Court Opinion

ID: 4295321
Source: CourtListenerOpinion
Date Created: 2018-07-18 18:00:25.988283+00
Date Added: 2024-06-11T14:40:06.286566
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 BERNARDINA RODRIGUEZ, on                         No. 16-15465
 behalf of herself, all others
 similarly situated, and the                       D.C. No.
 general public,                              1:13-cv-01498-SAB
                Plaintiff-Appellant,

                    v.                              OPINION

 TACO BELL CORP., a California
 corporation,
              Defendant-Appellee.

        Appeal from the United States District Court
            for the Eastern District of California
     Stanley Albert Boone, Magistrate Judge, Presiding

           Argued and Submitted December 7, 2017
                  San Francisco, California

                         Filed July 18, 2018

 Before: Mary M. Schroeder and N. Randy Smith, Circuit
        Judges, and Sara Lee Ellis,* District Judge.

                  Opinion by Judge Schroeder

    *
      The Honorable Sara Lee Ellis, United States District Judge for the
Northern District of Illinois, sitting by designation.
2                   RODRIGUEZ V. TACO BELL

                            SUMMARY**

                  California Employment Law

   The panel affirmed the district court’s judgment in favor
of Taco Bell Corp. in a putative class action concerning
employee meal breaks.

    After the district court granted summary judgment to
Taco Bell on most of plaintiff’s claims, the court granted
plaintiff’s request that the district court dismiss the remaining
pending claim. As a threshold jurisdictional issue, the panel
held that the dismissal with prejudice created a valid final
judgment for purposes of 28 U.S.C. § 1291.

    California Wage Order 5-2001 requires employees be
relieved of all duty during a requisite meal period. During
plaintiff’s period of employment, Taco Bell offered thirty-
minute meal breaks that were fully compliant with
California’s requirements, but with a special offer that
employees could purchase a meal from the restaurant at a
discount, provided they ate the meal in the restaurant.

    The panel held that California law was not violated
because Taco Bell relieved their employees of all duties
during the meal break period and exercised no control over
their activities, where employees were free to use the thirty
minutes in any way they wished, subject only to the
restriction that if they purchased a discounted meal, they had
to eat in the restaurant. The panel rejected plaintiff’s

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                 RODRIGUEZ V. TACO BELL                      3

contention that employees were under sufficient employer
control to render the time compensable. The panel also
rejected plaintiff’s assertion that the value of the discounted
meals be added to the regular rate of pay for overtime
purposes.

                         COUNSEL

H. Scott Leviant (argued) and Shaun Setareh, Setareh Law
Group, Beverly Hills, California, for Plaintiff-Appellant.

Nora K. Stiles (argued) and Tracey A. Kennedy, Sheppard
Mullin Richter & Hampton LLP, Los Angeles, California;
Morgan P. Forsey, Sheppard Mullin Richter & Hampton
LLP, San Francisco, California; for Defendant-Appellee.

                         OPINION

SCHROEDER, Circuit Judge:

    This case is about the meal breaks that California law
requires an employer provide to employees after they have
worked a certain number of hours. The Plaintiff-Appellant,
Bernardina Rodriguez (“Plaintiff”), was for many years a
restaurant employee of the Defendant-Appellee, Taco Bell
Corp. (“Taco Bell”). During that time Taco Bell offered
thirty-minute meal breaks that were fully compliant with
California’s requirements, but with a special offer that
employees could purchase a meal from the restaurant at a
discount, provided they ate the meal in the restaurant. That
policy was intended to prevent theft. Employees were not
required to purchase the discounted meal. The purchase was
4                RODRIGUEZ V. TACO BELL

voluntary. Plaintiff filed this putative class action contending
that she was entitled to be paid a premium rate for the time
spent on the employer’s premises eating the discounted meals
during her meal breaks. Her theory is that because the
employer required the discounted meal to be eaten in the
restaurant, the employee was under sufficient employer
control to render the time compensable.

    The district court agreed with Taco Bell that California
law was not violated because the employees were free to use
the thirty minutes in any way they wished, subject only to the
restriction that if they purchased a discounted meal, they had
to eat it in the restaurant. We affirm. Taco Bell relieved their
employees of all duties during the meal break period and
exercised no control over their activities within the meaning
of California law.

