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Wednesday, April 25, 2012

Brinker v. Superior Court: Detailed Analysis

Brinker v. Superior Court (4/12/12) --- Cal.4th ---, was probably the most highly anticipated Supreme Court employment law decision since Murphy v. Kenneth Cole (2007) 40 Cal. 4th 1094 (meal and rest period compensation constitute a wage, not a penalty). While most of the public has focused only on the question of what it means to “provide” a meal period, the opinion discusses a number of other issues and is a mixed bag for employers and employees.

The Cliff Notes Version

On the one hand, the Court adopted the neither the plaintiffs' nor the defendant’s standard for meal periods, but it rejected the plaintiff’s “rolling five” theory, rejected the theory that employers must authorize and permit employees to take rest periods before any meal period, and rejected certification of the plaintiff’s off-the-clock claims.

On the other hand, the Court held that trial courts typically should not decide legal issues – such as the nature of the employer’s duty to provide meal periods – until after certification, rejected the Court of Appeal’s interpretation of rest period timing requirements, affirmed the trial court’s order certifying rest period claims, and sent the meal period claims back to the trial court to reconsider certification.

Most surprisingly, Justice Werdegar wrote a concurring opinion, in which only Justice Liu joined, addressing certification standards, burdens of proof, and methods of proof at trial. This part of the opinion is certain to engender substantial disagreement between employer and employee advocates. 


Trial Courts Need Not Resolve Disputes over a Claim’s Elements at Certification


The Court of Appeal held that the trial court erred by failing to resolve questions about the employer’s duty to provide meal and rest periods before deciding certification. The Supreme Court reversed this holding:

While we agree trial courts must resolve any legal or factual issues that are necessary to a determination whether class certification is proper, the Court of Appeal went too far by intimating that a trial court must as a threshold matter always resolve any party disputes over the elements of a claim. In many instances, whether class certification is appropriate or inappropriate may be determined irrespective of which party is correct. In such circumstances, it is not an abuse of discretion to postpone resolution of the disputed issue.
Slip op. at 10 (italics in original). Issues affecting the merits may be intertwined with certification requirements, and when they do, the court may consider them. However, “such inquiries are closely circumscribed.” Slip op. at 12.
We summarize the governing principles. Presented with a class certification motion, a trial court must examine the plaintiff's theory of recovery, assess the nature of the legal and factual disputes likely to be presented, and decide whether individual or common issues predominate. To the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them. Out of respect for the problems arising from one-way intervention, however, a court generally should eschew resolution of such issues unless necessary. Consequently, a trial court does not abuse its discretion if it certifies (or denies certification of) a class without deciding one or more issues affecting the nature of a given element if resolution of such issues would not affect the ultimate certification decision.
Slip op. at 13-14. In other words, the trial court did not abuse its discretion by postponing a legal decision on the obligation to provide meal and rest periods, and it may not have abused its discretion by determining those issues at the certification stage, but courts should be very careful about making such determinations before certification. This seems to leave the door open – even if just a crack – for judges who choose to determine dispositive legal issues at the start, rather than waiting until after certification. 

Rest Periods: How Many? 

The Court reversed the Court of Appeal on this issue. It held that an employer must authorize and permit its employees to take one rest period every four hours or major fraction thereof, unless the daily work time is less than 3 ½ hours. Thus:

Employees are entitled to 10 minutes rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.
Slip op. at 20.

Rest Periods: When?

The Court rejected the plaintiff’s argument that the Wage Order requires employers to authorize and permit a rest period before any meal period. Slip op. at 22. “[I]n the context of an eight-hour shift, ‘[a]s a general matter,’ one rest break should fall on either side of the meal break. Shorter or longer shifts and other factors that render such scheduling impracticable may alter this general rule.” Slip op. at 23.

Rest Period Certification

The Court held that the trial court did not abuse its discretion in certifying the rest period class. Slip op. at 24. Brinker adopted a uniform corporate rest period policy that applied to all employees. Slip op. at 24-25. Whether Brinker’s policy violated California law can be shown through common proof. Slip op. at 25.

