throbber
Supreme Court Case No. S212704
`
`IN THE SUPREME COURT OF CALIFORNIA
`
`CPS SECURITY SOLUTIONS, INC.
`Defendants/Cross-Complainants/Appellants/Petitioners
`
`VS.
`
`TIM MENDIOLA, ET AL.
`P1aintiffs/Cross-Defendants/Respondents/Petitioners
`
`After a Decision of the Court of Appeal
`Second Appellate District, Division Four
`Consolidated on Appeal with Case No.: B240519
`Los Angeles County Superior Court Case Nos. BC3 88956, B@.$Hl6EME COURT
`JCCP 4605
`F I L E D
`Honorable Jane L. Johnson, Judge
`
`DEC - 3 2013
`
`BRIEF ON THE MERITS OF PETITIONER,Srar_k A McGuire Clerk
`
`CPS SECURITY SOLUTIONS, INC., eta
`
`Howard M. Knee, SBN 55048
`BLANK ROME LLP
`
`2029 Century Park East, 6th Floor
`Los Angeles, CA 90067
`Phone: (424) 239-3400
`Fax: (424) 239-3434
`knee@blankrome.com
`
`Jim D. Newman, SBN 133232
`CPS SECURITY SOLUTIONS, INC.
`
`436 W. Walnut Street
`Gardena, California 90248
`Phone: (310) 878-8165
`Fax: (310) 868-2835
`jnewman@cpssecurity.com
`
`Attorneys for Petitioners
`CPS SECURITY SOLUTIONS, INC., ETAL.
`
`

`
`Supreme Court Case No. S212704
`
`IN THE SUPREME COURT OF CALIFORNIA
`
`CPS SECURITY SOLUTIONS, INC.
`Defendants/Cross-Comp1ainants/Appellants/Petitioners
`
`VS.
`
`TIM MENDIOLA, ET AL.
`Plaintiffs/Cross-Defendants/Respondents/Petitioners
`
`After a Decision of the Court of Appeal
`Second Appellate District, Division Four
`Consolidated on Appeal with Case No.: B240519
`Los Angeles County Superior Court Case Nos. BC3 88956, BC39l669,
`JCCP 4605
`
`Honorable Jane L. Johnson, Judge
`
`BRIEF ON THE MERITS OF PETITIONERS
`
`CPS SECURITY SOLUTIONS, INC., et al.
`
`Howard M. Knee, SBN 55048
`BLANK ROME LLP
`
`2029 Century Park East, 6th Floor
`Los Angeles, CA 90067
`Phone: (424) 239-3400
`Fax: (424)239-3434
`knee@blankrome.com
`
`Jim D. Newman, SBN 133232
`CPS SECURITY SOLUTIONS, INC.
`
`436 W. Walnut Street
`Gardena, California 90248
`Phone: (310) 878-8165
`Fax: (310) 868-2835
`1'newman@cpssecurity.com
`
`Attorneys for Petitioners
`CPS SECURITY SOLUTIONS, INC., ET AL.
`
`

`
`CERTIFICATION OF INTERESTED ENTITIES OR PERSONS
`
`S212704 — MENDIOLA v. CPS SECURITY SOLUTIONS
`
`E Full Name of Interested
`'Entit /Person
`
`Party/Norm
`Par
`
`Nature of Interest
`
`-1
`I
`
`Petitioner/Defendant
`CPS Security Solutions, Inc.
`CPS Construction Security Plus, ‘ Petitioner/Defendant
`
`Inc.
`
`_
`
`Inc.
`
`Christopher L. Coffey
`
`Non-Party
`
`Sole Shareholder of
`
`Petitioner/Defendants
`
`Submitted by:
`
`Jim Douglas Newman
`
`

