Gutierrez v. Wells Fargo Bank: Ninth Circuit Rules on Preemption and Class Certification In Action Alleging that Bank Charged Improper Overdraft Fees

In Gutierrez v. Wells Fargo Bank, NA, 704 F.3d 712 (9th Cir. Dec. 26, 2012), the plaintiffs alleged that Wells Fargo violated the Unfair Competition Law (UCL) by imposing overdraft fees based on the high-to-low posting order and by misleading clients as to the actual posting order used. The district court enjoined Wells from using the high-to-low method and ordered it to pay over $200 million in restitution. Wells appealed, and the Ninth Circuit affirmed in part and reversed in part, holding:

Wells waived the right to demand arbitration by failing to make the demand in the district court, and only doing so on appeal, and ordering the case into arbitrate would frustrate, rather than advance, the Federal Arbitration Act (FAA) goal of expeditious litigation. Slip op. at 10-17.

The National Bank Act of 1864, 12 U.S.C. § 1 et seq., preempts application of the UCL's "unfair" prong to control a bank's method of posting transactions. Slip op. at 17-25. 

The National Bank Act does not preempt application of the UCL's "fraudulent" prong to control a bank's use of allegedly fraudulent communications with customers regarding the method of posting transactions or the impact of use of that method.  Slip op. at 25-30. 

The district court did not err in finding that the plaintiffs had standing to pursue the UCL claims because each had read and relied upon the bank's statements regarding its posting methods.  Slip op. at 30-31.  

The district court did not err in certifying the class because "class members, like the named plaintiffs, were exposed to the materials and likely relied on them." Citing Tobacco II, 46 Cal. 4th at 312 (to establish fraud under the Unfair Competition Law, plaintiffs must show 'that members of the public are likely to be deceived').  Slip op. at 31-32. 

In a line that reminds me of Jimmy Fallon's Capitol One commercials, the court said: "Unlike McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 223 (2d Cir. 2008) ... where individual class members could have had different motives for choosing 'light' cigarettes, we are hard pressed to agree that any class member would prefer to incur multiple overdraft fees." Slip op. at 32.  

Finally, the Court held that the district court did not err in holding that "Wells Fargo violated the Unfair Competition Law by making misleading statements likely to deceive its customers."  Slip op. at 32-34.  

The opinion is available here. 

Ramirez v. Balboa Thrift and Loan: Court of Appeal Reverses Denial of Class Certification in UCL Action

Ramirez v. Balboa Thrift and Loan (3/21/13, pub. 4/22/13) is an interesting case on class certification.

The plaintiff, Ramirez, brought a putative class action, alleging that a car finance company, Balboa, violated the Unfair Competition Law by improperly pursuing a deficiency claim after Ramirez surrendered her car to Balboa. Specifically, Ramirez alleged that Balboa violated the UCL and the Rees-Levering Motor Vehicle Sales and Finance Act (the Act) by failing to comply with the Act's requirement that its "Notice of Intention to Dispose of Motor Vehicle" (NOI) contain the specific "conditions precedent" to reinstatement of her vehicle loan.

The trial court denied certification, finding that individual issues predominated. Specifically, the trial court held that it was unclear "whether there were grounds to deny reinstatement" of each putative class member's motor vehicle loan under Civil Code section 2983.3(b)(1). Section 2983.3(b)(1) provides that a buyer has no right to reinstate her loan if the seller or holder "reasonably and in good faith" determines that the buyer "intentionally provided false or misleading information of material importance on his or her credit application."

The Court of Appeal reversed.

Ramirez challenges the court's reliance on section 2983.3(b)(1) to deny her class certification motion. We agree this ground was not a proper basis for denying class certification. The court's conclusion was based on an improper legal assumption, i.e., that Balboa would be entitled to assert this statutory exception as a valid affirmative defense to the UCL claim alleged by class members who were given a reinstatement right in the NOI.

Slip op. at 17. 

The Court relied on the fact that under the Act, "a seller/holder who wishes to preserve its rights to claim a deficiency must determine within a 60-day period after repossession whether a buyer is entitled to a reinstatement, and then notify the buyer of this decision." If the seller determines that the buyer is not entitled to reinstatement, it must state the reasons for this determination. Slip op. at 18-19.

With regard to Balboa's argument that individual issues predominated because other class members may not have had the right to reinstatement, the Court held that "Balboa did not proffer any facts showing that any such exception would apply to any of the other class members." Slip op. at 20.

The Court did not consider Balboa's other grounds for opposing certification because it found that the trial court had relied primarily on the mistaken legal analysis discussed above. Instead, the Court remanded for reconsideration on the proper legal analysis. Slip op. at 20-22.

The opinion is available here.  

Avidor v. Sutter's Place: Court of Appeal OKs Casino Card Dealer Tip Pooling

In Avidor v. Sutter's Place, Inc. (1/23/13) --- Cal.App.4th ---, the Court of Appeal held that a casino's policy of requiring card dealers to contribute a portion of their tips to a tip pool did not violate California law.  The Court held: 

1. Evidence of the tipping customer's intent in leaving or providing the tip is not relevant, and the trial court did not err in excluding evidence of such intent at trial.  Even if the patron intended the tip to go only to the tipped employee, "that does not mean that the employee to whom it is given may keep it notwithstanding a policy he or she has agreed to in accepting employment."  Slip op. at 6-10.
2. Mandatory tip pools in casinos, where patrons typically give tips directly to individual employees -- rather than leaving them on the table to be picked up, as typically happens in restaurants -- does not violate Cal. Labor Code section 351.  Slip op. at 10-12. 
3. Substantial evidence supported the trial court's finding that the casino did not impermissibly include its agents -- those "having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees" -- in the pool.  Slip op. at 12-14.  
4. Tips given to dealers were not their property, and the casino did not commit conversion by requiring the dealers to contribute tips to the pool.  Slip op. at 14-15. 
5. The dealers failed to show that they contributed more to the tip pool than they received in tips, thus reducing their hourly wages below the minimum wage rate, and the trial court did not err in granting summary judgment on the minimum wage claim.  Slip op. at 15-16.  
6. Because tips given to dealers were not their property, and every dealer understood that tips contributed to the pool were contributed for the benefit of the other employees in the pool, the dealers could not state a cause of action for money had and received.  Slip op. at 16-19.  

