Charles Ward v. United Airlines, Inc. , 889 F.3d 1068 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHARLES E. WARD, No. 16-16415
individually, and on behalf of
all others similarly situated, D.C. No.
Plaintiff-Appellant, 3:15-cv-02309-WHA
v.
UNITED AIRLINES, INC.,
Defendant-Appellee.
FELICIA VIDRIO, individually, No. 17-55471
and on behalf of all others
similarly situated; PAUL D.C. No.
BRADLEY, individually, and on 2:15-cv-07985-PSG-
behalf of all others similarly MRW
situated,
Plaintiffs-Appellants,
ORDER
v. CERTIFYING
QUESTIONS TO THE
UNITED AIRLINES, INC., SUPREME COURT
Defendant-Appellee, OF CALIFORNIA
and
DOES, 1 through 50, inclusive,
Defendants.
2 WARD V. UNITED AIRLINES
Filed May 9, 2018
Before: Paul J. Watford and Michelle T. Friedland, Circuit
Judges, and Jed S. Rakoff,* Senior District Judge.
SUMMARY**
Certified Questions to California Supreme Court
The panel certified the following questions of state law to
the Supreme Court of California:
(1) Wage Order 9 exempts from its wage
statement requirements an employee who has
entered into a collective bargaining agreement
(CBA) in accordance with the Railway Labor
Act (RLA). See 8 C.C.R. § 11090(1)(E).
Does the RLA exemption in Wage Order 9
bar a wage statement claim brought under
California Labor Code § 226 by an employee
who is covered by a CBA?
(2) Does California Labor Code § 226 apply
to wage statements provided by an out-of-
state employer to an employee who resides in
California, receives pay in California, and
*
The Honorable Jed S. Rakoff, Senior United States District Judge
for the Southern District of New York, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
WARD V. UNITED AIRLINES 3
pays California income tax on her wages, but
who does not work principally in California or
any other state?
ORDER
We respectfully ask the Supreme Court of California to
exercise its discretion to decide the certified questions set
forth in section II of this order.
I. Administrative Information
We provide the following information in accordance with
California Rule of Court 8.548(b)(1). The captions of these
cases are:
No. 16-16415
CHARLES E. WARD, individually, and on
behalf of all others similarly situated,
Plaintiff-Appellant,
v.
UNITED AIRLINES, INC., Defendant-
Appellee.
No. 17-55471
FELICIA VIDRIO, individually, and on
behalf of all others similarly situated; PAUL
4 WARD V. UNITED AIRLINES
BRADLEY, individually, and on behalf of all
others similarly situated, Plaintiffs-
Appellants,
v.
UNITED AIRLINES, INC., Defendant-
Appellee, and DOES, 1 through 50, inclusive,
Defendants.
The names and addresses of counsel for the parties are:
For Plaintiff-Appellant Charles E. Ward and
Plaintiffs-Appellants Felicia Vidrio and Paul
Bradley: Stuart Bruce Esner, Esner, Chang
& Boyer, Suite 750, 234 East Colorado
Boulevard, Pasadena, CA 91101; Kirk D.
Hanson, Jackson Hanson LLP, Suite 140,
2790 Truxtun Road, San Diego, CA 92106.
For Defendant-Appellee United Airlines, Inc.:
Adam P. KohSweeney, O’Melveny &
Myers LLP, Two Embarcadero Center, San
Francisco, CA 94111; Robert Alan Siegel,
O’Melveny & Myers LLP, 400 South Hope
Street, 18th Floor, Los Angeles, CA 90071.
We designate Charles Ward, Felicia Vidrio, and Paul
Bradley as the petitioners if our request for certification is
granted. They are the appellants before our court.
WARD V. UNITED AIRLINES 5
II. Certified Questions
We certify to the Supreme Court of California the
following two questions of state law:
(1) Wage Order 9 exempts from its wage
statement requirements an employee who has
entered into a collective bargaining agreement
(CBA) in accordance with the Railway Labor
Act (RLA). See 8 C.C.R. § 11090(1)(E).
Does the RLA exemption in Wage Order 9
bar a wage statement claim brought under
California Labor Code § 226 by an employee
who is covered by a CBA?
(2) Does California Labor Code § 226 apply
to wage statements provided by an out-of-
state employer to an employee who resides in
California, receives pay in California, and
pays California income tax on her wages, but
who does not work principally in California or
any other state?
We certify these questions pursuant to California Rule of
Court 8.548. The answers to these questions will determine
the outcome of the two appeals currently pending in our
court. We will accept and follow the decision of the
California Supreme Court on these questions. Our phrasing
of the questions should not restrict the California Supreme
Court’s consideration of the issues involved.
