Case3:12-cv-06327-NC Document78 Filed03/10/15 Page1 of 7
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
NORTHERN DISTRICT OF CALIFORNIA
10
11
12
13
14
15
16
17
18
19
20
YVETTE R. BALDERAS, on behalf of
herself and all others similarly-situated,
MODIFIED
[PROPOSED] ORDER ON:
Plaintiffs,
v.
MASSAGE ENVY FRANCHISING, LLC
and ENVEE ESTEP ENTERPRISE, INC.
dba MASSAGE ENVY OF ALAMEDA
TOWNE CENTRE; and DOES 1 TO 10,
inclusive,
Defendants.
CASE NO. 3-12-cv-06327-NC
(1) JOINT MOTION FOR FINAL APPROVAL
OF CLASS ACTION SETTLEMENT AND
JUDGMENT
-AND(2) PLAINTIFF’S MOTION FOR AWARD OF
ATTORNEYS’ FEES AND EXPENSES
On July 21, 2014, this Court entered its Order preliminarily approving the class action
21
settlement set forth in the Settlement Agreement reached between Plaintiff Yvette Balderas
22
(“Balderas”) and Defendant Massage Envy Franchising, LLC (“MEF”) (the “Agreement”) finding
23
that the settlement appeared fair, adequate, and reasonable, free of collusion or indicia of
24
unfairness, and within the range of possible judicial approval thereby warranting notice to the class.
25
(Dkt. 61.) The Court also conditionally certified the proposed settlement class (the “Settlement
26
Class”) pursuant to Rule 23(e) of the Federal Rules of Civil Procedure.
27
28
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
Case3:12-cv-06327-NC Document78 Filed03/10/15 Page2 of 7
1
Currently pending before the Court is the Joint Motion for Final Approval of the Class
2
Action Settlement and Entry of Final Judgment and Order of Dismissal (Dkt. 71) filed by Plaintiff
3
and Class Representative Balderas and Defendant MEF. Also pending is Plaintiff’s Motion for
4
Award of Attorneys’ Fees and Expenses. (Dkt. 69.) Due and adequate notice having been given of
5
the class action settlement, the Agreement, and of this hearing as required in the Preliminary
6
Approval Order (Dkt. 61) and the Court having considered all papers, including all objections filed,
7
having heard oral argument on March 3, 2015, and otherwise being fully informed and good cause
8
appearing:
9
10
IT IS HEREBY ORDERED THAT:
1.
This Final Order incorporates the Agreement, as submitted to the Court with
11
Plaintiff’s Motion for Preliminary Approval of Class Action Settlement, Approval of Class Notice,
12
and Class Certification, filed January 13, 2014 (Dkt 40).
13
14
15
2.
All of the definitions contained in the Agreement shall apply to this Order and are
incorporated by reference as if fully set forth herein.
3.
This Court has jurisdiction over the subject matter of this litigation and over all
16
members of the Settlement Class and over those persons and entities undertaking affirmative
17
obligations under the Agreement.
18
4.
Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Court hereby
19
certifies for settlement purposes only the Settlement Class which it previously conditionally
20
certified in its July 21, 2014, Order (Dkt. 61), which includes:
All Massage Therapists at one or more California Massage Envy
franchises between October 15, 2008, and July 21, 2014.
21
22
23
24
25
26
27
28
Excluded from the Settlement Class are those individuals identified on Exhibit 1 hereto who
properly excluded themselves from the Settlement by submitting a timely request for exclusion in
accordance with the requirements set forth in the Agreement.
5.
The Court finds on the record before it that the Settlement Class satisfies the
requirements for class certification under Federal Rules of Civil Procedure 23(a) and 23(b)(3), for
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
-2-
Case3:12-cv-06327-NC Document78 Filed03/10/15 Page3 of 7
1
settlement purposes only, because (a) the Settlement Class Members are so numerous that joinder
2
of all members is impracticable; (b) there are questions of law and fact common to the Settlement
3
Class Members; (c) Balderas’ claims are typical of the claims of the Settlement Class Members; (d)
4
Balderas and Class Counsel have adequately represented and will continue to adequately represent
5
and protect the interests of the Settlement Class for purposes of the Settlement; and (e) class-wide
6
treatment of the disputes raised in this action is superior to other available methods for adjudicating
7
the controversy before this Court at this time. Manageability issues do not prevent certification
8
here because there will be no trial.
9
6.
The Court hereby finds that the Class Notice fairly and adequately described the
10
litigation, the proposed Settlement, and the manner in which Settlement Class Members could
11
object to or exclude themselves from the Settlement, was the best notice practicable under the
12
circumstances, and complied fully with Federal Rule of Civil Procedure Rule 23, due process, and
13
all other applicable laws.
14
7.
The Court hereby finds 585 Settlement Class Members submitted valid and timely
15
claim forms; there were only two written objections, which were withdrawn prior to preliminary
16
approval; and only one request for exclusion from the Settlement. The small number of opt-outs
17
and the withdrawn objections indicate that the vast majority of the Settlement Class Members
18
found the Settlement and the Agreement to be fair and reasonable.
