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Monday, November 24, 2014

Martinez v. Joe’s Crab Shack Holdings: Court Reverses Order Denying Class Certification in Misclassification Action

In Martinez v. Joe's Crab Shack (2013) 221 Cal.App.4th 1148 (discussed here) the plaintiffs alleged that the defendants misclassified its salaried managers and assistant managers as exempt from California’s overtime requirements. The trial court denied certification, finding that the plaintiffs failed to establish typicality, adequacy of representation, predominance of common questions, and superiority of the class action mechanism. After the Court of Appeal reversed, the California Supreme Court granted review and remanded in light of its opinion in Duran v. US Bank N.A. (2014) 59 Cal.4th 1 (2014). On remand, the Court of Appeal once again reversed the trial court's decision, holding as follows: 

The trial court erred in finding that the plaintiffs’ claims were not typical of the class and that the plaintiffs would not be adequate class representatives because the plaintiffs' claims would be "vulnerable to the defense that each of them performed exempt tasks more than 50% of their work time." Slip op. at 12-13. Nor did the antagonism "voiced by general managers, who overwhelmingly opposed the litigation," necessarily indicate inadequacy of representation. On remand, the trial court could exercise its discretion to  create a general managers subclass or to exclude general managers entirely from the class. Slip op. at 13-14. 

"The theory of liability in this litigation—that, by classifying all managerial employees as exempt, [defendant] violated mandatory overtime wage laws—is, to paraphrase Brinker, 'by nature a common question eminently suited for class treatment.'" Slip op. at 18. Although such a theory of liability "has the potential to generate individual issues," considerations such as the employer's realistic expectations and the actual overall requirements of the job are "likely to prove susceptible of common proof." Slip op. at 20. Courts in such actions must analyze these common questions, rather than focusing on whether a particular employee was engaged in an exempt or non-exempt task at a given time. Slip op. at 21. Statistical sampling may prove helpful in analyzing these common questions, provided that the use of such sampling "accords the employer an opportunity to prove its affirmative defenses." Slip op. at 22. 

The Court concluded by recognizing that a number of appellate decisions have affirmed trial court decisions denying certification in misclassification actions. 
However, we understand from Brinker, Duran and Ayala that classwide relief remains the preferred method of resolving wage and hour claims, even those in which the facts appear to present difficult issues of proof. By refocusing its analysis on the policies and practices of the employer and the effect those policies and practices have on the putative class, as well as narrowing the class if appropriate, the trial court may in fact find class analysis a more efficient and effective means of resolving plaintiffs’ overtime claim.
Slip op. at 23. 

The opinion is available here

Thursday, November 6, 2014

LACBA Presents "Employment Law Nuts & Bolts" Program 11/15

The Los Angeles County Bar Association is presenting "Employment Law Nuts & Bolts: Discrimination, Harassment, Retaliation and Wage and Hour Law" on Saturday, November 15, 2014, at Loyola Law School in Los Angeles. The program runs from 9:00 am until 12:15 pm.

The program will focus on teaching the law to new attorneys, those in practice less than five years, or those with more experience outside of the employment law field who wish to gain a better understanding of employment law.

The first panel will cover federal and state wage and hour law. I am moderating, with Lauren Teukolsky presenting the employee's perspective and Leslie Abbott presenting the employer's perspective. 

For the second panel, Heather Appleton, Eric Schwettmann, and Art Silbergeld will cover discrimination, harassment, and retaliation. 

More information and registration are available here

Wednesday, November 5, 2014

Dynamex Operations West v. Superior Court: Who Is An Employer? (Revisited)

In Martinez v. Combs (2010) 49 Cal.4th 35 (discussed here), the California Supreme Court held that the broad, three pronged definition of "employer" found in the IWC Wage Orders applies in minimum wages actions brought under Labor Code section 1194. The question after Martinez was whether the Wage Order definition of "employer" would apply in all wage and hour actions or whether courts would continue to look at the multi-factor test found in cases such as S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

Dynamex Operations West, Inc. v. Superior Court (Lee) (10/15/14) --- Cal.App.4th --- addresses these issues.

The plaintiffs in Dynamex filed a class action, alleging that the defendant violated a range of wage and hour laws by classifying them as independent contractors, rather than employees. The defendant petitioned for a writ of mandate after the trial court denied its motion to decertify the class. It argued that the Borello "right to control" test applied, and that individual issues under that test would predominate over common issues. 

The Court of Appeal granted the petition in part, holding that the Wage Order definition of "employer" applies to those claims that fall within the scope of the Wage Order. Slip op. at 12-16. As to claims that fall outside the scope of the Wage Order, the multi-factor test discussed in Borello applies.

The real question becomes this: How do you know whether a claim falls within the scope of the Wage Order? For minimum wage and overtime claims, the answer seems clear. For other types of claims, such as the Labor Code section 2802 reimbursement claim in Dynamex, not so much. One can only assume that this particular issue will require greater clarification.

Incidentally, the Court also held that use of the Wage Order definition is not limited to determining whether an entity is a joint employer. Slip op. at 16, n. 14. 
Rather, it applies in any Wage Order claim in which one's employment status is at issue. This resolves a debate that I had with a number of people after Martinez came down. 

The opinion is available here.

Tuesday, November 4, 2014

Godfrey v. Oakland Port Services Corp.: FAAAA Does Not Preempt Meal and Rest Period Requirements

In People ex rel. Harris v. Pac Anchor Transportation, Inc. (7/28/14) --- Cal.4th --- (discussed here), the California Supreme Court held that an Unfair Competition Law (UCL) action based on a trucking company’s alleged violation of state labor and insurance laws was not “related to a price, route or service” of the company and, therefore, was not preempted by the Federal Aviation Administration Authorization Act of 1994 (FAAAA).

