turn, the “community
of interest requirement embodies three factors: (1) predominant common questions of
law or fact; (2) class representatives with claims or defenses typical of the class; and
(3) class representatives who can adequately represent the class.”’” (Brinker Restaurant
Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021; accord, Ayala, supra, 59 Cal.4th
at pp. 529-530; Dynamex Operations West, Inc. v. Superior Court (2014)

                                                3
230 Cal.App.4th 718, 725 (Dynamex).) “‘The certification question is “essentially a
procedural one that does not ask whether an action is legally or factually meritorious.”’”
(Brinker, at p. 1023.) Nonetheless, “a court may ‘consider[] how various claims and
defenses relate and may affect the course of the litigation’ even though such
‘considerations . . . may overlap the case’s merits.’” (Id. at p. 1024.)
       We review a trial court’s ruling on a certification motion for abuse of discretion
and generally will not disturb it “‘“unless (1) it is unsupported by substantial evidence,
(2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions.”’” (Ayala,
supra, 59 Cal.4th at p. 530; see Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal.App.4th
966, 973-974.) “We review the trial court’s actual reasons for granting or denying
certification; if they are erroneous, we must reverse, whether or not other reasons not
relied upon might have supported the ruling.” (Ayala, at p. 530.)
       2. The Trial Court Erred by Applying the Common Law Test for an Employee
          Relationship to Claims Falling Within the Scope of a Wage Order
       In Dynamex, supra, 230 Cal.App.4th 718 we considered whether delivery drivers
engaged by Dynamex had been misclassified as independent contractors for purposes of
their wage and hour claims. We concluded the superior court had correctly allowed the
drivers to rely on the Industrial Welfare Commission (IWC) definition of an employment
relationship for purposes of those claims falling within the scope of an IWC wage order.
(Dynamex, at p. 734; see Martinez v. Combs (2010) 49 Cal.4th 35, 64 (Martinez);
Cal. Code Regs., tit. 8, §§ 11000-11170.)1 With respect to those claims falling outside

1
       The IWC is the state agency empowered to regulate wages, hours and working
conditions through wage orders governing specific industries and occupations. (See
Brinker Restaurant Corp. v. Superior Court, supra, 53 Cal.4th at p. 1027; Ramirez v.
Yosemite Water Co., Inc. (1999) 20 Cal.4th 785, 795.) There are currently 18 wage
orders. Sixteen relate to specific industries or occupations: manufacturing; personal
service; canning, freezing and preserving; professional, technical, clerical, mechanical
and the like; public housekeeping; laundry, linen supply and dry cleaning; mercantile;
product handling after harvest (covering commercial packing sheds); transportation;
amusement and recreation; broadcasting; motion picture; preparation of agricultural
products for market (on the farm); agricultural; household; and construction, drilling,
logging and mining. There is also one general minimum wage order, and one order

                                              4
the scope of a relevant wage order, however, we concluded the common law test for an
employment relationship applies. (Dynamex, at p. 734; see Ayala, supra, 59 Cal.4th at
pp. 531-532; S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989)
48 Cal.3d 341, 350 (Borello).)
       As in Ayala and Dynamex, “the central legal issue” presented here is “whether
putative class members are employees for purposes of the provisions under which they
sue.” (Ayala, supra, 59 Cal.4th at p. 530; see Dynamex, supra,230 Cal.App.4th at
p. 725.) “If they are employees, [VIP] owes them various duties that it may not have
fulfilled; if they are not, no liability can attach.” (Ayala, at p. 530.)
       Salazar alleges exotic dancers are covered either by Wage Order No. 5 or No. 10.
Wage Order No. 5 applies to the public housekeeping industry, which is defined in part to
mean “any industry, business, or establishment which provides meals, housing, or
maintenance services whether operated as a primary business or when incidental to other
operations in an establishment not covered by an industry order of the Commission, and
includes, but is not limited to the following: [¶] (1) Restaurants, night clubs, taverns,
bars, cocktail lounges, lunch counters, cafeterias, boarding houses, clubs, and all similar
establishments where food in either solid or liquid form is prepared and served to be
consumed on the premises. . . .” Wage Order No. 10 applies to the amusement and
recreation industry, which is defined as “any industry, business, or establishment
operated for the purpose of furnishing entertainment or recreation to the public, including
but not limited to theaters, dance halls, bowling alleys, billiard parlors, skating rinks,
riding academies, racetracks, amusement parks, athletic fields, swimming pools,
gymnasiums, golf courses, tennis courts, carnivals, and wired music studios.”

implementing the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999.
(See Cal. Code Regs., tit. 8, §§ 11000-11170; Brinker Restaurant Corp. v. Superior
Court, supra, 53 Cal.4th at p. 1026; Martinez, supra, 49 Cal.4th at p. 57.) The
Legislature defunded the IWC in 2004; however, its wage orders remain in effect.
(Peabody v. Time Warner Cable, Inc. (2014) 59 Cal.4th 662, 667, fn. 3.)