The opinion is available here.  

Aryeh v. Canon Business Solutions: Common Law Accrual Rules and Exceptions Apply to UCL Actions

Aryeh v. Canon Business Solutions, Inc. (1/24/13) is not an employment law case, but the issues involved arise frequently in employment litigation.  

Aryeh filed a putative class action against Canon, alleging that it violated the unfair competition law (UCL) by charging him for too many copies on his leased Canon copiers.  Canon demurred to his complaint, arguing that he knew or should have known of the alleged wrong more than four years before he filed suit, and the statute of limitations barred his action.  The trial court sustained the demurrer without leave to amend. Aryeh appealed, and the Court of Appeal reversed. 

First, the Court held that common law accrual rules apply in UCL actions.   Slip op. at 6-12. This includes both the "last element rule" that "a cause of action accrues when it is complete with all of its elements," and that the last element rule's numerous equitable exceptions: 

1. The discovery rule (no accrual until plaintiff discovers or should discover the cause of action); 
2. Equitable tolling (tolling the statute when the plaintiff reasonably and in good faith chooses among several remedies, and the statute's notice function is served); 
3. Fraudulent concealment (tolling the statute when the defendant causes a claim to grow stale through deceptive conduct); 
4. Continuing violation (aggregating a series of wrongs or injuries and treating the limitations period as accruing for all of them upon the commission or sufferance of the last of them); and 
5. Continuous accrual (each event in a series of wrongs or injuries triggers its own limitations period, such that claims for some wrongs or injuries may be time barred, and others may be timely). 

Second, the Court held that the defendant bears the burden of proving the limitations defense, and the plaintiff bears the burden of proving an exception to it.  Slip op. at 12. 

Third, the Court held that the continuing violation doctrine did not apply in the present case because the complaint identified "a series of discrete, independently actionable alleged wrongs," rather than "a wrongful course of conduct [that] became apparent only through the accumulation of a series of harms." Slip op. at 12-14.  However, the continuous accrual doctrine did apply because Aryeh alleged a continuing duty on Canon's part, susceptible to recurring breaches. "Accordingly, each alleged breach must be treated as triggering a new statute of limitations." Slip op. at 14-20. 

The Court concluded as follows:

At the demurrer stage, Aryeh is the master of his complaint, and we must accept his allegations at face value. He has alleged a recurring unfair act—the inclusion in monthly bills of charges for copies Canon itself made. The theory of continuous accrual applies to such allegations, and insofar as the operative complaint alleges at least some such acts within the four years preceding suit, the suit is not entirely time-barred.

Slip op. at 20.  

The opinion is available here. 

Aryeh v. Canon Business Solutions Opinion Forthcoming

In Aryeh v. Canon Business Solutions (discussed here), the California Supreme Court will decide the following issues:  

1. May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code section 17200 et seq.)? 
2. May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action? 
3. May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action? 

The Supreme Court yesterday announced that it will issue its decision on Thursday, January 24, 2013 at 10 a.m. Stayed tuned for further information, including information on the State Bar of California's Watch List Webinar on the decision.

Lamps Plus Overtime Cases: On Remand Following Brinker, Court of Appeal Again Affirms Order Denying Certification

In Lamps Plus Overtime Cases (2011) 195 Cal.App.4th 389 (discussed here), the Court of Appeal held that the trial court did not abuse its discretion in denying class certification of a wage and hour action alleging, among other causes of action, violation of California's meal and rest period requirements. The California Supreme Court granted review and held pending its decision in Brinker v. Superior Court (4/12/12) 53 Cal.4th 1004 (discussed here).

On remand, the Court of Appeal has found that its earlier decision was consistent with Brinker and again affirmed the trial court's order. Lamps Plus Overtime Cases (8/20/12) --- Cal.App.4th ---, Slip op. at 2. The decision comes from the same panel (Second District, Division Eight, Justices Bigelow, Flier, and Grimes) that issued Hernandez v. Chipotle Mexican Grill, Inc. (8/21/12) --- Cal.App.4th --- (discussed here), and the two decisions parallel each other.

First, the Court held that the trial court correctly concluded that employers must "provide employees with meal and rest breaks, not to ensure the breaks are taken." Slip op. at 10-14. The Court distinguished Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, on grounds that: "Unlike the employer in Cicairos, in this case, there is overwhelming evidence that Lamps Plus's policies allowed and encouraged meal periods." Slip op. at 14-15. The Court also found that requiring employers to ensure that meal periods are taken would be "utterly impractical." Slip op. at 15-16.

Second, the Court found that the trial court did not improperly reach the merits of the plaintiffs' meal and rest period claims. "No case prevents a court from examining a legal issue when ruling on a certification motion." Slip op. at 16. The Court distinguished Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, on grounds that the employer's practices there -- giving the employees more work than they could do if they took meal periods, auto-deducting 30 minutes per day whether employees took meal periods or not, and requiring employees to acknowledge that they received their meal periods in order to be paid their wages -- "presented the predominant common factual issues on the meal and rest break claims." Slip op. at 17.

