Steven G. Pearl Named Super Lawyer in Dispute Resolution and Labor & Employment Law

For the second year in a row, I have been named a Super Lawyer in Alternative Dispute Resolution and Labor and Employment Law by Super Lawyers Magazine. 

Super Lawyers is a rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations, and peer evaluations. Five percent of the total lawyers in the state are selected as Super Lawyers.  

Reyes v. Macy’s: Defendant Cannot Appeal Order Compelling Arbitration of Individual Claims but Not Class or PAGA Claims

In Reyes v. Macy’s, Inc. (12/21/11, pub. 1/19/12) --- Cal.App.4th ----, 2011 WL 6416432, the plaintiffs filed an action alleging individual discrimination, harassment, and retaliation claims, class wage and hour class claims, and representative claims under PAGA. The employer moved to compel individual arbitration, dismiss the class allegations, and stay the court action. The trial court (San Francisco Superior, Judge Charlotte Walter Woolard) severed the individual claims and ordered them into arbitration. The court declined to dismiss the class and representative claims, but stayed them pending arbitration. The employer appealed, and the employee moved to dismiss the appeal.

The Court of Appeal granted the motion to dismiss. The Court held that that portion of the trial court's order granting the motion to compel arbitration of the individual claims is not appealable, and the remainder of the order denying the motion to dismiss representative claims is not a final judgment and, therefore, also is not appealable at this time. Slip op. at 1. The Court reasoned that the employer had not sought to compel arbitration of the class and representative claims, so the order denying the motion to dismiss them was not appealable. Cal. Code Civ. Proc. 904.1. Slip op. at 3.

Rejecting the employer's argument that the employee's PAGA claims also were individual claims, the Court held:

[P]laintiff may not and does not bring the PAGA claim as an individual claim, but “as the proxy or agent of the state’s labor law enforcement agencies.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 986.) “The purpose of the PAGA is not to recover damages or restitution, but to create a means of ‘deputizing’ citizens as private attorneys general to enforce the Labor Code. [Citation.] [T]he relief is in large part ‘for the benefit of the general public rather than the party bringing the action.’ ” (Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 501.)

*** 

A plaintiff asserting a PAGA claim may not bring the claim simply on his or her own behalf but must bring it as a representative action and include “other current or former employees.” (Machado v. M.A.T. & Sons Landscape, Inc. (E.D.Cal., July 23, 2009, No. 2:09-cv-00459 JAM JFM) 2009 U.S.Dist. Lexis 63414, *6.) In Machado, the district court, using the “common acceptation” of the word “and,” held that the claim must be brought on behalf of other employees. (Ibid.) “The PAGA statute does not enable a single aggrieved employee to litigate his or her claims, but requires an aggrieved employee “on behalf of herself or himself and other current or former employees to enforce violations of the Labor Code by their employers.” (Urbino v. Orkin Services of California Inc. (C.D.Cal Oct. 5, 2011, No. 2:11-cv-06456-CJC(PJWx)) 2011U.S. Dist. Lexis 114746, *22; see also Plows v. Rockwell Collins, Inc. (C.D.Cal. Aug. 9, 2011, No. SACV 10-01936 DOC (MANx)) 2011 U.S.Dist. Lexis 88781, *14; Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th 489.) Because the PAGA claim is not an individual claim, it was not within the scope of Macy’s request that individual claims be submitted to arbitration and the court’s order may not be construed as a denial of any such request.

Slip op. at 3-5.  

This is one of the few published California appellate decisions discussing PAGA, and as far as I know it is the only one holding that a plaintiff may not bring a PAGA claim only on his or her own behalf, but must include other current or former employees.  Someone feel free to correct me if I'm wrong about that.  Also, it's interesting that the Court relied on unpublished district court opinions on this point.  

The opinion is available here.

Bridgeford v. Pacific Health: Class Cert Denial Does Not Establish Collateral Estoppel Against Absent Class Members

In Smith v. Bayer Corp., 564 U.S. ---, 131 S.Ct. 2368, 2011 WL 768649 (6/16/11) (blogged here) the Supreme Court of the United States held that a District Court's denial of a Rule 23 class certification motion does not prevent separate plaintiffs from seeking certification in a separate state court action.  

In Bridgeford v. Pacific Health Corporation (1/18/12) --- Cal.App.4th ----, 2012 WL 130615, the California Court of Appeal held that denial of class certification in one action does not prevent absent class members from filing a second class action making the same allegations.

