RONALD COX, an individual, and on behalf of others similarly situated, Respondent,
THE KROGER COMPANY, an Ohio corporation, FRED MEYER STORES, INC., doing business as QUALITY FOOD CENTERS (aka QFC), Appellants.
Cox, a former Quality Food Centers Inc. (QFC) employee, filed
this class action challenging QFC's policy of rounding
hourly employees' clocked-in time to the nearest quarter
hour. Specifically, he contends QFC intentionally manipulated
the application of this policy to result in underpayment of
appeals the trial court's denial of the motion to compel
arbitration. Because the collective bargaining agreements
(CBAs) governing Cox's employment do not clearly and
unmistakably waive his right to a judicial forum for
statutory wage claims, the arbitration provision does not
encompass his claims, and the trial court did not err in
denying QFC's motion to compel arbitration.
also seeks review of the trial court's earlier
determination that Cox's claims were not preempted by
section 301 of the Labor Management Relations Act of 1947
(LMRA). Because the interlocutory partial summary
judgment order concerning preemption does not prejudicially
affect the arbitration order designated in QFC's notice
of appeal, the merits of the undesignated preemption ruling
are not before us.
deny QFC's motion to take judicial notice because the
documents at issue relate solely to the question of waiver of
the right to arbitrate, and we need not reach waiver. We deny
Cox's motion to dismiss this appeal as moot because the
appeal presents debatable issues. For the same reason, we
deny Cox's request for fees based on the argument that
QFC's appeal is frivolous.
employed by QFC between October 2011 and February 2014. He
worked at the QFC in Camas, Washington, and later transferred
to the Moreland QFC in Portland, Oregon.
a supermarket chain with locations in Washington and Oregon.
Between 2000 and 2014, QFC required hourly employees to use a
time card to clock in and out at the beginning and end of
their shifts. QFC employed a rounding policy that provided:
• Time is credited by the quarter hour. There is a seven
minute grace period which rounds the eighth minute to the
quarter hour. (Example: An employee is scheduled to work at
7:00 o'clock. The employee punches in at 7:08. The 7:08
punch will round to 7:15. If the employee punches in at 7:07
the punch will round to 7:00.).
• It is the employee's responsibility to follow
these procedures, as it will ensure they are paid accurately
and on a timely basis.!'
rounding policy is not contained in or referred to by the
2014, Cox and another former QFC employee, Sue Jin Yi, filed
the current class action challenging QFC's rounding
policy. The proposed class included hourly QFC
employees in Washington and Oregon.
Food and Commercial Workers Union Local 555 represents QFC
employees in Washington and Oregon. Cox's employment with
QFC was covered by one CBA while he worked at the QFC in
Camas, Washington,  and another while he worked at the
Moreland QFC in Portland, Oregon. The two CBAs are identical
as to all the relevant provisions for this appeal.
2015, the trial court denied QFC's motion to dismiss
Cox's second and third causes of action based on chapter
49.52 RCW and Oregon Revised Statutes section 652.120 (ORS)
as preempted under section 301 of the LMRA. In November 2016,
the court denied QFC's motion to compel arbitration of
these same claims.
Nature of Claims
preliminary matter, it is critical to our analysis to
understand the claims actually asserted by Cox. The first
amended complaint specifically alleges QFC's rounding
policy "deprives [hourly] employees of regular and
overtime pay they have earned." This appeal concerns only
Cox's second cause of action, based on chapter 49.52 RCW,
and his third cause of action, based on ORS section 652.120.
The core issue of this appeal is whether these claims are
statutory or contractual.
49.52.050(2) provides that "[a]ny employer or officer...
who ... [w]ilfully and with intent to deprive the employee of
any part of his or her wages, shall pay any employee a lower
wage than the wage such employer is obligated to pay such
employee by any statute, ordinance, or contract" is in
violation of the statute. The purpose of the statute is to
"ensure that the employee realizes the full amount of
his or her wages and that the employer does not evade his or
her obligation to pay wages . .. calculated to effect a
rebate of part of them."
to ORS section 652.120(1), "[e]very employer shall
establish and maintain a regular payday, at which date the
employer shall pay all employees the wages due and owing to
them." The essence of a claim under this statute is
"an assertion that one has not received payment from
one's employer of 'wages due and
contends the claims are statutory wage claims. Cox asserts
the rounding policy in conjunction with QFC's other
policies and procedures resulted in employees being
"consistently and systematically deprived of pay for all
straight time and overtime hours they actually
work." Specifically, Cox contends QFC's
various policies concerning timekeeping and attendance have
the impact of inhibiting conduct that would cause the
employee to benefit from the rounding policy and promoting
conditions that allow the employer to benefit. Commentators
have analogized this wage dispute theory challenging unfair
rounding policies to casinos where the odds of winning are
skewed to favor the "house."
takes a diametrically opposed view, that despite being
labeled as statutory wage claims, the claims are contractual
because Cox seeks damages only available under the CBAs. A
claim for unpaid wages necessarily requires a computation of
the regular rate of pay multiplied by the amount of
compensable time worked. QFC argues Cox's claims are
contractual because the CBA is the source of Cox's
regular rate of pay and the definition of "compensable
as to the Washington law claim, QFC points to an
interrogatory answer by Cox referring to claimed damages at a
rate of $12 per hour. Because Cox's standard rate when
working in Washington was less than $12 per hour, QFC infers
that he must be depending on some form of premium wage rate
contained in the CBAs. But the interrogatory answer does not
constitute a binding admission by Cox that his Washington
claim depends on the application of a premium wage rate
contained in the CBAs. In fact, he denies his claims include
any such rates.
also contends that Cox's wage claims under Oregon and
Washington law necessarily require a determination of the
definition of "compensable time." Although the
rounding policy is not contained in the CBAs, QFC argues the
policy controls the calculation of wages. Specifically, QFC
relies on Cox's acknowledgement of the rounding policy,
declarations from human resource executives about the lack of
complaints concerning the rounding policy, and general
declarations from QFC executive employees regarding QFC's
historical practice of compensating employees based on the
rounded time. But under a claim for unpaid wages due to the
alleged manipulation of the facially neutral rounding policy,
the question is not whether the rounding policy exists, the
question is whether QFC's policies and practices have the
impact of undercompensating the employees.
employer intentionally used "bad math" to
manipulate the computation of wages owed to employees, an
employee would possess a statutory claim for the withholding
of wages. Similarly, intentionally manipulating the
application of a facially neutral rounding policy used to
compute wages owed, resulting in underpayment, runs afoul of
Washington's and Oregon's wage and hour statutes.
Cox's claims qualify as statutory wage claims.
Motion To Compel Arbitration
first challenges the trial court's denial of the motion
to compel arbitration.
review a trial court's denial of a motion to compel
arbitration de novo.
the Federal Arbitration Act (FAA) applies to collective
bargaining agreements. "The purpose of the [FAA] is to
overcome the courts' historical reluctance to enforce
agreements to arbitrate." This court must apply federal
substantive law to any arbitration agreement within the
coverage of the FAA. In determining whether to enforce an
arbitration provision, this court must consider (1)
"whether the arbitration agreement is valid" and
(2) "whether the agreement encompasses the claims
arbitration agreement does not encompass statutory claims
unless the waiver of an employee's right to judicial
forum for such claims is "clear and
unmistakable." A clear and unmistakable waiver can
occur if the CBA contains "a general clause requiring
arbitration under the employment agreement, coupled with a
provision that makes it unmistakably clear that the ...