Petition for Writ of Certiorari — Firestone v. Southern California Gas Co.

Supreme Coun

File y U.S.

U

011582 se 2 4 2002

No.

ed

~

IN THE

Supreme Court of the Anited States

SAMUEL FIRESTONE, CALVIN MIYASHIRO, JACK PUTNAM

and BRIAN FRAZEN,

Petitioners,

Vv.

SOUTHERN CALIFORNIA GAS COMPANY,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

ROBERT A. CANTORE *

JOSEPH L. PALLER JR.

GILBERT & SACKMAN

A Law Corporation

6100 Wilshire Boulevard

Suite 700

Los Angeles, California 90048

(323) 938-3000

* Counsel of Record Attorneys for Petitioners

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 - WASHINGTON, D.C. 20001

® <P» 00

.

QUESTIONS PRESENTED

1. When a state statute or regulation fixes a minimum

labor standard requiring employers to pay their employees a

“premium wage rate” which is greater than their “regular

rate” for all work in excess of 8 hours in one day and 40

hours in one week, do the terms “premium wage rate” and

“regular rate” as found in that standard require the inter-

pretation of a collective bargaining agreement such that any

claim by a union employee to enforce the standard is

preempted by Section 301 of the Labor Management

Relations Act?

2. If the answer to the first issue is yes, can a state statute

or regulation allowing unions to “opt out” of its minimum

labor standards fix as its test for whether a union has elected

to opt out a procedure which requires the interpretation of a

collective bargaining agreement without having the opt-out

test itself be preempted under Section 301 of the Labor

Management Relations Act?

3. Ifa claim created by state law requires the interpretation

of a collective bargaining agreement, does preemption by

Section 301 of the Labor Management Reiations Act require

that the claim be substantially extinguished?

(i)

il

PARTIES BELOW

The parties named in the caption herein are all of the

parties in the Court of Appeals and in the District Court.

Although in the captions in both courts below petitioners

purported to sue on behalf of all other present and former

employees similarly situated, no class was ever certified.

Diet cine Uthdasasnenien es

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED... oocococococcccceeeee ee. i

PAM BD MEIOE MORES WY ...-.cscsesnssesscorecevacsescacserecesacosecesc...cee. ii

TABLE OF AUTHORITIES o00...oo.ccccccoccccccccccececeeeceees. \

PRION BIO o....asccccceccosecssecrccecsossssasasessescesese... 2

ES 2

STATUTES AND REGULATIONS INVOLVED ...... 2

STATEMENT OF THE CASE .oooooooooocccccccccccccececeeeeeen.. 3

A. Nature of the Case..............:ccccccccscsscsesseseoseseess... 3

B. Statement of the Facts .o.......c.ccccccccccccccececececeeeese. 5

C. The Proceedings in the Ninth Circuit................. 10

D. The Companion Proceedings in the State

SACRE J SNe on 12

REASONS FOR GRANTING THE WRIT.................. 13

l. THE NINTH CIRCUIT’S DECISIONS

CONFLICT WITH THIS COURT'S

Id vi Sencasceecasisuaniascnencicaisacionecscisie 14

Il. THE NINTH CIRCUIT’S DECISIONS

CONFLICT WITH THE CALIFORNIA

COURT OF APPEAL ................c.c.cccccccccscccsosoees 17

lll. THE COURT SHOULD DECIDE THE

IMPORTANT ISSUE LEFT UNRESOLVED

EE I aU a ee 18

EE 21

(ili)

IV

TABLE OF CONTENTS—Continued

APPENDICES

Opinion of the Court of Appeals on Denial of

RINIIUUIIIN <iicccscicscensdinicsdeeldandaeandgnensctntnnadevenbsenakiiantaded

Opinion of the Court of Appeals...............cccccceeeeeees

Opinion and Order of the District Court................0:

Opinion of the California Court of Appeal in

I i cacenincccesidcidinnisitadssisapncusdiasniaitiaibidiiiuianens

Section 301 of the Labor Management Relations

FE, Ar isc Fe crittintentntincnitnsnnintissrinditnntinnsnvins

California Industrial Welfare Commission Order

Page

Vv

TABLE OF AUTHORITIES

CASES Page

Alexander v. Gardner-Denver Co., 415 U.S. 36

[Fara iiarncsinasnicninadaccaghsenuenasialasasiatneL aaa 19, 20

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202

[RII Pistsinsticcensenmstinintuctguntadiaainien a ennne 18, 19

Firestone v. Southern California Gas Company,

219 F.3d 1063 (9th Cir. 2000) oo... eceeeeeeseeee passim

Firestone v. Southern California Gas Company,

281 F.3d 801 (9th Cir. 2002) ooo... se Oe

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

ESTHET Pinisaissssnsnssaitsisnisiiniedialgaiiasdaaiiaaaaie aan 15, 16

Industrial Welfare Commission v. Superior

Court, 27 Cal.3d 690 (1980) ......cccecececeseeeeees 6

International Brotherhood of Electrical Workers

v. Hechler, 481 U.S. 851 (1987) uu... cesses 18, 19

Livadas v. Bradshaw, 512 U.S. 107 (1994) 0.00.0... passim

Livadas v. Bradshaw, 865 F.Supp. 642 (N.D.