Third, the Court held that substantial evidence supported the trial court's ruling on the meal and rest period claims. "Lamps Plus did not have a universal practice of denying employees their breaks." Slip op. at 17. Its meal and rest period policies conformed to the law, and it disciplined employees for violating those policies. Slip op. at 18. The evidence of violations was "widely variable." Ibid. The Court rejected the plaintiffs' theory that chronic understaffing led to classwide violations. Slip op. at 19. The trier of fact would have to determine whether people actually missed breaks or just failed to record them. Slip op. at 19-20.

Fourth, the court did not err in declining to stay the case pending Brinker. Slip op. at 19.

With regard to the off-the-clock claims, the fact that approximately half of respondents to a survey said they worked off the clock did not "lead to an inference there was a companywide policy requiring such work." Slip op. at 21. Nor did the plaintiffs show that Lamps Plus knew or should have known of such off-the-clock work. Ibid.

With regard to the claim for waiting time penalties, the Court began by finding that Lamps Plus had a policy to pay wages upon termination. Slip op. at 22. The Court then held that "California employers are not obligated to keep a record of the date of final pay for each employee, or of the date on which each employee gave notice of termination." Ibid. Because the evidence that the plaintiffs submitted "varied widely," the trial court did not err in finding that individual issues predominated. Slip op. at 22-23.

The Court held that the trial court also was correct in denying certification of the claim for wage statement violations because class members would have to show "actual injury from the noncomplying pay stubs." Slip op. at 23. Also, the pay stub claims was derivative of the plaintiffs' other claims, which were not suitable for class treatment. Ibid.

The Court held that the plaintiffs' claims for violation of the Unfair Competition Law ("UCL"), Cal. Lab. & Prof. section 17200 et seq., also were derivative of their other claims and also were not suitable for class treatment. Slip op. at 24.

Having found that common questions did not predominate, the Court went on to discuss adequacy and typicality. Slip op. at 24-26. The Court found that one class representative was not adequate because he lied in deposition about his criminal records. Slip op. at 25. Another was not adequate because the Court found that his memory and "sincerity in trying to honestly answer questions under oath" was "unreliable." Ibid. The third was not adequate because "by his own testimony, Lamps Plus provided all the rights to which he was entitled by law." Ibid.

The Court also found that the plaintiffs had not established that class treatment was superior to litigation of individual claims because "there could be thousands of mini-trials to address the factual issues" identified by the Court in its ruling. Slip op. at 26.

The opinion is available here.

Aleksick v. 7-Eleven: Franchisor Not Liable for Wage and Hour Violations

In Patterson v. Domino's Pizza (6/27/12) --- Cal.App.4th --- (discussed here), Division Six of the Second District Court of Appeal (Justices Gilbert, Yegan, and Perren) held that a franshisor may be liable for a franchisee's alleged violations of the Fair Employment and Housing Act (FEHA).  

In Aleksick v. 7-Eleven (5/8/12) --- Cal.App.4th ---, Division One of the Fourth Appellate District (Justices McConnell, Huffman, and Nares) held that 7-Eleven is not liable for allegedly shorting its franchisees' employees of earned wages.   

Plaintiff Kimberly Aleksick worked for Michael Tucker, who owned franchises for two 7-Eleven stores.  Tucker's franchise agreement with 7-Eleven required him to use 7-Eleven's payroll services.  After her employment ended, Aleksick sued 7-Eleven, alleging that: 

7-Eleven's practice of converting hours worked from minutes to hundredths of an hour sometimes shorts employees of time and commensurate pay, and thus violates Labor Code wage statutes.  She focuses on the following elementary example:  20 minutes is one-third of an hour, and at an hourly rate of $12, pay should be $4.  When 7-Eleven converts the 20 minutes to 0.33, however, and multiplies that figure by $12, pay is $3.96. 

Slip op. at 1-2.  Aleksick alleged that 7-Eleven violated the unlawful and unfair prongs of the UCL.  The parties stipulated to class certification and made cross-motions for summary judgment / summary adjudication.  

As a side note, 7-Eleven's stipulation to class certification is very interesting.  As a result of that stipulation and the Court's decision, 7-Eleven now has a binding judgment against all class members, not just against Aleksick.  Had 7-Eleven moved for summary judgment against Aleksick alone, absent class members would have been free to bring subsequent actions alleging the same violations.  See Smith v. Bayer Corp., 564 U.S. ---, 131 S.Ct. 2368 (6/16/11) (discussed here); Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034 (discussed here). 

The trial court (Imperial County Superior, Judge Jeffrey B. Jones) granted 7-Eleven's motion for summary judgment and denied Aleksick's motion for summary adjudication, holding that 7-Eleven's system was "inherently reasonable."  The Court did not address 7-Eleven's arguments that Aleksick failed to identify a statutory predicate for her UCL claim or that 7-Eleven is not the class members' employer.  Aleksick appealed, and the Court of Appeal affirmed. 

First, the Court held that Aleksick failed to identify a statutory predicate for her UCL claim, thus forfeiting the argument: 

Her complaint does not allege any statutory predicate for the UCL cause of action.  The complaint merely alleges 7-Eleven "has violated both California law and/or its own contractual promise, thereby depriving the class members of money earned by them."  This vague allegation did not notify 7-Eleven that in moving for summary judgment it was required to address Labor Code sections 204, subdivision (a), 223, 510, subdivision (a), 1182.12, and 1194, subdivision (a) [which Aleksick identified for the first time on appeal].  

