August 05, 2025|Franchise Frontlines
August 5, 2025 | U.S. District Court for the Northern District of California | Published Opinion
Executive Summary
In a published decision, Judge P. Casey Pitts addressed cross-motions for summary judgment involving allegations by two janitorial employees who worked on Department of Veterans Affairs facilities in Northern California. According to the opinion, the plaintiffs alleged that Federal Medical Services, Inc., Ben Fitzgerald Real Estate Services, LLC, and certain individual representatives jointly employed them and violated California and federal wage laws. Defendants argued that only Federal Medical employed the plaintiffs, that the individual owners and managers could not be held liable, and that one plaintiff’s PAGA claim was untimely. The court concluded that factual disputes—particularly regarding day-to-day supervision, communications between entities, and the role of individual representatives—prevented summary judgment on most issues. The court dismissed one plaintiff’s PAGA claim on statute-of-limitations grounds, found that the remaining plaintiff qualified as an “aggrieved employee,” and held that owners may fall within Labor Code section 558.1(a). All remaining questions were reserved for trial based on the record presented.
Relevant Background
The opinion explains that Federal Medical is a Texas corporation owned by Jim Slattery. Ben Fitzgerald is also a Texas corporation, overseen by Jerry Tate, and operates a government-services division known as Rosemark. The two companies entered a “teaming agreement” years ago to bid on and service VA janitorial contracts. According to testimony cited in the opinion, Federal Medical became the prime contractor in 2019, while Ben Fitzgerald continued to handle on-site coordination for the janitorial staff.
The opinion states that plaintiffs Russo and Reddick worked evening shifts at the VA facilities and alleged that both companies controlled aspects of their schedules, tasks, and compensation. They further alleged that Slattery, Tate, and supervisor Abigail Woulfe influenced pay practices and working conditions. Defendants disagreed with these characterizations and argued that Federal Medical alone acted as the employer, that the individual representatives acted within corporate roles, and that plaintiffs’ evidence did not satisfy summary judgment standards. One plaintiff, Reddick, also faced a potential statute-of-limitations issue concerning his PAGA notice.
The parties filed four separate motions for summary judgment, which required the court to assess joint employment allegations, individual liability under California and federal law, wage-hour violations, willfulness under the FLSA, and PAGA standing and notice.
Decision
The court denied summary judgment on most issues due to fact-specific disputes appearing in the record.
The opinion states that California’s wage-hour framework permits more than one entity to qualify as an employer, depending on whether each exercised control over wages, hours, or working conditions or “suffered or permitted” an individual to work. The court explained that contractual labels were not dispositive and that certain communications and operational interactions described in the record could support either the plaintiffs’ joint-employer theory or the defendants’ single-employer theory. The court therefore found that these issues required a trial.
The court also declined to grant summary judgment on direct liability under the IWC wage orders. Applying the California Supreme Court’s decisions interpreting “employer” status, the opinion notes that owners and controlling shareholders may fall within the wage-order definition depending on their involvement in the alleged conduct. Because the evidence was mixed on the extent of Slattery’s and Tate’s involvement in pay-related or supervisory matters, the court held that their status could not be resolved on summary judgment.
Under the FLSA, the court applied the “economic reality” test and found similar factual disputes regarding authority over hiring, firing, scheduling, pay rates, or recordkeeping. For that reason, neither plaintiffs nor defendants were entitled to judgment as a matter of law on FLSA employer status.
The court denied plaintiffs’ motion for summary judgment on minimum-wage and overtime claims because the pay records submitted by plaintiffs were unauthenticated and therefore inadmissible under Ninth Circuit precedent. The court also found direct factual disputes concerning meal and rest breaks, noting that the plaintiffs testified that they felt discouraged from taking breaks, while Woulfe testified that breaks were available and encouraged. These issues were left for trial.
Regarding willfulness under the FLSA, the court concluded that disputed evidence regarding the defendants’ knowledge and intent prevented summary judgment for plaintiffs.
On the PAGA issues, the court held that Reddick’s PAGA claim was time-barred because he did not file his notice within the one-year limitations period. The court found that Russo qualified as an “aggrieved employee” because the operative complaint alleged that he personally suffered at least one of the asserted Labor Code violations. The opinion also determined that Russo’s PAGA notice was adequate, even though he listed “Rosemark” rather than “Ben Fitzgerald,” because testimony acknowledged that Rosemark was the fictitious name under which Ben Fitzgerald conducted its government-services business.
Looking Forward
This decision illustrates how courts may, under specific facts, decline to resolve joint-employer and individual-liability questions at the summary-judgment stage. The opinion emphasizes that operational realities, rather than contractual labels, shaped the court’s analysis here. In other business contexts—particularly franchise systems—courts may reach different conclusions when the record demonstrates that the entities maintain distinct roles, separate operational control, and independent employment practices.
For franchisors, the decision underscores the importance of maintaining a clear separation between brand standards and franchisee-level employment decisions. The allegations in this case centered on blended operational control between two contracting companies working on a single government project—a fact pattern materially different from franchise models, where franchisees independently manage hiring, scheduling, wages, and working conditions. Under differing circumstances, courts may evaluate employer-status theories differently, especially when franchisors maintain appropriate boundaries consistent with modern joint-employment guidance.
The ruling also highlights how individual liability under Labor Code section 558.1(a) may depend on fact-specific questions regarding ownership structure and the degree of involvement in the alleged conduct. While franchisors are not employers of franchisee personnel and therefore are not subject to section 558.1(a), the case reflects the importance of franchisee wage-hour compliance as a preventative measure for multi-entity systems generally.
Finally, the statute-of-limitations ruling on PAGA notice illustrates the value of timely compliance with administrative procedures. The court’s discussion also shows that courts may focus on the substance of notice rather than technical naming conventions, a reminder for business entities that use DBAs to ensure that their notice-response protocols are consistent and reliable.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