19
8.
The Court further finds that a full and fair opportunity has been afforded to the
20
Settlement Class Members to opt out of and to object to the Settlement and Agreement, and to
21
participate in the hearing convened to determine whether the Settlement and the Agreement should
22
be given final approval. Accordingly, the Court hereby determines that all members of the
23
Settlement Class are bound by this Final Order.
24
9.
The Court hereby finds that the Settlement set forth in the Agreement is in all
25
respects fair, reasonable, and adequate and in the best interests of the Settlement Class.
26
Accordingly, the Court hereby finally and unconditionally approves the Settlement set forth in the
27
Agreement.
28
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
-3-
Case3:12-cv-06327-NC Document78 Filed03/10/15 Page4 of 7
1
10.
Except for any individual claim of those persons identified in Exhibit 1 hereto who
2
duly requested exclusion from the Settlement Class, Balderas and each and all Settlement Class
3
Members and their respective executors, administrators, and successors hereby fully release and
4
forever discharge MEF, Massage Envy, LLC, Massage Envy Acquisitions Holdings, LLC, a
5
Delaware limited liability company (“Holdings”), Golub Capital Partners Coinvestment Ltd., a
6
Delaware corporation, Sentinel Capital Partners IV-A, L.P., a Delaware limited partnership, and
7
each of their respective current and former parents, subsidiaries, divisions, and affiliated
8
individuals and entities, legal successors, predecessors (including companies they have acquired,
9
purchased, or absorbed), assigns, joint ventures, and each and all of their respective officers,
10
partners, directors, servants, agents, shareholders, members, managers, principals, investment
11
advisors, consultants, employees, representatives, attorneys, accountants, lenders, underwriters, and
12
insurers, past, present, and future, and all persons acting under, by, through, or in concert with any
13
of them (the “Released Parties”), from any and all injuries, demands, losses, damages, costs, loss of
14
service, expenses, compensations, claims, suits, causes of action, attorneys’ fees, obligations, or
15
liabilities of any nature, type, or description, related in any way to the Settled Claims (as that term
16
is defined in the Agreement).
17
11.
Balderas and each and all of the Settlement Class Members hereby expressly waive
18
and relinquish, to the fullest extent permitted by law, the provisions, rights, and benefits of Section
19
1542 of the California Civil Code and any and all provisions, rights, and benefits of any similar
20
statute or law of California or of any other jurisdiction as to all known or unknown claims as
21
against the Released Parties with respect to the Settled Claims (as that term is defined in the
22
Agreement).
23
12.
Balderas and each of the Settlement Class Members do not waive any claims that
24
they may have against any Massage Envy franchise located in the state of California, however,
25
including Envee Estep Enterprise, Inc., which had been a Defendant in this action and has been
26
27
28
dismissed without prejudice.
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
-4-
Case3:12-cv-06327-NC Document78 Filed03/10/15 Page5 of 7
1
13.
The Released Parties may file this Final Order in any other action that may be
2
brought against them in order to support a defense or counterclaim based on principles of res
3
judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction, or any other
4
theory of claim preclusion or issue preclusion or similar defense or counterclaim.
5
14.
In its September 5, 2014, Order (Dkt. 65), the Court appointed and designated Dahl
6
Administration to act as the Settlement Administrator. Dahl Administration shall continue to act as
7
the Settlement Administrator to perform those duties and responsibilities that remain under the
8
Agreement and this Final Order.
9
15.
In light of the significant results obtained for Settlement Class Members, the
10
positive reaction of Settlement Class Members, the contingent basis of the representation, and
11
Class Counsel’s lodestar, the Court hereby awards Class Counsel the sum of $175,000 in attorneys’
12
fees and in reimbursement of expenses, which sum the Court finds to be fair and reasonable and
13
fairly compensates them for their contributions to the prosecution of this action and the Settlement.
14
The payment of attorneys’ fees and costs shall be pursuant to the terms of the Agreement.
15
16.
Balderas is hereby awarded an Enhancement Award in the amount of Four
16
Thousand Dollars ($4,000.00), which the Court finds to be fair and reasonable and in recognition
17
of her efforts in prosecuting the action and the Settlement. Payment of the Enhancement Award
18
shall be pursuant to the terms of the Agreement.
19
20
21
17.
MEF, Balderas, and each and all of the Settlement Class Members are to bear their
respective attorneys’ fees and costs, except as awarded by this Court in this Final Order.
18.
Within twenty-one (21) days after the Effective Date of the Settlement, as defined
22
and in accordance with the Agreement, the Settlement Administrator shall mail a check to each
23
Settlement Class Member representing the Settlement Class Member’s pro rata share of the Net
24
Class Benefit, i.e., a Settlement Benefit, to each Settlement Class Member who timely submitted a
25
Qualified Claim.
26
19.
27
Order, MEF shall:
28
In accordance with the Agreement, within sixty (60) days of receipt of this Final
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
-5-
Case3:12-cv-06327-NC Document78 Filed03/10/15 Page6 of 7
1
a.
