Search This Blog

Monday, December 27, 2010

Sheppard v. North Orange County Occupational Program: Minimum Wage Order Covers Public School Employees

Sheppard v. North Orange County Occupational Program (12/23/10) --- Cal.App.4th ----, 2010 WL 5188768, holds that employees of public entities are covered by the minimum wage protections of the Wage Order and may sue their employers for breach of contract when they fail to pay minimum wage. The plaintiff was employed by an entity created by four public school districts. His employer required him to spend 20 minutes of unpaid time preparing for every hour he spent teaching. He sued his employer for violation of the minimum wage law under Industrial Welfare Commission (IWC) wage order No. 4-2001 and Labor Code section 218, breach of contract, and quantum meruit. Slip op. at 1. The trial court (OCSC Judge Velasquez) sustained demurrers and granted judgment on the pleadings for the defendant.

The Court of Appeal reversed in part and affirmed in part:

We reverse the trial court’s order granting judgment on the pleadings as to the violation of the minimum wage law claim. Sheppard alleged he was employed by a regional occupational program which was the creation of one or more public school districts through Education Code section 52301. We conclude the minimum wage provision in Wage Order No. 4 2001 applies to Sheppard’s employment with NOCROP. We hold the Legislature has plenary authority over public school districts and was constitutionally authorized to vest in the IWC, through section 1173, the power to impose the minimum wage law provision contained in Wage Order No. 4 2001 as to employees of such public school districts. (For the reasons we explain, this holding is limited to employees of public school districts.) We therefore reverse the trial court’s order granting judgment on the pleadings as to the violation of the minimum wage law claim.

We also reverse the order sustaining NOCROP’s demurrer to Sheppard’s breach of contract claim. California Supreme Court precedent establishes that a public employee has a contractual right to earned but unpaid compensation, which is protected by the State Constitution.

We affirm the order sustaining the demurrer to the quantum meruit claim because the Government Claims Act (Gov. Code, § 810 et seq.) bars the assertion of such a claim against a public entity.


Slip op. at 1. The opinion is available here.

Wednesday, December 22, 2010

Azusa Land v. DIR: "Public Work" in Prevailing Wage Action Includes Public Infrastructure Constructed at Private Expense

In Azusa Land Partners v. Department of Industrial Relations (12/21/2010) 191 Cal.App.4th 1, the Court of Appeal held that where a developer contracts with a governmental entity to construct a master planned community, including public infrastructure and improvement work, and the public infrastructure and improvement work is to be funded at least in part with Mello-Roos tax bonds as a condition of regulatory approval for the project, then all construction of required public improvements is "public work" under Labor Code section 1720, and all such construction, including those portions of the public infrastructure constructed at private expense, is subject to prevailing wage requirements. The opinion is available here.

Home Depot v. Superior Court: Court of Appeal Confirms that PAGA Penalties Apply to Wage Order Violations

In Home Depot U.S.A., Inc. v. Superior Court (Harris) (December 22, 2010) --- Cal.App.4th ----, 2010 WL 5175194, the Court of Appeal again confirmed that employees may pursue civil penalties under the Labor Code Private Attorneys General Act (PAGA) for violations of the IWC Wage Orders.

The Wage Order at issue was section of Wage Order 7-2001, which requires employers in the retail industry to provide their employees with "suitable seats when the nature of the work reasonably permits the use of seats." The plaintiffs alleged that Home Depot failed to provide seats, although it has ample room for seats in its cashier and counter areas. Home Depot demurred, arguing that the plaintiffs had no private remedy for the Wage order violation. The trial court (LASC Judge Green) overruled Home Depot's demurrer, and Home Depot petitioned for a writ.

The Court of Appeal affirmed, holding that PAGA, specifically Labor Code section 2699(f), provides a civil penalty for violations of Labor Code section 1198, which provides:
The maximum hours of work and the standard conditions of labor fixed by the commission shall be the maximum hours of work and the standard conditions of labor for employees. The employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful.
Because the Wage order's seating requirement is a "standard condition of labor," violation of the requirement also violates section 1198 and gives rise to a civil penalty under PAGA. (This is the same conclusion that the Court of Appeal reached in Bright v. 99¢ Only Stores (November 12, 2010) 189 Cal.App.4th 1472, which I somehow failed to note when it came down. Mea culpa.) The Court explained:
The first amended complaint alleges that Home Depot has not provided seating for its employees, even though “there is ample space behind each counter/cashier to allow for a stool or seat.” The seating requirement of Wage Order 7-2001 clearly prohibits such conduct.
Slip op. at 12.

A secondary issue was which penalty provision applies: section 2699 or section 20(A) of the Wage Order, which provides:
In addition to any other civil penalties provided by law, any employer or any other person acting on behalf of the employer who violates, or causes to be violated, the provisions of this order, shall be subject to [enumerated civil penalties for the underpayment of wages].
The Court explained that 2699, rather than 20(A), applies to the alleged violation. Slip op. at 13-18.

The opinion is available here.

Tuesday, December 21, 2010

Duran v. U.S. Bank: Superior Court Issues $18 Million Fee Award After Class Action Trial

On December 17, 2010, in Duran v. U.S. Bank, Alameda County Superior Court Judge Robert Freedman issued an $18 million fee award to plaintiffs’ counsel following eight years of litigation and 53 days of trial before the court on misclassification claims by a class of 260 bank employees. The fee award, based on California Code of Civil Procedure section 1021.5, included a 2.25 multiplier.

The underlying case challenged the bank's alleged misclassification, under the outside sales exemption, of a class of 260 employees who provided banking services to small businesses. The case was tried to the court after the plaintiffs dismissed their Labor Code causes of action and proceeded solely on a claim for violation of the Unfair Competition Law (UCL). Cal. Business and Professions Code section 17200.

The Court earlier found that the employees were not properly deemed exempt and entered judgment in their favor for approximately $15 million in unpaid overtime and prejudgment interest. The bank has appealed the judgment.

The plaintiffs had two principal lawyers who sought and were awarded fees for 14,400 hours on the merits, and 168 hours on fee-related services. To show that their hours were reasonable, plaintiffs' counsel moved to compel defense counsel to provide its billing records. The Court ordered defense counsel to provide the hourly rates of its various counsel, the total hours spent by each attorney, and the total amount of attorneys’ fees incurred by Defendant. Those records showed that defense counsel had a total of 42 lawyers working on the cases and spent 22,000 hours.

The Court held that plaintiffs’ successful challenge to defendant's unlawful practices qualified class counsel to an award of reasonable attorneys’ fees under California’s private attorney general fee-shifting statute, Code of Civil Procedure §1021.5 because: (1) plaintiffs enforced important rights affecting the public interest; (2) the litigation conferred significant benefits on a large group of people; (3) plaintiffs' burden was greater than their individual stake in the action; and (4) the interests of justice supported an award against the defendant.

The Court awarded a lodestar of $8.3 million on the merits, awarding fees between $575 and $700 per hour. The Court then applied a 2.25 multiplier based on:
(1) the great risk Plaintiffs’ counsel took in litigating the case on an entirely contingent basis; (2) the negative impact the case had on counsel’s ability to maintain a practice; (3) the exceptional efficiency displayed in obtaining such an exceptional result with only two small law firms with just three attorneys; (4) the exceptional difficulties and complexities of maintaining this action in the face of over eight years of USB’s relentlessly aggressive defense tactics; (5) the public service Plaintiffs’ attorneys performed by enforcing California’s fundamental wage and hour laws, at no expense to the taxpayers; and (6) the fees awarded in comparable cases.
The Court did not apply an enhancement to fees incurred in bringing the motion for fees.

Monday, December 20, 2010

Futrell v. Payday California: Court of Appeal Affirms Finding that Payroll Processing Company Did Not Employ Plaintiff

Futrell v. Payday California, Inc. (December 16, 2010) --- Cal.Rptr.3d ----, 2010 WL 5117629, is one of the first published appellate cases applying the Supreme Court's recent decision in Martinez v. Combs, which defines employment for California wage law purposes. The Court described the case as follows:

This appeal arises from a class action alleging violations of sections of the Labor Code and the federal Fair Labor Standards Act (FLSA) by a payroll processing company operating in the local television commercial production industry. Plaintiffs' primary claim is that the payroll company violated various Labor Code and FLSA wage statutes, including Labor Code sections 510 and 1194 (authorizing a private right of action), by failing to pay statutorily required overtime compensation rates to Plaintiffs. In the context of a motion for summary adjudication of issues (SAI), the trial court ruled the payroll company had not been Plaintiffs' “employer.” The court thereafter entered judgment in favor of the payroll company, and Plaintiffs filed the appeal that comes before us today.