6 WARD V. UNITED AIRLINES
III. Statement of Facts
In these two related cases, pilots and flight attendants
have sued their employer, United Airlines, Inc. (United),
alleging violations of California Labor Code § 226. The
crucial state-law question is whether the plaintiffs seek an
extraterritorial application of the statute that is not permitted
by California law.
United is a major passenger airline headquartered in
Chicago, Illinois, with a large administrative office in
Houston, Texas. Approximately 16% of United flights fly
into and out of California airports, and almost 17% of its
employees are based in California, including the
approximately 2,660 pilots in the Ward class. Charles Ward,
the named plaintiff for his class, has been a pilot for United
since 1996. Felicia Vidrio, a named plaintiff for her class,
has been a flight attendant for United since 2001. Plaintiff
Paul Bradley became a flight attendant for United in 2010,
when United bought Continental Airlines, which employed
Bradley at the time. Bradley originally sued United
separately, but later consolidated his suit with Vidrio’s.
Ward and Vidrio represent certified classes of California-
based pilots and flight attendants, respectively. The classes
are defined as pilots and flight attendants “for whom United
applied California income tax laws pursuant to 49 U.S.C.
§ 40116(f)(2).” Section 40116(f)(2) provides that an airline
employee who has regularly assigned duties in at least two
states is subject to the income tax laws of the state either
where the employee resides or where the employee earns
more than 50% of her airline pay. 49 U.S.C. § 40116(f)(2).
For pilots and flight attendants, United applies state income
tax laws based on the employee’s residence because it
WARD V. UNITED AIRLINES 7
determined that pilots and flight attendants “rarely, if ever,
perform more than half their work in any one state.” If an
employee does not receive direct deposits, United mails her
the paycheck. Thus, by definition, the classes include only
pilots and flight attendants who reside in California, receive
their pay in California, and pay California income tax on their
wages.
The Ward and Vidrio class members do not, however,
work principally in California. The pilot class members
spend, on average, 12% of their flight time in the airspace
above California on flights within, to, or from California.
The flight attendant class members spend, on average, 17%
of their flight time in the airspace above California. These
percentages are not disputed.
United pilots and flight attendants are unionized. The
unions negotiated the pilots’ and flight attendants’ respective
collective bargaining agreements (CBAs) and entered into
them in accordance with the Railway Labor Act (RLA),
45 U.S.C. § 151 et seq. The CBAs govern the pilots’ and
flight attendants’ terms of employment, including their pay.
Ward and Vidrio are paid according to somewhat similar
formulas. United pilots are generally paid by the hour. But
a pilot’s hourly rate can vary significantly depending, for
example, on her seniority, role on each flight, work schedule,
and type of airplane flown. United flight attendants are
generally paid the higher of a minimum guaranteed amount
or an hourly rate based on hours flown. Like pilots, a flight
attendant’s hourly rate can vary based on a number of factors.
United issued Ward and Vidrio at least two wage
statements per month. The wage statements provide a P.O.
8 WARD V. UNITED AIRLINES
Box as United’s address, which United employees check
daily. The wage statements list the amount earned in various
flight and non-flight pay categories, such as “Regular Pay,”
“Sick Pay,” and “Customer Satisfaction Bonus.” But they do
not list the hours and pay rates that made up the “Regular
Pay” for that period. The hours worked and hourly pay rates
are available to Ward and Vidrio in electronic records. The
electronic records are updated in real time and are always
accessible through United’s internal website.
Ward and Vidrio separately sued United, alleging that
United violated California Labor Code § 226 by issuing
noncompliant wage statements. The first part of their claim
alleges that United failed to list its “name and address” on the
wage statements. See Cal. Labor Code § 226(a). The second
part alleges that United failed to list on the wage statements
themselves “all applicable hourly rates” and the “number of
hours worked at each hourly rate,” although Ward and Vidrio
admit that United provided access to a website where that
information was available. See Cal. Labor Code § 226(a),
(e)(2). Ward and Vidrio seek an injunction and statutory
penalties under § 226 and civil penalties under the Private
Attorneys General Act (PAGA). See Cal. Labor Code
§§ 226(e), (h), 2699.
Ward and Vidrio filed their suits in state court. United
removed both cases to federal court, where they were
assigned to different judges. In both cases, the district court
certified the proposed class and the plaintiffs and United each
filed motions for summary judgment.
