Court Opinion

ID: 4242365
Source: CourtListenerOpinion
Date Created: 2018-02-05 20:35:24.321615+00
Date Added: 2024-06-11T14:44:06.783048
License: Public Domain

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  IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                      DIVISION ONE

RONALD COX, an individual,      )                  No. 76143-9-1
and on behalf of others similarly
                                )
situated,                       )
                                )
                   Respondent,  )
                                )
          v.                    )
                                )
THE KROGER COMPANY, an Ohio     )
corporation, FRED MEYER STORES, )                  PUBLISHED OPINION
INC., doing business as QUALITY )
FOOD CENTERS(aka QFC),          )                  FILED: February 5, 2018
                                )
                   Appellants.  )
                                )

       VERELLEN, C.J. — Ronald Cox, a former Quality Food Centers Inc.(QFC)

employee, filed this class action challenging QFC's policy of rounding hourly

employees' clocked-in time to the nearest quarter hour. Specifically, he contends

QFC intentionally manipulated the application of this policy to result in

underpayment of wages.

       QFC appeals the trial court's denial of the motion to compel arbitration.

Because the collective bargaining agreements(CBAs)governing Cox's

employment do not clearly and unmistakably waive his right to a judicial forum for
No. 76143-9-1-2

statutory wage claims, the arbitration provision does not encompass his claims,

and the trial court did not err in denying QFC's motion to compel arbitration.

       QFC also seeks review of the trial court's earlier determination that Cox's

claims were not preempted by section 301 of the Labor Management Relations

Act of 1947(LMRA).1 Because the interlocutory partial summary judgment order

concerning preemption does not prejudicially affect the arbitration order

designated in QFC's notice of appeal, the merits of the undesignated preemption

ruling are not before us.

       We also deny QFC's motion to take judicial notice because the documents

at issue relate solely to the question of waiver of the right to arbitrate, and we need

not reach waiver. We deny Cox's motion to dismiss this appeal as moot because

the appeal presents debatable issues. For the same reason, we deny Cox's

request for fees based on the argument that QFC's appeal is frivolous.

       Therefore, we affirm.

                                       FACTS

       Cox was employed by QFC between October 2011 and February 2014. He

worked at the QFC in Camas, Washington, and later transferred to the Moreland

QFC in Portland, Oregon.

       QFC is a supermarket chain with locations in Washington and Oregon.

Between 2000 and 2014, QFC required hourly employees to use a time card to

       1 29 U.S.C. § 185.

                                          2
No. 76143-9-1-3

clock in and out at the beginning and end of their shifts. QFC employed a

rounding policy that provided:

   • Time is credited by the quarter hour. There is a seven minute grace
     period which rounds the eighth minute to the quarter hour.
     (Example: An employee is scheduled to work at 7:00 o'clock. The
     employee punches in at 7:08. The 7:08 punch will round to 7:15. If
     the employee punches in at 7:07 the punch will round to 7:00.).

   • It is the employee's responsibility to follow these procedures, as it
     will ensure they are paid accurately and on a timely basis.[2]

       The rounding policy is not contained in or referred to by the CBAs.

       In July 2014, Cox and another former QFC employee, Sue Jin Yi, filed the

current class action challenging QFC's rounding policy.3 The proposed class

included hourly QFC employees in Washington and Oregon.

       United Food and Commercial Workers Union Local 555 represents QFC

employees in Washington and Oregon. Cox's employment with QFC was covered

by one CBA while he worked at the QFC in Camas, Washington,4 and another

while he worked at the Moreland QFC in Portland, Oregon.5 The two CBAs are

identical as to all the relevant provisions for this appeal.

       In May 2015, the trial court denied QFC's motion to dismiss Cox's second

and third causes of action based on chapter 49.52 RCW and Oregon Revised

       2 Clerk's   Papers(CP)at 250.
       3 Yi   was dismissed in June 2015.
       4   Referred to as the Clark County CBA.
       5   Referred to as the Portland CBA.

                                            3
No. 76143-9-1-4

Statutes section 652.120(ORS)as preempted under section 301 of the LMRA. In

November 2016, the court denied QFC's motion to compel arbitration of these

same claims.

       QFC appeals.

                                     ANALYSIS

I. Nature of Claims

       As a preliminary matter, it is critical to our analysis to understand the claims

actually asserted by Cox. The first amended complaint specifically alleges QFC's

rounding policy "deprives [hourly] employees of regular and overtime pay they have

earned."6 This appeal concerns only Cox's second cause of action, based on

chapter 49.52 RCW,and his third cause of action, based on ORS section 652.120.