While Plaintiffs' appeal was pending in our court, the Supreme Court decided Martinez v. Combs (2010) 49 Cal.4th 35 (Martinez), cementing at least three employment principles in place which are relevant to the appeal. First, “no generally applicable rule of law imposes on anyone other than an employer a duty to pay wages.” (Id. at p. 49, italics added.) Second, a wage order adopted by the Industrial Welfare Commission (IWC) for a particular occupation, trade or industry, “and not the common law, properly defines the employment relationship in [an] action under section 1194.” (Id. at p. 62; id. at pp. 52-66.) Third, wage orders issued by the IWC “do not incorporate the federal definition of employment” under the FLSA. (Martinez, at p. 52; id. at pp. 66-68.) Because our review of the trial court's ruling on the motion for SAI is de novo (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 114), we now apply Martinez. Having done so, and having separately considered federal case law interpreting the FLSA, we affirm the judgment in favor of the payroll company.

Slip op. at 1. The evidence on summary adjudication included the following:
Payday's evidence in support of its motion for SAI showed that Payday did not hire or fire Futrell or have the authority to do so. Further, the evidence showed Payday did not control Futrell's work, did not set or negotiate his wages, did not assign or supervise his work, did not determine his hours or conditions of employment, and did not set his work schedule. In addition, Payday presented evidence that it never entered into a written or oral employment contract with Futrell.

***

Futrell's evidence showed he completed timecards, employee information sheets, employment eligibility verifications, and W-4 employee withholding certificates provided by Payday, and that Payday collected the information about the hours he worked from the timecards and placed the information into Payday's computer payroll system to generate Futrell's paychecks. The pay stubs provided with Futrell's paychecks identified Futrell as the “employee” and identified Payday as the “employer of record.” Payday furnished W-2 forms which identified Payday as Futrell's “employer.” Futrell also presented evidence that Payday was considered by the Internal Revenue Service as an employer of record for income tax and unemployment insurance purposes. In addition, the evidence showed that the funds accessed for Futrell's paychecks were drawn on Payday's accounts and that Payday paid premiums for workers' compensation insurance and unemployment insurance covering Futrell. Don McVeigh, an expert in “the insurance industry, including matters involving workers' compensation insurance,” submitted a declaration in which he stated that only an “employer” can purchase workers' compensation insurance. Finally, Futrell showed the general practices at Reactor's television commercial productions included a freelance production supervisor working on site “to liaise” with Payday.
Slip op. at 3. The trial court granted the motion, and the Court of Appeal affirmed, holding:
  1. Futrell introduced no evidence to show that Payday controlled his wages, hours, or working conditions (Slip op. at 7);
  2. One "exercises control over workers' wages" when it "has the power or authority to negotiate and set an employee's rate of pay, and not [merely when it] is physically involved in the preparation of an employee's paycheck (Slip op. at 7);
  3. "There is no evidence in the current case Payday allowed Futrell to suffer work, or permitted him to work, because there is no evidence showing Payday had the power to either cause him to work or prevent him from working" (Slip op. at 8);
  4. "Payday did not direct or supervise Futrell at the production sites" or meet any of the secondary indicia of employment (Slip op. at 8-9);
  5. Payday did not employ Futrell under the FLSA "economic realities" test (Slip op. at 9-10).
  6. Payday was not estopped from denying that it employed Futrell "because, even accepting Futrell's evidence that people affiliated with Payday made statements indicating that he was a Payday employee, there is no substantial evidence showing that Futrell did any act - e.g., worked on the side apart from his police officer position - only because Payday made such statements." (Slip op. at 11).
The opinion is available here.

Wednesday, December 15, 2010

Parth v. Pomona Valley Revisited: Ninth Circuit Modifies FLSA Alternate Workweek Decision

On December 13, 2010, the Ninth Circuit amended its decision in Parth v. Pomona Valley Hospital Medical Center, --- F.3d ----, 2010 WL 5064380 (9th Cir. December 13, 2010). The amendment did not affect the outcome. Our discussion of the case, which holds that the Fair Labor Standards Act (FLSA) allows an employer to lower its employees' regular of pay to accommodate their desire to work an alternate workweek schedule, is here.

The amended decision is available here.

Alcazar v. Catholic Archbishop: Ministerial Exemption Bars Minimum Wage Action

In Alcazar v. Corporation of the Catholic Archbishop of Seattle, --- F.3d ----, 2010 WL 5029533 (9th Cir. December 10, 2010), an en banc panel of the Ninth Circuit affirmed an order granting judgment on the pleadings in a case involving a seminarian who alleged that the Church failed to pay him minimum wage in violation of Washington law. The Court held:
Churches, like all other institutions, must adhere to state and federal employment laws. But the federal courts have recognized a “ministerial exception” to that general rule. The exception exempts a church's employment relationship with its “ministers” from the application of some employment statutes, even though the statutes by their literal terms would apply. A key inquiry, therefore, is whether an employee is a “minister” for purposes of the exception. Where, as here, the plaintiff alleges that he “entered the seminary to become a Catholic priest” and performed his duties “in a ministerial placement,” “[a]s part of [his] preparation for ordination into the priesthood,” we hold that he is a “minister” for purposes of the ministerial exception.
Slip op. at 1. The opinion is available here.

Friday, December 10, 2010

In re UPS Wage and Hour Cases: Court of Appeal Affirms Summary Judgment on Exemption Defenses

In In re United Parcel Service Wage and Hour Cases (December 9, 2010) --- Cal.App.3d ----, 2010 WL 4983586, the California Court of Appeal affirmed a trial court order granting summary judgment to the employer on the executive and administrative exemption defenses. The plaintiff had been employed as "an air hub full-time supervisor (Hub Supervisor)," an "on-road supervisor (ORS)," and a "Center Manager" or "business manager." Slip op. at 4.
In all three job positions, Taylor has regularly worked in excess of eight hours a day, often as many as 10 to 12 hours. He also has often felt compelled, due to the press of business, to skip breaks and take a “working lunch,” eating a sandwich at his desk and continuing to work. All three job positions have been salaried positions paying more than double the state minimum wage, starting at approximately $4800 per month as a Hub Supervisor up to his current salary as Center Manager of approximately $7115 per month. Since 1999, Taylor has received Management Incentive Program awards consisting of stock. His annual stock “awards” ranged in value from $9385.59 to $18,506. During that same time period, Taylor has also received annual monetary bonuses equal to a half-month's salary. Nonexempt hourly employees at UPS are not eligible to receive stock awards through the Management Incentive Program. Taylor has supervised numerous hourly employees and lower-level full- and part-time supervisors while holding each of the three job positions.
Ibid.

Considering these facts and others, the Court affirmed the order granting summary judgment. The opinion is available here.

Monday, December 6, 2010

Supreme Court Will Review Dukes v. Wal-Mart

The Supreme Court of the United States this morning granted Wal-Mart's petition for certiorari in Dukes v. Wal-Mart. The Court's order is here. It limits review to the first issue presented by Wal-Mart, then adds a second issue. The two issues to be decided are as follows:
  1. Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2) and, if so, under what circumstances; and
  2. Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).

The Court's docket is here. I do not yet know the briefing schedule, but the Court will decide the case by the close of the session on June 11, 2011.

Tuesday, November 30, 2010

Coleman v. Estes Express Lines: Ninth Circuit Gives Guidelines for Discretionary Appeals of CAFA Issues

In Coleman v. Estes Express Lines, --- F.3d ----, 2010 WL 4925407 (9th Cir. November 30, 2010), the Ninth Circuit addressed an issue that seems to have grown in prominence over just the last month, as the Court has issued a number of Class Action Fairness Act (CAFA) remand cases.

The plaintiff filed a putative class action in state court, and the defendants removed. The district court remanded the case as a "local controversy," and defendant appealed. The Ninth Circuit used the case as an opportunity to articulate rules for determining when it is appropriate to hear a discretionary appeal under CAFA.