`
`TABLE OF CONTENTS
`
`Page
`
`QUESTIONS PRESENTED ......................................................................... ..1
`
`INTRODUCTION ......................................................................................... .. 1
`
`STATEMENT OF FACTS ............................................................................ ..3
`
`PROCEDURAL HISTORY OF THE CASE ................................................ ..8
`
`STANDARD OF REVIEW ......................................................................... .. ll
`
`COURT OF APPEAL OPINION ................................................................ ..1l
`
`ARGUMENT ............................................................................................... ..14
`
`I.
`
`THE TRAILER GUARDS ARE NOT UNDER THE CONTROL
`
`OF CPS DURING THEIR ON-CALL SLEEP TIME, UNLESS AND
`
`UNTIL THEY REQUEST TO LEAVE THE JOB SITE. ....................... .. 14
`
`A. The Trailer Guards Are Voluntarily in their Residence on the
`
`Jobsite Until they Request to Leave ...................................................... ..14
`
`B. The Trailer Guards Are Not Under the Control of CPS Based
`
`on the Federal Factors Set Forth in the Gomez/Owens Test. ................ ..2l
`
`C.
`
`In Any Event, The Agreement Between CPS And The Trailer
`
`Guards to Exclude Eight Hours of Sleep Time From Compensable
`
`Hours Worked Is Lawful ............................
`
`......................................... ..25
`
`II.
`
`IT IS NOT REASONABLE TO CONCLUDE THAT THE IWC
`
`INTENDED TO INCORPORATE ONLY ONE PART OF THE
`
`FEDERAL SLEEP TIME REGULATIONS INTO WAGE ORDER
`
`NO. 4, BUT NOT THE COMPANION REGULATION. ....................... ..29
`
`A. Federal Regulations and Case Law Provide Guidance as to
`
`On-Call Time and Sleep Time Under California Law. ......................... ..29
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`i
`
`

`
`B.
`
`In Refusing to Import Section 785.23 into State Law, the
`
`Court of Appeal Made Incorrect Assumptions About the
`
`IWC’s Intent. ......................................................................................... ..3l
`
`1. The Court of Appeal Made Incorrect Assumptions about
`
`IWC Intent Regarding Wage Order No. 5. ........................................ ..33
`
`2. The Court of Appeal Should Have Afforded Deference
`
`to the Labor Commissioner’s Opinion that On-Call or Sleep
`
`Time Can Be Excluded from Hours Worked ..................................... ..34
`
`3. The Court of Appeal Erred in Assuming that Importing Section
`
`785.23 into California Law Would Require a Different Outcome in
`
`Seymore ............................................................................................... ..37
`
`CONCLUSION ............................................................................................ ..39
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`ii
`
`

`
`TABLE OF AUTHORITIES
`
`CASES
`
`Page(s)
`
`Aguilar v. Association for Retarded Citizens (Aguilar)
`(1991) 234 Cal.App.3d 21 ...................................................................... ..16
`
`Armour & Co. v. Wantock
`
`.
`
`(1944), 323 U.S. 126 ........................................................................ ..20, 21
`
`Berry v. County ofSonoma (Berry)
`(9th Cir. 1994) 30 F.3d 1174 .................................................................. ..27
`
`Bono Enterprises, Inc. v. Bradshaw (Bono)
`(1995) 32 Cal.App.4th 968 ..................................................................... ..16
`
`Bouchard v. Reg ’l Governing Bd. ofRegion VMental Retardation
`Svcs.
`
`(1991) 939 F.2d 1323 ............................................................................. ..34
`
`Brigham v. Eugene Water & Electric Board (Brigham)
`(9th Cir. 2004) 357 F.3d 931 ................................................ ..26, 27, 28, 29
`
`Bright v. Houston Northwest Med. Ctr. Survivor, Inc.
`(5th Cir. 1991) 934 F.2d 671 (en banc), (1992) cert. den.
`
`.................. .. 23
`
`Brinker Restaurant Corp. v. Superior Court
`53 Cal.4th 1104 ...................................................................................... ..34
`
`Chevron USA, Inc. v. Natural Resources Defense Council, Inc.
`(1984) 457 U.S. 837 ............................................................................... ..23
`
`Cinquegranti v. Department ofMotor Vehicles
`(2008) 163 Ca1.App.4th 741 ................................................................... ..11
`
`Estate ofHeath
`(2008) 166 Cal.App.4th 396 ................................................................... ..33
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`iii
`
`