CR, Be ascenenctcrsennsnuapuatiaammanaa meee 21

Local 174, Teamsters v. Lucas Flour Co., 369

ad FS CEE icninlnsaatibcnstaetanan ce eee ae 18

Metropolitan Life Ins. Co. v. Massachusetts, 471

CF FA COO iintinsccuimaiacantencge eet 15, 16

Millan v. Southern California Gas Co., 2002

Cal.App. LEXIS 2889 (2002).........0.000..... iz, $3, 15, 07

Morillion v. Royal Packing Company, 22 Cal.4th

FEF Ce winsrincccsin lie raaaaeeaee 10

Nash v. Florida Industrial Commission, 389 U.S.

EPP CUIET Piicciitnscimscuibiniasimui mana 15

Ramirez v. Yosemite Water Company, 20 Cal.4th

FD CE ciscithiictininadteaiiatea nee eee 9

Skyline Homes, Inc. v. Department of Industrial

Relations, 165 Cal.App.3d 239 (1985) ............. 6, 9, 10

United Steelworkers of America v. Rawson, 495

CE Fh, DURE GR We caccconssiniisdcdsenndvadteiaieia tania 19

vi

TABLE OF AUTHORITIES—Continued

Page

Walling v. Harnischfeger Corp., 325 U.S. 427

CR DED cccrcensensncsisiiintanesemnndesiiciinsianisalssalinassiaieaanennen 14

Walling v. Youngerman Reynolds Hardwood Co.,

SED Ute SED CEP ae ececscemnssenssssneensinsieanceppentn 13, 14, 15

Wright v. Universal Maritime Service Corp., 525

CLS, FO Cie nscssssntventansmisteniinivicsasenieiaiipiamaiain 19

STATUTES

2B UBL. © URGE) cccerecictnsinsciciesssiansianiiaiaiin 2

29 UBL. 9 O55 OF BG ctssomnionsinstinanineiaiain 2

29 UB. © O87 cscccctsnsssstnenintinsntisastinicnmnnapamaiiailin 6

BO UL BA. © GD ccsnccsssepiviininnnainiiandamaaamnsiiiiniais passim

ZO UGC. © BF cnccssscisasuninnscsnisnisniiasibiiidiieeiaiaaaamsaiinias 3

Call, Laer C60 © Bb 8 d ccnccsctssssthesstpiscintieantnininiats ‘ 13

Leder CaGs SSIS 60 BOG. cccsscrssessrscsneevnsennssseunsntensen 6

Cal. E.SBOP COGS BS DEG ccscrcssienensseiatsnntviiarnseintnes 13

Cal, LAO CD Te Fare cncccccssenssnsinteninnieiniansieniaees 13

Cal, Saber Cate © SF FD cccccssstsasssssenttinnstantsasaaia 3

Cal, Caer Cate © 8 IGE cecerstrscnicistannensntacinstnnainen 3

REGULATIONS

Title 8, California Code of Regulations § 11040... passim

Title 8, California Code of Regulations

BF CCE accccnnteseserctenseionsensinennidniiananeaineiia 10

Title 8, California Code of Regulations

© DIESE cccnscnssrnnsssntnscnncetenmminnpsiiiaaeninnam passim

Title 8, California Code of Regulations

BB RGR BITES ccscanscssecscssnsicsocpninsosssccaniieemeann passim

IN THE

Supreme Court of the United States

No.

SAMUEL FIRESTONE, CALVIN MIYASHIRO, JACK PUTNAM

and BRIAN FRAZEN,

Petitioners.

Vv.

SOUTHERN CALIFORNIA GAS COMPANY,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioners Samuel Firestone, Calvin Miyashiro, Jack

Putnam and Brian Frazen respectfully pray that a writ of

certiorari issue to review the judgment and opinion of the

United States Court of Appeals for the Ninth Circuit entered

in Samuel Firestone, Calvin Miyashiro, Jack Putnam, and

Brian Frazen. individually and on behalf of all other present

and former employees similarly situated. v. Southern

California Gas Company, 219 F.3d 1063 (9th Cir. 2000),

as amplified by its opinion denying rehearing, 281 F.3d 801

(9th Cir. 2002).

2

OPINIONS BELOW

The July 14, 1998 opinion of the United States District

Court for the Central District of California (the “District

Court”) granting defendant-respondent summary judgment is

unreported, but is reproduced in the Appendix at 14a. The

original opinion of the United States Court of Appeals for the

Ninth Circuit (the “Ninth Circuit”) is reported at 219 F.3d

1063 (9th Cir. 2000) and is reproduced in the Appendix at

4a. The Ninth Circuit’s opinion denying rehearing is reported

at 281 F.3d 801 (9th Cir. 2002) and is reproduced in the

Appendix at la.

JURISDICTION

The Ninth Circuit rendered its original opinion affirming in

part and remanding in part the final order of the District Court

on July 19, 2000. Petitioners timely filed a petition for

rehearing and suggestion for rehearing en banc. The Ninth

Circuit rendered its opinion denying this petition on Febru-

ary 12, 2002. The jurisdiction of this Court is invoked

pursuant to 28 U.S.C. § 1254(1).

STATUTES AND REGULATIONS INVOLVED

This case involves the preemptive effect on state-law wage

and hour claims of federal labor law, primarily Section 301 of

the Labor Management Relations Act, 1947 (“Section 301”),

29 U.S.C. § 185, and the National Labor Relations Act (the

“NLRA”), 29 U.S.C. § 151 et seg. The text of Section 301 is

reproduced in the Appendix at 47a.