The Court adopted guidelines set forth by the First Circuit and adopted by the Tenth Circuit:
In Dental Surgeons, the First Circuit held that a key factor in determining whether to accept an appeal is “the presence of an important CAFA-related question” in the case. Coll. of Dental Surgeons, 585 F.3d at 38. Because discretion to hear appeals exists in part to develop a body of appellate law interpreting CAFA, “[t]he presence of a non-CAFA issue (even an important one) is generally not thought to be entitled to the same weight.” Id. If the CAFA-related question is unsettled, immediate appeal is more likely to be appropriate, particularly when the question “appears to be either incorrectly decided [by the court below] or at least fairly debatable.” Id.
The First Circuit also enumerated several case-specific factors, including the importance of the CAFA-related question to the case at hand and the likelihood that the question will “evade effective review if left for consideration only after final judgment.” Id. The appellate court should also consider whether the record is sufficiently developed and the order sufficiently final to permit “intelligent review.” Id. Finally, the First Circuit observed that the court should conduct the familiar inquiry into the balance of the harms. Id. at 39.
The First Circuit explained, and we agree, that whether to permit appeal under 28 U.S.C. § 1453(c)(1) is ultimately “committed to the informed discretion” of the appellate court. Id. The foregoing criteria are guides, not a series of bright-line rules.
Slip op. at 3. Having adopted these guidelines, the Court granted the application for leave to appeal:
Although the local controversy exception to CAFA jurisdiction is “narrow,” it is nonetheless an enumerated exception to a federal court's CAFA removal jurisdiction. It is intended to “identify ... a controversy that uniquely affects a particular locality” and to ensure that it is decided by a state rather than a federal court. See Evans v. Walter Indus., Inc., 449 F.3d 1159, 1163-64 (11th Cir.2006) (internal quotation marks and citation omitted). The question whether the district court must rely only on the pleadings or should look to extrinsic evidence will often determine whether a case will be remanded under the local controversy exception. This case thus raises an important issue of CAFA law. As the district court recognized, this is an unsettled question in this Circuit. We do not say that district court's decision “appears to be incorrectly decided,” but the array of courts on both sides of the question indicates that it is at least “fairly debatable” and that appellate review would be useful.
Ibid. The opinion is available here.

Rhoades v. Progressive Casualty: Ninth Circuit Reverses CAFA Remand

In an unpublished opinion, the Ninth Circuit Court of Appeals in Rhoades v. Progressive Casualty Ins. Co. (Case No. 10-17129, 9th Cir., November 23, 2010) reversed a district court order remanding a wage and hour class action to state court after the district court found that the defendant failed to carry its burden under the Class Action Fairness Act (CAFA) of showing that the amount in controversy exceeded $5 million. The Court held:
Under CAFA, as in other diversity cases, “the party asserting federal jurisdiction has the burden of showing the case meets the statutory requirements for the exercise of federal jurisdiction and therefore belongs in federal court.” Lewis v. Verizon Communications, Inc., __ F.3d ___, 2010 WL 4645465, 4 (9th Cir. 2010). However, “‘[o]nce the proponent of federal jurisdiction has explained plausibly how the stakes exceed $5 million, . . . then the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.’” Id. (quoting Spivey v. Vertrue, Inc., 528 F.3d 982, 986 (7th Cir. 2008). In assessing whether the defendant has established that the amount in controversy exceeds $5 million, “we expressly contemplate the district court's consideration of some evidentiary record.” Id.
Slip op. at 2. Without discussion, the Court held that the defendant met its burden, and the plaintiff failed to demonstrate that it was "legally impossible" for them to recover $5 million. Slip op. at 3.

Judge Ikuta dissented, noting that Progressive removed the case for a second time after the remand order at issue, the District Court remanded the case for a second time, and Progressive failed to appeal from the second removal order, making its appeal from the first removal order moot. Slip op. at 5-6.

Monday, November 29, 2010

Don't Believe the Hype: SCOTUS Delays Decision on Dukes

We reported last week that the Supreme Court of the United States had decided the fate of the Ninth Circuit's decision in Dukes v. Wal-Mart and would make its decision known this morning at 10:00 a.m. eastern. The Court may have made its decision, but it did not announce that decision this morning. This morning's "Order List" includes one case with the name "Dukes" and one with "Wal-Mart," but no case with both.

According to SCOTUSblog, the Court will consider Dukes at its December 3 conference, which means that it should announce its decision on the morning of December 6. Stay tuned.

Wednesday, November 24, 2010

Gordon v. City of Oakland: City May Require Police Officer to Repay Training Costs Under FLSA

In Gordon v. City of Oakland, --- F.3d ----, 2010 WL 4673695 (9th Cir. November 19, 2010), the Ninth Circuit Court of Appeals held that a city did not violate the minimum wage provisions of the Fair Labor Standards Act (FLSA) by requiring the plaintiff, a former police officer subject to a collective bargaining agreement, to repay a portion of her training costs when she voluntarily left the City's employment before completing five years of service. The Court quoted 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 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.
It then held:
Because Gordon did not allege she was paid below the federal minimum wage for any given week, 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.
Slip op. at 3.

Finally, the Court held that the costs of training were similar to a loan to the plaintiff, not a kickback to the employer, and the City paid the plaintiff at least minimum wage for her final work week before deducting the training costs. Slip op. at 4.

The opinion is here.

Lewis v. Verizon: Ninth Circuit Eases Burden of Proof on CAFA Amount in Controversy Requirements

In Lewis v. Verizon Communications, Inc., --- F.3d ----, 2010 WL 4645465 (9th Cir. November 18, 2010), the Ninth Circuit eased the amount in controversy requirements of the Class Action Fairness Act (CAFA).

The plaintiff filed a class action in Superior Court, alleging that Verizon violated state law by billing telephone subscribers for products and services without their authorization. Verizon removed the case to district court, alleging that its total billings -- not just those alleged to be improper -- exceeded $5 million, exclusive of fees and interest. The court (Gutierrez, C.D.Cal.) granted the plaintiff's motion to remand, and Verizon requested permission to appeal, which the Ninth Circuit granted. Verizon contended on appeal that, "given the Plaintiff's refusal to limit the damages sought [to less then $5 million] and Verizon's showing that the total billings exceed $5 million, the total billings constitute the 'amount in controversy.'" The Ninth Circuit agreed.

The first place to look for the amount in controversy is in the complaint, and the complaint generally controls. Slip op. at 4. However, in the Ninth Circuit, "when the complaint does not contain any specific amount of damages sought, the party seeking removal under diversity bears the burden of showing, by a preponderance of the evidence, that the amount in controversy exceeds the statutory amount." Slip op. at 1.
In what may well be at root a semantic misunderstanding, the district court refused to accept the total billings as representing the amount in controversy. Instead, looking to the allegations of the complaint, it held that the total billings could not represent the amount in controversy because the complaint was claiming liability only for charges that were “unauthorized.” The district court thus assumed total billings would include both authorized and unauthorized charges and held that the Defendant had failed to meet its burden under our case law to show the amount in controversy, i.e., unauthorized charges, exceeded the jurisdictional amount.
There is no evidence or allegation to support this assumption, however. The Plaintiff has alleged that the putative class has been billed for unauthorized charges; the Defendant has put in evidence of the total billings and the Plaintiff has not attempted to demonstrate, or even argue, that the claimed damages are less than the total billed. Indeed, even though it was not apparent in the district court, before us the Defendant has conceded that where proposed class members have been billed for services they did not order, they are entitled to a refund. Hence, on this record, the entire amount of the billings is “in controversy.” The amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability. To establish the jurisdictional amount, Verizon need not concede liability for the entire amount, which is what the district court was in essence demanding by effectively asking Verizon to admit that at least $5 million of the billings were “unauthorized” within the meaning of the complaint.
Slip op. at 4-5.

The opinion is here.

