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Salazar v. McDonald's Corp.

United States Court of Appeals for the Ninth Circuit

October 17, 2018, Argued and Submitted, San Francisco, California; December 11, 2019, Amended

No. 17-15673

Opinion

 [*1027]  AMENDED OPINION

GRABER, Circuit Judge:

In this class action, [**6]  workers employed at McDonald's franchises in California appeal from a summary judgment entered in favor of McDonald's. Plaintiffs allege that they were denied overtime premiums, meal and rest breaks, and other benefits in violation of the California Labor Code. Plaintiffs further allege that McDonald's (the franchisor) and the franchisee are joint employers and that McDonald's is, therefore, liable for these violations. The district court held that McDonald's is not a joint employer of the franchisee's employees and that Plaintiffs' ostensible-agency and negligence claims fail as a matter of law. ] Reviewing the summary judgment de novo, and viewing the facts in the light most favorable to Plaintiffs, Animal Legal Def. Fund v. FDA, 836 F.3d 987, 988-89 (9th Cir. 2016) (en banc) (per curiam), we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

McDonald's U.S.A., LLC 2 contracts with franchisees to license the McDonald's name, trademark, and various business practices. The Haynes Family Limited Partnership ("Haynes") operated eight McDonald's franchises in Oakland and San Leandro, California, during the relevant period. The franchise agreements required Haynes to pay fees to McDonald's. To maintain the franchise, Haynes had to meet certain standards, such as serving [**7]  McDonald's products.

Plaintiffs Guadalupe Salazar, Genoveva Lopez, and Judith Zarate worked at a Haynes-operated McDonald's franchise restaurant in Oakland. They sued McDonald's and Haynes on behalf of a class of approximately 1,400 employees at Haynes-operated McDonald's franchises in the Bay Area. They allege that McDonald's and Haynes denied overtime premiums, meal and rest breaks, and other benefits in violation of California wage-and-hour statutes. Plaintiffs also allege negligence and seek civil penalties under California's Private Attorneys General Act ("PAGA"). Plaintiffs further allege that McDonald's and Haynes are their joint employers. The relevant facts in the record, viewed in Plaintiffs' favor, are these.

Haynes selects, interviews, and hires employees for its franchises. It trains new employees and sets their wages, which are paid from Haynes' bank account. Haynes sets employees' schedules and monitors their time entries. Haynes also supervises, disciplines, and fires employees such as Plaintiffs. There is no evidence that McDonald's performs any of those functions.

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944 F.3d 1024 *; 2019 U.S. App. LEXIS 36683 **

GUADALUPE SALAZAR; GENOVEVA LOPEZ; JUDITH ZARATE, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. MCDONALD'S CORP., a corporation; MCDONALD'S USA, LLC, a limited liability company; MCDONALD'S RESTAURANTS OF CALIFORNIA, INC., a corporation; BOBBY O. HAYNES SR. AND CAROL R. HAYNES FAMILY LIMITED PARTNERSHIP, dba McDonald's, erroneously sued as Bobby O. Haynes and Carole R. Haynes Family Limited Partnership, Defendants-Appellees.

Subsequent History: Rehearing denied by, En banc, Rehearing denied by Salazar v. McDonald's Corp., 944 F.3d 1024, 2019 U.S. App. LEXIS 36682 (9th Cir. Cal., Dec. 11, 2019)

Prior History:  [**1] Appeal from the United States District Court for the Northern District of California. D.C. No. 3:14-cv-02096-RS. Richard Seeborg, District Judge, Presiding.

Salazar v. McDonald's Corp., 939 F.3d 1051, 2019 U.S. App. LEXIS 29500 (9th Cir. Cal., Oct. 1, 2019)Salazar v. McDonald's Corp., 2017 U.S. Dist. LEXIS 34886 (N.D. Cal., Mar. 10, 2017)

Disposition: AFFIRMED.

CORE TERMS

franchise, employees, wage-and-hour, hiring, joint employer, franchisee's, Plaintiffs', violations, wages, entity, common law, wage order, franchisor, working conditions, rest break, overtime, meal, definition of employer, district court, overtime pay, supervision, firing, exercise control, negligence claim, summary judgment, computer system, fail to prevent, quality control, ostensible-agency, day-to-day

Civil Procedure, Appeals, Summary Judgment Review, Standards of Review, Labor & Employment Law, Wage & Hour Laws, Scope & Definitions, Definition of Employers, Governments, Legislation, Interpretation, Business & Corporate Law, Distributorships & Franchises, Franchise Relationships, Employment Relationships, Agency Relationships, Authority to Act, Actual Authority, Apparent Authority, Statutory Remedies & Rights, Business & Corporate Compliance, Labor & Employment Law, Statutory Application, Torts, Negligence, Elements