Continue with its policy that massage therapists employed by any Massage
2
Envy California Franchise are not required to carry professional liability insurance, which was
3
implemented in January 2013 after this action was filed.
4
b.
Continue to ensure that any materials distributed to any Massage Envy
5
California Franchise in no way state or imply that MEF seeks to dictate or does dictate the
6
insurance requirements of any employee at any of the clinics or spas operated by any Massage
7
Envy California Franchise.
8
9
10
c.
Continue to ensure that any sample job descriptions for massage therapists
that MEF may provide to any Massage Envy California Franchise do not require that massage
therapists pay for their own professional liability insurance.
11
d.
Continue to inform and emphasize to the Massage Envy California
12
Franchises that MEF expects the franchises to be familiar with and comply with federal and state
13
employment laws.
14
15
16
e.
Continue to provide a copy of Labor Code § 2802 to all Massage Envy
California Franchises and inform them that they need to be familiar with its requirements.
20.
In the event that the Settlement does not become effective in accordance with the
17
terms of the Agreement, then this Final Order shall be rendered null and void and be vacated, the
18
Agreement and all orders entered in connection therewith shall be rendered null and void ab initio,
19
and this action shall be reinstated as it existed prior to the execution of the Agreement. In that
20
case, all communications, documents, filings, negotiations, and other actions taken to negotiate and
21
pursue settlement through the Agreement including the Agreement itself shall be considered
22
confidential settlement communications that cannot be used as evidence for any purposes
23
whatsoever in the action or any proceedings between the Parties or in any other action related to
24
the Settled Claims or otherwise involving the Parties or any Released Party.
25
21.
Nothing in this Final Order or the Agreement shall be construed as an admission or
26
concession by any party. The Agreement and this resulting Final Order simply represent a
27
compromise of disputed allegations.
28
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
-6-
Case3:12-cv-06327-NC Document78 Filed03/10/15 Page7 of 7
1
2
3
22.
All parties to the Agreement and the Settlement Administrator are directed to carry
out their obligations under the Agreement and this Final Order.
23.
Without impacting the finality of this Final Order, the Court hereby retains
4
continuing jurisdiction to assure compliance with all terms of the Settlement in accordance with the
5
Agreement and this Final Order.
6
24.
Class Counsel shall serve a copy of this Final Order on MEF and the Settlement
7
Administrator within three (3) days of receipt and the Settlement Administrator shall post a copy of
8
this Final Order on the Settlement Website within three (3) days of receipt of this Final Order.
IT IS SO ORDERED
ER
H
16
17
Cousins
R NIA
.
thanael M
Judge Na
FO
RT
15
AS M
NO
14
HON. NATHANAEL M. COUSINS
ED
Magistrate Judge SO ORDER
IS Northern
ITCourt,
ED of California
U.S. District
ODIFIDistrict
LI
13
UNIT
ED
12
DATED:March
____ __,
10 2015
RT
U
O
11
S
10
ISTRIC
ES D
TC
T
A
T
A
9
N
F
D IS T IC T O
R
C
18
19
20
21
22
23
24
25
26
27
28
[PROPOSED] ORDER ON JOINT MOT. FOR FINAL APPROVAL OF CLASS
ACTION SETTLEMENT
CASE NO. 3-12-cv-06327-NC
-7-
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page1 of 14
EXHIBIT 1
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page2 of 14
.,
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 1of13
1
·ts .JAN -6
2
AM Lf: 42
3
4
..,
5
6
7
8
UNITED STATES DISTRICT COURT
9
SOUTHERN DISTRICT OF CALIFORNIA
10
11
TERRANCE ALLAN VANN, an
Individual, On Behalf of Himself and
All Others Similarly Situated,
12
13
14
15
Plaintiff,
vs.
ORDER GRANTING MOTION
FOR SUMMARY JUDGMENT
[Docket No. 41]
MASSAGE ENVY FRANCHISING
LLC, an Arizona Limited Liability
Corporation, et al.,
Defendants.
16
17
CASE NO. 13-CV-2221-BEN (WVG)
Before this Court is a Motion for Summary Judgment, filed by Defendant
18 Massage Envy Franchising, LLC ("MEF"). (Docket No. 41 ). Plaintiff Terrance Allan
19 Vann filed a Response in Opposition. (Docket No. 60). Having carefully considered
20 the Parties arguments, the Court finds and concludes as follows.
BACKGROUND
21
22 I. Procedural Background
23
Mr. Vann, a massage therapist who worked at various Massage Envy spa
24 locations, filed this class-action complaint against Defendants MEF, Charis Group,
25 LLC, and OC Wellness Group, Inc., 1 alleging violations ofCalifornia's minimum-wage
26 laws. (Docket No. 1, Ex. B). Defendant MEF is the franchisor, and Defendants Charis
27 Group, LLC and OC Wellness Group, Inc. are franchisees.
28
1Incorrectly
sued as "OC Envy Group, Inc."