Parth v. Pomona Valley Hospital: FLSA Allows Employer to Change Regular Rate of Pay to Accommodate Alternative Workweek Schedule

In Parth v. Pomona Valley Hospital Medical Center, --- F.3d ----, 2010 WL 4643846 (9th Cir. November 18, 2010), the Ninth Circuit held:
When an employer changes its shift schedule to accommodate its employees' scheduling desires, the employer may reduce the employee pay rate to pay its employees the same wages they received under the former schedule, so long as the rate reduction was not designed to circumvent the provisions (including overtime) of the Fair Labor Standards Act (“FLSA”).
Slip op. at 1. Defendant hospital offered its nurse employees the option of working 8-hour or 12-hour days. Defendant paid those who worked 12-hour days a lower regular rate and daily overtime compensation, so that their weekly pay approximated the pay of those who worked 8-hour days.

In 2003, defendant's nurse employees unionized. The CBA incorporated defendant's shift pay differentials. In 2004, plaintiff filed a collective action, alleging that the shift differentials violated the FLSA. The Court (Morrow, C.D.Cal.) conditionally certified a class, then granted summary judgment in favor of the employer. The Ninth Circuit affirmed.
Parth argues that PVHMC violated the FLSA by creating a pay plan that pays nurses working 12-hour shifts a lower base hourly rate than nurses who work 8-hour shifts. In support of her argument, Parth contends that: (A) PVHMC cannot reduce the base pay for nurses working the 12-hour shift, (B) the 12-hour base pay rate is an “artifice” designed to avoid the FLSA's overtime and maximum hours requirements, and (C) PVHMC cannot justify the base hourly pay rate differences between the 8-hour and 12-hour shifts, because nurses working both shifts perform the same job duties.
Slip op. at 3. The Court disagreed. It held that FLSA does not prevent an employer from lowering its employees' regular rate of pay so that their weekly pay when they work an alternative workweek schedule -- including overtime compensation -- approximates their weekly pay when working a regular schedule. See, e.g., Walling v. A.H. Belo Corp., 316 U.S. 624, 628-30 (1942).

Next, the plaintiff argued that the the 12-hour shift pay plan was "essentially an artifice to avoid paying overtime." Again, the Court disagreed. It held:
First, the reduced rate was agreed to by the employees through the collective bargaining agreement, in which there appears no evidence of improper influence or inequality of bargaining position. The plan provides employees more scheduling flexibility, allows them to spend less time commuting to work (because they spend fewer days at work), and ensures that PVHMC does not retain an incentive to ask the nurses to work longer hours. Second, the rate has been in place since 1989 or 1990 (and applied to Parth since 1993). Third, the rate paid nurses working the 12-hour shift far exceeds the Act's minimum wage.
Slip op. at 7.

Finally, plaintiff argued that defendant's pay plan was unlawful "because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates." Slip op. at 8. Again, the Court disagreed.
We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary. We do, however, find ample authority from other circuits that supports PVHMC's argument that workers working different shifts may be paid different rates. As the Supreme Court has noted, employers and employees are generally free to set the pay rates if minimum wages and overtime payments are paid when due.
Ibid.

The opinion is available here.

Pineda v. Bank of America: Cal. Supremes Clarify Waiting Time Penalty Issues

I expressed surprise when the California Supreme Court granted review in Pineda v. Bank of America to determine, among other things, whether Labor Code Section 203 waiting time penalties could be recovered in an action under the Unfair Competition Law (UCL). It seemed clear to me that such penalties were not subject to restitution under the UCL. The Court issued its decision last week, confirming this analysis. Pineda v. Bank of America (November 18, 2010) --- Cal.Rptr.3d ----, 2010 WL 4643834.

Maybe I should not have been so surprised that the Court decided to review the case. The other issue in Pineda is this:
Does a different statute of limitations apply when an employee seeks to recover only section 203 penalties (because, as in this case, final wages were paid-albeit belatedly-prior to the filing of the action), as opposed to when an employee seeks both final wages and penalties?
Slip op. at 1. This question was complicated by McCoy v. Superior Court (Kimco)(2007) 157 Cal.App.4th 225, which injected a fair amount of confusion into the pretty clear limitations language in Section 203:
Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.
Fortunately, the Court cleared up this confusion by holding: "section 203(b) contains a single, three-year limitations period governing all actions for section 203 penalties irrespective of whether an employee's claim for penalties is accompanied by a claim for unpaid final wages." Slip op. at 5. The Court thus disapproved of McCoy.

I think the Court got it right on both counts. The opinion is available here.

Monday, November 22, 2010

Brookler v. Radioshack Corporation: California Supreme Court Grants Review and Holds Pending Brinker

In Brookler v. Radioshack (August 26, 2010) unpub. 2010 WL 3341816, the Court of Appeal reversed a trial court order denying class certification in a meal and rest period claim. The Court explained:
Citing Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949 (Cicairos), the trial court granted the plaintiffs' motion for class certification of their claims against their employer for failure to provide meal periods as required under the Labor Code. The defendant employer's subsequent motion for decertification was also denied. However, in July 2008, the Fourth District filed its opinion in Brinker Restaurant v. Superior Court (2008) 165 Cal.App.4th 25 (Brinker), holding meal break claims were not amenable to class treatment because the employer need only make meal breaks available, not ensure they are taken. The employer filed another motion for decertification, arguing class certification was inappropriate under Brinker. This time, the trial court granted the motion for decertification. A week later, the California Supreme Court granted review in the Brinker case (review granted Oct. 22, 2008, S166350; see also Brinkley v. Public Storage, review granted Jan. 14, 2009, S168806), to address the proper interpretation of California's statutes and regulations applicable to an employer's duty to provide meal and rest breaks to hourly workers, and the matter is still pending.

Unless and until our Supreme Court holds otherwise, we agree with the analysis in Cicairos which held an employer's obligation under the Labor Code and related wage orders is to do more than simply permit meal breaks in theory; it must also provide them as a practical matter. Accordingly, we reverse.
Slip op. at 1.

On November 17, 2010, the California Supreme Court granted the employer's petition for writ of certiorari, pending Brinker. This increases the list of Brinker grant-and-holds to at least four: Brinkley v. Public Storage; Bradley v. Networkers Int'l LLC; Faulkinbury v. Boyd & Associates; and now Brookler. Brinker, Brinkley, Bradley, Brookler. I guess Faulkinbury is the odd man out.

I believe that the Court also will grant review in Hernandez v. Chipotle Mexican Grill, Inc. (October 28, 2010) --- Cal.App.4th ---, 2010 WL 4244583, even though it doesn't start with "Br."

When the Supremes will hear Brinker is another question entirely.

Dukes v. Wal-Mart: SCOTUS to Announce Certiorari Decision Next Monday

The Supreme Court of the United States will decide in a private session tomorrow whether to grant the petition for certiorari filed by Wal-Mart in Dukes v. Wal-Mart. SCOTUS will announce its decision next Monday, November 29, at 10:00 am. The Court's docket is here.

Friday, November 19, 2010

Kirby v. Immoos: Cal. Supreme Court Grants Review on Attorney Fee Issues

On July 27, 2010, the Court of Appeal affirmed an award of attorney fees to a defendant under Labor Code section 218.5. Kirby v. Immoos Fire Protection, Inc. (July 27, 2010) 113 Cal.Rptr.3d 370. See our blog post here.

Yesterday (while I was mediating a tough class action that we did get resolved), the California Supreme Court announced that it would review Kirby. The Court limited review to the following issues:
  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?

Very interesting questions with some complex arguments involved. The Court's case summary is here. I will add Kirby to our watch list.

Thursday, November 18, 2010

Dalton v. Lee Publications: 9th Circuit Denies Permission to Appeal Order Granting Class Certification

On Tuesday, a split panel of the Ninth Circuit Court of Appeals denied a defendant employer's petition for permission to appeal an order granting class certification. Dalton v. Lee Publications, Inc., --- F.3d ----, 2010 WL 4608799 (November 16, 2010). The plaintiffs deliver newspapers for San Diego's North County Times. They allege that the defendant illegally classifies them as independent contractors, rather than employees. District court judge Barry Ted Moskowitz (S.D. Cal.) certified the class in July. Dalton v. Lee Publications, Inc., --- F.R.D. ----, 2010 WL 2985130 (July 27, 2010).

Circuit Judge Diarmuid F. O'Scannlain dissented from the decision to deny permission to appeal, expressing concerns about the pressure to settle after class certification, the $18 million potential exposure in the case, and the fact that the defendant is "a member of the struggling newspaper industry."