The plaintiffs filed a putative class action alleging minimum wage, overtime, and other wage and hour violations. The defendants demurred, arguing that the plaintiffs were collaterally estopped from seeking class certification because the issue of class certification was decided in an earlier putative class action. The trial court (Los Angeles Superior, Judge Zaven V. Sinanian) sustained the demurrer without leave to amend, holding that the trial court in the earlier action had rendered a final decision on the merits of “the issue of class certification,” and  the plaintiffs could not bring a class action on either the same causes of action or additional causes of action against the same defendant or additional defendants because such causes of action could not have been asserted in the prior litigation. Slip op. at 6-7.  

The Court of Appeal reversed. It rejected those cases in which "California courts have held or suggested that the denial of class certification can establish collateral estoppel against absent putative class members on issues that were actually decided in connection with the denial." Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1236; Bufil v. Dollar Financial Group, Inc. (2008) 62 Cal.App.4th 1193, 1202-1203; Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1510-1513 & fn. 8.  The Court concluded, "to the contrary that if no class was certified by the court in the prior proceeding, the interests of absent putative class members were not represented in the prior proceeding and the requirements for collateral estoppel cannot be established...." Slip op. at 11.

Relying on the Supreme Court's decision in Smith v. Bayer, the Court held that "the denial of class certification cannot establish collateral estoppel against unnamed putative class members on any issue because unnamed putative class members were neither parties to the prior proceeding nor represented by a party to the prior proceeding so as to be considered in privity with such a party for purposes of collateral estoppel." Slip op. at 12-13. 

The opinion is available here.

Zelasko-Barrett v. Brayton-Purcell: Supreme Court Grants Review and Holds Pending Kirby v. Immoos

In Zelasko-Barrett v. Brayton-Purcell, LLP (8/17/11) 198 Cal.App.4th 582, the Court of Appeal held that a law school graduate who was not licensed to practice law but who worked for a law firm and performed tasks customarily performed by junior attorneys was exempt as a learned professional. My post on Zelasko-Barrett is here. I thought the Supreme Court would grant and hold pending its decision in Harris v. Superior Court (12/29/11) --- Cal.4th ----, 2011 WL 6823963, which most people thought would shed light on the white collar exemptions. (As it turned out, Harris shed little light on anything, but that's a different story.)

Yesterday, the Supreme Court did in fact grant review in Zelasko-Barrett, but on a different point. The back story is this: after the Court of Appeal issued its August 17 decision, it issued an unpublished decision (available here) on October 24, 2011, holding that the successful employer could not recover its attorney fees under Labor Code section 218.5. This is at issue in Kirby v. Immoos Fire Protection, Inc., which will address the following:

1. Does Labor Code section 1194 apply to a cause of action alleging meal and rest period violations (Lab. Code 226.7) or may attorney's fees be awarded under Labor Code section 218.5?
2. Is our analysis affected by whether the claims for meal and rest periods are brought alone or are accompanied by claims for minimum wage and overtime?

So Zelasko-Barrett becomes the second Kirby grant-and-hold. The other is In re. UPS Wage and Hour Cases (blogged here). I thought the Court might grant review in Plancich v. United Parcel Service, Inc. (8/11/11) 198 Cal.App.4th 308 (blogged here) in which the Court of Appeal held that while Labor Code section 1194 gives a prevailing employee the right to recover attorney's fees and costs, it "does not contain express language excluding prevailing employers from recovering their costs." Turns out I'm a lousy judge of grant-and-holds. Go figure.

The Supreme Court's Kirby page is here.  

Raniere v. Citigroup: District Court Holds Collective Action Waiver Unenforceable as Preventing Employees From Vindicating Substantive Statutory Rights under the FLSA

Thank you to Andrew Frisch for his Overtime Law Blog. Mr. Frisch does a truly excellent job of covering FLSA developments, and I recommend his blog highly. Mr. Frisch has written a detailed article on an interesting District Court case, Raniere v. Citigroup Inc. (S.D.N.Y. 11/22/11). I will not review the case in detail but will only note a few important points.

In Raniere, three individuals brought a putative nationwide FLSA collective action for unpaid overtime, alleging that the defendants classified its home mortgage consultants as exempt employees and failed to pay them overtime compensation. The defendant moved to compel individual arbitration, and the Court denied the motion. Slip op. at 2.