The district courts granted summary judgment to United
in both cases. In Ward, the district court held, citing
Tidewater Marine Western, Inc. v. Bradshaw, 927 P.2d 296,
WARD V. UNITED AIRLINES 9
309 (Cal. 1996), and Sullivan v. Oracle Corp., 254 P.3d 237,
248 (Cal. 2011), that § 226 does not apply to class members
who work primarily outside of California. Ward v. United
Airlines, Inc., No. CV15-02309, 2016 WL 3906077, at *5
(N.D. Cal. July 19, 2016). In Vidrio, the district court relied
heavily on Ward, holding that Vidrio could not assert a claim
under § 226 because the class members do not work
principally in California and United is not based or
headquartered in California and does not operate primarily in
California. Vidrio v. United Airlines, Inc., No. CV15-7985,
2017 WL 1034200, at *6 (C.D. Cal. Mar. 15, 2017). Ward
and Vidrio separately appealed.
We heard oral argument in these cases, which we
consolidated for that purpose, on March 16, 2018. The Air
Transport Association of America, Inc., filed an amicus brief
in support of United. We requested post-argument briefing
in both cases on the effect of Wage Order 9’s RLA exemption
on the plaintiffs’ § 226 claims.
On the same day that we heard oral argument in these
cases, we heard oral argument in Oman v. Delta Air Lines,
Inc., No. 17-15124. Oman raises questions about the
extraterritoriality of California labor law that are similar to
the questions raised in Ward and Vidrio. We are also
certifying the state-law questions in Oman to the California
Supreme Court, in a separate certification order.
IV. Explanation of Certification Request
No controlling California precedent answers the certified
questions on the interaction between California Labor Code
§ 226 and Wage Order 9, or on the proper territorial reach of
California Labor Code § 226. The answers to the certified
10 WARD V. UNITED AIRLINES
questions would not only determine the outcome of the
summary judgment motions in these cases but also resolve
extraterritoriality issues that Tidewater and Sullivan left open.
The certified questions matter greatly to the many California
residents who work only episodically in California and to the
many employers who regularly send California residents to
work outside of the state.
A.
California precedent does not resolve whether Wage
Order 9’s RLA exemption applies to employees who, like
Ward and Vidrio, bring claims exclusively under § 226.
Section 226 requires that a wage statement list the “total
hours worked by the employee,” the “name and address” of
the employer, “all applicable hourly rates,” and the “number
of hours worked at each hourly rate.” Cal. Labor Code
§ 226(a). Wage Order 9 requires that a wage statement list
“all deductions” and “the name of the employer.” 8 C.C.R.
§ 11090(7)(B). But, unlike § 226, Wage Order 9 exempts
from this requirement an employee who is covered by a CBA
that was entered into in accordance with the RLA. See
8 C.C.R. § 11090(1)(E).
California law requires us to “harmonize” § 226 and
Wage Order 9. See Brinker Rest. Corp. v. Superior Court,
273 P.3d 513, 528 (Cal. 2012). But it is not clear how to
harmonize § 226 and Wage Order 9’s RLA exemption.
On the one hand, Wage Order 9’s RLA exemption is
arguably irrelevant to § 226 because § 226 does not refer to
Wage Order 9’s wage statement requirements or include an
RLA exemption in its section on exemptions. See Cal. Labor
Code § 226(j). Nor does § 226 leave undefined the precise
WARD V. UNITED AIRLINES 11
requirements for a wage statement, which could suggest that
the California Legislature intended § 226’s requirements to be
“read as shorthand for the requirement[s] contemplated in . . .
[the] wage order[].” Brinker, 273 P.3d at 534. Instead, the
wage statement requirements in § 226 are far more
comprehensive than those in Wage Order 9. Compare Cal.
Labor Code § 226(a) with 8 C.C.R. § 11090(7)(B). The lack
of an RLA exemption in the detailed text of § 226 may mean
that § 226 properly applies to a claim brought by a unionized
worker. See, e.g., Cicairos v. Summit Logistics, Inc., 35 Cal.
Rptr. 3d 243, 247, 251 (Ct. App. 2005).
On the other hand, that reading of § 226 arguably nullifies
Wage Order 9’s RLA exemption with regard to wage
statements. It requires an employer of a unionized employee
to comply with the more specific requirements of § 226,
which is at odds with Wage Order 9’s identification of wage
statement regulations as properly overridden by a CBA. It
may be that to best effectuate the purpose of both provisions,
Wage Order 9’s RLA exemption must be deemed to cover
§ 226 claims as well. See Collins v. Overnite Transp. Co.,
129 Cal. Rptr. 2d 254, 260 (Ct. App. 2003) (on Wage Order
9’s motor carrier exemption).
Because we find both interpretations plausible, we certify
this question as an antecedent to the second certified question,
discussed below.
B.
There is also no directly controlling California precedent
on the question whether California Labor Code § 226 applies
to a California-resident employee who works for an out-of-
state employer and does not work principally in California.