Slip op. at 9-10.  

Second, the Court held that the "undisputed evidence shows 7-Eleven was not the class members' employer."  Slip op. at 10.  Relying on Martinez v. Combs (2010) 49 Cal.4th 35 (discussed here) and Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419 (discussed here), the Court held: 

7-Eleven exercised no control over Tucker's employees, including their hiring or firing, rate of pay, work hours and conditions; 7-Eleven did not "suffer or permit" the employees to work; and it did not engage them in work. 

Aleksick did not meet her burden of raising a material issue of fact on the employment issue.  Indeed, in supplemental briefing we requested, Aleksick concedes "it is undisputed that 7-Eleven is not the employer of the class members."

Slip op. at 17 (emphasis in original).  

Third, the Court held that Aleksick failed to raise a triable issue of fact on her claim that 7-Eleven violated the UCL's "unfair" prong.  Noting the uncertainty regarding the scope of that prong in consumer cases, the Court followed Gregory v. Albertson's, Inc. (2002) 104 Cal.App.4th 845, 854, which held: 

[Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163]  . . . may signal a narrower interpretation of the prohibition of unfair acts or practices in all unfair competition actions and provides reason for caution in relying on the broad language in earlier decisions that the court found to be 'too amorphous.'  Moreover, where a claim of an unfair act or practice is predicated on public policy, we read Cel-Tech to require that the public policy which is a predicate to the action must be 'tethered' to specific constitutional, statutory or regulatory provisions." 

Slip op. at 20-21.  

Aleksick argued that 7-Eleven had violated the public policy in favor of full and prompt payment of wages, but she cited only to cases in which employees sued their employers.  Because the Court held that7-Eleven could not be liable as the class members' employer, it held that these cases were inapposite, and Aleksick's claim failed.  

The Court did not reach the issue of whether an employer could be liable under the Labor Code wage statutes and the UCL for the conversion of any partial hour worked from minutes to hundredths of an hour. 

The opinion is available here.  

Nelsen v. Legacy Partners: Court of Appeal Affirms Order Compelling Individual Arbitration of California Wage Claims

It seems like we have new cases every day dealing with arbitration, so why should today be any different?

In Nelsen v. Legacy Partners Residential, Inc. (7/18/12) --- Cal.App.4th ---, the plaintiff, Nelsen, worked as a property manager for the defendant, LPI. Nelsen filed a putative class action against LPI alleging violation of various California wage and hour laws and the UCL. Cal. Bus & Prof. Code 17200 et seq. Nelsen had signed an agreement to arbitrate any disputes with LPI, and LPI moved to compel individual arbitration. The trial court (San Francisco Superior, Judge Charlotte Walter Woolard) granted the motion to compel individual arbitration and stayed the action. Nelsen appealed from the order. Citing Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277, Nelsen argued that the trial court's order constituted a "death knell" for the putative class action, making the order appealable.

The Court of Appeal affirmed. First, the Court questioned whether the case truly implicated the death knell doctrine, as Nelsen had not explained "how the trial court‘s order makes it impossible or impracticable for her to proceed with the action at all." Slip op. at 5. Regardless, the Court exercised its discretion to treat the appeal as a petition for writ of mandate. Ibid.

On the merits, the Court first considered whither the arbitration clause at issue was unconscionable. The Court held that "several factors support a finding LPI's arbitration agreement is procedurally unconscionable": it was a contract of adhesion; the arbitration section's header did not mention arbitration; and the arbitration language was in a smaller font than other portions of the form. Slip op. at 7.

As to substantive unconscionability, the Court found that the arbitration clause at issue was identical to the one at issue in Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, except that the one clause that the California Supreme Court found objectionable in Little -- a clause allowing an appeal of an award greater than $50,0000 -- was not present here. The Court held that Little controlled, and the arbitration clause was not substantively unconscionable.

The Court next examined whether the agreement's class action ban was unenforceable on public policy grounds. "Relying on Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry), Nelsen contends requiring individual arbitration of her wage and hour claims would violate California public policy even if the arbitration agreement is otherwise found to be valid and enforceable." Slip op. at 10. Citing Arguelles-Romero v. Superior Court (2010) 184 Cal.App.4th 825 (discussed here), Court explained Gentry as follows:

Gentry holds that when a class action is requested in a wage and hour case notwithstanding an arbitration agreement expressly precluding class or representative actions, the court must decide whether individual arbitration is so impractical as a means of vindicating employee rights that requiring it would undermine California‘s public policy promoting enforcement of its overtime laws. If the court makes that determination, Gentry requires that it invalidate the class arbitration waiver and require class arbitration. Gentry further held that refusing to enforce class arbitration waivers on such public policy grounds would not violate the FAA.

Slip op. at 10-11.

The agreement did not expressly waive class arbitration. LPI argued that silence on class arbitration did not constitute a waiver (but also did not constitute consent to class arbitration), and Gentry did not apply. Nelsen argued that the agreement‘s silence constitued a de facto waiver of class arbitration, and Gentry did apply. The Court agreed with Nelsen, holding that Gentry applies whether the agreement explicitly waives class arbitration or implicitly does so by indicating no consent to class arbitration. Slip op. at 11.

The Court next examined the arbitration clause to determine whether it in fact permitted class arbitration. Relying on Stolt-Nielsen S.A. v. Animal Feeds Int’l Corp. (2010) ___ U.S. ___ [130 S.Ct. 1758] (discussed here), the Court held that the agreement did not permit class arbitration.