`
`Gomez v. Lincare, Inc. (Gomez)
`(2009) 173 Ca1.App.4th 508 ................................................. ..13, 21, 22, 24
`
`Huong Que, Inc. v. Luu
`(2007) 150 Ca1.App.4th 400 ................................................................... .. 11
`
`Isner v. Falkenberg/ Gilliam & Associates
`(2008) 160 Ca1.App.4th 1393 ................................................................. ..36
`
`Keyes Motors, Inc. v. Division ofLabor Standards Enforcement
`(1987) 197 Cal.App.3d 557 .................................................................... ..19
`
`Marina Point, Ltd. v. Wolfson
`(1982) 30 Cal.3d 721 .............................................................................. ..33
`
`Marken v. Santa Monica-Malibu Unif Sch. District
`(2012) 202 Cal.App.4th 1250 ................................................................. ..11
`
`Mendiola v. CPS Security Solutions, Inc. (Mendiola)
`(2013) 217 Ca1.App.4th 851 ........................
`.................................. ..passim
`
`,
`Monzon v. Schaefer Ambulance Service, Inc. (Monzon)
`(1990) 224 Cal.App.3d 16 .............................................. ..11, 12, 13, 30, 32
`
`Morillion v. Royal Packing Co.
`(2000) (Morillion) 22 Cal.4th 575 ............................ ... ..................... ..passim
`
`Overton v. Walt Disney Co. (Overton)
`(2006) 136 Ca1.App.4th 263 ............................................................. ..16, 17
`
`Owens v. Local No. I 69 (Owens)
`(9th Cir. 1992) 971 F.2d 347 ....................... .. 13, 14, 21, 22, 23, 24, 28, 29
`
`Ramirez v. Yosemite Water Co.
`(1999) 20 ca1.4‘h 785 .............................................................................. ..20
`
`Seymore v. Metson Marine, Inc. (Seymore)
`(2011) 194 Ca1.App.4th 361 .............................. .. 11,12, 13, 30, 32, 36, 37
`
`Strategix, Lta’. v. Infocrossing West, Inc.
`(2006) 142 Ca1.App.4th 1068 ................................................................. ..11
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`iv
`
`

`
`Taylor v. The American Guard and Alert, Inc.
`(9th Cir. 1998) 1998 U.S.App. LEXIS 26934 ........................................ ..22
`
`Vega v. Jasper
`(5th Cir. 1994) 36 F.3d 417 .................................................................... ..17
`
`V0 v. City of Garden Grove
`(2004) 115 Cal.App.4th 425 ................................................................... .. 11
`
`STATUTES
`
`Cal. Code Civ. Proc., § 904.1, subd. (a)(6) ................................................. .. 10
`
`Labor Code Section 1194 ............................................................................ .. 10
`
`OTHER AUTHORITIES
`
`29 C.F.R. Part 785 ....................................................................................... ..25
`
`29 C.F.R. §§ 785.20—785.23 ........................................................................ ..34
`
`29 C.F.R. § 785.17 ....................................................................................... ..26
`
`29 C.F.R. § 785.21 ....................................................................................... ..26
`
`29 C.F.R. § 785.22 ........................................................... ..2, 12, 25, 26, 34, 37
`
`29 C.F.R. § 785.23 ................................... .. 3, 13, 25,26, 29, 30, 31, 32, 36, 37
`
`Wage Order No. 4 .............................................
`
`......................... ..8, 10, 15, 32
`
`Wage Order No. 5 ................................................................. ..31 ,33, 34,36, 37
`
`Wage Order No. 9 ........................................................................................ ..32
`
`I Wage Order No. 14 ...................................................................................... ..15
`
`www.dir.ca.gov/iWe/wageorderindustriesgrior.htm................................... ..32
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`v
`
`

`
`QUESTIONS PRESENTED
`
`1.
`
`Does California law permit employers and employees who
`
`reside on the employer’s premises for extended periods of time, but who do
`
`not work 24-hour shifis, to agree to deduct eight hours of sleep time from
`
`compensable hours worked?
`
`2.
`
`Is on-call time compensable hours worked when an employee,
`
`who resides on the employer’s premises for extended periods of time,
`
`voluntarily remains on-site even though the employee is subject to certain
`
`employer imposed restrictions?
`
`INTRODUCTION
`
`In Morillion v. Royal Packing C0. (2000) (Morillion) 22 Cal.4th 575,
`
`this Court held that an employer who requires its agricultural workers to
`
`travel to a work site on the employer’s buses must compensate the workers
`
`for their time spent traveling on the bus, even though the employees are not
`
`performing any agricultural job duties. This Court held that such time
`
`constitutes “hours worked” because the employer exercises control over the
`
`workers by requiring them to travel to the fields from an employer-
`
`designated location.
`
`(Id. at 586-588, holding compulsory travel time
`
`compensable but also recognizing that “[t]ime employees spend traveling on
`
`transportation that an employer provides but does not require its employees
`
`to use may not be compensable as ‘hours worked.’ [emphasis supplied]”).
`
`The general question presented in this case is whether an employer
`
`whose employees reside on its premises must compensate those employees
`
`for all hours when they are requested by the employer to remain on the
`
`premises and agree to do so, even if they are not performing their regular
`
`duties. Or can the employer and the employee form a bonafide and
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`_ 1 _
`
`