The core issue of this appeal is whether these claims are statutory or contractual.

       RCW 49.52.050(2) provides that "[a]ny employer or officer. .. who ...

[w]ilfully and with intent to deprive the employee of any part of his or her wages,

shall pay any employee a lower wage than the wage such employer is obligated to

pay such employee by any statute, ordinance, or contract" is in violation of the

statute. The purpose of the statute is to "ensure that the employee realizes the full

amount of his or her wages and that the employer does not evade his or her

obligation to pay wages... calculated to effect a rebate of part of them."7

       6 CP   at 499.
       7 Jumamil   v. Lakeside Casino, LLC, 179 Wash. App. 665, 687, 319 P.3d 868
(2014).

                                          4
No. 76143-9-1-5

       Pursuant to ORS section 652.120(1), "[e]very employer shall establish and

maintain a regular payday, at which date the employer shall pay all employees the

wages due and owing to them." The essence of a claim under this statute is "an

assertion that one has not received payment from one's employer of'wages due

and owing.'"8

       Cox contends the claims are statutory wage claims. Cox asserts the

rounding policy in conjunction with QFC's other policies and procedures resulted in

employees being "consistently and systematically deprived of pay for all straight

time and overtime hours they actually work."8 Specifically, Cox contends QFC's

various policies concerning timekeeping and attendance have the impact of

inhibiting conduct that would cause the employee to benefit from the rounding

policy and promoting conditions that allow the employer to benefit. Commentators

have analogized this wage dispute theory challenging unfair rounding policies to

casinos where the odds of winning are skewed to favor the "house."10

       QFC takes a diametrically opposed view, that despite being labeled as

statutory wage claims, the claims are contractual because Cox seeks damages

     8 Arken v. City of Portland, 351 Or. 113, 145, 263 P.3d 975(2011)(quoting
ORS § 652.120(1)).
       9 CP   at 503.
       19 Elizabeth Tippett, Charlotte S. Alexander & Zev. J. Eigen, When
 Timekeeping Software Undermines Compliance, 19 YALE J.L. & TECH. 1, 38(2017)
("While courts do not permit overtly unfair rounding rules, facially neutral rounding
rules can act like casino odds when they interact with employer attendance
policies—consistently favoring 'the house.").

                                         5
No. 76143-9-1-6

only available under the CBAs. A claim for unpaid wages necessarily requires a

computation of the regular rate of pay multiplied by the amount of compensable

time worked. QFC argues Cox's claims are contractual because the CBA is the

source of Cox's regular rate of pay and the definition of"compensable time."

      Specifically, as to the Washington law claim, QFC points to an interrogatory

answer by Cox referring to claimed damages at a rate of $12 per hour. Because

Cox's standard rate when working in Washington was less than $12 per hour,

QFC infers that he must be depending on some form of premium wage rate

contained in the CBAs. But the interrogatory answer does not constitute a binding

admission by Cox that his Washington claim depends on the application of a

premium wage rate contained in the CBAs. In fact, he denies his claims include

any such rates."

      QFC also contends that Cox's wage claims under Oregon and Washington

law necessarily require a determination of the definition of"compensable time."

Although the rounding policy is not contained in the CBAs, QFC argues the policy

controls the calculation of wages. Specifically, QFC relies on Cox's

acknowledgement of the rounding policy, declarations from human resource

executives about the lack of complaints concerning the rounding policy, and

general declarations from QFC executive employees regarding QFC's historical

       11 See Resp't's Br. at 5 ("Plaintiff does not seek—and has never sought—
damages calculated using any premium rates or shift premiums provided for in any
collective bargaining agreements.").

                                        6
No. 76143-9-1-7

practice of compensating employees based on the rounded time. But under a

claim for unpaid wages due to the alleged manipulation of the facially neutral

rounding policy, the question is not whether the rounding policy exists, the

question is whether QFC's policies and practices have the impact of

undercompensating the employees.

       If an employer intentionally used "bad math" to manipulate the computation

of wages owed to employees, an employee would possess a statutory claim for

the withholding of wages. Similarly, intentionally manipulating the application of a

facially neutral rounding policy used to compute wages owed, resulting in

underpayment, runs afoul of Washington's and Oregon's wage and hour statutes.

Cox's claims qualify as statutory wage claims.

II. Motion To Compel Arbitration

       QFC first challenges the trial court's denial of the motion to compel

arbitration.