The state-law claims at issue arose out of a California

regulation, commonly referred to as “Wage Order No. 4-89,”

which was found at Title 8, California Code of Regulations

§ 11040. Relevant excerpts from the regulation, which has

since been modified several times, are reproduced in the

Appendix at 49a.

es Eee oe ae nS en a ea

Si Phe ate

3

STATEMENT OF THE CASE

A. Nature of the Case

This is an action by a group of union employees con-

tending that defendant-respondent Southern California Gas

Company (“SCGC”) violated both Section 7 of the Fair Labor

Standards Act (the “FLSA”), 29 U.S.C. § 207 (the first claim

for relief), and comparable California wage and hour law (the

second claim for relief) in the manner in which it computed

overtime rates on a daily basis for its meter readers.'

Petitioners do not seek a writ of certiorari regarding their

dismissed FLSA claims. :

With respect to Petitioners’ claims under California wage

and hour law, California’s Labor Code empowers the Cali-

fornia Industrial Welfare Commission (the “IWC’”’) to fix by

regulation the minimum wages (see Cal. Labor Code § | 182)

and maximum hours, as well as other minimum labor

standards (see Cal. Labor Code § 1178.5), for California

employees. At the time this case arose, the regulation

applicable to Petitioners (and other similarly situated employ-

ees) was commonly referred to as Wage Order No. 4-89 and

provided in part as follows:

3. HOURS AND DAYS OF WORK.

(A) The following overtime provisions are applicable

to employees eighteen (18) years of age or over and to

employees sixteen (16) or seventeen (17) years of age

who are not required by law to attend school: such

employees shall not be employed more than eight (8)

hours in any workday or more than forty (40) hours in

any workweek unless the employee receives one and

one-half (12) times the employee’s regular rate of pay

for all work over eight (8) hours in any workday or in

' Because of circumstances not relevant to the case, Petitioners were

represented by two unions, the Utility Workers of America and the

International Chemical Workers Union Council of the UFCW, AFL-CIO.

excess of forty (40) hours in any workweek. Employ-

ment beyond eight (8) hours in any workday or more

than six (6) days in any workweek is permissible

provided the employee is compensated for such overtime

at not less than:

(1) One and one-half (1'4) times the employee’s

regular rate of pay for all hours worked in excess of

eight (8) hours up to and including twelve (12) hours

in any workday, and for the first eight (8) hours

worked on the seventh (7th) day of work; and

(2) Double the employee’s regular rate of pay for

all hours worked in excess of twelve (12) hours in any

workday, and for all hours worked in excess of eight

(8) hours on the seventh (7th) day of work in any

workweek.

x *x* * *

(G) Except as provided in subsections (D), (F) and

(I), this section shall not apply to any employee covered

by a collective bargaining agreement if said agreement

provides premium wage rates for overtime work and a

cash wage rate for such employee of not less than one

dollar ($1.00) per hour more than the minimum wage.

Title 8, California Code of Regulations § 11040(3)(A) and

(G) (emphasis added).

Petitioners claimed below that SCGC violated Section 3(A)

of this Wage Order in the manner in which it computed their

daily overtime. Although admittedly “covered by a collective

bargaining agreement [which provided] a cash wage rate for

such employee of not less than one dollar ($1.00) per hour

more than the minimum wage,” Petitioners contended that the

collective bargaining agreement did not “provide[] premium

wage rates for overtime work” within the meaning of Section

3(G), so that their unions had not effectively “opted out” of

the provisions of Section 3(A).

5

Specifically, Petitioners contended that SCGC’s practice

(to which Petitioners’ unions had agreed) did not compensate

them for all overtime hours that they worked, a practice

which Petitioners contended was unlawful under California

law. SCGC contended that it merely was trying to calculate

Petitioners’ “regular rate” by dividing a flat sum paid to

Petitioners for a particular meter-reading route by the total

number of hours worked, but that its computer system could

not handle the resulting fluctuating rates. Accordingly, it was

forced to use a formula which did reduce the number of

Overtime hours for which Petitioners were compensated.

Petitioners responded by contending that, under California

law, a fixed rate paid on a daily basis could only be divided

by 8 to arrive at the employee’s “regular rate.”

On July 14, 1998, the District Court entered an order

granting SCGC’s motion for summary judgment. Appendix

at 14a. The District Court concluded that the Petitioners’

state-law claim regarding the manner in which SCGC

calculated overtime rates on a daily basis was preempted by

Section 301. On appeal, the Ninth Circuit affirmed the

District Court essentially for the same reasons given by the

District Court, Appendix at 4a, and later denied Petitioners’

petition for rehearing and suggestion for rehearing en banc.

Appendix at la. The net effect of these decisions has been to

extinguish Petitioners’ state-law wage and hour claim without

any determination on its merits.

B. Statement of the Facts

As noted above, the State of California has delegated to the

Statutorily created IWC the power to fix by regula-

tion minimum wages and other minimum working condi-

tions, including maximum hours. Pursuant to its regulatory

authority, the IWC has adopted several “Wage Orders,” each

applicable to a particular industry or occupation. The parties

have agreed that the Wage Order that was applicable to

SCGC until January 1, 1998 was Wage Order No. 4-89,

6

which was found in Title 8, California Code of Regulations

§ 11040 (hereafter, simply “Wage Order No. 4-89”).

Until January 1, 1998, Section 3(A) of Wage Order No.