                        Background

    Plaintiff worked for Taco Bell in its restaurant in Suisun
City, California, from approximately August 2005 to
December 2012. She was a “Team Member” whose duties
included preparing and cooking food and cleaning. She
received a copy of the Taco Bell Restaurant Orientation
Handbook (“Handbook”) that, along with other descriptions
of various applicable procedures and policies, set forth the
company’s discounted meal policy; it was contained in the
Handbook section entitled “Rules for Rest Breaks, Meal
Periods & Discounted Meals.”

   The introduction to that section stated that “[e]veryone
needs and deserves a rest break or meal period when working.
Taco Bell wants you to feel refreshed and productive while
you work by following a few simple rules.” The rules
                RODRIGUEZ V. TACO BELL                    5

required employees take rest breaks and meal periods away
from “[t]he food production area” and “[t]he cash register
service area.” The policy then provided that Taco Bell
employees could receive discounted meals and
complimentary drinks, provided employees observed the
following rules:

       When you work a shift of two (2) or more
       hours, you may eat one (1) discounted meal.
       Follow these rules:

       •   You can receive a discounted meal
           immediately before, during or after your
           shift.

       •   You must eat your discounted meal in the
           restaurant.

       •   You must go to the front counter and
           place your order as a Guest.

       •   You and your manager must sign the
           register receipt and place the signed
           receipt in the cash register drawer.

    It is not disputed that the purchase of the discounted
meals was on a voluntary basis, and that there was no
requirement that employees ever purchase Taco Bell
products. A Taco Bell representative explained the purpose
of the discounted meal policy was to provide the meal as a
benefit that employees could choose to take advantage of
each shift. The requirement that the meal be eaten on the
premises was to ensure that the benefit was utilized only by
employees and that the food did not leave the premises to be
6                 RODRIGUEZ V. TACO BELL

given to friends and family. In other words, employees had
to consume the discounted food in the restaurant to prevent
theft. The policy apparently was popular. The Plaintiff
availed herself of a discounted meal almost every shift, and
brought lunch from home only about once a month.

    Plaintiff filed this action in California State Court on May
16, 2013, and Taco Bell removed it to federal district court.
The crux of Plaintiff’s theory is that Taco Bell’s on-premises
discount policy subjected the employees to sufficient
employer control to render the time employees spent
consuming the meals as working time under California law.
Plaintiff’s operative complaint alleges that Taco Bell violated
California law by: (1) failing to provide uninterrupted, duty-
free meal periods, or premium wages in lieu thereof;
(2) failing to provide rest periods, or premium wages in lieu
thereof; (3) failing to calculate regular hourly and overtime
wages at a rate that reflected the value of the discount;
(4) failing to provide accurate written wage statements; and
(5) failing to timely pay all final wages to employees upon
end of their employment with Taco Bell.

    The district court granted summary judgment for Taco
Bell on the first two claims. The court observed that under
the discounted meal policy, employees were free to use the
meal break time as they wished, and that a requirement to
remain on the premises was imposed only if an employee
voluntarily chose to purchase a discounted meal. Imposition
of that condition does not satisfy the applicable test of control
under California law as set forth in the leading California
Supreme Court decision, Brinker Restaurant Corp. v.
Superior Court, 273 P.3d 513 (Cal. 2012). The district court
denied Plaintiff’s motion for summary judgment on the third
claim, the regular rate claim, on the ground that Plaintiff
                 RODRIGUEZ V. TACO BELL                       7

failed to provide any evidence of the reasonable cost or fair
value to Taco Bell of the employee discount. The district
court denied Plaintiff’s motion for summary judgment on her
remaining claims on the ground that they were derivative of
her other claims.

                   Appellate Jurisdiction

    There is a threshold jurisdictional issue. When the district
court granted summary judgment in October 2014 to Taco
Bell on most of Plaintiff’s claims, the court also denied
Plaintiff’s motion for summary judgment on the regular rate
claim, so that it remained pending.

    On March 2, 2016, Plaintiff requested “the Court dismiss
with prejudice the [regular rate] claim[] that remained in th[e]
case after the Court’s October 23, 2014 summary judgment
order.” The court did so and its dismissal resulted in a final
judgment. We have jurisdiction pursuant to 28 U.S.C.
§ 1291, which grants an appeal as of right from a final
judgment. See Concha v. London, 62 F.3d 1493, 1507–09
(9th Cir. 1995) (recognizing that a voluntary dismissal with
prejudice of all remaining claims results in an appealable
final judgment permitting review of all earlier orders).