While the arbitration agreement in issue broadly encompasses any employment-related "claim, dispute, or controversy . . . which would otherwise require or [allow] resort to any court," it contains one very significant limitation. The agreement only covers claims, disputes, and controversies "between myself and Legacy Partners," that is, between Nelsen and LPI. A class action by its very nature is not a dispute or controversy "between [Nelsen] and Legacy Partners."

Slip op. at 14. The Court cited to Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506 (discussed here), noting that it decided "a nearly identical question" language and reached the same conclusion. Slip op. at 14. 

Having held that the agreement did not permit class arbitration, the Court turned to whether it was enforceable under Gentry. The Court cited a number of cases holding that AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___ (discussed here) overturns Gentry, but it declined to reach this issue. Instead, the Court held that Nelsen had failed to make the factual showing required under Gentry.

Having relied on Gentry in her opposition to the motion to compel in the trial court, it was Nelsen's burden to come forward there with factual evidence supporting her position classwide arbitration was required. She is not entitled to a remand for the purpose of affording her a second opportunity to produce such evidence, as she now requests.

Slip op. at 17.

The Court next considered whether the NLRB's decision in D.R. Horton (discussed here) afforded Nelsen any relief. The Court declined to follow D.R. Horton.

The Board's decision reflects a novel interpretation of section 7 and the FAA. It cites no prior legislative expression, or judicial or administrative precedent suggesting class action litigation constitutes a "concerted activit[y] for the purpose of . . . other mutual aid or protection" (29 U.S.C. § 157), or that the policy of the FAA favoring arbitration must yield to the NLRA in the manner it proposes.

Slip op. at 19. The Court cited to a number of district court decisions both before and after D.R. Horton that disagree with its analysis. Grabowski v. C.H. Robinson (S.D.Cal. 2011) 817 F.Supp.2d 1159, 1168–1169; Slawienski v. Nephron Pharmaceutical Corp. (N.D.Ga. 2010) 2010 WL 5186622, *2; Jasso v. Money Mart Exp., Inc. (N.D.Cal. 2012) ___ F.Supp.2d ___ [2012 WL 1309171, *4–*7]; and LaVoice v. UBS Financial Services, Inc. (S.D.N.Y. 2012) 2012 WL 124590, *6. (I do not typically blog district court decisions -- just too many of them.) The Court also cited to Iskanian v. CLS Transportation Los Angeles, LLC (2012) 206 Cal.App.4th 949 (discussed here), which rejected the D.R. Horton analysis.

The Court then held that D.R. Horton could not apply because the NLRA does not apply to "any individual employed as a supervisor." The Court concluded that Nelsen's title as a "property manager" likely excluded her from coverage by the NLRA.

Finally, the Court considered whether the trial court could order her injunctive relief claims to arbitration under the Broughton-Cruz doctrine. The Court held: "(1) Nelsen waived her Broughton-Cruz argument by failing to raise it in the trial court; and (2) Broughton-Cruz has, in any event, been abrogated in the wake of Concepcion." Slip op. at 20-21. Citing Kilgore v. KeyBank, Nat. Assn. (9th Cir. 2012) 673 F.3d 947 (discussed here), the Court held: "Since Broughton-Cruz prohibits outright the arbitration of claims for public injunctive relief, it is in conflict with the FAA." Slip op. at 22.

The Court distinguished the recent decision in Hoover v. American Income Life Insurance Co. (2012) 206 Cal.App.4th 1193:

[Hoover], cited by Nelsen following oral argument, does not convince us otherwise. Hoover does not mention Kilgore or analyze Concepcion's potential relevance to the continued application of Broughton-Cruz. Moreover, the court in Hoover found the arbitration agreement in issue was not subject to the FAA and did not encompass state statutory claims. That is not our case.

Slip op. at 22.

The decision is available here.

Kilgore v. KeyBank: Ninth Circuit Holds That FAA Preempts California Cases Holding That Actions for Public Injunctive Relief Are Not Subject to Arbitration

In Kilgore v. KeyBank, N.A., 673 F.3d 947 (3/7/12), the Ninth Circuit Court of Appeals weighed in on the question of the day: the impact of the Supreme Court's decision in AT&T Mobility v. Concepcion. The Court described its holding as follows:

These consolidated appeals involve the sometimes delicate and precarious dance between state law and federal law. [Plaintiffs] brought this putative class action against [KeyBank], alleging violations of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof.Code § 17200, in connection with private student loans that KeyBank extended to Plaintiffs. Each of Plaintiffs' loan contracts contained an arbitration clause, which the district court declined to enforce. [We] consider whether, in light of the Supreme Court's recent decision in AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), the Federal Arbitration Act ("FAA" or "Act") preempts California's state law rule prohibiting the arbitration of claims for broad, public injunctive relief—a rule established in Broughton v. Cigna Healthplans of California, 21 Cal.4th 1066 (1999), and Cruz v. PacifiCare Health Systems, Inc., 30 Cal.4th 303 (2003). We consider also whether the arbitration clause is unconscionable. We have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(C).  

We conclude that (1) the FAA preempts the Broughton-Cruz rule and (2) the arbitration clause in the parties' contracts must be enforced because it is not unconscionable.... [We] reverse the district court's denial of KeyBank's motion to compel arbitration, vacate the judgment, and remand to the district court with instructions to enter an order staying the case and compelling arbitration. 

