United States v. 2010-11-19 | 09-16167 | COURTNEY GORDON V. CITY OF OAKLAND | precedential | opinion |

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 COURTNEY GORDON, an individual,
on behalf of herself and those No. 09-16167
similarly situated, D.C. No. Plaintiff-Appellant, 3:08-cv-01543- v. WHA
CITY OF OAKLAND, a municipal OPINION
corporation,
Defendant-Appellee. 
Appeal from the United States District Court
for the Northern District of California
William H. Alsup, District Judge, Presiding
Argued and Submitted
October 8, 2010—San Francisco, California
Filed November 19, 2010
Before: Procter Hug, Jr., Pamela Ann Rymer and
N. Randy Smith, Circuit Judges.
Opinion by Judge Hug
18635

-- 1 of 10 --

COUNSEL
Jon Webster, Concord, California, for the appellant.
18637 GORDON v. CITY OF OAKLAND

-- 2 of 10 --

Eugene B. Elliot and Michael C. Wenzel, Bertrand Fox &
Elliot, San Francisco, California, for the appellee.
OPINION
HUG, Senior Circuit Judge:
This case concerns the City of Oakland’s (“City”) policy
requiring police officers to repay a portion of their training
costs if they voluntarily leave the City’s employment before
completing five years of service. Plaintiff-appellant Courtney
Gordon was a police officer for the City who left her position
after less than two years. She alleges that the City violated the
minimum wage provisions of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. §§ 201, et seq., by requiring her to reim-
burse it for part of her training costs. The district court dis-
missed Gordon’s complaint for failure to state a claim.
Gordon appeals the district court’s partial denial of her
motion for leave to file her Proposed First Amended Com-
plaint. The issue in this case is whether Gordon’s Proposed
First Amended Compliant states a cognizable claim under the
minimum wage provisions of the FLSA. We have jurisdiction
under 28 U.S.C. § 1291, and we affirm.
I. BACKGROUND
The facts here are taken from Gordon’s Proposed First
Amended Complaint and the attachments thereto. Since the
late 1990s, the City and the collective bargaining unit for City
police officers, the Oakland Police Officers’ Association,
have entered into successive collective bargaining agree-
ments. These agreements provide that officers who voluntar-
ily separate from the City’s employment prior to completing
five years of service must repay a pro rata share of their police
academy training costs. The agreement at issue here states
that the cost of the training is $8,000, and it establishes the
following repayment schedule:
18638 GORDON v. CITY OF OAKLAND

-- 3 of 10 --

Length of Service % of Repayment Due
Separation prior to 1 year 100% repayment of the
$8,000.
Separation after 1 year
but before completing the
second year 80% repayment of the
$8,000.
Separation after 2 years
but before completing the
third year 60% repayment of the
$8,000.
Separation after 3 years
but before completing the
fourth year 40% repayment of the
$8,000.
Separation after 4 years
but before completing the
fifth year 20% repayment of the
$8,000.
Separation after 5 years 0% repayment
The agreement further provides that any repayment is due
at the time of the officer’s separation and that the City will
deduct any amounts owed from the officer’s final paycheck
and any balance will be due.1
Gordon was a successful applicant for the position of
1The City conceded at oral argument that it would have violated the
minimum wage provisions of the FLSA had it followed this collective bar-
gaining agreement and withheld Gordon’s entire final paycheck in satis-
faction of her debt.
18639 GORDON v. CITY OF OAKLAND