    That result is not affected here by the Supreme Court’s
subsequent decision in Microsoft Corp. v. Baker, 137 S. Ct.
1702 (2017). That case involved an attempt to use the
voluntary dismissal mechanism to obtain an appeal as of right
in order to review an earlier denial of class certification. The
Supreme Court held the denial of class certification was not
reviewable because plaintiffs had already been denied a
discretionary appeal pursuant to Federal Rule of Civil
Procedure 23(f). See Baker, 137 S. Ct. at 1714–15 (“If
8                RODRIGUEZ V. TACO BELL

respondents’ voluntary-dismissal tactic could yield an appeal
of right, Rule 23(f)’s careful calibration . . . would be
severely undermined.”) (citation and internal quotation marks
omitted). This case does not involve an attempt to obtain
review of a class certification issue. As we recognized in our
post-Baker decision in Brown v. Cinemark USA, Inc.,
876 F.3d 1199, 1201 (9th Cir. 2017), a voluntary dismissal of
remaining claims can render the earlier interlocutory order
appealable, so long as the discretionary regime of Rule 23(f)
is not undermined.

    Since this is an appeal seeking review of a partial
summary judgment order, not a class-certification denial, our
decision in Brown, as well as our pre-Baker decision in
Concha, control, and Plaintiff’s dismissal with prejudice
creates a valid final judgment for purposes of 28 U.S.C.
§ 1291.

               The Discounted Meal Policy

    California requires non-exempt employees be afforded
rest breaks and meal periods after working a certain number
of hours. See Cal. Labor Code §§ 226.7, 512. Relevant to
this case is the requirement that employees who work more
than five hours in a day be afforded a meal period of “not less
than 30 minutes.” Id. § 512(a). Employees who work more
than ten hours in a day must be provided a second meal
period of the same duration. Id.

     The applicable regulation governing meal periods, rest
breaks, and overtime pay in the restaurant industry, California
Wage Order 5–2001 (“Wage Order 5”), requires employees
be relieved of “all duty” during the meal period. Cal. Code
                 RODRIGUEZ V. TACO BELL                     9

Regs., tit. 8, § 11050, subd. 11(A). It provides, in relevant
part, that:

       Unless the employee is relieved of all duty
       during a 30 minute meal period, the meal
       period shall be considered an “on duty” meal
       period and counted as time worked. An “on
       duty” meal period shall be permitted only
       when the nature of the work prevents an
       employee from being relieved of all duty and
       when by written agreement between the
       parties an on-the-job paid meal period is
       agreed to.

Id. The remedy for failure to provide a meal or rest break
required by statute or regulation is premium wages: “one
additional hour of pay at the employee’s regular rate of
compensation for each workday that the meal or rest or
recovery period is not provided.” Cal. Labor Code
§ 226.7(c).

    The California Supreme Court’s decision in Brinker
provides the authoritative standard to be applied. In Brinker,
non-exempt employees brought a putative class action against
the owners of various well-known restaurants for failure to
provide rest and meal breaks, or premium wages in lieu of
both, under Wage Order 5. Brinker, 273 P.3d at 521. The
court held that employers fulfill their obligation to provide
meal periods to their employees when they relieve their
“employees of all duty, relinquish[] control over their
activities and permit[] them a reasonable opportunity to take
an uninterrupted 30-minute break, and do[] not impede or
discourage them from doing so.” Brinker, 273 P.3d at
536–37.
10               RODRIGUEZ V. TACO BELL

    In this case, Plaintiff does not dispute that the condition
of consumption-on-premises is to ensure discounted
purchases are not taken off the premises and given to others.
Plaintiff argues, however, that despite the restriction’s
purpose, employees are under employer control during the
meal period. She contends the legal effect is that they are “on
duty” for purposes of California Wage Order 5, and the time
must be counted as time worked. Taco Bell counters that
imposing the on-premises condition does not place the
employees “on duty”; the purchase is entirely voluntarily, and
employees are free to choose to spend their break time
however they please.

     On the basis of the undisputed facts in this case, we
conclude that Taco Bell’s meal policy satisfies the standard
set forth in Brinker, because the company relieves employees
of all duty and relinquishes control over their activities. Taco
Bell does not require the employee to purchase a discounted
meal. The purchase of the meal is entirely voluntary.
Plaintiff has not alleged nor introduced any evidence to show
that Taco Bell pressured its employees to purchase the
discounted meals. Employees are free to leave the premises
or spend their break time in any way that they choose that
does not interfere with Taco Bell conducting its business. For
that matter, employees are free to purchase meals at full price
and eat them wherever the employees wish. The company
does not otherwise interfere with the employees’ use of the
break time or require the employees to serve the interests of
Taco Bell. Nor has Plaintiff alleged or introduced any
evidence to show that her employer required or pressured her
to conduct work activities while on premises during the meal
period. Taco Bell’s policy indeed appeared to prohibit this,
as employees were required to take rest breaks and meal
                 RODRIGUEZ V. TACO BELL                     11

periods away from “[t]he food production area” and “[t]he
cash register service area.”

