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Friday, January 30, 2009

Post-Judgment Costs of Collection and Bankruptcy

I find this decision interesting, given the current economic climate and the number of employers who threaten to file bankruptcy when their employees ask to be paid lawful wages. On December 30, 2008, the California Court of Appeal held that Code of Civil Procedure Section 685.040, which allows a judgment creditor to recover reasonable and necessary attorney fees incurred in "enforcing" a judgment, applies to those attorney fees that creditor incurrs in a debtor’s post-judgment bankruptcy proceeding. Chinese Yellow Pages Company v. Chinese Overseas Marketing Service Corporation (December 30, 2008, Second District, Division Five).

Class Member Contact Information is Discoverable

A very important recent case addressed an unfortunate defense tactic that has grown more prevalent since the California Supreme Court held that class action plaintiffs are entitled to discover the names and contact information for putative class members.

In Pioneer Electronics, Inc. v. Superior Court (2007) 40 Cal.4th 360, the plaintiff filed a class action law suit alleging that the defendant had sold a defective dvd player. The plaintiff sought contact information for every consumer who had complained to the defendant about the dvd player. The defendant objected that providing the contact information would violate the consumers' right of privacy. The California Supreme Court held that the consumers did have a right of privacy in their contact information, but that the plaintiff's interest in communicating with them outweighed that right. The Court held that sending a letter to the class members allowing them to "opt out" of having their contact information disclosed would adequately protect the consumers' contact information.

Some defense attorneys in wage and hour class actions have reacted to Pioneer by having their clients get their employees to sign statements that they don't want their contact information provided to anyone, including class action plaintiffs. Very clever, right? Maybe not.

In Crab Addison, Inc. v. Superior Court (Martinez) (December 30, 2008) the Second District Court of Appeal, Division Seven, considered exactly this situation. An employee filed a class action against a restaurant alleging wage and hour violations: failure to pay overtime, failure to provide meal breaks and rest breaks, etc. The employee then did what plaintiffs always do in class actions: he asked the employer for the names and contact information of the employees who would fall into the class. The employer objected that the employees had a "heightened privacy interest" their contact information, because some of them had signed statements saying that they did not want the employer to give their contact information to anyone, including any plaintiffs in hypothetical class action law suits. The trial court apparently recognized how easy it would be for an employer to coerce its employees into signing these types of statements and ordered the employer to turn over the contact information. The employer filed a petition for writ of mandate, asking the Court of Appeal to overturn the trial court's decision.

The Court of Appeal upheld the trial court's decision. First, the Court reviewed Pioneer and two post-Pioneer decisions that confirmed an employee's right to obtain class member contact information in class action discovery: Puerto v. Superior Court (2008) 158 Cal.App.4th 1242 and Lee v. Dynamex, Inc. (2008) 166 Cal.App.4th 1325.

Second, the Court reviewed the Supreme Court's recent decision in Gentry v. Superior Court (2007) 42 Cal.4th 443, which held that, under certain circumstances, an arbitration agreement that forces employees to give up their right to pursue class action litigation (a class action waiver) "would result in a de facto waiver of statutory rights 'and would impermissibly interfere with employees' ability to vindicate unwaivable rights and to enforce the overtime laws.'" The Court of Appeal drew the following lessons from Gentry:
Gentry highlights the importance placed on the rights of employees to bring class action lawsuits to enforce their statutory rights to overtime pay. So high is the importance of these rights that courts may invalidate contractual provisions that infringe upon them.

Gentry also highlights the dangers of placing in the employer's hands the responsibility for notifying employees of the pending litigation and requiring employees to opt in to the litigation. Current employees may decline to opt in to the litigation for fear of retaliation by their employer. This in turn could immunize the employer from liability for violation of statutory wage and overtime requirements. This would violate the public policy protecting employee rights.
The public policy concerns expressed in Gentry weigh against enforcing a release form that may have the effect of waiving an employee's right to notice of a pending class action lawsuit concerning the employer's alleged violations of overtime and wage statutes.
Turning its attention from public policy concerns to the specifics of the documents that the Crab Addison employees had signed, the Court noted that they were signed after the litigation was filed, but "there is nothing in the record to suggest that the employees who indicated they did not want their contact information disclosed to third parties, or they wanted to consider disclosure on a case-by-case basis, did so knowingly, that is, with knowledge of the pending litigation and the fact the release form would affect their ability to be included in the class." Given this concern that the employer should have advised the employees of the litigation before asking them to sign the forms, the Court held:
Employees indicating that they did not want their contact information disclosed, or wanted disclosure on a case-by-case basis, were unaware at the time they signed the forms of the pending litigation to enforce their statutory wage and overtime rights through a class action lawsuit. We may presume that, had they known about the litigation, their response on the form would have been different.
Given the public policy concerns that favor providing class member contact information to plaintiffs and the concerns about the forms signed by some of the Crab Addison employees, the Court of Appeal upheld the trial court's order requiring the employer to turn over the class members' contact information without further delay.


I am a lawyer and advocate for employees who focuses on making sure that employees are paid correctly. The California Wage and Hour Law Blog for Employees focuses on wage and hour law issues of importance to employees: Overtime, Meal Breaks, Rest Breaks, Proper Pay Checks, Waiting Time Penalties, Independent Contractors vs. Employees, Exempt v. Non-Exempt Employees, Class Actions, the Unfair Competition Law (UCL), Business and Professions Code Section 17200, the Fair Labor Standards Act (FLSA), and the Consumer Legal Remedies Act (CLRA).

You can get more information about me and The Pearl Law Firm at our web site:

Thursday, January 22, 2009

Supreme Court Takes Brinker Off the Table

The California Supreme Court has granted the plaintiffs' petition for review in Brinker Restaruant v. Superior Court (Hohnbaum). As phrased by the Supremes, Brinker "presents issues concerning the proper interpretation of California's statutes and regulations governing an employer's duty to provide meal and rest breaks to hourly workers." Got that right!

The Supreme Court's docket for Brinker is here.