-- 4 of 10 --

Police Officer Trainee. She was advised that she was required
to sign the “Conditional Offer of Position as a Police Officer
Trainee” (“Conditional Offer”) to complete the hiring process.
The Conditional Offer restated the training repayment sched-
ule established in the collective bargaining agreement but it
did not include a statement that the City would withhold an
officer’s paycheck in satisfaction of any repayment owed.
Gordon accepted and signed the Conditional Offer and
became a police officer trainee employed by the City. The
City directed her to attend its police academy, and she suc-
cessfully completed her training in June 2006. She then
became a police officer for the City.
On January 25, 2008, before completing her second year of
service, Gordon resigned. At that time, she was earning
$37.8025 per hour. In her final two weeks of work, Gordon
was compensated for sixty hours. Her regular hourly pay,
combined with an educational incentive in the amount of
$117.33, resulted in Gordon earning $2,385.48 in gross pay
for her final two workweeks. Gordon received a final pay-
check reflecting this amount.
On the same day as her resignation, the City’s Fiscal Ser-
vices Division notified Gordon that the City was entitled to
recover $6,400 (eighty percent of $8,000) in training costs as
set forth in the Conditional Offer Gordon signed. This notifi-
cation stated that the City had withheld, in partial satisfaction
of these claims, the paychecks for Gordon’s accrued unused
vacation ($1,295.57) and compensatory time off ($654.77).
Thus, the City’s total remaining demand was $4,449.66.2 This
unpaid demand increased to $5,268.03 in March 2008 with
the addition of a “collection fee.”
2Due to an apparent “miscalculation” by the City of the sum it claims
was due, and the Proposed First Amended Complaint’s failure to explain
the nature of this “miscalculation,” the $4,449.66 balance is the court’s
figure. This total is the amount remaining after deducting the sum of Gor-
don’s two withheld checks ($1,950.34) from the City’s $6,400 training
reimbursement claim.
18640 GORDON v. CITY OF OAKLAND

-- 5 of 10 --

Gordon, on behalf of herself and others similarly situated,
filed this action in district court seeking damages and declara-
tory relief under the FLSA, 42 U.S.C. § 1983, and various
California state laws. The district court granted the City’s
motion to dismiss Gordon’s complaint for failure to state a
claim and gave Gordon fourteen days within which to file a
motion for leave to file an amended complaint.
Following the court’s dismissal, Gordon paid the City the
$5,268.03 it claimed was due and moved for leave to file her
Proposed First Amended Complaint. The new complaint elim-
inated all but the FLSA claims and included that she paid the
City $5,268.03 for “training reimbursement” and “collection
costs.” The district court concluded that the proposed
amended complaint still did not demonstrate that Gordon was
paid less than the federal minimum wage during any work-
week, and it denied her leave to file her minimum wage claim
in the amended complaint. The district court did, however,
grant Gordon leave to amend to assert a claim for violation of
the overtime wage requirements under 29 U.S.C. § 207(o).
Gordon subsequently dismissed with prejudice all overtime
wage claims under 29 U.S.C. § 207(o) and entered into a Stip-
ulation for Judgment of Dismissal for the purpose of facilitat-
ing this appeal.
II. DISCUSSION
Although leave to amend a deficient complaint shall be
freely given when justice so requires, Fed. R. Civ. P. 15(a),
leave may be denied if amendment of the complaint would be
futile. Albrecht v. Lund, 845 F.2d 193, 195 (9th Cir. 1988).
We review for abuse of discretion the district court’s denial
of leave to amend a complaint. Smith v. Pac. Props. & Dev.
Co., 358 F.3d 1097, 1100 (9th Cir. 2004). However, whether
such “denial rests on an inaccurate view of law, and is there-
fore an abuse of discretion,” requires de novo review of the
underlying legal determination. Id. All allegations of material
fact made in the complaint are taken as true and construed in
18641 GORDON v. CITY OF OAKLAND

-- 6 of 10 --

the light most favorable to the plaintiff. See Smith v. Jackson,
84 F.3d 1213, 1217 (9th Cir. 1996).
The issue in this case is whether the Conditional Offer’s
training reimbursement agreement, which required Gordon to
repay $6,400 at the time of her resignation, caused her to
receive less than the federal minimum wage during her final
workweek. Gordon contends that there is no legal difference
between deducting a sum from an employee’s check and
directly demanding the employee surrender a sum after being
paid. She maintains that after subtracting the costs she paid to
the City for the training program, she was actually paid a neg-
ative sum for her last week of work. The district court, how-
ever, concluded that because the City issued Gordon a
paycheck exceeding the minimum wage amount, the City’s
reimbursement demand did not violate the FLSA’s minimum
wage provision. We affirm.
[1] The FLSA requires all covered employers to pay their
employees at least the federal minimum hourly wage every
workweek. 29 U.S.C. § 206. As a “public agency,” the City
is a covered employer under the FLSA and must comply with
the FLSA’s minimum wage requirements. 29 U.S.C. § 203(d).
Additionally, employees cannot waive the protections of the
FLSA, Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707
(1945), nor may labor organizations negotiate provisions that
waive employees’ statutory rights under the FLSA. Barren-
tine v. Arkansas-Best Freight Sys., 450 U.S. 728, 740-41
(1981). Consequently, neither the Conditional Offer nor the
collective bargaining agreement limit Gordon’s right to
receive at least minimum wage.
[2] The United States Department of Labor has adopted
regulations outlining employers’ FLSA obligations. One such
regulation is 29 C.F.R. § 535.31, which provides in pertinent
part:
Whether in cash or other facilities, ‘wages’ cannot
be considered to have been paid by the employer and
18642 GORDON v. CITY OF OAKLAND