    The Plaintiff nevertheless emphasizes that employers
must compensate employees when they are under the
employer’s control, regardless of whether employees are
required to work, citing Morillion v. Royal Packing Co.,
995 P.2d 139 (Cal. 2000). In Morillion, however, the
employer required employees to travel to work on employer-
provided buses. Id. at 141. Employees had no choice.
Indeed the employer’s work rules “prohibited employees
from using their own transportation to get to and from the
fields” where they worked. Id. (footnote omitted). The travel
time was therefore considered hours worked and
compensation was required. Id. at 147. But the court was
careful to limit its holding to those policies that compelled
employee participation. If employers offered a benefit or
service that employees could choose, but were not required to
take advantage of, compensation was not required. Id.
Employers, the court said, “may provide optional free
transportation to employees without having to pay them for
their travel time, as long as employers do not require
employees to use this transportation.” Id. at 152. That is our
case.

    It is true that in California an employer may so burden the
use of employees’ break time that employees must be
considered “on duty.” Good examples are found in Augustus
v. ABM Security Services, Inc., 385 P.3d 823 (Cal. 2016) and
Madera Police Officers Ass’n v. City of Madera, 682 P.2d
1087 (Cal. 1984). In both cases, the employees were required
to be “on call” during their breaks, and subject to performing
duties on behalf of the employer. In Augustus, the employees
were required to carry a device so that the employer could
12                RODRIGUEZ V. TACO BELL

reach the employee during the break if services were needed.
Augustus, 385 P.3d at 832. The California Supreme Court
said that such an arrangement was “irreconcilable with
employees’ retention of freedom to use rest periods for their
own purposes.” Id. In Madera, the employees were not only
on call, but were forbidden to conduct any personal business.
See Madera, 682 P.2d at 1089.

      This case is not remotely similar. The employees are not
on call and are free to use the time in any way they wish. In
sum, the discounted meal policy was intended as a benefit to
the employees, and one that the employer could discontinue
if it were to result in a requirement to compensate employees
who take advantage of it. The district court properly granted
summary judgment in favor of Taco Bell.

    Plaintiff raises an additional claim relating to the value of
the discounted meals. She asserts that the discount value
must be added to the regular rate of pay for overtime
purposes. Wage Order 5 requires that employees who work
more than eight hours in any workday, or more than forty
hours in any workweek, receive one and one-half times that
employee’s “regular rate of pay” for all hours worked over
forty hours in any workweek. Cal. Code Regs., tit. 8,
§ 11050, subd. 3(A)(1). It appears that this regular rate claim
is derivative of her challenge to Taco Bell’s discounted meal
policy, since the overtime she seeks is predicated on counting
the time spent eating meals as on-duty time. See Pl.’s First
Am. Compl. at ¶ 58. Accordingly, because we have held
Plaintiff is not entitled to be paid for her time eating the
meals, she is not entitled to overtime pay for it.

    Even assuming the regular rate claim is not completely
derivative of her meal break claim and refers to overtime
                 RODRIGUEZ V. TACO BELL                    13

hours worked apart from meal breaks, and even assuming
further that the value of the meal could be considered part of
her compensation, she has not established that value. The
district court properly denied Plaintiff’s motion for summary
judgment. The additional compensation she would receive
from Taco Bell would be the reasonable cost of the meal to
Taco Bell. See 29 C.F.R. § 778.116 (“Where payments are
made to employees in the form of goods or facilities which
are regarded as part of wages, the reasonable cost to the
employer or the fair value of such goods or of furnishing such
facilities must be included in the regular rate.”);
Prachasaisoradej v. Ralphs Grocery Co., 165 P.3d 133, 147
n.14 (Cal. 2007) (“California follows the federal standard for
purposes of determining, under the Labor Code, what
constitutes an employee’s regular pay subject to an overtime
rate.”). Plaintiff relies only upon the dollar amount of the
discount from the retail price. She has failed to produce any
evidence showing the “reasonable cost” or “fair value” to
Taco Bell of furnishing the discounted meal. The district
court thus properly denied Plaintiff’s motion for summary
judgment on that basis and she has made no further showing.

   AFFIRMED.