       We review a trial court's denial of a motion to compel arbitration de novo.12

       Generally, the Federal Arbitration Act(FAA)13 applies to collective

bargaining agreements.14 "The purpose of the[FAA] is to overcome the courts'

       12   Otis Hous. Ass'n, Inc. v. Ha, 165 Wash. 2d 582, 586, 201 P.3d 309(2009).
       13 9    U.S.C. §§ 1-14.
       14 See Brundridqe v. Fluor Fed. Servs., Inc., 109 Wash. App. 347, 355, 35
P.3d 389(2001)("FAA is applicable to the CBA in the present case."); Adler v.
Fred Lind Manor, 153 Wash. 2d 331, 341, 103 P.3d 773(2004)(FAA "applies to all
employment contracts"). Notably, the Washington uniform arbitration act does not
apply to employment contracts. RCW 7.04A.030(4).

                                          7
No. 76143-9-1-8

historical reluctance to enforce agreements to arbitrate."15 This court must apply

federal substantive law to any arbitration agreement within the coverage of the

FAA.16 In determining whether to enforce an arbitration provision, this court must

consider (1)"whether the arbitration agreement is valid" and (2)"whether the

agreement encompasses the claims asserted."17

       An arbitration agreement does not encompass statutory claims unless the

waiver of an employee's right to judicial forum for such claims is "clear and

unmistakable."15 A clear and unmistakable waiver can occur if the CBA contains

"a general clause requiring arbitration under the employment agreement, coupled

with a provision that makes it unmistakably clear that the statutes that are the

basis for the asserted claims. . . are part of the agreement."19

       Here, the grievance and arbitration procedure is contained in article 19 of

the Clark County CBA and the Portland CBA. The procedure applies to "[a]ny

grievance or dispute concerning the application or interpretation of this

Agreement."2° Because article 19 does not identify any specific statutes or make

       15   Brundridae, 109 Wash. App. at 354.
      16 Schuster v. Prestige Senior Mgmt., LLC, 193 Wash. App. 616, 627, 376
P.3d 412(2016).
      17 Wiese v. CACH, LLC, 189 Wash. App. 466, 474, 358 P.3d 1213(2015).

       18 See Brundridae, 109 Wash. App. at 355 ("[F]ederal courts have established
that an arbitration clause in a CBA will not waive an employee's right to a judicial
forum unless such a waiver is clear and unmistakable.").
       19   Id.
       20 CP      at 64 (Portland CBA), 188 (Clark County CBA).

                                            8
No. 76143-9-1-9

any general reference to statutory wage claims, it does not make it unmistakably

clear that claims under chapter 49.52 RCW or ORS section 652.120 are subject to

arbitration.

       QFC argues the separate wage claims provisions found in article 6 of the

CBAs support arbitration. Article 6 states, "All claims for back wages or overtime

not paid must be presented through the Union to the Employer."21 But the wage

claims provisions contain no arbitration clause and no reference to article 19.

Article 6 also sets a different deadline for filing a claim than a grievance subject to

the article 19 arbitration provision.22 In other sections of the CBAs, the parties

included express references to article 19 illustrating the clear intent to apply the

arbitration procedures to such provisions.23 The failure to include a similar cross-

reference to article 19 in the wage claim provision is inconsistent with an objective

manifestation of intent that the arbitration procedure of article 19 applies to wage

       21   CP at 45-46 (Portland CBA), 173(Clark County CBA).
        22 S   CP at 45(Portland CBA), 173(Clark County CBA)("All claims for
back wages or overtime not paid must be presented through the Union to the
Employer in writing within thirty (30) days of the date the employee is paid for the
period in which back wages or overtime is claimed."); see also CP at 64 (Portland
CBA), 188 (Clark County CBA)("Any grievance or dispute... shall be presented
in writing by the aggrieved Party to the other Party within twenty(20) days from the
date of the occurrence first giving rise to such grievance or dispute, except that in
the cases of discharge the grievance must be presented within ten (10) calendar
days.").
       23 S    CP at 64(Portland CBA), 188 (Clark County CBA)("The Employer
and the Union agree that discharges will be made fairly and impartially, but in the
event a protest of a discharge is lodged with the Employer, then the provisions of
Article 19.. . shall be invoked.").

                                           9
No. 76143-9-1-10

claims under article 6.24 The wage claim provisions also fail to identify any specific

statutes covered by the agreement. Absent any reference to specific statutes or

article 19, the article 6 CBA wage claim provisions do not support arbitration.