- 1-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page3 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 2 of 13
1
On September 16, 2013, the action was removed to this Court. (Docket No. 1).
2 On March 3, 2014, the Parties agreed to dismiss all claims against OC Wellness Group,
3 Inc. (Docket Nos. 23, 24). The action against Defendant Charis Group, LLC was
4 stayed in light of its recent filing for bankruptcy. (Docket No. 69).
5 II. Factual Background
6
The following factual background is drawn from the evidence submitted by the
7 Parties, from which the Court finds there are no genuine issues of material fact in
8 dispute.
9
A. Massage Enyy Franchising
10
MEF is a "business format franchisor" 2 headquartered in Scottsdale, Arizona.
11
(Mot. 3). MEF grants licenses to independently owned and operated entities to use the
12 Massage Envy name, trademark, and standardized business operations in exchange for
13 paying a franchise fee. (Id.) Each ofMEF's more than 900 locations nationwide offers
14 customers a uniform experience of convenient, affordable, and quality massages.
15 (Opp'n 3). MEF operates a website which provides service information and lists job
16 opportunities at its various franchised locations. (Id)
17
On November 14, 2006, Defendants MEF and Charis Group entered into a
18 Franchise Agreement. (Mot., Deel. of Melanie Hansen ("Hansen Deel."), Ex. 1). MEF
19 provided franchisee Charis Group with an Operations Manual that "contain[ed]
20 mandatory and suggested specifications, standards, operating procedures and rules that
21
[MEF] periodically prescribe[s] for operating a [franchise]." (Id. at 14). Pursuant to
22 the Franchise Agreement, any personnel policies or procedures made available in the
23
Operations Manual were "for [the franchisee's] optional use and are not mandatory."
24
2
25
26
27
28
A business format franchisor applies the following model:
[T]he franchisee pays roY.alties and fees for the right to sell products or
services under the francliisor's name and trademarK. In the process, the
franchisee also acquires a business P.lan, which the franchisor has crafted
for all of its stores. This business plan requires the franchisee to follow
a system of standards and procedures.
Patterson v. Domino's Pizza, LLC, 60 Cal. 4th 474, 489 (2014) (citations omitted).
-2-
l3cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page4 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 3 of 13
1 (Id)
2
The 2014 version of the Operations Manual was the first version of the Manual
3 that included any information about a pay policy. (Opp'n, Deel. of Jeff Geraci ("Geraci
4 Deel."), Ex. F at 5).
The 2014 Operations Manual provided, "Franchisees are
5 responsible for hiring, managing and compensating their employees within the law and
6 are encouraged to consult their own legal counsel to ensure their compliance with all
7 applicable laws." (Geraci Deel., Ex. J at 2). The Operations Manual notes that
8 California has more stringent rules regarding piece-rate payments. (Id. at 8). It urges
9 franchisees who intend to implement a piece-rate pay policy to consult with legal
10 counsel. (Id. at 8-9).
11
The Franchise Agreement states that it is the franchisee's responsibility to
12 determine whether any suggested personnel policies are applicable in the franchisee's
13 jurisdiction. (Hansen Deel., Ex. 1 at 14). It goes on, "You [Charis Group] and we
14 [MEF] recognize that we neither dictate nor control labor and employment matters for
15 you and your employees." (Id.) The Franchise Agreement also explicitly defined the
16 relationship between Charis Group and MEF. It stated that Charis Group was an
17 independent contractor, and had "no authority, express or implied, to act as agent of
18 [MEF]." (Id. at 41 ). By way ofthe Agreement, the Defendants agreed that they did not
19 intend to be "partners, associates, or joint employers in any way." (Id.) The Franchise
20 Agreement further stated, "[MEF has] no relationship with [Charis Group] employees
21
22
.. . ." (Id.)
Defendant MEF required Charis Group, and all other franchise owners to use a
23 particular computer system. The Franchise Disclosure Document states, "You must
24 obtain the Computer System, software licenses, maintenance and support services, and
25 other services related to the Computer System from the suppliers we specify. ..."
26 (Hansen Deel., Ex. 8). The Franchise Disclosure Document also specified that the
27 required software was the "Millennium Software." (Hansen Deel., Bxs. 8-13). Its
28 purpose was to "generate and/or store member, accounting, and point of sale
- 3-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page5 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 4 of 13
I
2
information." (Hansen Deel., Ex. 8).
MEF enlists regional developers to recruit potential franchisees and assist in
3 opening new franchises. (Geraci Deel., Ex.Eat 3). Regional developers receive a
4 portion of the franchise fee and a portion of the royalties for their services.
5
In addition to the computer system, MEF requires franchise owners to conform
6
to other MEF standards. MEF requires that franchise owners perform mandatory
7 background checks of potential massage therapists using Universal Background
8 Screening. (Geraci Deel., Ex. G at 4). They were not required to perform background
9 checks on sales associates, although it was recommended. (Jd. at 5). Also, MEF
10 implements standard business hours for all franchise locations. MEF allows the
II
regional director to choose a color scheme for employee attire. MEF also has a sample
I2
script for massage therapists to use when interacting with clients and guests. MEF only
13
allows certain types of massage, and prohibits the use of scented oils.
