Gessele v. Jack in the Box Inc.

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Questions Presented

1. Whether the district court properly granted plaintiffs summary judgment that Jack in the Box willfully overdeducted Workers' Benefit Fund contributions.
2. Whether plaintiffs could present the Late Final Pay 1 penalty-wage theory and whether the district court properly reconsidered an earlier interlocutory ruling.
3. Whether the statutory penalty-wage award required reconsideration under constitutional due-process proportionality limits.
4. Whether class members whose mailed notices were undeliverable had to be excluded and whether prejudgment interest could be reduced for plaintiff-caused delays.
5. Whether plaintiffs' cross-appeal was timely after the district court granted a Rule 50(b) motion and entered an amended judgment.
6. Whether the district court properly refused to certify and entered judgment on unpaid meal-break claims under Oregon law.
7. Whether the cost of required non-slip shoes was deducted for the employees' benefit and whether written authorization was a defense to minimum-wage and overtime shoe claims.
8. Whether the district court improperly overrode the jury's award on the named plaintiffs' shoe claims.

Holdings

1. The district court erred by granting plaintiffs summary judgment that Jack in the Box willfully overdeducted Workers' Benefit Fund contributions. A reasonable jury could find either that Jack in the Box lacked full knowledge of the relevant facts or that its miscalculation was innocent and not careless.
2. The district court did not abuse its discretion by reconsidering the prior interlocutory ruling and allowing plaintiffs to present the Late Final Pay 1 theory.
3. The district court erred in analyzing the constitutional limits on the penalty-wage award. On remand, if willfulness is found and penalty wages are awarded, the court must consider the punitive character of Oregon penalty wages, the statute's compensation, deterrence, and punishment goals, the public-interest and uniform-adherence factors, and the ratio between actual damages and statutory penalties.
4. The district court did not abuse its discretion by declining to exclude class members whose mailed notices were undeliverable.
5. The district court correctly refused to reduce or toll prejudgment interest based on alleged plaintiff-caused litigation delays, but it must recalculate the interest in light of the reversal on willfulness.
6. The Ninth Circuit had jurisdiction over the cross-appeal because the 30-day appeal period ran from the amended judgment entered after the district court granted Jack in the Box's Rule 50(b) motion.
7. The district court properly denied class certification and granted judgment against the named plaintiffs on the unpaid meal-break claims because the named plaintiffs' employment ended before June 2010, when Oregon's regulation did not require payment for shortened meal breaks. Although employers were required to enforce 30-minute meal periods before June 2010, the later pay requirement did not apply retroactively.
8. The district court erred by granting Jack in the Box summary judgment on its affirmative defense that shoe deductions were for the employees' benefit. A reasonable jury could find that the ultimate reason for the shoe requirement was Jack in the Box's receipt of rebates and indemnities rather than employee benefit.
9. Written authorization is not a defense to plaintiffs' minimum-wage and overtime shoe claims under Or. Rev. Stat. § 653.055. The district court therefore erred in treating written authorization as dispositive of those claims and in overriding the jury's shoe-related penalty-wage award on that basis.

Key quotations

Factual background

Jack in the Box deducted 1.8 cents per hour from Oregon employees for the Workers' Benefit Fund even after Oregon reduced the total assessment, causing employees to pay more than half of the assessment until the error was corrected in 2012. The company also treated meal periods shortened to more than 20 minutes as unpaid and required employees to purchase non-slip shoes from a designated vendor, receiving rebates and indemnities connected with those purchases. The named plaintiffs left Jack in the Box before June 2010, and Jack in the Box had no Oregon employees after September 2011.

Procedural history

Plaintiffs sued Jack in the Box under Oregon wage-and-hour law. The district court certified classes concerning Workers' Benefit Fund and shoe deductions, declined to certify an unpaid-break class, granted partial summary judgment on willfulness and the employee-benefit defense, and conducted a jury trial on the remaining issues. After post-trial rulings and an amended judgment, both sides appealed. The Ninth Circuit affirmed in part, reversed in part, and remanded.

Remand instructions

Retry the willfulness issue concerning Workers' Benefit Fund overdeductions; recalculate prejudgment interest in light of the willfulness ruling; reassess any constitutional limits on penalty wages if awarded; reconsider certification of the shoe class; retry the shoe claims, on a class or individual basis, concerning whether the shoes were for the employees' benefit; and resolve remaining issues consistently with the opinion. Each side bears its own costs on appeal.