`
`enforceable agreement to exclude from these employees’ compensable
`
`“hours worked” reasonable periods for sleep time during which no regular
`
`duties are performed? As described in both parties’ Petitions for Review,
`
`the answer to this question has enormous significance for a broad range of
`
`occupations whose employees reside on the employer’s premises.
`
`More specifically, this case presents the question of whether persons
`
`employed in California as Trailer Guards by CPS Security Solutions, Inc. or
`
`its subsidiary Construction Protective Services, Inc. (collectively, “CPS”)
`
`must be paid for sleep time hours when the employee: (1) is on-call; (2) is in
`
`his or her residence (a trailer home provided by CPS); (3) is permitted to
`
`engage in purely personal activities; and, most importantly, (4) is permitted
`
`to leave the premises with notice and, if commanded to stay, is paid from the
`
`moment the request to leave is made until the end of the on-call period.
`
`Stated differently, is an employee who lives on the employer’s premises
`
`under the “control” of the employer when the employee agrees to remain in
`
`his or her residence and is on-call to respond to emergencies (that may or
`
`may not arise), but is permitted to eat, sleep, watch television and engage in
`
`other personal activities?
`
`The trial court answered this question in the affirmative, viewing
`
`federal regulations and case law, which permit the exclusion of up to 8 hours
`
`of sleep time from compensable hours worked, as completely irrelevant to
`
`the determination of California law. (RT 18: 1 8‘-21 :2.) The Court of Appeal
`
`disagreed in part with the trial court’s conclusion, holding that 29 C.F.R.
`
`§ 785.22, the federal sleep time regulation governing employees who are
`
`required to be on duty 24 hours or more, applies to the Trailer Guards on
`
`weekends when they are generally scheduled to be at the jobsite from
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`_ 2 _
`
`

`
`3:00 p.m. Friday until 7:00 a.m. Monday. However, the Court of Appeal
`
`declined to extend the same logic to the companion section of the federal
`
`regulations that authorizes the deduction of sleep time for employees who
`
`reside on the employer’s premises but who are required to be on duty for
`
`less than 24 hours, 29 C.F.R. § 785.23. The court, therefore, concluded that
`
`the sleep time agreements are not enforceable on weekdays when the Trailer
`
`Guards can leave the jobsite without notice to CPS during the daytime
`
`hoursl (between 7:00 a.m. and 3:00 p.m).
`
`This brief explains why the Court of Appeal erred in finding the sleep
`
`time agreements between CPS and its Trailer Guards partially
`
`unenforceable.
`
`STATEMENT OF FACTS
`
`CPS provides security guard services for construction companies at
`
`construction sites throughout California and in several other states. Some of
`
`CPS’s security guards work as Trailer Guards and others work as Hourly
`
`Guards. Trailer Guards reside on the work premises in a trailer home
`
`provided by CPS; Hourly Guards do not. Generally, Trailer Guards are
`
`scheduled to be on site 24 hours a day on the weekends and up to 16 hours a
`
`day on weekdays. On weekdays, the Trailer Guards are free to leave the
`
`premises from 7:00 a.m. until 3:00 p.m., when workmen are typically on
`
`site. The obligation of each Trailer Guard to reside on the premises and his
`
`1 As discussed below (see infla, at p. 23, fn. 5), federal law requires that for
`sleep time to be excluded from the compensable hours worked of employees
`who reside on the employer’s premises, the employees must be “completely
`free to leave the premises for their own purposes and engage in normal
`private pursuits during all non-duty time other than the sleep time.” (See,
`July 27, 2004 DOL opinion letter (FLSA 2004-7) (copy attached hereto as
`Exhibit 1).)
`
`_ 3 -
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`