Demonstrating liability does not require individualized proof.

An employer is required to authorize and permit the amount of rest break time called for under the wage order for its industry. If it does not – if, for example, it adopts a uniform policy authorizing and permitting only one rest break for employees working a seven-hour shift when two are required – it has violated the wage order and is liable. No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it. As Hohnbaum pleaded and presented substantial evidence of a uniform rest break policy authorizing breaks only for each full four hours worked, the trial court's certification of a rest break subclass should not have been disturbed.
Slip op. at 25-26. Although a victory for employees, this holding is relatively narrow in that it only applies to employers whose policies violate the rest period requirements. Employees much more commonly allege that the employer’s policies comply with the law, but that the employer failed to follow its own meal and rest period policy. We will have to wait and see whether trial courts will certify such claims post-Brinker.

The Employer’s Duty to Provide Meal Periods

An employer must relieve its employees of all duty during the 30-minute meal period, but need not ensure that the employees do no work during that period. Slip op. at 27. 

The Court found that an off-duty meal period is defined by its opposite: the on-duty meal period. The Wage Order provides that employer and employee may agree to an on-duty meal period – i.e., one during which the employee is not relieved of all duty – when the nature of the work prevents the employee from being relieved of all duty. Slip op. at 28. Absent such circumstances and an agreement, the employer must relieve the employee of all duty. Ibid. Stated differently, “Employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please.” Slip op. at 31.

The Court rejected the plaintiff’s argument that the employer must ensure that employees do no work during their meal periods. Slip op. at 32. The Court found no support for this position in the Wage Order or Labor Code section 512. As Justice Liu’s questioning indicated at oral argument, the Court found a potential conflict between a duty to ensure that no work is done and the employer’s duty to relinquish all employee control during meal periods. Slip op. at 33.

An employer does not violate the Wage Order when it “suffers or permits” an employee to work through a meal period. Id. at 35. The employer complies with the Wage Order by relieving the employee of duty, whether the employee continues to work or not.

On the other hand, an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks. The wage orders and governing statute do not countenance an employer's exerting coercion against the taking of, creating incentives to forego, or otherwise encouraging the skipping of legally protected breaks.
Id. at 36.

If the employer knows or reasonably should know that work continues through the meal period, the employer will be liable to the employees for the time worked, but not for the one hour of premium pay that is required when an employer violates the meal period requirement. Slip op. at 35, fn. 19.

This section of the opinion is very important. On the one hand, the Court said that to provide a meal period is to relieve of duty, but not to ensure. On the other hand, the Court warns employers against attempting to coerce employees not to take their meal periods. And the Court cites to the cases that employee advocates have been arguing: Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962–963; Jaimez v. DAIOHS USA, Inc. (2010) 181 Cal.App.4th 1286, 1304-1305; and Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 638 (S.D.Cal.2010).

The Court did not determine whether employees will be able to certify cases in which they allege that employers with facially compliant meal period policies coerced against the taking of, created incentives to forego, or otherwise encouraged the skipping of meal and rest periods. We undoubtedly will see further litigation on this issue in the future.

Meal Period Timing

The Court concluded that, “absent waiver, section 512 requires a first meal period no later than the end of an employee's fifth hour of work, and a second meal period no later than the end of an employee's 10th hour of work.” Slip op. at 37.

The plaintiff argued that the law also requires a second meal period no later than five hours after the end of the first meal period. This is the so-called “rolling five” requirement. The plaintiff argued that this requirement prevents employers from requiring employees to take their meal periods early in their shifts and then return to work for periods in excess of five hours – so-called “early lunching.”

The Court rejected the plaintiff’s argument, finding no support for such a requirement in section 512. Slip op. at 39. Further, although the Wage Orders previously contained a rolling five requirement, the IWC abandoned this requirement after the Legislature passed AB 60 – the Eight Hour Workday Restoration Act – in 1999. Slip op. at 44.