       The CBAs do not clearly and unmistakably waive the right to a judicial

forum for Cox's statutory wage claims. Therefore, the CBA arbitration provision

does not encompass Cox's claims and the trial court did not err in denying the

motion to compel arbitration. Given this conclusion, we do not need to address

Cox's alternative arguments concerning waiver and unconscionability.

III. Preemption

       As to the extensive arguments concerning preemption under section 301 of

LMRA,that issue is not before us. Preemption was addressed by the trial court

when it denied QFC's motion for partial summary judgment in May 2015.

      "RAP 2.2 determines whether a particular superior court decision is

appealable."25 Under RAP 2.2(a)(3), a party may appeal "[a]ny written decision

affecting a substantial right in a civil case that in effect determines the action and

prevents a final judgment or discontinues the action." A ruling denying a motion to

compel arbitration is appealable as a matter of right under RAP 2.2(a)(3)"because

       24 See Svrovy v. Alpine Res., 122 Wash. 2d 544, 550, 859 P.2d 51(1993)("If
the parties had wanted to make logging of the various sections optional, they
would have used specific language to that effect.").
       25 Munden v. Hazelrigg, 105 Wash. 2d 39, 42, 711 P.2d 295 (1985).

                                          10
No. 76143-9-1-11

it involves issues wholly separate from the merits of the dispute and because an

effective challenge to the order is not possible without an interlocutory appeal."26

       Here, the trial court's interlocutory partial summary judgment order

concerning preemption is not appealable as a matter of right because the order

does not discontinue the action or prevent final judgment. QFC did not seek

discretionary review of the preemption order within 30 days of its entry, and there

was no CR 54(b) certification or supporting findings of no just cause for delay.

       Neither party has addressed whether an appeal as a matter of right from an

order denying a motion to compel arbitration opens the door to include any and all

prior interlocutory rulings. But even assuming the preemption ruling could be

included in an appeal from a separate motion to compel arbitration, the preemption

order was not designated in QFC's notice of appeal.

       We will review an undesignated order only if "the order or ruling prejudicially

affects the decision designated in the notice."27 Our Supreme Court has

interpreted the term "prejudicially affects" to turn on whether the order designated

in the notice of appeal would have occurred absent the other order.28 "'The issues

       26   Stein v. Geonerco, Inc., 105 Wn. App. 41,44, 17 P.3d 1266 (2001).
       27   RAP 2.4(b).
       28Adkins v. Alum. Co. of Am., 110 Wash. 2d 128, 134, 750 P.2d 1257 (1988);
Right-Price Recreation, LLC v. Connells Prairie Cmty. Council, 146 Wash. 2d 370,
380, 46 P.3d 789(2002).

                                          11
No. 76143-9-1-12

in the two orders must be so entwined that to resolve the order appealed, the court

must consider the order not appealed.'"29

       The consequence of section 301 preemption is to require an employee to

exhaust contractual remedies.3° As a result, section 301 of the LMRA is in large

part a mechanism "to assure that agreements to arbitrate grievances would be

enforced."31 Although there is overlap in the consequences of rulings concerning

preemption and arbitration, the legal questions underlying the doctrine of

preemption and the standards applicable to a CBA arbitration provision are not so

entwined that we must consider the undesignated preemption ruling.

       Even if a claim was preempted by section 301, there would not be a

contractual remedy for the employee to exhaust if the arbitration provision does

not extend to the particular claim. Because we have determined the arbitration

clause does not encompass Cox's statutory wage claims, the preemption decision

does not prejudicially affect the arbitration order, and that ruling is not currently

before us.32

       29Foster v. Gilliam, 165 Wash. App. 33, 45, 268 P.3d 945(2011)(quoting
Right-Price Recreation, LLC v. Connells Prairie Cmty. Council, 105 Wash. App. 813,
819,21 P.3d 1157(2001), remanded, 146 Wash. 2d 370).
       39 Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S. Ct. 614, 13 L.
Ed. 2d 580(1965).
       31 Livadas v. Bradshaw, 512 U.S. 107, 122, 114 S. Ct. 2068, 129 L. Ed. 2d
93(1994).
       32 QFC could potentially appeal the interlocutory preemption ruling as a

matter of right from a final judgment resolving all claims as to all parties. See
RAP 2.2(a)(1)(a party may appeal from the "final judgment entered in any action
or proceeding").