`
`or her specific work schedule is set forth in a written agreement between the
`
`Trailer Guard and CPS. (Jt. App. Vol. 1, 0079-80.)
`
`CPS was founded by two brothers, Robert and Christopher Coffey, in
`
`1989. The geneses of the Trailer Guard business, as designed and
`
`implemented at CPS, were the problems of theft and vandalism at
`
`construction sites. (Jt. App. Vol. 1, 0031.) The Company’s founders noted
`
`that losses most often occurred during times when workers were entering or
`
`exiting the site, or during the night and on weekends when no one was
`
`working. (Jt. App. Vol. 1, 0032.) The trailer guard program allowed
`
`security officers to live in trailers placed on construction sites. The security
`
`officer would work during the days, and be present in the trailer at night.
`
`(Id.) The first placement of a trailer on a construction site as an initial
`
`experiment resulted in an immediate cessation of theft and vandalism at the
`site. (Id.) CPS sought and obtained the approval of the Labor
`
`Commissioner, first informally and then in a formal opinion letter issued by
`
`acting Labor Commissioner John Duncan in 1997. (Mendiola v. CPS
`
`Security Solutions, Inc. (Mendiola) (2013) 217 Cal.App.4th 851, 858.)
`
`The trailer homes used by the Trailer Guards provide a home-like
`
`environment. The trailers range in size from 150 to 200 square feet. Each
`
`trailer home has a living area, a bed, bathroom facilities (a toilet and
`
`shower), a kitchen area (including a sink, refrigerator, microwave or oven
`
`and stovetop) and a table. Each trailer has electricity, heat, and air-
`
`conditioning. Fresh water and pumping of sewage is provided. Trailer
`
`Guards may keep personal clothing, books, magazines, televisions, radios,
`
`personal computers and other belongings in the trailer. (Jt. App. Vol. 1,
`
`0080-81.)
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
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`- 4 —
`
`.
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`

`
`The trailers are private quarters. They are equipped with locks, and
`
`only the Trailer Guards and CPS maintenance staff are provided with keys.
`
`Maintenance employees only enter a trailer with the permission of the
`
`resident Trailer Guard. Other CPS employees, including other guards and
`
`Field Supervisors, do not have access to the trailer. (Jt. App. Vol. 1, 0083.)
`
`There are some necessary restrictions that flow from residing and working at
`
`an active construction site. Because construction sites are often hazardous,
`
`minors are not permitted to visit the sites, consumption of alcohol is
`
`restricted, and Trailer Guards are generally not permitted to keep pets or
`
`entertain visitors. Exceptions to these restrictions are permitted on a case-
`
`by-case basis, at the CPS customer's sole discretion. (Jt. App. Vol. 1, 0081.)
`
`Not everyone is well suited to work as a Trailer Guard. For example,
`
`some security guards who have families or who maintain their own
`
`residences may not be willing to reside at a construction site, or may not
`
`accept restrictions such as the prohibition on visitors. However, any guard
`
`who does not agree to the terms and conditions of employment as a
`
`Trailer Guard is offered a position as an Hourly Guard when available.
`
`Hourly Guards are not provided with a trailer home and do not reside at a
`
`particular construction site. Rather, Hourly Guards work routine guard
`
`shifts, generally lasting from six to 12 hours, and are paid for all the hours
`
`they are assigned to be at the construction site. (It. App. Vol. 1, 0080.)
`
`Each Trailer Guard must agree to reside on the premises and to work
`
`the specific hours at each construction site to which he or she is assigned
`
`(the "Trailer Agreement"). The Trailer Agreement specifies a Trailer
`
`Guard's scheduled work hours, during which he is periodically required to
`
`patrol the premises. On weekdays, patrol hours are generally from 5:00 a.m.
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`- 5 _
`
`