14
B, Mr. Vann's Employment
15
Mr. Vann worked as a massage therapist at a Massage Envy franchise in Brea,
16 California ("Spa Brea"), which was owned by OC Wellness Group. (Mot. IO). Mr.
17 Vann only worked at Spa Brea for a few days in January 2011. He applied directly to
18 the clinic administrator of Spa Brea via an advertisement on Craigslist. (Def.' s Reply,
19 Supplemental Deel. ofHope Anne Case, Ex. 14). Mr. Vann was interviewed and hired
20 by someone named Megan, an employee at Spa Brea. (Deel. of Hope Anne Case
21
("Case Deel."), Ex. 3). During the interview, Mr. Vann was told he would be paid
22 "hourly plus commission." (Id.) Mr. Vann's one and only paycheck from Spa Brea
23
was written by OC Wellness Group and paid an hourly rate (for the hours he was
24 clocked in), plus commission (for the hours he performed massages) and tips. Mr.
25
Vann agreed that he was paid appropriately for his time at Spa Brea.
26
In May 2011, Mr. Vann went to work for the Massage Envy franchise in Chula
27
Vista, California ("Spa Chula Vista"), which was owned by Charis Group. Mr. Vann
28
agreed that his pre-employment contact regarding a massage therapist position at Spa
-4-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page6 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 5 of 13
1 Chula Vista was with Cynthia ~ovar, its clinic administrator. (Case Deel., Ex. 3 at 62).
2 Ms. Tovar interviewed Vann, and extended him a verbal offer of employment. Mr.
3 Vann was informed he would be paid "hourly versus commission," which meant that
4 Mr. Vann would be paid either minimum wage for all the hours clocked in during a pay
5 period, or $15 per hour for each hour he performed massages during the pay period,
6 whicheverwasgreater. (Id. at63-64). Ms. Tovar also communicated Mr. Vann'swork
7 schedule to him; and, either she or her assistant would review his requests for days off.
8 (/d. at 71-72). All of Mr. Vann' s performance reviews and disciplinary records are
9 signed by either Ms. Tovar, or her assistant. (Case Deel., Ex. 10-13). All of the
10 paychecks Mr. Vann received for his work at Spa Chula Vista were written by Charis
11
Group. (Case Deel., Ex. 4).
12
Mr. Vann acknowledged that he received an Employee Handbook, which
13
described policies imposed by ADP Total Source3 and the "work site
14 employer"- Charis Group. (Case Deel., Ex. 8). Mr. Vann's responsibilities at Spa
15 Chula Vista were different from those at Spa Brea. Mr. Vann had to dust, vacuum, and
16 do laundry among other things at Spa Chula Vista. (Case Deel., Ex. 3 at 55). Mr. Vann
17 also claims that he was not compensated for meetings he was required to attend while
18 working at Spa Chula Vista.
19
Mr. Vann presented testimonies of five other MEF franchise employees to
20
support his argument that MEF implemented a uniform pay policy. First, Erika
21
Calderon testified that she was paid either hourly or commission, whichever was
22 greater, at a MEF franchise in Wildomar, California ("Spa Wildomar"). (Opp'n, Deel.
23
of Erika Calderon). In October 2013, Spa Wildomar changed its pay policy to "hourly
24 plus commission." (Id.)
25
Second, Monica Estrada testified that she currently works at Spa Wildomar and
26 claims that a new pay policy took effect on July 1, 2014. (Opp'n, Deel. of Monica
27
28
3
Automated Data Processing, Inc., the company hired by Charis Group to
manage employee payment records at Spa Chula Vista.
-5-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page7 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 6 of 13
1 Estrada). Before July 1, 2014, Ms. Estrada was paid $15 for each hour she performed
2
massages, or $8 per hour that she was clocked in during the pay period, whichever was
3 greater. (Id.) Since July 1, Ms. Estrada was paid $9 per hour she was clocked in, plus
4 an additional $6 per hour for those hours she performed massages. (Id.)
5
Third, Toby O'Dell testified that he worked at a franchise location in Escondido,
6 California ("Spa Escondido") until November 1, 2013. (Opp'n, Deel. ofToby O ' Dell).
7 Mr. O'Dell was paid "hourly versus commission." (Id.)
8
Fourth, Garrett Love testified that he used to work at a MEF franchise in
9 Escondido, California, but currently works at a franchise in Corona, California ("Spa
10 Corona"). (Opp'n, Deel. of Garrett Love). Spa Corona paid Mr. Love "hourly versus
11
commission" until January 1, 2014. (Id at 2). As of January l, Love was paid $9 per
12 hour he was clocked-in plus a "service bonus" of $2.75 for the hours he performed
13 massages. (Id.)