4-89 provided that an employee could not be employed for

more than forty (40) hours in one work week or more that

eight (8) hours in one day unless the employee was paid at a

“premium rate” equal to “one and one-half (12) times such

employee’s regular rate” for all hours worked in excess of

forty (40) hours in one work week and in excess of eight (8)

hours in one day.’ A primary purpose of this regulation was

to actually discourage employers from working employees

for more than 8 hours in one day. Skyline Homes, Inc. v.

Department of Industrial Relations, 165 Cal.App.3d 239, 254

(1985); accord Industrial Welfare Commission v. Superior

Court, 27 Cal.3d 690, 713 (1980) (upholding wage statement

of IWC providing that overtime compensation is “a premium

or penalty pay for overtime work te regulate maximum

hours”). Indeed, this section went on to provide that an

employee was to receive “[dJouble the employee’s regular

rate” for all work in excess of twelve (12) hours in one day.

Section 3(G) of Wage Order No. 4-89 then provided that

the overtime provisions of Section 3(A) automatically did not

apply to any employee who had exercised his or her federally

protected right under Section 7 of the NLRA, 29 U.S.C.

? Effective January 1, 1998, Wage Order No. 4-89 was amended by the

IWC in Wage Order No. 4-98 which, among other things, eliminated the

8-hour day. Effective January |, 2000, the 8-hour day was restored to

California’s workers, albeit now by statute. See Cal. Labor Code § 510 et

seq. The current Wage Order, Wage Order No. 4-01, tracks the language

of the new statute with respect to overtime.

> Given that the Wage Order quoted by the Ninth Circuit makes no

mention of the overtime premiums required to be paid after 8 hours (7a),

it appears to be Wage Order No. 4-98, which was not effective until

January 1, 1998, and not Wage Order No. 4-89, the Wage Order upon

which Petitioners’ state-law claims were based.

7

§ 157, to bargain collectively and whose union had succeeded

in negotiating a collective bargaining agreement that (i)

provided “premium wage rates for overtime work” and (ii)

required that the employee be paid a cash wage “not less than

one dollar ($1.00) more than the minimum wage.” * Peti-

tioners admittedly were covered by a collective bargaining

agreement that required them to be paid a cash wage “not less

than one dollar ($1.00) more than the minimum wage.”

Nevertheless, Petitioners state-law claim essentially alleged

that, even if Section 3(G) were a valid opt-out provision not

itself preempted by Section 301 (as the Ninth Circuit later

found), SCGC’s method of paying overtime did not provide

for “premium rates for overtime work” within the meaning of

this section of the Wage Order, and Petitioners thus were

entitled to overtime compensation in accordance with Section

3(A) of the Wage Order. Stated differently, Petitioners

contended that their unions did not effectively opt out of

Section 3(A) standards.

The Ninth Circuit accurately summarized the relevant facts

as follows:

In 1995, the plaintiffs’ unions and the employer, South-

em California Gas Company (SCGC), agreed to a

compensation arrangement set forth in a document

entitled “Pay-Per-Route (PPR) for Meter Reading and

Meter Reading A/B Routes” (PPR document). Under the

Pay-Per-Route system, all meter readers were paid flat

sums for completing meter reading routes of assigned

lengths, even if it took less than the estimated time to

complete the routes. The flat sum for each route was

calculated by multiplying the hourly rate set forth in the

* Given that the citation in the Ninth Circuit’s decision is to Section

3(D) and not 3(G) (Appendix at 7a), Petitioners again suspect that

the Circuit was relying upon Wage Order No. 4-98 and not Wage Order

No. 4-89.

ee

8

collective bargaining agreement ($16.56 per hour) by

the amount of time it was expected to take to complete

the route.

Meter readers who worked more than 8 hours in one day

received an adjustment to the flat sum normally paid.

The method of calculating compensation for these hours

is the subject of some dispute by the parties. According

to the PPR document itself, the unassigned overtime

hours posted were computed as follows: (assigned

hours/actual hours) X .3334 X (actual hours—8). That

figure was then multiplied by one and one-half the

hourly rate set forth in the collective bargaining

agreement and added to the flat rate for the assigned

hours. SCGC contends that the total pay for a

meter reader who worked unassigned overtime was

actually calculated by dividing the flat sum by the total

number of hours it actually took to complete the route to

arrive at the employee’s “regular rate” for that day. The

meter reader would then receive one and one-half times

that regular rate for hours worked beyond 8 per day,

added to 8 times the “regular rate” for that day. The

difference between the formula contained in the PPR

document and that allegedly used by SCGC apparently

resulted from the inability of SCGC’s computerized

payroll system to handle variable rates of pay. These

formulae yield almost the same result, however,

plaintiffs contend that under either one the defendant

violates state wage and hour laws by failing to provide a

“premium” wage rate for overtime work.