First, the Court based its ruling in the "federal substantive law of arbitrability," which "requires federal courts to declare otherwise operative arbitration clauses unenforceable when enforcement would prevent plaintiffs from vindicating their statutory rights." Slip op. at 30. The Court stated that AT&T Mobility v. Concepcion "in no way alters" this federal law of arbitrability. Slip op. at 32.

Second, the Court held that employees cannot waive their right to proceed collectively under the FLSA, and "a waiver of the right to proceed collectively under the FLSA is per se unenforceable." Slip op. at 36.

Third, because the agreement at issue included a "blow-up" provision -- a clause stating that if the collective action waiver is found unenforceable, then the action shall proceed in court, rather than in arbitration -- the Court declined to order class arbitration or to stay the court proceedings. Slip op. at 51.

The opinion is available here. Mr. Frisch's post on Raniere is here.  

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC:

I am mediating more cases that fall outside of the wage and hour realm, and wanted widen the blog's focus to include more traditional employment law.  

In Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, --- S.Ct. ----, 2012 WL 75047 (1/11/12), the Supreme Court considered whether a minister may sue her church for wrongful termination based on acts of discrimination. In a unanimous opinion written by Chief Justice Roberts, the Court held that the Establishment and Free Exercise Clauses of the First Amendment bar such actions.

Cheryl Perich worked as a teacher for Hosanna-Tabor. She was considered "called," meaning that she was regarded as having been called to her vocation by God through a congregation. She taught academic and religious classes and led the students in prayer. Perich was diagnosed with narcolepsy and went on disability leave. When Perich advised the school that she was able to return to work, it told her that it had filled her position. After Perich showed up for work, Hosanna-Tabor terminated her.

Perich filed a charge with the Equal Employment Opportunity Commission (EEOC), alleging that Hosana-Tabor had terminated her employment in violation of the Americans with Disabilities Act (ADA). 42 U. S. C. §12101 et seq. The EEOC filed suit, alleging that Hosanna-Tabor had fired Perich in retaliation for threatening to file an ADA lawsuit. Hosanna-Tabor moved for summary judgment, arguing that Perich was a minister, and she had been fired for a religious reason - namely, that her threat to sue the Church violated the Synod’s belief that Christians should resolve their disputes internally. The District Court agreed that the suit was barred by the ministerial exception and granted summary judgment in Hosanna-Tabor’s favor. The Sixth Circuit Court of Appeals vacated the decision, but the Supreme Court granted certiorari and affirmed.

The Court began by tracing the history of the First Amendment Establishment and Free Exercise Clauses from the Magna Carta, through the reign or Henry VIII, to the founding of the colonies by the Puritans, and the early days of the United States. The principal lesson drawn from this history is that the government under the First Amendment has no role in telling a church whom to choose as its minister. In the words of then Secretary of State James Madison in 1806, the selection of church functionaries was an “entirely ecclesiastical” matter left to the Church’s own judgment. Slip op. at 9.

The Court then considered whether "this freedom of a religious organization to select its ministers is implicated by a suit alleging discrimination in employment." Slip op. at 13. The Court held that there is a “ministerial exception,” grounded in the First Amendment, that precludes application of anti-discrimination legislation to claims concerning the employment relationship between a religious institution and its ministers. Ibid.

The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions.

Slip op. at 13-14.

The Court then held that the ministerial exception applied to the facts of the present case. The Court declined to set a bright line rule on the limits of the ministerial exemption and instead looked to the particular facts of the case, including: Hosanna-Tabor held Perich out as a minister; her title as a minister "reflected a significant degree of religious training followed by a formal process of commissioning;" Perich held herself out as a minister of the Church by accepting the formal call to religious service; and her job duties reflected a role in conveying the Church’s message and carrying out its mission. Slip op. at 16-18. The Court concluded:

The interest of society in the enforcement of employment discrimination statutes is undoubtedly important. But so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith, and carry out their mission. When a minister who has been fired sues her church alleging that her termination was discriminatory, the First Amendment has struck the balance for us. The church must be free to choose those who will guide it on its way.

Slip op. at 21-22.

The opinion is available here.

CompuCredit Corp. v. Greenwood: New SCOTUS Arbitration Decision May Shed Light on Future of Employment Class Action Waivers

In CompuCredit Corp. v. Greenwood, --- S.Ct. ----, 2012 WL 43514 (1/10/12) the Supreme Court of the United States (SCOTUS) considered whether the Credit Repair Organizations Act (CROA), 15 U.S.C. § 1679 et seq., precludes enforcement of an arbitration agreement in a lawsuit alleging violations of that Act. The plaintiffs filed a putative class action under the CROA, the defendant moved to compel arbitration, the trial court (N.D.Cal., Judge Claudia Wilken) denied the motion, and the Ninth Circuit affirmed. 