In Dilts v. Penske Logistics, LLC, ___ F.3d ___ (9th Cir. 7/9/14, amended 9/8/14) (discussed here), the Ninth Circuit held that the FAAAA does not preempt California's meal and rest period requirements. 

In Godfrey v. Oakland Port Services Corp. (10/28/14) --- Cal.App.4th ---, the Court of Appeal followed suit, also holding that the FAAAA does not preempt California's meal and rest period requirements. Slip op. at 9-17. 

The opinion is available here.

Wednesday, October 8, 2014

Gomez v. Campbell-Ewald Co.: Rejected Settlement Offer Does Not Moot Individual or Putative Class Claims

Gomez v. Campbell-Ewald Company, ___ F.3d ___ (9th Cir. 9/19/2014) concerns an issue that has arisen more frequently in employment class actions: whether a rejected settlement offer moots individual and/or class claims. See Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___, 133 S.Ct. 1523 (2013) (discussed here).

In Gomez, the plaintiff filed an individual and putative class action under the Telephone Consumer Protection Act (TCPA). The defendant made a Rule 68 offer of judgment for the full amount of the plaintiff’s individual claim, and the plaintiff rejected the offer. After the district court dismissed the action on grounds not relevant here, the plaintiff appealed. The defendant then moved to dismiss the appeal for lack of jurisdiction, arguing that the personal and putative class claims were mooted by Gomez’s refusal to accept the settlement offer. The Ninth Circuit rejected this argument, holding as follows:

Under Ninth Circuit precedent, "an unaccepted Rule 68 offer that would fully satisfy a plaintiff’s claim is insufficient to render the [individual] claim moot," and such an offer, even if made before the plaintiff moves for class certification, does not render the class claims moot. Slip op. at 6-8.

Genesis Healthcare did not change this result. Genesis Healthcare was a putative collective action under the Fair Labor Standards Act (FLSA), rather than a Rule 23 class action. Slip op. at 8-9. As the Supreme Court stated in Genesis Healthcare, and as a number of courts have held since, the precedents established in FLSA collective actions do not apply in Rule 23 class actions.

The opinion is available here.

Monday, September 29, 2014

Kao v. University of San Francisco: Employer Not Required to Enter into Interactive Process before Requiring Fitness-for-Duty Exam

In Kao v. University of San Francisco (8/2/14, pub. 9/2/14) --- Cal.App.4th ---, plaintiff John S. Kao alleged that the University of San Francisco (USF) violated the Fair Employment and Housing Act (FEHA) and other California laws by directing him to have a fitness-for-duty exam (FFD) after faculty members and school administrators reported that his behavior was frightening them, and then terminating his employment when he refused to participate in the examination. He appealed from a judgment against him after jury trial, and the Court of Appeal affirmed, holding as follows:

The law did not require USF to engage in the interactive process because Kao never acknowledged having a disability or sought any accommodation for one.

Unless a disability is obvious, it is the employee’s burden to initiate the interactive process. (Gelfo v. Lockheed Martin Corp (2006) 140 Cal.App.4th 34, 62, fn. 22; 2 Wilcox, Cal. Employment Law (2013) § 41.51[3][b], p. 41-278.) Kao cannot plausibly claim it should have been obvious to USF that he was disabled because he never admitted any disability in the workplace. When a disability is not obvious, the employee must submit “reasonable medical documentation confirm[ing] [its] existence.” (Cal. Code Regs., tit. 2, § 11069, subd. (d)(2).) Kao did nothing of the sort. He provided no information to USF after learning of the university’s concerns other than documents at the October 2008 meeting with [a USF administrator], which were aimed at showing that those concerns were illusory.
Slip op. at 14-15.

USF presented substantial evidence that the FFD was "job related and consistent with business necessity" as required by FEHA, particularly evidence that the FFD was necessary to determine whether Kao posed a danger to others in the workplace. Slip op. at 15-16.

USF did not violate the Unruh Act's prohibition against disability discrimination because "[t]he evidence did not as a matter of law establish that USF had a discriminatory motive in keeping Kao away from campus." Slip op. at 16-17. 

The opinion is available here.

Friday, September 26, 2014

Jimenez v. Allstate: District Court Did Not Err in Certifying Off-the-Clock Class Action

In Jimenez v. Allstate Insurance Company ___ F.3d ___ (9th Cir. 9/3/14), the defendant, Allstate, appealed from an order granting Rule 23 class certification in an action alleging that it had a practice or unofficial policy of requiring its claims adjusters to work unpaid off-the-clock overtime in violation of California law. The Ninth Circuit affirmed, holding as follows:

The plaintiff satisfied the commonality requirement of Federal Rule 23(a)(2) by identifying common questions, the truth or falsity of which would "resolve an issue that is central to the validity of each claim in one stroke":

(i) whether class members generally worked overtime without receiving compensation as a result of Defendant’s unofficial policy of discouraging reporting of such overtime, Defendant’s failure to reduce class members’ workload after the reclassification, and Defendant’s policy of treating their pay as salaries for which overtime was an “exception”; (ii) whether Defendant knew or should have known that class members did so; and (iii) whether Defendant stood idly by without compensating class members for such overtime.
These common questions constituted the "glue" necessary to say that "examination of all the class members’ claims for relief will produce a common answer to the crucial question[s]" raised by the plaintiffs’ complaint. Slip op. at 7-11. 

The plaintiff could use statistical sampling and representative testimony to prove liability, "so long as the use of these techniques is not expanded into the realm of damages." The district court "was careful to preserve Allstate’s opportunity to raise any individualized defense it might have at the damages phase of the proceedings" and "preserved the rights of Allstate to present its damages defenses on an individual basis." As a result, the district court did not err by certifying the class. Slip op. at 11-15.

The opinion is available here.