Friday, November 12, 2010

Delodder v. Aerotek, Inc.: Ninth Circuit Allows Appeal from Order Denying Class Certification

The Ninth Circuit Court of Appeals on Monday took the relatively unusual step of allowing a party to appeal a district court order on class certification. Such appeals are discretionary under FRCP 23(f).

On August 16, 2010, the district court (Snyder, C.D. Cal.) denied the plaintiff's motion to certify a class of people employed by defendant Aerotek, Inc., as recruiters and recruiter trainers. The plaintiffs petitioned the Ninth Circuit for permission to appeal, and the Ninth Circuit agreed. Delodder v. Aerotek, Inc., No. 10-80178 (November 8, 2010).

Wednesday, November 10, 2010

AT&T Mobility v. Concepcion: Oral Argument Reviews

The Supreme Court of the United States yesterday heard oral argument in AT&T Mobility Services v. Concepcion, which many believe will have a substantial impact on future class action practice. SCOTUSblog has a review of coverage, as does The UCL Practitioner.

Tuesday, November 9, 2010

Conservatorship of Whitley: Cal. Supreme Court Clarifies CCP 1021.5 Private Attorney General Attorney Fees

In Conservatorship of Whitley (November 8, 2010) --- Cal.4th ---, the California Supreme Court has held that litigants who have personal, non-pecuniary motives to pursue litigation may recover private attorney general attorney fees under Code of Civil Procedure section 1021.5. The Court explained its holding as follows:

Under Code of Civil Procedure section 1021.5, a litigant who acts as a private attorney general and is a successful party in the litigation may under certain circumstances recover attorney fees from the opposing parties. One of the requirements that courts are directed to consider when determining eligibility for attorney fees is "the necessity and financial burden of private enforcement." As explained below, courts have long construed this language to mean, among other things, that a litigant who has a financial interest in the litigation may be disqualified from obtaining such fees when expected or realized financial gains offset litigation costs. What is less clear is whether nonfinancial, nonpecuniary personal interests in the litigation, such as vindicating the best interests of a child or sibling, can also serve to render a litigant ineligible for attorney fees, as some Courts of Appeal have held. That issue is squarely presented by this case.

We conclude that a litigant's personal nonpecuniary motives may not be used to disqualify that litigant from obtaining fees under Code of Civil Procedure section 1021.5. The contrary interpretation, which was adopted by the Court of Appeal in this case, has no basis in the language, legislative history, or evident purpose of section 1021.5. As discussed below, the purpose of section 1021.5 is not to compensate with attorney fees only those litigants who have altruistic or lofty motives, but rather all litigants and attorneys who step forward to engage in public interest litigation when there are insufficient financial incentives to justify the litigation in economic terms. Accordingly, we reverse the Court of Appeal's judgment and remand for proceedings consistent with this opinion.

Slip op. at 1-2. Had the Supreme Court ruled otherwise, defendants in most cases undoubtedly would have argued that the plaintiffs had - at the very least - nonfinancial, nonpecuniary personal interests that should prevent them from recovering section 1021.5 fees.

The opinion is available here.

Monday, November 8, 2010

AT&T Mobility v. Concepcion: SCOTUS Sets Oral Argument in Consumer Arbitration Dispute

On Tuesday, November 9, the Supreme Court of the United States will hear oral argument in AT&T Mobility, LLC v. Concepcion (No. 09-893). This case could decide the future of class action practice in the United States. The questions presented are:
Whether the Federal Arbitration Act preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures - here, class-wide arbitration - when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.
Although I normally don't try to guess how appellate courts will rule, the question's phrasing seems to give a pretty clear indication of where the Court is headed with this one.

It also appears to open the door for lower courts to distinguish this case by finding that class-wide arbitration is necessary in other contexts. See, e.g., Gentry v. Superior Court (2007) 42 Cal.4th 443, discussed here.

Our post on the Ninth Circuit's decision in the underlying matter, Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. October 27, 2009), is here. The Supreme Court's docket for Concepcion is here.

Thursday, November 4, 2010

Ahanchian v. Xenon Pictures: Ninth Circuit Reverses Summary Judgment Where Defense Refuses Reasonable Request for Additional Week

Ahanchian v. Xenon Pictures, 624 F.3d 1253 (9th Cir., November 03, 2010) is another example of the type of overly aggressive litigation tactics that we sometimes see.

This was a copyright infringement action regarding a film. The procedural history bears stating at some length:
Ahanchian filed a complaint on September 17, 2007 against Sam Maccarone (director and writer of the film), Preston Lacy (writer and actor), Xenon Pictures, Inc. (distributor), and CKrush, Inc. (producer) asserting causes of action for copyright infringement, breach of an implied contract, and unfair competition in violation of the Lanham Act. Apparently, Maccarone and Lacy were difficult to locate. Defense counsel for Xenon Pictures, who had been appointed by the district court to represent Maccarone and Lacy, sought additional time to answer Ahanchian's complaint on their behalf. Exhibiting the professional courtesy expected of officers of the court, Ahanchian's counsel stipulated to an extension of time-which stipulation the district court then rejected.
On January 7, 2008, the district court issued its scheduling order establishing, among other deadlines: November 18, 2008, as the date for the commencement of trial; September 2, 2008, as the discovery cut-off date; and September 15, 2008, as the last day for hearing motions. Maccarone and Lacy did not file their answer to the complaint until June 30, 2008. Because of Maccarone and Lacy's late entrance into the litigation, the parties entered into a joint stipulation on July 9, 2008, seeking to extend by twelve weeks all the deadlines established by the scheduling order to allow more time for discovery. The district court again denied the stipulated extension of time, finding that the parties had failed to demonstrate good cause as to why discovery could not be completed by September 2, 2008.
Because the district court's scheduling order set September 15, 2008, as the last day for hearing motions, the local rules in force at the time made August 25, 2008, the last date to file any motion for summary judgment. See C.D. Cal. Local R. 6-1 (2008) (requiring that any motion be filed within twenty-one days before the hearing date). Though there is no indication in the record that they did so, the defendants assert that they informed Ahanchian's counsel on August 6, 2008, that they would be filing a motion for summary judgment. On August 25, 2008, the last possible day for filing, the defendants moved for summary judgment seeking dismissal of all of Ahanchian's claims and for terminating sanctions resulting from a discovery dispute. These motions were accompanied by roughly 1,000 pages of supporting exhibits and declarations. Because the defendants chose to wait until the last day to file their motions, the local rules operated to set a deadline of September 2, 2008-the day after Labor Day-for Ahanchian to review these materials and to prepare and file his oppositions. Ahanchian, therefore, was left with a mere eight days, three over the Labor Day weekend, to draft his oppositions to the motions. See C.D. Cal. Local R. 7-9 (2008) (requiring any opposition to be filed no later than fourteen days before the hearing date); Fed.R.Civ.P. 6(a)(1)(C) (extending deadlines by an additional day where a deadline would otherwise fall on a holiday). Also, Ahanchian's lead counsel was scheduled to travel out of state on August 25 to fulfil a previously-scheduled
commitment.
Given the already unreasonably strained deadlines, within which fell an out-of-state commitment and Labor Day weekend, on August 28, 2008, Ahanchian asked defense counsel to stipulate to a one-week continuance of the hearing date for defendants' motions, along with corresponding one-week extensions of the deadlines for Ahanchian to file oppositions and for defendants to reply. Defense counsel refused to so stipulate. The very next day, on August 29, 2008, Ahanchian filed an ex parte application pursuant to Local Rule 7-19 seeking a one-week extension. Ahanchian recited as good cause for the requested extension of time that: (1) defendants had waited until the last day to file their motions, choosing to file four days before the Labor Day weekend, and with knowledge of pending depositions; (2) the accompanying motions and exhibits amounted to 1,000 pages of materials; (3) Ahanchian's lead counsel had left the state on August 25 on a prescheduled trip and would not be returning until September 2; and (4) Ahanchian, who was needed to respond to the motion, was also out of town over Labor Day weekend. Ahanchian noted that “[n]o party will suffer any prejudice” should the court grant the continuance.
Defendants opposed the motion, arguing that Ahanchian had failed to demonstrate “good cause.” Specifically, they argued that Ahanchian's counsel “knew (or should have known) that the motions would be filed no later than August 25-and yet, for reasons unexplained, this is precisely the date plaintiff's counsel decided to travel ‘out of state.’ Why? No reason is offered.” In a footnote, the defendants posed some hypothetical possibilities: “A family emergency? A conflicting work-related priority? Or a vacation to Mexico? The point is, it is not explained. Absence [ sic ] explanation, good cause cannot be discerned.” As for prejudice, defendants made the weak and false arguments that the requested continuance would give Ahanchian “several weeks to prepare an Opposition,” and yet defendants would have only one week to file their reply. They also asserted that they would have “less time to prepare for
trial.” In point of fact, Ahanchian had requested extensions of time to file both his opposition and for the defendants' replies. Had Ahanchian's request been granted, defendants would have had the full time allowed by the local rules to reply. Moreover, the trial was not scheduled to commence for another three months.
Ahanchian ultimately filed his opposition to the summary judgment motion three days late, on September 5, 2008, at which time he also filed an ex parte application seeking permission to make the late filing. On September 8, 2008, defendants responded by reiterating their opposition to any extension of time, and urging the district court to “ignore” the late opposition. They further suggested that Ahanchian's counsel's representation that he believed the deadline was September 4 was disingenuous, and that Ahanchian had failed to adequately explain the technical computer problems that had resulted in the one-day delay.
On September 10, 2008, in a three-paragraph order, the district court granted defendants' summary judgment motion in full. It simultaneously denied Ahanchian's ex parte motion, concluding, without citing any record support, that Ahanchian, “apparently not pleased with the court's ruling,” had simply failed to file timely oppositions. The court construed Ahanchian's September 5, 2008, ex parte application as a Federal Rule of Civil Procedure 60(b) motion for reconsideration of its denial of Ahanchian's August 29, 2008, request for a one-week extension. The court then denied the motion, citing three authorities: (1) a Fifth Circuit decision concluding that the “inadvertent mistake” of counsel was not a sufficient ground to excuse missing a filing deadline; (2) a Sixth Circuit decision rejecting “calendaring errors” as justification for reconsideration; and (3), finally, an inapposite Ninth Circuit decision that suggests a party should sue its lawyer for malpractice rather than bring a Rule 60(b)(1) motion when it comes to regret an action based on erroneous legal advice.
Meanwhile, in its summary judgment order, the court correctly observed that Ninth Circuit precedent bars district courts from granting summary judgment simply because a party fails to file an opposition or violates a local rule, and also correctly cited its obligation to analyze the record to determine whether any disputed material fact was present. It then effectively flouted both legal principles, stating that it had reviewed only the defense evidence, even though it knew the opposition papers were already filed, having ruled upon the accompanying motion for a late filing. Unsurprisingly, based on only defendants' version of the facts, the court concluded that defendants were not liable on any claim and granted judgment in their favor.
624 F.3d at 1256-1258.