673 F.3d at 951.

In Broughton, the California Supreme Court held that plaintiffs could not be compelled to arbitrate claims under the Consumers Legal Remedies Act ("CLRA") when the plaintiff is functioning as a private attorney general, enjoining future deceptive practices on behalf of the general public. 673 F.3d at 958. In Cruz, the California Supreme Court extended this holding to cases for public injunctive relief under the Unfair Competition Law ("UCL"). Ibid. After reviewing a number of post-Concepcion district court decisions on this issue, the Ninth Circuit held:

We hold that the Broughton-Cruz rule does not survive Concepcion because the rule "prohibits outright the arbitration of a particular type of claim" — claims for broad public injunctive relief. Concepcion, 131 S.Ct. at 1747. Therefore, our statement in Davis — that Broughton and Cruz prohibit the arbitration of public injunctive relief claims in California—is no longer good law.   

We are not blind to the concerns engendered by our holding today. It may be that enforcing arbitration agreements even when the plaintiff is requesting public injunctive relief will reduce the effectiveness of state laws like the UCL. It may be that FAA preemption in this case will run contrary to a state's decision that arbitration is not as conducive to broad injunctive relief claims as the judicial forum. And it may be that state legislatures will find their purposes frustrated. These concerns, however, cannot justify departing from the appropriate preemption analysis as set forth by the Supreme Court in Concepcion.

673 F.3d at 960-961.

The Court also cited the recent decision in Marmet Health Care Center, Inc. v. Brown, 565 U.S. ___, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (per curiam) (discussed here), in which the Supreme Court held that under the FAA, an arbitration agreement between a nursing home and a patient's family member was enforceable in a suit against the nursing home for personal injury or wrongful death—despite the West Virginia Supreme Court of Appeals' conclusion that arbitration of such claims was against that state's public policy.

The Court then considered the plaintiff's argument that the arbitration agreement at issue was unconsconable -- an analysis that the Court held was still viable after Concepcion. The Court then held that the clause at issue was not procedurally unconscionable.

Here, the arbitration clause in the Note, like that at issue in [Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198, 1199-1200 (9th Cir.2002)], withstands scrutiny. The arbitration agreement is not buried within the document; it is conspicuous and appears in its own section of the Note. The Note contains more than one statement setting forth in plain language the rights that Plaintiffs would waive if they did not opt-out of the arbitration clause: the right to litigate in court, the right to a jury trial, and the right to proceed on a class basis. The arbitration clause even points out that the costs of arbitration could be higher than those of a trial.

673 F.3d at 964. Having held that the clause at issue was not procedurally unconscionable, the Court did not address whether it was substantively unconscionable.

The opinion is available here.  

Sullivan v. Oracle Corp. Returns to Ninth Circuit

In 2009, the Ninth Circuit asked the California Supreme Court to rule on certain issues regarding work performed inside and outside of California by non-California residents.  

In Sullivan v. Oracle Corp. (2011) 541 Cal.4th 1191 (blogged here) the California Supreme Court held: (1) California's overtime requirements apply to work performed in California for a California employer by non-residents; and (2) Business and Professions Code section 17200, known as the Unfair Competition Law or "UCL" applies to such overtime work; but (3) the UCL does not apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs.  

In an opinion yesterday, the Ninth Circuit addressed two remaining issues, holding that application of the California Labor Code to non-residents working in California does not violate violates Due Process Clause of the Fourteenth Amendment or the Dormant Commerce Clause of the United States Constitution.  Sullivan v. Oracle Corp., --- F.3d ----, 2011 WL 6156942 (9th Cir. 12/13/11).  

The opinion is available here.  

Supreme Court to Determine Federal Preemption of Driver Misclassification Action

On August 10, 2011, the California Supreme Court granted review in People ex rel. Harris v. Pac Anchor Transportation, Inc. This is the issue on review:

Is an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that is based on a trucking company's alleged violation of state labor and insurance laws "related to the price, route, or service" of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501)?

The Court of Appeal held that the federal statute, popularly known as the FAAAA, did not preempt such an action. Discussed here.

The Supreme Court's web page on the case is here. It is Case No. S194388. Go here to sign up for automatic email notifications about developments in the case. 

Boschma v. Home Loan Center: Compliance with Truth in Lending Act Does Not Provide Safe Harbor in Fraud and UCL Action

Just a brief note on this case. In Boschma v. Home Loan Center, Inc. (8/10/11) 198 Cal.App.4th 230, the plaintiffs were borrowers who brought an action against a mortgage lender for fraudulent omissions and violations of Unfair Competition Law (UCL). Cal. Bus. & Prof. Code 17200. Specifically, the plaintiffs alleged that the lender's loan documents failed to disclose the essential terms of the loans, "namely that plaintiffs would suffer negative amortization if they made monthly payments according to the only payment schedule provided to them prior to the closing of the loan."

The trial court (Orange County Superior, Judge Andler) sustained the lender's demurrer without leave to amend, and the borrowers appealed. The Court of Appeal reversed, holding that the borrowers adequately alleged fraud and violation the UCL to withstand demurrer based on defendant’s allegedly misleading, incomplete, and/or inaccurate disclosures. 

The opinion is available here.

Harris v. Pac Anchor: Federal Law Does Not Preempt Independent Contractor Misclassification Action

In People ex rel. Harris v. Pac Anchor Transportation, Inc. (5/18/11) 195 Cal.App.4th 765, 2011 WL 1879209, the Court of Appeal held that the Federal Aviation Administration Authorization Act ("FAAAA") does not preempt an action alleging that a motor carrier violated the Unfair Competition Law ("UCL") by misclassifying its employee drivers as independent contractors. Here are the facts:

Pac Anchor is a trucking company in Long Beach, California. Barajas is an owner of Pac Anchor, where he works as a manager and truck dispatcher. Pac Anchor has contracts with shipping companies to transport shipping containers from the ports of Los Angeles and Long Beach to locations in Southern California, including warehouses and railroad freight depots.