Meal Period Certification

The plaintiff sought, and the trial court granted, certification of a class of employees who “worked one or more work periods in excess of five (5) consecutive hours, without receiving a thirty (30) minute meal period during which the Class Member was relieved of all duties...” The Court found that this class definition was overbroad in that it included employees who would only have claims under the “rolling five” concept. Slip op. at 50. The Court remanded to the trial court for reconsideration in light of its decision. Slip op. at 51.

Off-the-Clock Certification

Finally, the Court found that the trial court erred in certifying a class of employees who worked off the clock without pay. Slip op. at 51. This was an off-shoot of the plaintiff’s meal period claim: he alleged that Brinker required employees to work off the clock during their unpaid meal periods.

The Court found no common policy or common method of proof that would allow the plaintiff to prove liability on a class-wide basis. Slip op. at 52.

The only formal Brinker off-the-clock policy submitted disavows such work, consistent with state law. Nor has Hohnbaum presented substantial evidence of a systematic company policy to pressure or require employees to work off the clock, a distinction that differentiates this case from those he relies upon in which off-the-clock classes have been certified.
Slip op. at 52.
On a record such as this, where no substantial evidence points to a uniform, companywide policy, proof of off-the-clock liability would have had to continue in an employee-by-employee fashion, demonstrating who worked off the clock, how long they worked, and whether Brinker knew or should have known of their work.
Ibid.

Concurring Opinion on Class Certification Issues

Justice Werdegar, who wrote the per curiam opinion, also wrote a concurring opinion, in which only Justice Liu joined. She wrote regarding meal period certification, “to emphasize what our opinion does not say.” Slip op. at 1. “[T]he opinion of the court does not endorse Brinker's argument, accepted by the Court of Appeal, that the question why a meal period was missed renders meal period claims categorically uncertifiable.” Ibid. (ital. in original).

Justice Werdegar notes that the Wage Order requires employers both to relieve employees of duty during their meal periods “and to record having done so.” Ibid. “If an employer's records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” Ibid. And the employer bears the burden of proving as an affirmative defense that it relieved the employee of duty, but the employee chose to work. Slip op. at 2.

While individual issues arising from an affirmative defense can in some cases support denial of certification, they pose no per se bar. Instead, whether in a given case affirmative defenses should lead a court to approve or reject certification will hinge on the manageability of any individual issues.
Slip op. at 3.
For purposes of class action manageability, a defense that hinges liability vel non on consideration of numerous intricately detailed factual questions, as is sometimes the case in misclassification suits, is different from a defense that raises only one or a few questions and that operates not to extinguish the defendant's liability but only to diminish the amount of a given plaintiff's recovery. We have long settled that individual damages questions will rarely if ever stand as a bar to certification.
Ibid.

Finally, she turned to a theme that plaintiffs’ lawyers have been urging for years, since the Court’s decision in Sav-On:

[W]e have encouraged the use of a variety of methods to enable individual claims that might otherwise go unpursued to be vindicated, and to avoid windfalls to defendants that harm many in small amounts rather than a few in large amounts. Representative testimony, surveys, and statistical analysis all are available as tools to render manageable determinations of the extent of liability.
***
Given these settled principles, Brinker has not shown the defense it raises, waiver, would render a certified class categorically unmanageable. Instead, it remains for the trial court to decide on remand, in the fullness of its discretion, whether in this case methods exist sufficient to render class treatment manageable. As to that question, neither the full court nor I express any opinion.
Slip op. at 4.

Conclusion

With the departures of Carlos Moreno and Ronald George from the Court and the additions of Tani Cantil-Sakauye and Goodwin Liu, this is a Court that appears to be looking for its identity, at least in employment law cases. See Harris v. Superior Court (2011) 53 Cal.4th 170 (blogged here). Justice Werdegar’s concurring opinion, joined only by Liu, combined with the extended time necessary for the Court to issue its opinion, tells me that the Court had a difficult time reaching a per curiam decision and may not be functioning as well as it has in the recent past. It will be very interesting to see how the Court handles cases going forward, such as the pending Kirby v. Immoos Fire Protection Services.

1 comment:

  1. Nice job on the analysis!

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