The Ninth Circuit reversed:
Procedure “is a means to an end, not an end in itself-the ‘handmaid rather than the mistress' of justice.” Charles E. Clark, History, Systems and Functions of Pleading, 11 Va. L.Rev. 517, 542 (1925). While district courts enjoy a wide latitude of discretion in case management, this discretion is circumscribed by the courts' overriding obligation to construe and administer the procedural rules so as “to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed.R.Civ.P. 1. These consolidated appeals arise from a district court's refusal to exercise discretion consistent with the dictates of Rule 1.
624 F.3d at 1254-1255.

The Court held that the district court abused its discretion, first by denying Ahanchian's motion for an extension of time, and then by denying his request that the Court accept his late-filed papers. The Court had very harsh words for defense counsel:
Perhaps contributing to the district court's errors and certainly compounding the harshness of its rulings, defense counsel disavowed any nod to professional courtesy, instead engaging in hardball tactics designed to avoid resolution of the merits of this case. We feel compelled to address defense counsel's unrelenting opposition to Ahanchian's counsel's reasonable requests. Our adversarial system depends on the principle that all sides to a dispute must be given the opportunity to fully advocate their views of the issues presented in a case. See Indep. Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th Cir.2003); Iva Ikuko Toguri D'Aquino v. United States, 192 F.2d 338, 367 (9th Cir.1951). Here, defense counsel took knowing advantage of the constrained time to respond created by the local rules, the three-day federal holiday, and Ahanchian's lead counsel's prescheduled out-of-state obligation. Defense counsel steadfastly refused to stipulate to an extension of time, and when Ahanchian's counsel sought relief from the court, defense counsel filed fierce oppositions, even accusing Ahanchian's counsel of unethical conduct. Such uncompromising behavior is not only inconsistent with general principles of professional conduct, but also undermines the truth-seeking function of our adversarial system. See Cal. Attorney Guidelines of Civility & Professionalism § 1 (“The dignity, decorum and courtesy that have traditionally characterized the courts
and legal profession of civilized nations are not empty formalities. They are essential to an atmosphere that promotes justice and to an attorney's responsibility for the fair and impartial administration of justice.”); see also Marcangelo v. Boardwalk Regency, 47 F.3d 88, 90 (3d Cir.1995) (“We do not approve of the ‘hardball’ tactics unfortunately used by some law firms today. The extension of normal courtesies and exercise of civility expedite litigation and are of substantial benefit to the administration of justice.”).
Our adversarial system relies on attorneys to treat each other with a high degree of civility and respect. See Bateman, 231 F.3d at 1223 n. 2 (“[A]t the risk of sounding naive or nostalgic, we lament the decline of collegiality and fair-dealing in the legal profession today, and believe courts should do what they can to emphasize these values.”); Peterson v. BMI Refractories, 124 F.3d 1386, 1396 (11th Cir.1997) (“There is no better guide to professional courtesy than the golden rule: you should treat opposing counsel the way you yourself would like to be treated.”). Where, as here, there is no indication of bad faith, prejudice, or undue delay, attorneys should not oppose reasonable requests for extensions of time brought by their adversaries. See Cal. Attorney Guidelines of Civility & Prof. § 6.
Id. at 1262-1263.

At the risk of sounding naive or nostalgic, I also lament the decline of collegiality and fair-dealing in the legal profession today and believe all attorneys should emphasize these values in their daily practice. I hope that cases like Ahanchian will serve as reminders that we all suffer when we fail to treat each other with the respect and professional courtesy that we all deserve.

The opinion is available here.

Wednesday, November 3, 2010

Dilts v. Penske Logistics: District Court Certifies Off-the-Clock, Meal, and Rest Period Action

Thank you to Michael Singer for pointing out Dilts v. Penske Logistics, LLC, 267 F.R.D. 625 (April 26, 2010). The plaintiffs are truck drivers and installers who were assigned to engage in off-site delivery and installation of appliances. They allege that their employer, a logistics company, failed to pay for off-the-clock work, failed to provide meal and rest periods, failed to endmnify them for business expenses and losses, and failed to pay wages upon separation.

The district court (S.D. Cal., Janis L. Sammartino, J.) initially denied the plaintiffs' motion for class certification because of concerns with the class definitions. On plaintiffs' renewed motion, plaintiffs asked the court to certify one class and twelve subclasses, e.g., "Subclass One: All Class Members who had 30 minutes wages deducted every shift by Defendants' automatic meal period time deduction (Wage Deduction Subclass)." Id. at 631. Defendant conceded that these class definitions "would allow the Court to determine [class] membership through objective criteria." The court thus found that the class was adequately defined. Id. at 632.

The Court found that the Rule 23(a) factors were present and that common legal and factual issues predominated regarding plaintiffs' claims and that class treatment was superior to individual actions.

On plaintiffs' off-the-clock claim, which arose from defendants' policy of auto-deducting 30 minutes each day, whether the employee took a meal period or not, the court held:
After reviewing these arguments, the Court finds that common issues predominate with respect to this subclass. The ultimate underlying factual issue is the existence of the thirty minute auto-deduct. If class members were not paid for time they actually worked, then Defendant is liable. And there is no question that Defendant deducted thirty minutes per day regardless of whether a break was taken. Thus, the common issues predominate over the individual issues on the question of liability. As to measure of damages, that will require more individualized inquiry. However, individualized questions going to damages do not preclude a finding that common questions predominate. Blackie, 524 F.2d at 905 (“The amount of damages is invariably an individual question and does not defeat class action treatment.”).
Id. at 635. Regarding plaintiffs' meal and rest period claims, the court held:

Given the facts, the Court finds that Plaintiffs have demonstrated that common issues of law and fact predominate. The first issue to deal with is the employer's obligation with respect to meal periods under California law. The legal uncertainty about this issue has been a recent source of heartburn for courts. Although it is presently before the California Supreme Court in Brinker Restaurant v. Superior Court, until that decision has issued this Court must proceed as best it can.