12 WARD V. UNITED AIRLINES
The three principles that generally guide our evaluation of the
propriety of a potentially extraterritorial application of
California law, and the California Supreme Court’s
application of those principles, do not provide sufficient
guidance here.
The first principle is that “[o]rdinarily the statutes of a
state have no force beyond its boundaries.” N. Alaska Salmon
Co. v. Pillsbury, 162 P. 93, 94 (Cal. 1916). To evaluate
whether a claim seeks to apply the force of a state statute
beyond the state’s boundaries, courts consider where the
conduct that “creates liability” under the statute occurs.
Sullivan, 254 P.3d at 248; see also RJR Nabisco, Inc. v.
European Cmty., 136 S. Ct. 2090, 2101 (2016) (where the
“conduct relevant to the statute’s focus occur[s]”). If the
conduct that “creates liability” occurs in California,
California law properly governs that conduct. Sullivan,
254 P.3d at 248; see also Diamond Multimedia Sys., Inc. v.
Superior Court, 968 P.2d 539, 554 (Cal. 1999). By contrast,
if the liability-creating conduct occurs outside of California,
California law generally should not govern that conduct
(unless the Legislature explicitly indicates otherwise, which
it did not in the Labor Code). See Sullivan, 254 P.3d at 248.
The second principle is that the proper reach of Labor
Code provisions can differ because the provisions regulate
different conduct and implicate different state interests. See
id. at 243–44. For example, because “California’s interest in
the content of an out-of-state business’s pay stubs” may be
weaker than its interest in the payment of overtime wages,
wage statement provisions may apply more narrowly than
overtime provisions do. See id. at 243.
 WARD V. UNITED AIRLINES 13
The third principle is that courts must balance
California’s interest in applying its law with considerations of
“interstate comity,” in order to avoid unnecessary conflicts of
state law. See id. at 242–43. For example, courts should
consider whether the proposed use of California law would
displace another state’s law or protect an employee who is
otherwise not protected by any state law. See id. at 243
(citing Bostain v. Food Express, Inc., 153 P.3d 846 (Wash.
2007)).
The California Supreme Court has applied these
principles twice to the Labor Code. Tidewater held that wage
orders apply to an employee who “resides in California,
receives pay in California, and works exclusively, or
principally, in California,” 927 P.2d at 309, and Sullivan held
that overtime provisions apply to day-long or week-long work
performed in California for a California employer by an out-
of-state resident, 254 P.3d at 243, 247.
But with regard to the certified question here, Tidewater
did not address whether California law applies to California
residents “who work primarily outside California[].”
927 P.2d at 309. Moreover, because Sullivan confined its
holding to overtime provisions, it did not clarify whether its
emphasis on the work’s location arose from the overtime
law’s focus on the pay due for specific work done in
California. 254 P.3d at 248. Does § 226’s focus on an
employee’s receipt of information about her pay make the
relevant location for a § 226 claim the place where the
employee receives her pay? See Cal. Labor Code
§ 226(e)(2); see also Lopez v. Friant & Assocs., LLC,
224 Cal. Rptr. 3d 1, 6 (Ct. App. 2017); Morgan v. United
Retail, Inc., 113 Cal. Rptr. 3d 10, 19 (Ct. App. 2010). If so,
does an employee’s California residence and receipt of pay in
14 WARD V. UNITED AIRLINES
California strengthen California’s interest in the content of an
out-of-state employer’s wage statement? Cf. Sullivan,
254 P.3d at 243. On that score, neither Tidewater nor
Sullivan discussed how to balance California’s interest in
applying its law to its residents with California’s interest in
avoiding interstate conflict by not applying its law to an out-
of-state employer, such as United.
In short, Tidewater and Sullivan, even informed by the
principles of extraterritoriality, do not allow us to confidently
resolve the plaintiffs’ California law claim. The claim
implicates the proper reach of California labor law, which in
turn implicates the wage-and-hour protections given to
California residents who work primarily outside of the state.
For this reason, we certify this important question.
V. Accompanying Materials
The clerk of this court is hereby directed to file in the
Supreme Court of California, under official seal of the United
States Court of Appeals for the Ninth Circuit, copies of all
relevant briefs and excerpts of the record, and an original and
ten copies of this 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 withdrawn from submission. Further
proceedings before us are stayed pending final action by the
Supreme Court of California. The Clerk is directed to
administratively close this docket, pending further order. The
parties shall notify the clerk of this court within seven days
after the Supreme Court of California accepts or rejects
certification, and again within seven days if that court accepts
WARD V. UNITED AIRLINES 15
certification and subsequently renders an opinion. The panel
retains jurisdiction over further proceedings.
IT IS SO ORDERED.