Appendix at 6a to 7a (emphasis added).°

*So that it is clear to this Court, it is undisputed that Petitioners’

unions actually agreed to and SCGC actually used the formula contained

in the written PPR document for purposes of computing Petitioners’

overtime compensation. Excerpts of Record filed with the Ninth Circuit

(hereafter, simply “ER”) 116-17, 119-20, 151-52. That is, SCGC actually

reduced the number of overtime hours for which an employee was

compensated by using the complicated formula recited in the Court of

Appeal’s decision (“(assigned hours/actual hours) X .3334 X (actual

9

Petitioners contended “that under either one [of the

formulae] the defendant violate[d the then existing] state

wage and hour laws” because, under California wage and

hour law, any flat sum paid to an employee (such as a flat

sum per route) may only be divided by the “maximum hours”

allowable under state law on a daily basis (if the flat sum is

paid on daily basis) or by the “maximum hours” allowable

under state law on a weekly basis (if the flat sum is paid on

weekly basis) in order to determine the employee's “regular

rate.” See Skyline Homes, Inc., supra, 165 Cal.App.3d at 245

(weekly flat sum must be divided by 40—and not the actual

number of hours worked—to determine an employee’s

“regular rate”). Thus, if SCGC’s “perception” of its compen-

sation method (i.e., how it would have paid overtime

compensation if its computer could have handled it) is used, it

violates California law because it divides the daily flat sum

by the total number of hours worked, and not by 8—the then

maximum allowable daily hours.° Conversely, if the formula

hours—8)”). Admittedly, this formula ultimately resulted in the same

daily pay as dividing the flat sum paid per route by the total number of

hours worked to arrive at a fluctuating hourly rate of pay.

This reduced hours formula was used precisely because SCGC’s

computerized payroll system could not handle the “variable rates of pay”

that resulted from using the other formula. “[T]he PPR [document to

which the unions actually agreed] was only an accounting device to maxe

the Pay-Per-Route system compatible with the Company’s automated

payroll system.” SCGC’s Opening Brief to the Ninth Circuit at 8-9.

Petitioners readily accept the fact that SCGC intended to use the

fluctuating rate formula, but could not because of its computer’s

limitations.

*Although the Ninth Circuit found this practice to have not violated the-

FLSA, “[t]he !WC’s wage orders, although at times patterned after federal

regulations, also sometimes provide greater protection [for employees]

then is provided under federal law in the Fair Labor Standards Act.”

Ramirez v. Yosemite Water Company, 20 Cal.4th 785, 795 (1999). Thus, a

practice which clearly does not violate the FLSA may still violate

10

explicitly articulated in the PPR document (i.e., the actual

document to which Petitioners’ unions agreed and which was

actually used by SCGC) is used as the test by which SCGC’s

compensation method is judged, it violates Wage Order No.

4-89 because it failed to compensate employees for all hours

they were “engage[d], suffer[ed] or permit[ted] to work.” See

Section 2(E) of Wage Order No. 4-89.

C. The Proceedings in the Ninth Circuit

Notwithstanding the fact that the parties had agreed that the

written document to which Petitioners’ unions actually had

agreed contained the formula actually used by SCGC’s

computer system to calculate overtime payments and the fact

that Petitioners did not dispute that SCGC would have used

the other formula if its computer system were capable of

handling the fluctuating rates of pay generated whenever an

employee worked more than 8 hours, the Ninth Circuit

concluded that there was a dispute concerning these facts.

More importantly, the Ninth Circuit concluded that the

disputes arose under a collective bargaining agreement and

therefore were preempted by Section 301.

Specifically, the Ninth Circuit held:

According to plaintiffs, they are not paid a “premium

rate” because the rate they ultimately receive for

overtime hours is lower than the standard rate of $16.56

per hour used to calculate the flat rate for each route.

Thus, argue plaintiffs, they actually receive lower wages

for overtime hours than they receive for scheduled

hours. On the other hand, because the employer per-

ceives the “regular rate” to be the standard rate divided

by the number of hours it actually takes plaintiffs to

complete the route on any given day, the employer

California wage and hour law. /d. (citing cases, including Skyline Homes,

Inc., supra); Morillion v. Royal Packing Company, 22 Cal.4th 575 (2000).

— — so

maintains that plaintiffs are paid a rate for overtime

work that includes a “premium” equal to 50% of the

regular rate for that day.

The parties therefore disagree on the meaning of terms

in the collective bargaining agreement for purposes of

California law. To resolve that dispute, it would be

necessary to apply California law to determine the

overtime rights and obligations of the parties to the

agreement. The claim is not “independent” of the col-

lective bargaining agreement under federal premption

law. See Lingle, 486 U.S. at 407, 108 S.Ct. 1877.

Appendix at 8a.

The Circuit then opined as follows:

This case illustrates that problem well, for if California

law were to apply, the parties negotiating the agreement

would not know whether the employer’s overtime

obligations were defined by the contract or not.

depending on which rate a court determined was the

“regular” rate under the California law. The claim is

preempted.

Id. at 9a.

In its decision denying rehearing, the Ninth Circuit further

explained its rationale for holding Petitioners’ state-law

claims preempted by Section 301 as follows:

In our original opinion in this case, we held that

resolution of plaintiffs’ state law overtime claim would

require interpretation of the agreement, because

plaintiffs are not entitled to any overtime under state law

if they are paid a “premium” for overtime work above

the “regular rate” of pay in the contract. Firestone v.

S. Cal. Gas Co., 219 F.3d 1063, 1066 (9th Cir 2000).

The parties in this case disagree about which rate in the

contract is the “regular” rate and, thus, disagree on

whether plaintiffs are receiving a “premium” for over-

time work. Resolving this question, we held, requires

12

interpretation of the agreement. The agreement would be

enforced differently depending on which _party’s

interpretation is accepted.

Appendix at 2a.

D. The Companion Proceedings in the State Courts

In April 1998, while this action still was pending in the

District Court, the State of California, by its Labor Com-

missioner, sued SCGC in state court over the exact same

overtime practice with respect to the exact same class of

employees (meter readers). Stated differently, California’s

Labor Commissioner contended that SCGC violated its

statutes and regulations exactly as Petitioners claimed. Un-

like Petitioners, however, California prevailed in most of

its claims.