                                           12
No. 76143-9-1-13

       QFC also contends this court may address preemption under RAP 2.5(a)

because it implicates the trial court's jurisdiction. But in Wingert v. Yellow Freight

Systems, Inc., our Supreme Court rejected the application of RAP 2.5(a) to a

section 301 preemption argument because "[t]he preemptive effect of federal law

is not an issue that satisfies any of the exceptions to[RAP 2.5(a)]."33 The 2015

order denying section 301 preemption is not before us in this appeal of the 2016

order denying QFC's motion to compel arbitration.

IV. Cox's Motion To Dismiss

       Cox contends QFC's appeal is moot and asks this court to dismiss.

       Pursuant to RAP 18.9(c), an appellate court may dismiss a case if it is

moot.34 "A case is moot when it involves only abstract propositions or questions,

the substantial questions in the trial court no longer exist, or a court can no longer

provide effective relief."35

       This appeal is not moot because if we had determined the trial court erred

in denying the motion to compel arbitration, we could have provided effective relief

to QFC.

       We deny Cox's motion to dismiss.

       33 146 Wash. 2d 841, 853, 50 P.3d 256 (2002).
      34 Spokane Research & Def. Fund v. City of Spokane, 155 Wash. 2d 89, 99
117 P.3d 1117(2005).
       35   Id.

                                          13
No. 76143-9-1-14

V. Timeliness

       Cox contends QFC's appeal is untimely. Cox argues QFC's 2016 motion to

compel arbitration was an untimely motion for reconsideration of the trial court's

preemption decision in the 2015 partial summary judgment order.

       To be timely, an appeal must be filed within 30 days of entry of the order

being appealed.36 Although a timely motion for reconsideration will extend the

time for appeal, an untimely motion for reconsideration does not toll the 30-day

deadline.37

       Here, QFC filed a notice of appeal of the arbitration order on December 5,

2016. Cox does not provide any compelling authority to advance his argument

that the arbitration motion was an untimely motion for reconsideration of the 2015

order. The two motions sought different relief and required the court to consider

different bodies of law.

       We conclude QFC's appeal is timely because the notice of appeal was filed

within 30 days of the entry of the order denying arbitration.

V. QFC's Motion To Take Judicial Notice

       QFC asks this court to take judicial notice of pleadings filed in the removal

proceedings before the United States District Court for the Western District of

Washington. Specifically, QFC offers Cox's motion to remand, QFC's opposition

       36   RAP 5.2(a)(1).
     37 CR 59; RAP 5.2(e); Schaefco, Inc. v. Columbia River Gorqe Com'n, 121
Wash. 2d 366, 368, 849 P.2d 1225 (1993).

                                         14
No. 76143-9-1-15

to remand, Cox's reply, and accompanying declarations and exhibits. But QFC

offers the pleadings in response to Cox's argument concerning waiver of QFC's

right to arbitration.38 Given our conclusion that the arbitration provision does not

encompass Cox's claims, we need not address waiver.39 We deny QFC's motion

to take judicial notice.

VI. Fees on Appeal

       Cox seeks an award of fees under RAP 18.9(a), arguing QFC's appeal is

frivolous.

       RAP 18.9(a) permits this court to award a party attorney fees when the

opposing party files a frivolous appea1.4° "An appeal is frivolous if, considering the

entire record, the court is convinced that the appeal presents no debatable issues

upon which reasonable minds might differ, and that the appeal is so devoid of

merit that there is no possibility of reversal."41

       38 Appellant's Reply Br. at 19("Cox argues that QFC 'waived any right to
compel arbitration' because it actively litigated the case before it moved to compel
arbitration. As examples of what Cox deems was QFC's 'aggressive litigation,'
Cox faults QFC for... removing the case .. . . But with these waiver arguments,
Cox misstates the record and omits key details." (citation omitted)(quoting
Resp't's Br. at 35)).
      39 Additionally, in appellate courts, ER 201, governing judicial notice, must
be read in light of RAP 9.11. Spokane Research & Def. Fund, 155 Wash. 2d at 98.
QFC has not addressed the criteria of RAP 9.11.
      40 Reid v. Dalton, 124 Wash. App. 113, 128, 100 P.3d 349 (2004).
      41 Advocates for Responsible Dev. v. W. Wash. Growth Momt. Flegs Bd.,
170 Wash. 2d 577, 580, 245 P.3d 764(2010).

                                            15
No. 76143-9-1-16

      QFC's appeal is not frivolous because it presents debatable issues. We

deny Cox's request for fees on appeal.

      Therefore, we affirm.

WE CONCUR:

                                         16