By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has held, in a case involving Charter Communications’ acquisition of Time Warner Cable, that where persons find themselves employees of a new employer, through an ownership shift, they are effectively fired by the original employer—even if they keep doing the same work at the same place—and are entitled, under California law, to payment for accrued vacation time.
A three-judge panel said Monday, in a memorandum opinion, that the California Supreme Court has not yet ruled on the question, so it was proceeding on the basis of reasoned speculation as to what the state high court’s holding would be.
The panel—comprised of Circuit Judges Mary H. Murguia and John B. Owens, along with District Court Judge Benjamin H. Settle of the Western District of Washington, sitting by designation—applied California Labor Code §227.3, which provides:
“Unless otherwise provided by collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate.…”
Summary Judgment Reversed
In light of that section, the panel said, District Court Judge William Q. Hayes of the Southern District of California erred in awarding summary judgment to Charter Communications, Inc. and two of its subsidiaries in a putative class action January brought by Jennifer Sansone and Baldemar Orduno Jr.
Prior to the May 18, 2016 merger, valued at $60 billion, both had been working for a Time Warner subsidiary, TWC Administration LLC (“TWCA”), Sansone as a managing supervisor and Orduno as a sales account manager. As a result of the merger, TWCA became, in effect, a subsidiary of Charter Communications.
The opinion pegs the time when the vacation pay should have been remitted not when the May 2016 merger took place, but in December 2016, when Sansone and Orduno were rendered employees of a different Charter Communications subsidiary, Charter Communications, LLC (“CCL”).
District Court Decision
Hayes pointed out in his Sept. 18, 2019 order granting summary judgment that both plaintiffs “continued to perform the same jobs, at the same location, selling to the same customers after the transaction at issue closed on May 18, 2016.” Their employment situations continued to be unaffected, he said, after their positions were shifted to CCL in December of that year.
Their vacation credits, he noted, were transferred from TWCA to CCL.
“The court concludes that Plaintiffs have not come forward with evidence to show that a termination occurred,” Hayes declared.
Ninth Circuit Opinion
In reversing, the three-judge panel said:
“The central issue here is whether Plaintiffs were terminated such that TWCA was obligated to pay Plaintiffs their unused vested vacation time. We conclude that Plaintiffs were terminated within the meaning of § 227.3.”
The panel relied on a 1973 Court of Appeal decision of the First District’s Div. Two in Chapin v. Fairchild Camera & Instrument Corp. There, the plaintiffs had been employed by the Memory Products Department of Fairchild Camera and Instrument Corporation; Fairfield sold the department to Core Memories, Inc, which assumed the employment of the plaintiffs; they sued Fairfield for accrued severance benefits.
Reversing a judgment in favor of the defendant, the appeals court rejected the contention that the employees voluntarily traded their employment by Fairfield for that by Core, eliminating any persisting obligations to them on the part of Fairfield. The opinion says:
“[T]he employment with the seller was terminated; the Employees were hired by Core under substantially different terms that not only did not provide severance pay of the same duration as Fairchild, but also did not undertake to discharge Fairchild's obligation of severance pay to the Employees. Thus, it cannot be said that the termination of their employment by Fairchild was voluntary on the part of the Employees. We are not concerned with the new jobs but the old ones. The termination was entirely involuntary on the part of the Employees. Fairchild sold Memory Products, that part of its business in which the Employees were engaged, and by its voluntary act made it wholly impossible for the Employees to continue their employment with Fairchild.”
Applying State Precedent
Monday’s Ninth Circuit opinion declares:
“Similarly, TWCA ‘made it wholly impossible for [Plaintiffs] to continue their employment with’ TWCA by merging with CCL….Thus, notwithstanding the fact that Plaintiffs’ vacation time was transferred to CCL, Plaintiffs were entitled to payment of their unused vested vacation time when their employment ended with TWCA in December 2016, absent an agreement to the contrary.”
(It was Charter Communications that merged with Time Warner Cable, not its respective subsidiaries, TWCA and CCL.)
The case is Sansone v. Charter Communications, 19-56158.
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