Contrary to the Ninth Circuit, the California Court of

Appeal has now held (as Petitioners argued below) that the

terms “regular rate” and “premium rate” are determined not

be interpreting a collective bargaining agreement, but by

interpreting the Wage Order. Millan v. Southern California

Gas Co., 2002 Cal.App. LEXIS 2889 (2002), Appendix at

45a.’ The California appellate court also held that, when

interpreting these phrases, courts should defer to the

interpretation given to them by the state’s Labor Com-

missioner. /d. Finally, and most importantly to this petition,

the court held that the state’s claims were not preempted by

Section 301. /d. at 44a.

Petitioners concede that, given the California Court of

Appeal’s construction of Wage Order No. 4, there is very

” At the time this petition was sent to the printer, this case was not yet

officially reported. Accordingly, as an aid to the Court, the complete

opinion of the California Court of Appeal is reproduced in the Appendix

at 32a.

“13

little left of their state-law claims. See Appendix at 45a-46a.°

However, as will be shown below, the Ninth Circuit’s opinion

is clearly erroneous, and there are many opt-out provisions in

California law to which this erroneous decision may be

applied. See, e.g., Cal. Labor Code §§ 227.3 (allowing union

to opt out of vested vacation pay), 514 (allowing unions to

opt out of statutory overtime provisions), and 554 (allowing

unions to opt out of seventh day of rest).

REASONS FOR GRANTING THE WRIT

There are several important reasons why a writ of certiorari

to the Ninth Circuit should issue. First, the Ninth Circuit’s

opinion conflicts with this Court’s decisions in Livadas v.

Bradshaw, 512 U.S. 107 (1994), and Walling v. Younger-

man-Reynolds Hardwood Co., 325 U.S. 419 (1945). Second,

this Court should resolve the conflict between the Ninth

Circuit and the California Court of Appeal. And third, even

assuming that the Ninth Circuit’s opinion is correct (and that

the California Court of Appeal’s decision is therefore wrong),

the Court would settle an important issue of federal

preemption left unresolved by Livadas: whether “{hjolding

the plaintiff's cause of action substantively extinguished [is]

always [] the only means of vindicating the arbitrator’s

primacy as the bargained-for contract interpreter.” 512 U.S.

at 124n.18. |

* If their state-law claim is reinstated, Petitioners could argue that, on

this issue, the California Court of Appeal erred. Specifically, Petitioners

could argue that either a union’s collective bargaining agreement meets

the opt-out test of Section 3(G) or it does not and that, if it does not, the

agreement cannot be applied to opt out of the Section 3(A) standard some-

times but not others. Petitioners have been advised that the California

Labor Commissioner is seeking rehearing on this issue.

14

I. THE NINTH CIRCUIT’S DECISIONS CON-

FLICT WITH THIS COURT'S DECISIONS.

The heart of the Ninth Circuit’s rationale for its decision is

that, because Petitioners argued that, under either formula,

their “regular rate” could only be determined by dividing

their flat daily rate by 8 while SCGC argued that their

“regular rate” was “the standard rate divided by the number

of hours it actually takes plaintiffs to complete the route on

any given day,” “[t}he parties therefore disagree on the

meaning of terms in the collective bargaining agreement for

purposes of California law.” Appendix at 8a. But “regular

rate” is not a contractual term, it is a regulatory term plucked

right out of the applicable Wage Order. not the collective

bargaining agreement. Given this simple fact, this Court long

ago recognized that:

The regular rate . . . is not an arbitrary label chosen by

the parties; it is an actual fact. Once the parties have

decided upon the amount of wages and the mode of

payment, the determination of the regular rate becomes a

matter of mathematical computation, the result of which

is unaffected by any designation of a contrary ‘regular

rate’ in the wage contracts.

Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S.

419, 424-25 (1945) (emphasis added). Thus, “[t]o discover

that [regular] rate, . . . we look not to contract nomenclature

but to the actual payments, exclusive of those paid for

overtime, which the parties have agreed shall be paid during

each workweek.” Walling v. Harnischfeger Corp., 325 U.S.

427, 430 (1945) (emphasis added).

Simply put, as this Court and the California Court of

Appeal have recognized, it matters not whether SCGC

reduced the number of overtime hours in order to calculate

Petitioners’ overtime compensation (as the PPR Document

stated) or whether it simply divided the flat sum paid to

determine an hourly rate under the collective bargaining

15

agreement; the determination of whether Petitioners were

paid a “premium wage rate” above their “regular rate”

as required by Wage Order No. 4-89(3)(G) is a simple

“mathematical computation” using California wage and hour

law, not the collective bargaining agreement. Younger-

man-Reynolds Hardwood Co., supra, 32§ U.S. at 424-25:

Millan v. Southern California Gas Co., supra, at 44a. But

even if the Ninth Circuit were right, and the determination of

whether Petitioners were paid a “premium wage rate” above

their “regular rate” (as required by the opt-out provisions

- of Section 3(G) of Wage Order No. 4-89) “requires

interpretation of the agreement” (2a), what then is preempted,

Petitioners’ claim or the opt-out provision of Wage Order

No. 4-89?