`
`to 7:00 a.m. and 3:00 p.m. to 9:00 p.m.; on weekends, patrol hours are
`
`generally from 5:00 a.m. to 9:00 p.m. The frequency of the patrol rounds
`
`and the amount of time spent patrolling during scheduled work hours varies
`
`from site to site. (Jt. App. Vol. 1, 0080.)
`
`The hours from 9:00 p.m. to 5:00 a.m. each day are designated as "on-
`
`call" or "personal time." Each Trailer Guard signs an agreement that
`
`designates his or her personal time. These written agreements, titled
`
`"Designation of Personal Time for In-Residence Guard" (Jt. App. Vol. 1,
`
`0119-145), together with the specific Trailer Agreements for each work site
`
`(Jt. App. Vol. 1, 0146-0169), reflect the contractual agreements between
`
`CPS and each Trailer Guard. (Jt. App. Vol. 4, 0558-0580.) While there are
`
`minor variations in the wording of different versions of these agreements, all
`
`of the agreements contain the same material terms. (It. App. Vol. 1, 0080.)
`
`During on-call hours, Trailer Guards are permitted to, and in fact do, engage
`
`in personal activities such as sleeping, taking showers, cooking, eating,
`reading, watching television, listening to the radio and surfing the Internet.
`
`(Jt. App. Vol. 1, 0081.)
`
`Trailer Guards who remain at the site during their on-call hours are
`
`paid for actual interruptions, such as responding to alarms. If a Trailer
`
`Guard is interrupted for three hours or more during his or her on-call hours,
`
`the entire eight-hour on-call period is counted as hours worked and is paid.
`
`(It. App. Vol. 1, 0084-85.) Before 9:00 p.m. each night, Trailer Guards
`
`place electronic alarm sensors at various locations around the construction
`
`site. The alarm sensors are connected to an alarm panel that sounds either in
`
`Dispatch or in the trailer. If an alarm sounds in.Dispatch, the Trailer Guard
`
`is notified by telephone and instructed to investigate the disturbance. If an
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
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`_ 5 _
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`

`
`alarm sounds in the trailer, or if the Trailer Guard is interrupted by noise,
`
`motion or other activity during on-call time, he or she is required to contact
`
`Dispatch, put on his or her uniform before leaving the trailer, and then
`
`investigate the disturbance. After the alarm or interruption has been cleared,
`
`the Trailer Guard must inform Dispatch so that Dispatch can report the hours
`
`worked during the interruption to the CPS payroll department. (Jt. App.
`
`Vol. 1, 0082-85.)
`
`Pursuant to the on-call agreements and subject to their terms, Trailer
`
`Guards may leave the construction site during their on-call time. Trailer
`
`Guards who wish to leave the site during on-call hours must notify Dispatch
`
`in order to permit CPS to secure a reliever. They must advise Dispatch
`
`regarding the length of time they intend to be away from the site and where
`
`they will be. (Jt. App. Vol. 1, 0082.) Dispatch must then identify a reliever
`
`to cover the site during the Trailer Guard's absence. Significantly, Trailer
`Guards who request to be relieved during on-call hours but who are required
`
`to stay are paid: (1) from the moment they request to leave the construction
`
`site until a reliever arrives; or (2) if a reliever is not available, for the
`
`remainder of the on-call hours. (Jt. App. Vol. 1, 0082-0084.)
`
`Trailer Guards who leave the construction site are typically relieved
`
`by either Rover Guards or Field Supervisors. Trailer Guard requests to leave
`
`a site during on-call hours are relatively infrequent, and staffing levels are
`
`generally adequate to meet coverage needs. Pursuant to the agreements,
`
`CPS has the ability to command a Trailer Guard to stay on site, but this is an
`
`unusual occurrence. (Jt. App. Vol. 1, 0082-0083.)
`
`While away from the site during on-call hours, the Trailer Guard must
`
`carry a CPS-provided pager or radio telephone and is expected to stay within
`- 7 _
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`