14
Finally, Rachel Ogren testified that between 2008 and 2013 she worked for three
15 different MEF franchise locations in northern California. (Opp' n, Deel. of Rachel
16 Ogren). Ms. Ogren was paid "minimum wage versus commission." (Id.) She also
17 testified that "one time,'' after a new payroll employee was hired, Ms. Ogren received
18 a check that paid minimum wage plus commission. (Id. at 2). The following day, Ms.
19 Ogren claimed that the franchise owner demanded the checks back. (Id.)
20
21
STANDARD OF REVIEW
Summary judgment is appropriate when "there is no genuine dispute as to any
22 material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ.
23 P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). In
24 considering a summary judgment motion, the evidence of the nonmovant is to be
25 believed, and all justifiable inferences are to be drawn in his or her favor. Id. at 255.
26
A moving party bears the initial burden of showing there are no genuine issues
27 of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can do so by
28 negating an essential element of the non-moving party's case, or by showing that the
-6-
13ov2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page8 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 7 of 13
1 non-moving party failed to make a showing sufficient to establish an element essential
2 to that party's case, and on which the party will bear the burden of proof at trial. Id.
3 The burden then shifts to the non-moving party to show that there is a genuine issue
4 for trial. Id
5
"Only disputes over facts that might affect the outcome of the suit under the
6 governing law will properly preclude the entry ofsummary judgment. Factual disputes
7 that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248. As
8 a general rule, the "mere existence of a scintilla of evidence" will be insufficient to
9 raise a genuine issue of material fact; there must be evidence on which the jury could
10 reasonably find for the non-moving party. Id. at 252.
11
A moving party is only entitled to summary judgment where it has shown that
12 there are no genuine issues of material fact, even ifthe nonmoving party does not offer
13 materials in support ofits opposition. Henryv. Gill Indus. Inc., 983 F.2d 943, 950 (9th
14 Cir. 1993). Summary judgment is inappropriate where the movant's papers are
15 insufficient to support that motion or on their face reveal a genuine issue of material
16 fact. See id.
17
DISCUSSION
18 I. Mr. Vann's Rule 56(d) Request
19
Mr. Vann requests the Court, in the event it does not deny MEF's Motion for
20 Summary Judgement, to permit further discovery.
21
"If a nonmovant shows by affidavit or declaration that, for specified reasons, it
22 cannot present facts essential to justify its opposition, the court may: (1) defer
23 considering the motion or deny it; (2) allow time to obtain affidavits or declarations or
24 to take discovery; or (3) issue any other appropriate order." Fed. R. Civ. P. 56(d). In
25 making a Rule 56(d) motion, a party opposing summary judgment must make clear
26 what information is sought and how it would preclude summary judgment." Burnett
27 v. Frayne, No. C 09-04693, 2011 WL 5830339, at *1 (N.D. Cal. Nov. 18, 2011)
28 (quoting Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir. 1998)). In a ruling on a Rule
-7-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page9 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 8 of 13
1 56(d) motion, a district court considers: "whether the movant had sufficient opportunity
2 to conduct discovery; whether the movant was diligent; whether the information sought
3 is based on mere speculation; and whether allowing additional discovery would
4 preclude summary judgment." Martinez v. Columbia Sportswear USA Corp., 553 F.
5 App'x 760, 761 (9th Cir. 2014) (citations omitted).
6
Mr. Vann failed to meet his burden of showing that additional discovery would
7 reveal specific facts precluding summary judgment. He claimed that through limited
8 discovery, he learned "of additional information that is likely to controvert the
9 positions taken by Massage Envy." (Opp'n 19). However, Mr. Vann did not allege
10 what the "additional information" was, or what specific facts he believes further
11
12
discovery will uncover.
Mr. Vann argued that because he was only permitted five requests for
13 admissions, nine document requests, five interrogatories, and a deposition notice as to
14 MEF, he should be permitted further discovery. Specifically, Mr. Vann requests
15 additional discovery of Andrea Rivera, Massage Envy Director of Training; the four
16 owners ofCharis Group; the current owner of Charis Group; Dennis Conklin, Regional
17 Developer for San Diego; and depositions of two current or former franchise owners.
18 But, in addition to discovery ofMEF, Mr. Vann was also permitted discovery of Charis
19 Group. (See Order Regarding Discovery, Docket No. 28). Further, the number of
20 requests of Charis Group was not limited like that of MEF. It is evident then, that Mr.
21
22
Vann had the opportunity to gain the information he now seeks.
The Court therefore DENIES Mr. Vann's Motion for Further Discovery.
23 II. MEF's Motion for Summary Judgment
24
A. Evidentiary Objections
25
Mr. Vann objects to portions of Melanie Hansen's and Jordan Levine's
26 Declarations. Defendant objects to portions of JeffGeraci's, Terrance Allan Vann's,
27 Erika Calderon's, Monica Estrada's, Toby O'Dell's, Garrett Love's, and Rachel
28 Ogren's Declarations, and to characterizations in Vann's Opposition.
-8-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page10 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 9 of 13
1
In connection with a motion for summary judgment, courts focus on the
2 admissibility of the evidence's content rather than its form. Fraser v. Goodale, 342
3 F.3d 1032, 1036 (9th Cir. 2003). Where material cited to support or dispute a fact
4 cannot be presented in a form that would be admissible in evidence, a party is permitted
5 to object. Fed. R. Civ. P. 56(c)(2). Affidavits or declarations used to support or oppose
6
a motion must be made on personal knowledge, set out facts that would be admissible
7 in evidence, and show that the affiant or declarant is competent to testify on the matters
8 stated. Fed. R. Civ. P. 56(c)(4).