To answer this question, Petitioners first note that it is now

beyond dispute that “the establishment of [minimum] labor

standards falls within the traditional police power of the

state,” and will not lightly be held to be preempted. Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1, 21 (1987). How-

ever, “‘it would turn the policy that animated the [NLRA] on

its head to understand it to have penalized workers who have

chosen to join a union by preventing them from benefitting

from state labor regulations imposing minimal standards on

nonunion employees.’” Livadas v. Bradshaw, supra, 512 U.S.

at 129 (quoting Metropolitan Life Ins. Co. v. Massachusetts,

471 U.S. 724, 756 (1985)).

Thus, it is equally well established that, in fixing a mini-

mum labor standard (such as the maximum number of hours

an employee can be required to work without a premium),

States may not simply “withdraw state benefits” from em-

ployees because they exercised their federal right to join a

union. Nash v. Florida Industrial Commission, 389 U.S. 235,

239 (1967). Simply put, any minimum labor standard must

treat “individual union and nonunion workers alike, and thus

‘neither encourage{] nor discourage[] the collective-bar-

16

gaining processes that are the subject of the NLRA.’” Fort

Halifax Packing Co. v. Coyne, supra, 482 U.S. at 20-21

(quoting Metropolitan Life Ins. Co., supra, 471 U.S. at 755).

Thus, in Livadas v. Bradshaw, supra, 512 U.S. 107, this

Court held that the California Labor Commissioner’s policy

of refusing to process the wage claims of union workers,

while processing the wage claims of non-union workers, was

unlawful under federal law precisely because the California

Labor Commissioner treated union workers differently than

nonunion workers. It is true, as the court below obviously

concluded, that this Court specifically recognized the validity

of certain “familiar and narrowly drawn opt-out provisions”

in state minimum labor standard statutes which allowed union

workers to be treated somewhat differently by allowing their

unions to bargain for a different labor standard. Livadas, 512

U.S. at 132. Thus, the question arises as to whether a state

statute or regulation which requires the interpretation of

a collective bargaining agreement could constitute such

“narrowly drawn opt-out provisions” recognized as valid

in Livadas.

Under a Maine severance statute containing an opt-out

provision and discussed in Livadas, employers were required

to provide laid-off employees with certain minimum

severance benefits. However, all Maine employees (both

union and nonunion alike) could expressly agree on different

severance terms. Livadas, 512 U.S. at 130-31. Given this

fact, the Court noted that, in Fort Halifax Packing Co., supra,

it had rejected a federal attack on the Maine statute for two

reasons. “Most fundamentally, the Maine law treated all

employees equally, whether or not represented by a labor

organization.” /d., 512 U.S. at 131. “Second, the minimum

protections of Maine’s plant closing law were relinquished

not by the mere act of signing an employment contract (or

collective-bargaining agreement), but only by the parties’

express agreement on different terms.” /d.

iinet

17

Simply put, to be a valid opt-out provision,“union-

represented employees [must] have the full protection of the

minimum standard, absent any agreement for something

different.” Livadas, supra, 512 U.S. at 131. Moreover, the

“agreement for something different” must be more than “the

mere act of signing an employment contract”; it must be “the

parties’ express agreement on different terms.” /d. Here, the

Ninth Circuit held that, if a collective bargaining agreement

must be interpreted to determine whether the parties actually

entered into an “express agreement on different terms,”

Section 301 preemption requires that a union member’s claim

for violation of the minimum labor standard must be pre-

empted without ever finding out if his or her union actually

opted out of the standard. Given that any provision purporting

to waive a state minimum labor standard must be “clear and

unmistakable” for a court to even consider giving it effect,

Livadas, 512 U.S. at 125, Petitioners respectfully submit that,

if an opt-out provision actually requires interpretation (and

thus is not clear and unmistakable), the default should be in

granting “union-represented employees . . . the full protection

of the minimum standard,” id. at 131, not in having their

claims held to be extinguished through preemption.

Il. THE NINTH CIRCUIT’S DECISIONS CON-

FLICT WITH THE CALIFORNIA COURT OF

APPEAL.

Petitioners readily concede that this Court generally grants

certiorari to resolve conflicts among the federal courts of

appeals, not between a federal court of appeals and a state

court of appeal. Here, however, the Court is presented with a

unique situation.

First, although the parties to this case and to Millan v.

Southern California Gas Co., supra, are not identical, the

defendant is the same. The only difference between the two

cases is that Petitioners’ proposed class was never certified,

18

while the State of California was able te sue on behalf of all

of Petitioners’ coworkers without a certified class. Second,

the two cases arose under the same facts, involving the same

collective bargaining agreement and the same overtime

provisions. And finally, the Ninth Circuit and the California

Court of Appeal reached diametrically opposed conclusions.

Clearly, some Supreme Court should resolve the conflict;

the only real issue is should it be the California Supreme

Court or this Court. Given the important mistakes made by

the Ninth Circuit on issues of federal law outlined above,

Petitioners respectfully submit that it should be this Court.

fil. THE COURT SHOULD DECIDE THE

IMPORTANT ISSUE LEFT UNRESOLVED BY

LIVADAS.