`
`a 30 minute radius of the construction site, unless other arrangements are
`
`made. (Jt. App. Vol. 1, 0082.) The individuals who relieve the Trailer
`
`Guards remain on site, but they do not have access to the trailer homes. (Jt.
`
`App. Vol. 1, 0083.)
`
`PROCEDURAL HISTORY OF THE CASE
`
`Beginning in March 1996, the California DLSE conducted an audit of
`
`CPS and investigated whether CPS’s policy of excluding up to 8 hours of
`
`“sleep time” from hours worked was lawful.
`
`(Jt. App. Vol. 1, 0085.) At the
`
`end of the DLSE’s investigation, CPS received a letter from John C.
`
`Duncan, Chief Deputy Director of the Department of Industrial Relations
`
`and acting Labor Commissioner. Mr. Duncan’s letter, dated April 24, 1997,
`
`assumed that Wage Order 4 was applicable to the Trailer Guards and
`
`provided CPS with a written opinion expressly “excluding sleep time and
`
`other non—active duty hours” from the compensable time of its Trailer
`
`Guards. (Jt. App, Vol. 1, 0086, 0172-0174.)
`
`In 1999, newly appointed Labor Commissioner Marcy Saunders
`
`abruptly reversed the enforcement position taken by Mr. Duncan in his April
`
`1997 letter. CPS immediately requested to meet with Ms. Saunders to
`
`discuss the agency’s sudden about-face on the sleep time issue, but these
`
`requests were refused for nearly three years. (Jt. App. Vol. 1, 0086.)
`
`In November 2002, CPS filed an action for declaratory relief seeking
`
`resolution of the policy’s legality, which the parties settled by entering into
`
`an October 14, 2003 Memorandum of Understanding (MOU). Mendiola,
`
`supra, 217 Cal.App.4th at 858-859. In the MOU, CPS agreed to change the
`
`terms of employment for its Trailer Guards by recasting the sleep time
`
`period as uncontrolled standby or “on-call” time. The terms of the MOU
`_ g -
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`

`
`provided (1) that CPS could require its Trailer Guards to agree to reside on
`
`the premises in a trailer home provided by CPS; (2) that Trailer Guards
`
`would be on “stand-by” and required to respond to alarms while on site; (3)
`
`Trailer Guards would have the right to leave during on-call time, provided
`
`they first notified CPS; and (4) if a reliever was not available, CPS would
`
`have the right to command a Trailer Guard to remain on site, but if CPS did
`
`so, the Trailer Guard’s time would be paid “hours worked.” (Jt. App. Vol.
`
`1, 0176-0180.) By focusing upon the level of control exerted by CPS over
`
`the Trailer Guards during the evening sleep time period, the current on-call
`
`policy reflected the joint efforts of CPS and the Labor Commissioner to
`
`reconcile the previously approved sleep time policy with this Court’s
`
`holding in Morz'lli0rz.;
`
`In 2008, the Mendiola plaintiffs and the Acosta plaintiffs filed two
`
`separate wage and hour class action lawsuits against CPS seeking to
`
`represent the same class of California Trailer Guards. The competing class
`
`actions were consolidated by Judge Rosenfeld of the Los Angeles County
`
`Superior Court. Additional wage and hour class action lawsuits were filed
`
`against CPS in other counties, and CPS successfully petitioned the Judicial
`
`Council for coordination before a single trial judge. The cases were
`
`assigned to the Honorable Jane L. Johnson in the Complex Litigation
`
`division of the Los Angeles County Superior Court.
`
`The parties recognized early in the litigation that it was critical to
`
`obtain a judicial determination of the lawfulness of CPS's on-call policy.
`
`2 The DLSE Opinion Letter approving the original sleep time policy (the
`“Duncan Letter”) was issued in April, 1997. This Court’s Morillion opinion
`was issued in 2000. CPS filed its first action for Declaratory Relief in 2002
`and the MOU was signed on October 14, 2003.
`- 9 _
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ET AL.
`
`