9
Here, the Parties demand of each other that they go beyond what is required for
10 a declaration or an attachment thereto. The declarants have personal knowledge ofthe
11 items or topics they seek to testify to due to their various professional capacities. Thus,
12 the Court OVERRULES both Plaintifrs and Defendant's Objections.
13
B. Burden of Proof
14
Providing no authority in support, Plaintiffargues that Defendant has not met its
15 burden because it did not present evidence covering the entire class period. The Court
16 disagrees. Evidence that spans the duration that Mr. Vann worked for MEF franchisees
17 is sufficient to support MEF's Motion. See Lierboe v. State Farm Mut. Auto Ins. Co. ,
18 350 F.3d 1018, 1022-23 (9th Cir. 2003).
19
C. MEF's Relationship to Mr. Vann
20
Defendant MEF filed the instant Motion arguing that, as franchisor, MEF is not
21
an employer of Mr. Vann and cannot be liable for any wage and hour violations made
22 by a franchisee. (Mot. 1-2).
23
24
1. Legal Standard
Under California Labor Code section 1194, an employee who received less than
25 the legal minimum wage is entitled to recover the unpaid balance. Only an employer
26
has a duty to pay wages. Martinez v. Combs, 49 Cal. 4th 35, 49 (2010). In section
27
1194 actions, California Industrial Welfare Commission Wage Orders define the
28 employment relationship. Id. at 52, 66.
- 9-
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page11 of 14
Case 3: 13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 10 of 13
"Employer" is defined as "any person ... who directly or indirectly, or through
1
2 an agent or any other person, employs or exercises control over the wages, hours, or
3 working conditions of any person." Cal. Code Regs. tit. 8, § l 1020(2)(F). A "person"
4 is any "person, association, organization, partnership, business trust, limited liability
5 company, or corporation." Cal. Lab. Code § 18. The California Supreme Court
6 interpreted the Wage Order4 to define "employer" in three ways-as one who exercises
7 the ability "(a) to exercise control over the wages, hours or working conditions, or (b)
8 to suffer or permit to work, or (c) to engage, thereby creating a common law
9 employment relationship." Ford v. Yasuda, No. 13-1961, 2014 U .S. Dist. LEXIS
10
109540, at *12-13 (C.D. Cal. July 30, 2014) (quoting Martinez, 49 Cal. 4th at 64).
11
California courts analyze the employment relationship between franchisors,
12 franchisees, and employees under an agency theory. See Kuchta v. Allied Builders
13 Corp., 21 Cal. App. 3d 541, 547 (4th Dist. 1971) ("In the field of franchise agreements,
14 the question of whether the franchisee is an independent contractor or an agent is
15 ordinarily one of fact, depending on whether the franchisor exercises complete or
16 substantial control over the franchisee.").
It is apparent that franchisors set
17 "comprehensive and meticulous standards" to ensure uniformity among their
18 franchises. Patterson v. Domino's Pizza, LLC, 60 Cal. 4th 474, 478 (2014). As the
19 business of franchising grows, the application of those theories must adapt. Id. "A
20 franchisor will be liable [as an employer] if it has retained or assumed the right of
21
general control over the relevant day-to-day operations at its franchised locations .. . ."
22 Id. at 503 (emphasis added).
23 Ill
24 Ill
25
26
4
The court specifically interpreted Wage Order No. 14 Cal. Code Regs. tit. 8,
Wage Order No. 2_, Cal. Co<fe Reg~i tit. 8 1'i020(2)(F), is a1mfic~ble
27 m the mstant case. Because botn W~ge Order 1'\10. Jq1 and No. 2 use 1aent1cal
definitions of"emploY,.er.,:' applying the Martinez court's interpretation is apQroP.riate
28 to determine whether ivmF ts an employer. See Ford v. Yasuda, No. 13-1961, 2014
U.S. Dist. LEXIS 109540, at *13 (CTI. Cal. July 30, 2014).
Jl l 40(7)(C)(F).
- 10 -
I3cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page12 of 14
Case 3:13-cv-02221-B EN-WVG Document 71 Filed 01/06/15 Page 11of13
1
2
2. Analysis
Plaintiff argues that disputes of material fact exist regarding MEF 's status as an
3 employer. Plaintiff claims that multiple Massage Envy franchises use the same or
4 similar payment policy, which supports his argument that MEF implemented the policy
5 and MEF controlled Mr. Vann's wages, hours, and working conditions.