Before addressing this issue, Petitioners first note that there

are two types of state-law claims that may be preempted by

Section 301. See Livadas, 512 U.S. at 124 n.18. First, there is

the claim that is based upon a right or duty created by

a collective bargaining agreement. See, e.g., /nternational

Brotherhood of Electrical Workers v. Hechler, 481 U.S. 851

(1987) (holding preempted a state-law tort action based upon

a contractual duty arguably created by a collective bargaining

agreement). Petitioners will refer to this type of Section 301

preemption as “Hechler Preemption.” The second type of

case that may be preempted is where the right or duty

is actually created by state law, but its enforcement is

“inextricably intertwined with consideration of the terms of

the labor contract.” Allis-Chalmers Corp. v. Lueck, 471 U.S.

202, 213 (1985). Petitioners will refer to this second type of

Section 301 preemption as “Allis-Chalmers Preemption.”

Both forms of Section 301 preemption find their basis in

Congress’s intention that issues relating to the interpretation

of a collective bargaining agreement be judged only in

accordance with federal labor law. Local 174, Teamsters v.

19

Lucas Flour Co., 369 U.S. 95, 103-04 (1962); see also United

Steelworkers of America v. Rawson, 495 U.S. 362, 368 (1990)

(“State law is . . . ‘preempted’ by § 301 in that only the

federal law fashioned by the courts under § 301 governs the

interpretation or application of collective bargaining agree-

ments”). Given that “arbitrators are in a better position than

courts fo interpret the terms of a CBA.” Wright v. Universal

Maritime Service Corp., 525 U.S. 70, 78 (1998) (emphasis in

original), it is not surprising that implicit in Section 301

preemption is preserving for the labor arbitrator the

interpretation of collective bargaining agreements. Livadas,

512 U.S. at 121-22.

With respect to Hechler Preemption, Petitioners, who are

union members, have no problem with the concept that not

only are “arbitrators in a better position than courts to

interpret the terms” of their collective bargaining agreement,

the parties bargained for the arbitrator’s remedy of any

violation of its terms, not that of some state court jury. See

Allis-Chalmers Corp. v. Lueck, supra, 471 U.S. at 211. Thus,

Petitioners have no probiem with the idea that Section 301

actually extinguishes any state-law claim to enforce an obli-

gation created by a collective bargaining agreement. Inter-

national Brotherhood of Electrical Workers v. Hechler.

supra, 481 U.S. at 860-62

With respect to Allis-Chalmers Preemption, however,

Petitioners do have a problem with having their claims

preempted, at least in the manner in which the Ninth Circuit

has done so. To begin with, in Alexander v. Gardner-Denver

Co., 415 U.S. 36 (1974), this Court specifically recognized

that a labor arbitrator has very limited jurisdiction:

As the proctor of the bargain, the arbitrator’s task is to

effectuate the intent of the parties. His source of

authority is the collective-bargaining agreement, and he

must interpret and apply that agreement in accordance

with the “industrial common law of the shop” and the

20

various needs and desires of the parties. The arbitrator,

however, has no general authority to invoke public laws

that conflict with the bargain between the parties:

“An arbitrator is confined to interpretation and appli-

cation of the collective bargaining agreement; he does

not sit to dispense his own brand of industrial justice. He

may of course look for guidance from many sources, yet

his award is legitimate only so long as it draws its

essence from the collective bargaining agreement. When

the arbitrator’s words manifest an infidelity to this

obligation, courts have no choice but to refuse

enforcement of the award” United Steelworkers of

America v. Enterprise Wheel & Car Corp., 363 US.

593, 597 (1960).

If an arbitral decision is based “solely upon the

arbitrator’s view of the requirements of enacted legis-

lation,” rather than on an interpretation of the collective-

bargaining agreement, the arbitrator has “exceeded the

scope of the submission,” and the award will not be

enforced. Ibid. Thus the arbitrator has authority to

resolve only questions of contractual rights, and this

authority remains regardless of whether certain con-

tractual rights are similar to, or duplicative of, the

substantive rights secured by Title VII.

415 U.S. at 53-54 (emphasis added).

Simply put, among other things, Gardner-Denver stands

for the basic proposition that a labor arbitrator lacks the

authority to adjudicate Petitioners’ state-law overtime claims,

even if a labor arbitrator is required to interpret the phases

“regular rate” and “premium wage rate.” But given the Ninth

Circuit’s decision, Petitioners also cannot bring these claims

before the state court. For all intents and purposes, Peti-

tioners’ claims have been completely extinguished by the

Ninth Circuit.

In Livadas, this Court recognized that: “Holding the

plaintiff's cause of action substantively extinguished may not

21

... always be the only means of vindicating the arbitrator’s

primacy as the bargained-for contract interpreter.” Livadas,

512 U.S. at 124 n.18. This Court should grant certiorari to

determine whether there are other acceptable means available,

such as staying the action pending arbitration of any issue

relating to the interpretation of a collective bargaining

agreement. See Livadas v. Bradshaw, 865 F. Supp. 642,

645-46 (N.D. Cal. 1994) (on remand from Supreme Court,

Labor Commissioner adopts policy of staying administrative

proceedings pending arbitration of disputed terms of col-

lective bargaining agreement). Indeed, one has to wonder

whether there is any need to vindicate the arbitrator’s primacy

if the collective bargaining agreement is one of the rare ones

which do not contain an arbitration clause.

CONCLUSION =

For all of the foregoing reasons, the writ of certiorari

should be granted.

Respectfully submitted,

ROBERT A. CANTORE *

JOSEPH L. PALLER JR.

GILBERT & SACKMAN

A Law Corporation

6100 Wilshire Boulevard

Suite 700

Los Angeles, California 90048

(323) 938-3000

* Counsel of Record Attorneys for Petitioners