As such, the Court finds that California meal break law requires an employer to affirmatively act to make a meal period available where the employee are relieved of all duty. See Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949, 35 Cal.Rptr.3d 243, 252-53 (2006) (“[T]he defendant's obligation to provide the plaintiffs with an adequate meal period is not satisfied by assuming that the meal periods were taken, because employers have ‘an affirmative obligation to ensure that workers are actually relieved of all duty.’ ”); Brown v. Fed. Express Corp., 249 F.R.D. 580, 585 (C.D.Cal.2008) (“It is an employer's obligation to ensure that its employees are free from its control for thirty minutes.”). An illusory meal period, where the employer effectively prevents an employee from having an uninterrupted meal period, does not satisfy this requirement. Cicairos, 35 Cal.Rptr.3d at 252-53; Brown, 249 F.R.D. at 585. However, the employee is not required to use the provided meal period.

Thus, the question here is whether Defendant, by its policies, failed to provide meal breaks to the putative class members. Or, put another way, whether Defendant's policies effectively denied driver/installers and installers uninterrupted lunch periods. The majority of Plaintiff's evidence as to this question is anecdotal, consisting of the declarations of driver/installers and installers. Plaintiffs also offer some evidence from an employee of Defendant stating that dispatchers did not schedule lunches.

***

In weighing the common and individual issues, the Court finds that common issues predominate. These claims center around defendant's policies in terms of whether meal and rest breaks were available. Although drivers' circumstances varied, they were all ultimately controlled by the same set of central policies, including the delivery schedules and auto-deduct system. These issues are sufficient to find predominance.

Id. at 638-639.

Regarding plaintiffs' expense reimbursement (LC 2802) claims, the court held:
The Court finds that Plaintiffs have shown that common issues predominate. The putative class members were engaged in a common type of job and performed common tasks. Given this commonality of employment obligation, an expense which is “necessary” for a class member to do his job would also be “necessary” for any other class member. And although the measure of damages is a clearly individual issue, such issues do not preclude a finding that common questions predominate. Blackie, 524 F.2d at 905. Therefore, because the underlying legal issues and many of the factual determinations are common to all class members, the Court finds that common issues predominate with respect to the reimbursement subclasses.
Id. at 639-640. Regarding plaintiffs' "derivative" claims (LC 226, LC 203, and B&P 17200), the court held:
With respect to these three subclasses, the Court finds that common issues predominate. As both sides agree, if Plaintiffs' other claims can be tried on a class wide basis, these claims are also ripe for class adjudication. Given the numerous common issues detailed above, the Court finds that common questions predominate with respect to these subclasses.
Id. at 640.

Voters Approve Tani Cantil-Sakauye as Next California Supreme Court Chief Justice

California voters have approved Tani Cantil-Sakauye as the next chief justice of the Supreme Court of California. About two thirds of voters agreed to give Cantil-Sakauye a 12-year term on the Court. Voters also approved 12-year terms for justices Ming Chin and Carlos R. Moreno on similar margins. Cantil-Sakauye will take the oath of office on January 3, 2011.

No Overtime for Public Employees Absent CBA, Court of Appeal Holds

It's been a bad few weeks for California's correctional peace officers.

In California Correctional Peace Officers’ Association v. State of California (August 18, 2010, publ. September 17, 2010) 188 Cal.App.4th 646 ("CCPOA I"), the Court of Appeal held that Labor Code Sec. 512 and 226.7, which require employers to provide employees with meal periods or pay them for their missed peal periods, and Industrial Welfare Commission (IWC) Wage Order No. 17-2001, which sets wage and hour standards for "miscellaneous employees," do not apply to employees who work for public entities. Our post on CCPOA I is here.

In California Correctional Peace Officers’ Association v. State of California (October 29, 2010) --- Cal.App.4th ----, 2010 WL 4262046 ("CCPOA II"), the Court of Appeal held that, in the absence of a collective bargaining agreement, Government Code section 19851 does not mandate the payment of overtime compensation to correctional peace officers who work more than eight hours per day or 40 hours per week. Slip op. at 1.

For those who are interested in public employment issues, the opinion is available here.

Monday, November 1, 2010

McCaskey v. CSAA: Employer May Be Bound By Oral Promise of Relaxed Performance Standards for Older Employees

McCaskey v. California State Automobile Association (October 29, 2010) --- Cal.App.4th ----, 2010 WL 4261437, presents an unusual set of facts and holding. The Court described the case as follows:
Plaintiffs ... brought these actions against [defendants] charging breach of contract and age discrimination. The gist of the claims was that defendant brought about plaintiff's discharges by breaching a promise to permit senior sales agents to continue in their employ under relaxed sales quotas. The trial court entered summary judgment for defendants primarily on the grounds that they were contractually entitled to rescind the promise, and that plaintiffs failed to raise a triable issue of fact concerning defendants' claimed nondiscriminatory reasons for eliminating the policy. We find that the record raises a triable issue of fact on the contract claim over the question whether defendants honored the policy for an agreed time, or if no agreement as to time can be inferred from the terms and circumstances of the employment contract, for a reasonable time. The record also presents triable issues of fact concerning the genuineness of defendants' claimed reasons for eliminating the policy. Accordingly, we will reverse the judgment.
Slip op. at 1.

The opinion is available here.

Burke v. Ipsen: Court Affirms Judgment In Union Election Dispute

Burke v. Ipsen (October 29, 2010) --- Cal.App.4th ----, 2010 WL 4261474, covers ground that we normally don't cover here, but the discussion of private attorney general fees under Code of Civil Procedure 1021.5 caught my eye. This is an area that we deal with frequently in class and representative actions. Here's the background for the case, as described by the Court of Appeal:

A member of a union filed a petition for a writ of mandate in the trial court, seeking to compel the union to conduct an election of officers and directors and to set aside the union's recently amended bylaws. The petition alleged violations of the Corporations Code and the union‘s original bylaws.

The union opposed the petition on the ground that plaintiff had failed to exhaust administrative remedies by not presenting his claims to the local employee relations commission.

The trial court concluded plaintiff did not have to exhaust administrative remedies because his claims involved internal union affairs, which the employee relations commission did not have the authority to resolve. The court granted the petition and issued a writ of mandate directing that an election be conducted and declaring the amended bylaws invalid. In subsequent proceedings, the court awarded attorney fees to plaintiff under the private attorney general statute, Code of Civil Procedure section 1021.5. The union appealed.

We agree with the trial court that plaintiff did not have to exhaust administrative remedies because the court was the proper tribunal to enforce the Corporations Code and the union's original bylaws in a dispute involving internal union affairs. We also conclude that the trial court did not abuse its discretion in awarding attorney fees under a private attorney general theory.

Slip op. at 1. On the attorney fee issue, the Court held that:
In determining whether to award attorney fees under Code of Civil Procedure section 1021.5, a trial court ―must consider whether: (1) plaintiffs' action has resulted in the enforcement of an important right affecting the public interest, (2) a significant benefit, whether pecuniary or nonpecuniary has been conferred on the general public or a large class of persons and (3) the necessity and financial burden of private enforcement are such as to make the award appropriate. We conclude the trial court did not err in finding that all three factors were satisfied.
Slip op. at 23. The Court held that (1) the right of union members to insure that their unions maintain fair and reasonable election procedures is an important right that affects the public interest, (2) the judgment in favor of the union member would confer a significant benefit on more than 1,000 union members, and (3) it was appropriate to award attorney fees to the plaintiff, who had no greater stake in the litigation than any other union member. Slip op. at 23-24. The Court thus affirmed the order granting the plaintiff his fees.

The opinion is available here.