                                                5
       Both wage orders appear to apply to exotic dancers. Because each defines the
employment relationship in the same terms, we do not distinguish between the two. Like
all other wage orders, Wage Order Nos. 5 and 10 define the word “employ” as “to
engage, suffer, or permit to work.” (Cal. Code Regs., tit. 8, §§ 11050, subd. 2(E); 11100,
subd. 2(E).) An employer is defined as any person “who directly or indirectly, or through
an agent or any other person, employs or exercises control over the wages, hours, or
working conditions of any person.” (Id., §§ 11050, subd. 2(H), 11100, subd. 2(G).)
Parsing this same language in light of the IWC’s statutory purposes, Martinez concluded
that “[t]o employ, then, under the IWC’s definition, has three alternative definitions. It
means: (a) to exercise control over the wages, hours or working conditions, or (b) to
suffer or permit to work, or (c) to engage, thereby creating a common law employment
relationship.” (Martinez, supra, 49 Cal.4th at p. 64.)2
       Martinez involved a claim for overtime and other unpaid wages under Labor Code
section 1194. As we explained in Dynamex, “[I]t is not inappropriate to rely on the
common law standard to determine whether an employment relationship exists for
purposes of liability under section 1194. However, Martinez recognized that limiting
plaintiffs to that test in actions under section 1194 and ‘ignoring the rest of the IWC’s
broad regulatory definition would substantially impair the commission’s authority and the
effectiveness of its wage orders.’ [Citation.] . . . ‘Were we to define employment
exclusively according to the common law in civil actions for unpaid wages we would
render the commission’s definitions effectively meaningless.’” (Dynamex, supra,
230 Cal.App.4th at p. 729, quoting Martinez, supra, 49 Cal.4th at p. 65.)

2
       Under Wage Order No. 5, the standard IWC definition of “employee”—
“‘Employee’ means any person employed by an employer”—is supplemented to include
“any lessee who is charged rent, or who pays rent for a chair, booth, or space; and [¶]
(1) Who does not use his or her own funds to purchase requisite supplies; and [¶]
(2) Who does not maintain an appointment book separate and distinct from that of the
establishment in which the space is located; and [¶] (3) Who does not have a business
license where applicable.” (Cal. Code Regs., tit. 8, § 11050, subd. 2(F).)

                                              6
       There is no cause of action under Labor section 1194 in this case, but virtually all
of Salazar’s causes of action cite wage and hour violations within the scope of the
pertinent wage orders. We concluded in Dynamex, if plaintiffs allege claims falling
within the scope of an IWC wage order, the court must permit them to rely on any of the
three prongs identified in Martinez to establish an employment relationship. (Dynamex,
supra, 230 Cal.App.4th at pp. 728, 733; see also Bradley v. Networkers Internat., LLC
(2012) 211 Cal.App.4th 1129, 1146-1147 [remanding motion for class certification for
lower court to consider whether plaintiffs were employees under Martinez or the common
law test articulated in Borello; complaint alleged claims under provisions other than
§ 1194].) Because the trial court applied only the common law, reversal is required to
permit the court to consider whether class certification is proper with respect to claims
falling within the scope of an IWC wage order if the dancers are found to be employees
under either of the first two prongs of Martinez.3
       If the court concludes the dancers hired by VIP were employees under the IWC
definitions contained in Wage Order Nos. 5 and 10, the court should reexamine whether
common issues predominate in keeping with the analysis of Ayala. (See Ayala, supra,
59 Cal.4th at p. 528 [trial court should have focused on “differences in [the defendant’s]
right to exercise control,” rather than “variations in how that right was exercised”];
Dynamex, supra, 230 Cal.App.4th at pp. 734-735 [remanding for reconsideration of class
certification in light of Martinez and Ayala].) As to claims falling outside the scope of a
pertinent wage order, the common law test for an employee relationship will control.
(Dynamex, at p. 734.) For any such claims, the court should also reconsider whether
certification is appropriate in light of Ayala.

3
       We express no view on the quality of the evidence submitted to the court in
support of the motion for class certification. Because the court erred as a matter of law in
limiting Salazar to the common law test for an employment relationship, reversal is
required. (See Ayala, supra, 59 Cal.4th at p. 530 [“[w]e review the trial court’s actual
reasons for granting or denying certification; if they are erroneous, we must reverse,
whether or not other reasons not relied upon might have supported the ruling”].)

                                                  7
                                     DISPOSITION
       The order denying class certification is reversed. The matter is remanded to the
superior court for proceedings not inconsistent with this opinion. Salazar is to recover
her costs on appeal.

                                                        PERLUSS, P. J.

       We concur:

                       ZELON, J.

                       SEGAL, J.*

*
        Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

                                             8