In re Walgreen Co. Overtime Cases: Court of Appeal Affirms Denial of Certification in Meal Period Class Action

In In re Walgreen Co. Overtime Cases (10/23/14, pub. 11/13/14) --- Cal.App.4th ---, the plaintiffs sought to certify a class of hourly employees on the theory that Walgreens propounded a lawful meal period policy, but in practice Walgreens failed to provide its employees with compliant meal periods. The trial court denied their motion for class certification, and the Court of Appeal affirmed, holding as follows: 

The trial court held that employers must make meal periods available, but need not ensure that their employees actually take those meal periods. Slip op. at 3-6. The trial court thus predicted the eventual holding in Brinker Restaurant Corp. v. Superior Court (2013) 53 Cal.4th 1004, and used the proper criteria to analyze the motion. 

The evidence on certification demonstrated that Walgreens made meal periods available, but that its employees sometimes decided to skip or delay them. Slip op. at 4. The plaintiffs' evidence to the contrary failed to convince the trial court otherwise. 

The plaintiffs introduced expert witness testimony regarding the rate at which Walgreens' time records showed a missed or late meal period. Slip op. at 6. The trial court properly rejected this evidence because it relied on the faulty assumption that every such instance represented a violation of the meal period requirement. 

The plaintiffs introduced emails among Walgreens management regarding missed meal periods, but the emails showed the "significant importance Walgreens attached to the meal break issue and the efforts of Walgreens to provide meal breaks to all employees." Slip op. at 7-8. Rather than showing Walgreens pressuring employees to skip meal periods, the emails showed Walgreens pressuring its management to ensure that meal periods were taken. 

Finally, the plaintiffs introduced employee declarations stating that meal periods were not made available. Slip op. at 8-10. The declarations were unreliable, and numerous employees recanted them in deposition, raising questions about how counsel created them in the first place. 

The opinion is available here.  

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

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

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

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

The Court concluded by recognizing that a number of appellate decisions have affirmed trial court decisions denying certification in misclassification actions. 

However, we understand from Brinker, Duran and Ayala that classwide relief remains the preferred method of resolving wage and hour claims, even those in which the facts appear to present difficult issues of proof. By refocusing its analysis on the policies and practices of the employer and the effect those policies and practices have on the putative class, as well as narrowing the class if appropriate, the trial court may in fact find class analysis a more efficient and effective means of resolving plaintiffs’ overtime claim.

Slip op. at 23. 

The opinion is available here. 

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

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

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

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

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

More information and registration are available here. 

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

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

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

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

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

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

The Court also held that use of the Wage Order definition is not limited to determining whether an entity is a joint employer. Slip op. at 16, n. 14. Rather, it applies in any Wage Order claim in which one's employment status is at issue. 

The opinion is available here.

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

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

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

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

The opinion is available here.