Friday, October 29, 2010

Dukes v. Wal-Mart: Plaintiffs File Opposition to Wal-Mart Petition for Certirorari

On October 21, 2010, plaintiffs filed their opposition to the petition for certiorari filed by Wal-Mart in Dukes v. Wal-Mart Stores, Inc. The introduction lays out the arguments:

The Petition seeks review of an interlocutory class certification order that the appeals court affirmed in part, reversed in part, and remanded for reconsideration on two issues central to the questions presented by Petitioner. Class certification orders are inherently provisional, but the two issues still to be resolved render this order particularly ill-suited for certiorari review at this time. As a result, the Petition raises questions that this case does not present – and may never present. The request for review is, thus, premature.

The First Question ["Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances"] posits the existence of a circuit split as to whether and how “monetary relief” claims may be certified in a Rule 23(b)(2) injunctive class action. While the circuits have treated claims for legal damages under Rule 23(b)(2) somewhat differently, there is no circuit split presented by the en banc ruling, as the only form of monetary relief that the Ninth Circuit allowed to proceed collectively was equitable back pay. All the circuits that have addressed the issue agree that equitable back pay may properly be certified in a Rule 23(b)(2) class action.

The Second Question ["Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23"] – an amalgam of purported errors, large and small, based on a host of legal doctrines – makes little pretense of meeting this Court’s requirements for certiorari. No circuit split exists as to any of these issues. Instead, the Petition exhorts this Court to second-guess the case-specific findings of the district court or to adopt, in the first instance, legal theories never accepted by any appellate court.

Petitioner returns repeatedly to the refrain that the certified class is very large, a fact that is indisputably true but legally irrelevant. The class is large because Wal-Mart is the nation’s largest employer and manages its operations and employment practices in a highly uniform and centralized manner. The district court was keenly aware of the implications of the class size but ultimately concluded that “Title VII . . . contains no special exception for large employers.” App. 165a. The certification decision was firmly grounded in this Court’s Title VII class action jurisprudence and “[c]ertification does not become an abuse of discretion merely because the class has 500,000 members.” App. 112a (Graber, J., concurring).

Sorry for the long block quote, but the intro does a good job of laying out the arguments. I understand that we should know by the end of November whether the Court will grant cert.

Our post on Wal-Mart's petition is here. The opposition brief and other relevant documents are available here. The Supreme Court's docket is here.

Hernandez v. Chipotle: Court of Appeal Jumps Into Brinker Breach

Lately we've been hearing about some trial court judges wanting to stay cases that include meal and rest period claims until the Supreme Court decides Brinker v. Superior Court (Hohnbaum). Never mind that no one knows when the Court will decide Brinker or exactly what issues it will decide. People seem to forget that the Court has no deadline for hearing cases on its docket, as demonstrated by the fact that it took more than five years to decide Martinez v. Combs.

The trial court in Hernandez v. Chipotle Mexican Grill, Inc. (October 28, 2010) --- Cal.App.4th ---, 2010 WL 4244583, decided not to wait for Brinker.

Rogelio Hernandez worked at a Chipotle restaurant as an hourly worker. He sued Chipotle for failure to provide meal and rest periods to hourly employees. Chipotle moved to deny class certification, and Hernandez moved to certify the class. The Court found Hernandez had established numerosity, ascertainability, typicality, and adequacy, but denied certification on the grounds that individual issues predominated over common issues, and class treatment was not superior to individual actions.
The trial court held that with regard to rest breaks, as conceded by Hernandez, employers need only authorize and permit such breaks, which means to make them available. The trial court recognized that the California Supreme Court had granted review of two cases to decide whether California law required employers to ensure employees take meal breaks, or if the proper standard was that employers need only provide employees with the opportunity to take such breaks. The trial court concluded the Supreme Court likely was to decide California employers were required to provide employees with the ability to take breaks, not to ensure breaks be taken. The trial court further ruled that although there were common questions regarding whether Chipotle's policy was to provide breaks, whether employees “missed or received shorten[ed] meal and rest breaks[,] and whether such constituted an unfair business practice, these questions do not predominate.” The trial court stated that if the Supreme Court held employers had to ensure employees take breaks, class action treatment of this case would be appropriate.

The trial court found that class adjudication of the wage and hour break claims was not manageable, nor would it provide a substantial benefit to the court or parties. Rather, individual inquiry was “required to determine if [Chipotle] is liable for denying proper meal and rest breaks to each of its thousands of employees.” Further, adjudication of these individual issues rendered classwide adjudication unmanageable because, even if an employee's time record indicated a break was missed, that in and of itself did not establish that Chipotle failed to provide, authorize or permit the employee to take a meal or rest break. Additionally, Hernandez failed to present a clear outline of how the court and parties could use a sampling of testimony to address all of the individual questions that had to be answered.
Slip op. at 3-4.

The Court of Appeal affirmed. First, the Court held that employers must make meal and rest periods available, not ensure that they are taken. Slip op. at 5-6. The Court distinguished Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949 on grounds that Cicairos relied on a now withdrawn DLSE opinion letter and that the employer in Cicairos effectvely precluded its employees from taking their meal and rest periods. Slip op. at 6-7.

The Court next held that California law did not foreclose the trial court from addressing the "make available v. ensure" issue in the context of class certification.
[N]either Linder [v. Thrifty Oil Co. (2000) 23 Cal.4th 429] nor other Supreme Court authority forecloses courts from examining a legal issue in addressing certification. “[Linder] said only that a plaintiff need not establish a likelihood of success on the merits in order to obtain class certification. It does not follow that, in determining whether the criteria of Code of Civil Procedure section 382 are met, a trial or appellate court is precluded from considering how various claims and defenses relate and may affect the course of the litigation, considerations that may overlap the case's merits.
Slip op. at 8. The Court distinguished the recent decision in Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, on the following grounds:
In Jaimez, Division One of this district reversed the denial of class certification in a case that, like Cicairos, involved employees who were on the road most of the day or at customers' places of business. Jaimez found it unnecessary to decide whether employers need only “provide” meal breaks and not ensure employees take them. The declarations established there were predominant common factual issues whether the employees missed meal breaks because of the employer's practice of designating delivery schedules and routes that made it impossible for employees to both take their breaks and complete their deliveries on time. Before 2006, the employer had a practice of deducting 30 minutes per shift for meal breaks even if no break was taken, and after 2006, employees had to sign a manifest indicating they took a meal break, regardless of whether they took the break, in order to get paid. Since the employer's practices presented the predominant common factual issues on the meal and rest break claims, Jaimez did not have to consider whether the employer violated a duty to provide or to ensure breaks. Jaimez does not hold that in every wage-and-hour case, even those presenting entirely different factual issues, courts may not consider the merits of a legal issue in order to rule on class certification. The trial court appropriately decided the threshold legal issue as it could not otherwise assess whether class treatment was warranted.
Slip op. at 8.

Given the foregoing, the Court held that the trial court did not abuse its discretion in denying class certification. The Court held that: substantial evidence supported the trial court's finding that individual issues predominate (slip op. at 8); the employer's time records did not demonstrate that Hernandez could prove classwide failure to provide meal and rest periods (slip op. at 9); Hernandez's evidence did not undermine the trial court's ruling (slip op. at 9); and there was substantial evidence of conflicts of interest among the putative class members because some class members also acted as supervisors and some class members may accuse others of violating the wage laws (slip op. at 10).

People have asked me whether this decision gives any indication of which way the Supreme Court will decide Brinker or might influence the Court in Brinker. The answer to both questions is no.

A few years ago, when we were all waiting for a decision in Murphy v. Kenneth Cole, several appellate courts and federal district courts published decisions on the same issue. The strong majority held that meal and rest period compensation was a penalty, not a wage. The Supreme Court granted review of the California cases and held pending its decision in Murphy.

I remember being on an MCLE panel with a well-known defense attorney the day after the Murphy oral argument. He boldly predicted that the Court would hold that meal period compensation was a penalty.

Of course, the majority of courts and my colleague were wrong. The Supreme Court in Murphy held that meal and rest period compensation is a wage.

I assume that the Supreme Court will grant the plaintiff's petition for review in Hernandez and hold pending Brinker. If the Court ultimately decides that employers need only make meal and rest periods available, it will be because the Court finds that to be the most reasonable and persuasive interpretation of the law, not because appellate courts or district courts said so.

The opinion is available here.