Barajas owns 75 trucks. He recruits drivers, then leases his trucks and the drivers to Pac Anchor. Barajas and Pac Anchor classify the drivers as independent contractors. As a result, Barajas and Pac Anchor do not obtain workers' compensation insurance, withhold state disability insurance or income taxes, pay unemployment insurance or employment training fund taxes on behalf of the drivers, reimburse business expenses, insure payment of the state minimum wage, or provide itemized written statements of hours and pay to the drivers.

The drivers do not invest any capital, however, or own the trucks that they drive. They use trucks, tools, and equipment furnished by Barajas and Pac Anchor. The drivers are employed for extended periods of time, but can be discharged without cause. The drivers take all their instructions from Barajas and Pac Anchor. They are not skilled workers and do not have substantial control over operational details. The drivers do not have other customers or their own businesses. The drivers do not have Department of Transportation operating authority or other necessary permits and/or licenses to independently engage in the transport of cargo. They are an integrated part of Barajas's and Pac Anchor's trucking business, because they perform the core activity of delivering cargo.

Slip op. at 2-3.

The State of California filed suit, alleging that Pac Anchor and Barajas violated the UCL. Defendants moved for judgment on the pleadings, arguing that the action was preempted by the FAAAA. The Court (Los Angeles Superior, Judge White) granted the motion:

First, the court concluded that the holding of Fitz-Gerald v. SkyWest, Inc. (2007) 155 Cal.App.4th 411 (Fitz-Gerald) required finding all UCL causes of action against motor carriers preempted by the FAAAA. Second, the court found that requiring Barajas and Pac Anchor to treat its truck drivers as employees would increase the motor carrier's operational costs, and therefore, the action related to the motor carrier's prices, routes, and services. Third, the court concluded that the action threatened to interfere with the forces of competition by discouraging independent contractors from competing in the trucking market.

Slip op. at 4. The Court of Appeal reversed.

The Court began by discussing FAAAA preemption:

The FAAAA preempts state and local regulation relating to the prices, routes or services of motor carriers with respect to the transportation of property. (49 U.S.C. § 14501(c).) Specifically, section 14501(c) of title 49 of the United States Code provides in pertinent part: “(1) . . . Except as provided in paragraphs (2) and (3), a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.

Slip op. at 5-6. After discussing a number of cases that deal with FAAAA preemption, the Court stated that it declined to follow Fitz-Gerald, supra:

We disagree with Fitz-Gerald’s cursory citation to Morales and Wolens to support the conclusion that all state unfair business practices statutes are preempted by the [Airline Deregulation Act of 1978, which is analogous to the FAAAA]. Where a cause of action is based on allegations of unlawful violations of the State's labor and unemployment insurance laws, we see no reason to find preemption merely because the pleading raised these issues under the UCL, as opposed to separately stated causes of action. We respectfully disagree with Fitz-Gerald’s contrary conclusion as to preemption of causes of action under the UCL.

Slip op. at 8. The Court then held that the State's UCL action "is not preempted by the FAAAA, because it is not related to the price, route or service of any motor carrier." Slip op. at 8. After explaining the broad scope of the UCL and the fact that wage violations also violate the UCL, the Court concluded:

In this case, the State's action to enforce Barajas's and Pac Anchor's statutory obligations as an employer is not related to Pac Anchor's prices, routes, or services, even though it may remotely affect the prices, routes, or services that the motor carrier provides. Case law supports finding that the effect of California's minimum wage law (Lab. Code, § 1194) on a motor carrier's prices, routes, and services is too tenuous for preemption under the FAAAA. (See Fitz-Gerald, supra, 155 Cal.App.4th at p. 423 [connection of minimum wage law to higher fares, fewer routes, and less service is tenuous]; Mendonca, supra, 152 F.3d at p. 1189 [California's prevailing wage law applicable to public works contractors is not preempted by the FAAAA].) Other California labor and unemployment insurance provisions that Barajas and Pac Anchor allegedly violated have a similarly indirect and tenuous connection to Pac Anchor's prices, routes, and services. We hold that the State's UCL action based on Barajas's and Pac Anchor's alleged violations of generally applicable state laws governing an employer's relationship with employees is not an action related to the price, route, or service of a motor carrier and, therefore, not preempted by the FAAAA.

Slip op. at 10. The opinion is available here.

Mora v. Big Lots: Court Affirms Denial of Class Certification in Store Manager Class Action

In Mora v. Big Lots Stores, Inc. (4/18/11) --- Cal.App.4th ----, 2011 WL 1466322, the Court of Appeal held that the trial court (Los Angeles Superior Court, Judge Ann I. Jones) did not abuse its discretion in denying a motion to certify a class of Big Lots store managers who alleged wage and hour and UCL violations as a result of their being deemed "exempt" employees. The opinion covers a number of points, including the following:

The trial court did not use improper criteria in denying class certification based on its finding that the evidence presented “plainly and inescapably established” that Big Lots does not “operate its stores or supervise its managers in a uniform and standardized manner” Slip. op. at 8.

Plaintiffs' expert witness's declaration that a survey could be done to establish that class members were categorically misclassified as exempt employees "did nothing to refute the evidence presented by Big Lots that it did not operate its stores or supervise its managers in a uniform and standardized manner." Slip. op. at 8.