`
`The parties entered into an extensive Stipulation of Facts and submitted
`
`dispositive cross-motions on their respective claims for declaratory relief.
`
`On April 25, 2011, the trial court granted the Trailer Guards‘ motion for
`
`summary adjudication of their cause of action for declaratory relief and
`
`denied CPS's motion for summary judgment on its cross-complaint. The
`
`trial court held that CPS's on-call policy violates Wage Order 4 and Labor
`
`Code Section 1194, finding that agreements to exclude sleep time from
`
`compensable hours worked are unenforceable under Wage Order 4, except,
`
`in the health care industry. (Jt. App. Vol. 4, 0576.)
`
`CPS timely appealed the trial court's April 25, 2011 order, but the
`
`Court of Appeal dismissed the appeal as premature. On January 17, 2012,
`
`the Trailer Guards moved for a preliminary injunction in the trial court. The
`
`motion sought to enjoin CPS from continuing to violate Wage Order 4 and
`
`Labor Code Section 1194 through application of its on-call policy, and to
`
`require CPS to begin paying all California Trailer Guards for hours spent on
`
`the jobsite during their on-call time. (Jt. App. Vol. 4, 0594-619.)
`
`On March 6, 2012, the trial court granted the Trailer Guards’ motion
`
`and issued an Order for Preliminary Injunction as prayed for in the motion.
`
`On April 12, 2012, CPS timely filed an appeal. (Jt. App. Vol. 4, 0649-651.)
`
`As set forth above, the Court of Appeal affirmed the trial court’s order in
`
`part and reversed in part. The Court of Appeal held that CPS’s agreements
`
`are lawfial on the weekends when Trailer Guards are scheduled to work 24-
`
`hour shifts, but are unlawful on weekdays when the Trailer Guards can
`
`either leave without notice or remain at home between 7:00 a.m. and 3:00
`
`p.m.
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`_ 10 _
`
`

`
`STANDARD OF REVIEW
`
`As the Court of Appeal correctly recognized, an order granting a
`
`preliminary injunction is an appealable order. (Cal. Code Civ. Proc., § 904.1,
`
`subd. (a)(6).) If the facts on which the trial court relied are undisputed, as
`
`here, the propriety of granting the injunction becomes a question of law,
`
`subject to de nava review. (Cinquegranti v. Department afMatar Vehicles
`
`(2008) 163 Cal.App.4th 741, 746.) Because appellate review of the
`
`injunction requires the construction of statutes and regulations, this case
`
`presents questions of law which the appellate courts review independently.
`
`(Id.; Accord, Va v. City of Garden Grove (2004) 115 Cal.App.4th 425 (the
`
`lower court's decision to grant a preliminary injunction is reviewed de nava
`
`where, as here, "the likelihood of prevailing on the merits factor depends
`
`upon a question of law”); Strategix, Ltd. v. Infacrassing West, Inc. (2006)
`
`142 Cal.App.4th 1068; see also, Marken v. Santa Monica-Malibu Unzf Sch.
`
`District (2012) 202 Cal.App.4th 1250, 1260-1261; Huang Que, Inc. v. Luu,
`
`(2007) 150 Cal.App.4th 400, 408.)
`
`COURT OF APPEAL OPINION
`
`In holding that the employees are not entitled to be paid for their on-
`
`call sleep time when they are scheduled for 24 hours, the Court of Appeal
`
`relied on two prior appellate decisions, Manzan v. Schaefer Ambulance
`
`Service, Inc. (Manzan) (1990) 224 Cal.App.3d 16 and Seymare v. Metsan
`
`Marine, Inc. (Seymare) (2011) 194 Cal.App.4th 361. Manzan and Seymare
`
`each upheld agreements between an employer and employee to exclude
`
`eight hours of sleep time from compensable hours worked when the
`
`employee is required to be on duty for 24 hours or more. The plaintiffs in
`
`Manzan were ambulance drivers who were scheduled to remain on premises
`
`BRIEF ON THE MERITS OF PETITIONERS CPS SECURITY SOLUTIONS, ETAL.
`
`_ 11 _
`
`

`
`for 24-hour shifts. The employer’s policy was to pay the ambulance drivers
`
`for 16 of those hours, but not for eight hours of sleep time unless the drivers
`
`were called to respond to an emergency. The Court of Appeal in Monzon
`
`found that although the definition of “hours worked” in state wage orders is
`
`different from the Fair Labor Standards Act (“FLSA”), federal law is
`
`entitled to deference because the wage orders “are closely modeled after” the
`
`FLSA. (Monzon, supra, 224 Cal.App.3d at 38-39.) The court then
`
`recognized an implied sleep time exclusion in California law based on 29
`
`C.F.R. §785.22, a federal regulation interpreting the FLSA that authorizes
`
`agreements to exclude to up eight hours of sleep time from compensable
`
`hours worked for employees scheduled for shifts of 24 hours or longer. (Id.
`
`at 41-46).
`
`Monzon was followed by Seymore, where the plaintiffs worked 14-
`
`day “hitches” on ships used to clean oil spills off the California coast.
`
`(Seymore, supra, 194 Cal.App.4th at 366.) The plain

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