6
In the most recent decision on the topic, the California Supreme Court held that
7 Domino's Pizza franchisor was not liable to an employee for the sexual harassment she
8 endured by a supervisor at the franchised location. Patterson, 60 Cal. 4th at 503.
9 Although Patterson dealt with a franchisor's liability for torts committed by the
10 franchisee's employees, the court's analysis is helpful here. The record revealed that
11 Domino's implemented a number of policies concerning appropriate attire and pizza12 making, and even employed regional directors to check in on the franchises to ensure
13 they were following Domino's policies. Id. at 502-03. In spite of this, the court
14 concluded Domino's could not be liable for the supervisor's sexual harassment of
15 another employee because it was not within Domino's authority to hire, fire, or train
16 the supervisor-or any of the franchisee's employees for that matter. Id.
17
Mr. Vann presented undisputed testimonies of payment practices at MEF
18 franchises throughout California. The same evidence that supports Mr. Vann's
19 argument that a uniform pay policy exists, however, also negates it. Ms. Calderon, Ms.
20 Estrada, Mr. O'Dell, Mr. Love, and Ms. Ogren all testified that they were either a
21
current or past employee of an MEF franchise, and were paid "hourly versus
22 commission." Spa Wildomar changed its pay policy in October 2013 and July 2014.
23 Spa Corona changed it policy on January 1, 2014. There is no evidence that Spa
24 Escondido or the northern California locations changed their pay policy at all. In
25 addition, the two locations that did change their policies, did so at different times, and
26 the new policy at Spa Wildomar was different from the new policy at Spa Corona. One
27 paid $9 per hour that the employee was clocked in and $15 per hour for those hours the
28 employee performed massages. The other paid $9 per hour that the employee was
- 11 -
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page13 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 12 of 13
1 clocked in, plus a service bonus of $2.75 per hour the employee performed massages.
2 The lack of uniformity among these locations suggest that MEF did not control
3 employee wages and hours but, rather, left the responsibility to the franchise owners.
4
Plaintiffargues MEF exercised control over the hiring and firing decisions at the
5 franchise locations because MEF distributed the Operations Manual to franchise
6 owners, a script governing conversations between employees and clients, and because
7 MEF requires all massage therapists pass a background check. Based on the language
8 of the Franchise Agreement between MEF and Charis Group, it appears that Charis
9 Group possessed the exclusive right to control the hiring and firing decisions at Spa
10 Chula Vista. In fact, Mr. Vann's deposition supports that conclusion. Mr. Vann
11
testified that he never had any interactions with MEF, nor did any ofthe other franchise
12 employees testify that they had any interactions with MEF. Mr. Vann further testified
13 that it was the clinic administrator of Spa Chula Vista who hired and fired him, that
I 4 Charis Group signed his pay checks, and that his daily work schedule and assignments
I 5 were handed down from the clinic administrator or her assistant. No evidence indicates
16 that MEF exercised any involvement with the terms of Mr. Vann's employment.
17
Further, Mr. Vann argues that MEF's use of regional directors and its
18 implementation of other workplace policies show that MEF exercised control of daily
19 operations. The Court is not so persuaded. First, Mr. Vann presented no evidence that
20 a regional director ever visited Spa Chula Vista while he was working, or that a
21
regional director gave him instruction directly, or even that a regional director
22 instructed the clinic administrator to do something. Assuming arguendo that a regional
23 director did actively visit Spa Chula Vista, such activity does not rise to the level of
24 exercising control over day-to-day operations. See Patterson, 60 Cal. 4th at 485
25 (finding no vicarious liability where an area leader and other inspectors visited the
26 franchisee four times per year did not amount to control of daily operations).
27
MEF's policies on attire, the types of massages offered, what types of products
28 could be used during a massage, and the types of conversations that should be had with
- 12 -
13cv2221
Case3:12-cv-06327-NC Document78-1 Filed03/10/15 Page14 of 14
Case 3:13-cv-02221-BEN-WVG Document 71 Filed 01/06/15 Page 13 of 13
1 a client were policies to assist in brand uniformity. MEF is in the business of selling
2 massages. Ensuring that a client can receive the same type of experience in California
3 as she does in Texas is a necessary concern of franchisors. See Patterson, 60 Cal. 4th
4
at 490 ("The [franchisor's] systemwide standards and controls provide a means of
5 protecting the trademarked brand at great distances.").
6
There is also no evidence that MEF controlled the employees' work schedules.
7 On the contrary, the only evidence presented revealed that the work schedules were
8 created, managed, and distributed within the particular franchise location.
9
10
CONCLUSION
Upon analysis ofthe foregoing, Mr. Vann's claims against MEF cannot proceed
11 as a matter of law. MEF was not an employer or joint employer of Mr. Vann, and
12 therefore, cannot be liabile for any wage violations committed by Charis Group.
13
Finding no triable issues of material fact exist, MEF's Motion for Summary Judgment
14 is GRANTED.
15
IT IS SO ORDERED.
16
17 Dated:
January/~15
18
19
20
21
22
23
24
25
26
27
28
- 13 -
13cv2221