Substantial evidence supported the trial court's decision. The trial court did not err in discounting the class members' declarations, given "the lack of detail in the putative class members' declarations and the similarity in the wording of many declarations, as well as the discrepancies between the former managers' deposition testimony and their declarations." Slip op. at 9. It also did not err in considering the employer's observational study, conducted by Robert W. Crandall. Slip op. at 9-10.

The trial court did not commit prejudicial error in overruling the plaintiffs' objections to the declarations of Mr. Crandall and Lloyd Aubry, although Mr. Aubry "arguably exceeded the proper bounds of expert testimony when he opined the case is not amenable to class treatment..." Slip op. at 10-11. Nor did the court err in admitting defendant's "summary of evidence," a mix of evidence and argument that the plaintiffs apparently counteracted in the trial court. Slip op. at 11.

Although the trial court erred in sustaining objections to some of the plaintiffs' evidence, the errors did not prejudice the plaintiffs. Slip op. at 12.

The opinion is available here.

Oracle v. Sullivan Oral Argument

The UCL Practitioner has this report on the Cal. Supreme Court oral argument in Sullivan v. Oracle Corp., written by Thomas R. Kaufman of Sheppard Mullin. In Sullivan, the Ninth Circuit has asked the Supreme Court to decide the following issues:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

Tom concludes:

From the questioning, it looks as though most of the justices are leaning to holding that out-of-state employees of a California-based company who come to California must be paid overtime under California law (e.g., daily overtime and California exemptions apply).

As always, the UCL Practitioner is the best resource around for all things UCL.

Supreme Court Calendars Sullivan v. Oracle Oral Argument

The California Supreme Court will hear oral argument in Sullivan v. Oracle on April 6, 2011, at 9:00 a.m., in Los Angeles. Sullivan raises the following questions:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

We will provide more information as soon as we can after the oral argument.

Safaie v. Jacuzzi: Plaintiff Cannot Renew Motion to Certify After Order Denying Cert Becomes Final

In Safaie v. Jacuzzi Whirlpool Bath, Inc. (2/22/11) --- Cal.App.4th ----, 2011 WL 213494, the plaintiff, Safaie, appealed from an order denying his motion to recertify a class of individuals who purchased bath tubs from defendant.

Safaie alleged that the defendant misrepresented the horsepower of its whirlpool bath motors. The trial court (San Diego Superior, Judge Hayes) originally certified, then decertified the class. Safaie appealed from the decertification order, and the Court of Appeal affirmed. Safaie did not seek review in the Supreme Court.

Shortly thereafter, the Supreme Court then issued its decision in In re Tobacco II Cases (2009) 46 Cal.4th 298, which addressed standing issues in Unfair Competition cases after passage of Prop. 64. We blogged Tobacco II here and here.

Safaie then renewed his certification motion. The trial court denied the motion, and Safaie appealed.

The Court of Appeal affirmed. It held that Safaie could not appeal the order denying his recertification motion:

Unlike a denial of a class certification motion, the order denying recertification did not “end” the class case or dispose of the class allegations. Instead, when Safaie moved to recertify the class in June 2009, the class allegations had already been removed from the case (based on the trial court's decertification order and this court's affirmance of the order), and Safaie was the sole plaintiff in an individual action. Thus, the effect of the challenged order was not to dismiss the action as to the members of the class, but it was to deny Safaie's request to insert class allegations back into his individual action. A denial of this request did not serve as a death knell to Safaie's individual action because the complaint already existed as an individual action. Safaie's motion to recertify the class was essentially a request to reconsider the court's prior order based on asserted new law. Generally, a denial of a reconsideration motion is not appealable.

Slip op. at 4.

Next considering his appeal as a writ petition, the Court held that the trial court did not abuse its discretion in denying the motion.

Safaie contends the court erred in denying his motion to recertify the class. We determine the court properly denied Safaie's motion based on the “state law policy” rule that a party is not entitled to bring a renewed motion for class certification after a court has issued a final order denying certification. We thus do not reach Safaie's challenges to the court's alternate ground for denying the motion based on the law of the case doctrine.

Slip op. at 5.

The opinion is available here.

Kwikset: Broad Standing Rule Applies in 17200 False Advertising Case

In Kwikset Corporation v. Superior Court (Benson) (January 27, 2011) --- Cal.4th ----, 2011 WL 240278, the California Supreme Court decided an important standing issue in Unfair Competition Law (UCL) cases post-Prop. 64.

In 2000, plaintiff James Benson filed a representative action against defendant Kwikset, alleging Kwikset falsely marketed and sold locksets labeled as “Made in U.S.A.” that in fact contained foreign-made parts or involved foreign manufacture. Mr. Benson prevailed at trial, the trial court (Orange County Superior, Judge Velasquez) ordered injunctive relief, and Kwikset appealed. While the appeal was pending, the voters passed Proposition 64, which imposed new standing requirements in UCL cases.

We granted review to address the standing requirements of the unfair competition and false advertising laws in the wake of Proposition 64. We conclude Proposition 64 should be read in light of its apparent purposes, i.e., to eliminate standing for those who have not engaged in any business dealings with would-be defendants and thereby strip such unaffected parties of the ability to file “shakedown lawsuits,” while preserving for actual victims of deception and other acts of unfair competition the ability to sue and enjoin such practices. (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) argument in favor of Prop. 64, p. 40; see also Prop. 64, § 1.) Accordingly, plaintiffs who can truthfully allege they were deceived by a product's label into spending money to purchase the product, and would not have purchased it otherwise, have “lost money or property” within the meaning of Proposition 64 and have standing to sue. Because plaintiffs here have so alleged, we reverse.

Slip op. at 1.

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.

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.