In an opinion written by Justice Scalia, the Supreme Court reversed.  First, the CROA's provision requiring credit repair organizations to notify consumers of their right to sue ("You have a right to sue a credit repair organization that violates the Credit Repair Organization Act") is a notification provision, not a private right of action provision (which occurs elsewhere in the CROA) and "does not create a right to initial judicial enforcement."  Slip op. at 4.  

Second, the CROA's non-waiver language ("Any waiver by any consumer of any protection provided by or any right of the consumer under this subchapter—(1) shall be treated as void; and (2) may not be enforced by any Federal or State court or any other person") does not prohibit the waiver of one's right to proceed in court because, again, the CROA "does not create a right to initial judicial enforcement."  Ibid.  

Because the CROA "is silent on whether claims under the Act can proceed in an arbitrable forum, the FAA requires the arbitration agreement to be enforced according to its terms."  Slip op. at 6. 

This brings to my mind the somewhat related issue in the National Labor Relations Board's recent decision in D.R. Horton, Inc. (blogged here).  In D.R. Horton, the Board held that an employer violates Section 8(a)(1) of the National Labor Relations Act (NLRA) when it requires employees covered by the Act, as a condition of employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, whether arbitral or judicial.  The Board emphasized that its holding did not implicate the Federal Arbitration Act (FAA) because the policy at issue prohibited collective or class actions in any forum, not just in arbitration.  However, even if the NLRA did conflict with the FAA, the FAA would have to yield: 

[U]nder the Norris-LaGuardia Act, a private agreement that seeks to prohibit a “lawful means [of] aiding any person participating or interested in” a lawsuit arising out of a labor dispute (as broadly defined) is unenforceable, as contrary to the public policy protecting employees’ “concerted activities for . . . mutual aid or protection.” To the extent that the FAA requires giving effect to such an agreement, it would conflict with the Norris-LaGuardia Act. The Norris-LaGuardia Act, in turn—passed 7 years after the FAA,—repealed “[a]ll acts and parts of act in conflict” with the later statute (Section 15). 

Would this reasoning hold in the Supreme Court?  Addressing federal laws that prohibit arbitration, Justice Scalia in CompuCredit wrote: 

When [Congress] has restricted the use of arbitration in other contexts, it has done so with a clarity that far exceeds the claimed indications in the CROA. See, e.g., 7 U.S.C. § 26(n)(2) (2006 ed., Supp. IV) (“No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section”); 15 U.S.C. § 1226(a)(2) (2006 ed.) (“Notwithstanding any other provision of law, whenever a motor vehicle franchise contract provides for the use of arbitration to resolve a controversy arising out of or relating to such contract, arbitration may be used to settle such controversy only if after such controversy arises all parties to such controversy consent in writing to use arbitration to settle such controversy”); cf. 12 U.S.C. § 5518(b) (2006 ed., Supp. IV) (granting authority to the newly created Consumer Financial Protection Bureau to regulate predispute arbitration agreements in contracts for consumer financial products or services).

Slip op. at 5.  Justice Sotomayor, joined by Justice Kagan, joined in the result, but added this note: 

The majority opinion contrasts the liability provision of the Act with other, more recently enacted statutes that expressly disallow arbitration. I do not understand the majority opinion to hold that Congress must speak so explicitly in order to convey its intent to preclude arbitration of statutory claims. We have never said as much, and on numerous occasions have held that proof of Congress' intent may also be discovered in the history or purpose of the statute in question.  See ibid. (“If such an intention exists, it will be discoverable in the text of the [statute], its legislative history, or an ‘inherent conflict’ between arbitration and the [statute's] underlying purposes”); Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 227, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (“If Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent ‘will be deducible from [the statute's] text or legislative history,’ or from an inherent conflict between arbitration and the statute's underlying purposes” (quoting Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); citation omitted)). 

Slip op. at 8.  

If the Supreme Court does eventually take up the Board's decision in D.R. Horton, it is possible that the decision will turn on the question of whether Congress, in enacting the NLRA and the Norris-LaGuardia Act, intended the employee protections of those acts to trump the policies at work in the FAA.  

Until then, the Court's opinion in CompuCredit is available here.