-- 7 of 10 --

received by the employee unless they are paid finally
and unconditionally or ‘free and clear.’ The wage
requirements of the Act will not be met where the
employee ‘kicks-back’ directly or indirectly to the
employer or to another person for the employer’s
benefit the whole or part of the wage delivered to the
employee. This is true whether the “kick-back” is
made in cash or in other than cash.
Because Gordon did not allege she was paid below the federal
minimum wage for any given week,3 the only way Gordon
has stated a cognizable claim is if her payment to the City for
a portion of her training costs is a “kick-back” payment as
described in section 535.31.
[3] While this court has not previously addressed this
issue, we find persuasive the Seventh Circuit’s reasoning in
Heder v. City of Two Rivers, Wisconsin, 295 F.3d 777 (7th
Cir. 2002). Heder was decided in the context of a similar
reimbursement scheme for city firefighters. The City of Two
Rivers funded its firefighters’ mandatory paramedic training
but required a firefighter to reimburse the city for the costs of
training if the firefighter left the city’s employment before
completing three years of service. Id. The Seventh Circuit
upheld the reimbursement agreement, comparing it to a loan;
the cost of the training was a loan the city made to its fire-
fighters, repayment of which was forgiven after three years.
Id. at 781-82. If, however, a firefighter left before three years
of service, the loan became due. Id. As long as the city paid
departing firefighters at least the statutory minimum wage, it
3Although the City withheld Gordon’s paychecks for her accrued
unused vacation ($1,295.57) and compensatory time off ($654.77), Gor-
don’s final paycheck demonstrates that she was paid her regular hourly
rate for her final two weeks of work. Gordon does not claim that her
hourly rate was below the $5.85 per hour required by the FLSA at the time
of her employment. 29 U.S.C. § 206(a)(1)(A).
18643 GORDON v. CITY OF OAKLAND

-- 8 of 10 --

could collect the training costs as an ordinary creditor. See id.
at 779.4
[4] The Seventh Circuit’s analysis is applicable here. The
$5,268.03 payment Gordon made to the City is repayment of
a voluntarily accepted loan, not a kick-back. Instead of requir-
ing applicants to independently obtain their police training
prior to beginning employment, which the City could do by
only hiring individuals already possessing a POST certification,5
the City elected to essentially loan police officer trainees like
Gordon the cost of their police academy training. The Condi-
tional Offer Gordon signed explained that the City would for-
give her repayment obligation at the specified rate and that
she would owe nothing after five years of service. Gordon,
however, chose not to serve the five years necessary to secure
complete forgiveness. Despite the debt Gordon owed follow-
ing her resignation, the City satisfied the FLSA’s require-
ments by paying Gordon at least minimum wage for her final
week of work. The City was therefore free to seek repayment
of Gordon’s training debt as an ordinary creditor.
[5] Because Gordon’s repayment of her training costs is
not a kick-back under section 531.35, the training reimburse-
ment agreement does not violate the FLSA since she was paid
at least minimum wage for her final workweek. Accordingly,
4Notably, the California Court of Appeal cites Heder with approval in
its review of the same reimbursement policy at issue here. See Hassey v.
City of Oakland, 163 Cal. App. 4th 1477 (2008). In Hassey, another
departing police officer challenged the City’s repayment demand under
the FLSA. The California Court of Appeal concluded that the plaintiff’s
reimbursement payment was not a kick-back under section 531.35; and
therefore the Conditional Offer’s reimbursement agreement did not violate
the FLSA. Id. at 1486-88.
5The Commission on Peace Officer Standards and Training issues
POST Certificates to individuals who complete training programs pre-
scribed by the Commission. These certificates enable individuals to inde-
pendently utilize their peace officer powers in accordance with Cal. Penal
Code § 830.1, et seq.
18644 GORDON v. CITY OF OAKLAND

-- 9 of 10 --

we affirm the district court’s partial denial of Gordon’s
Motion for Leave to File her Proposed First Amended Com-
plaint.
AFFIRMED.
18645 GORDON v. CITY OF OAKLAND

-- 10 of 10 --