Safeway v. Superior Court: Class Certification Appropriate in Action Alleging that Employer Uniformly Failed to Compensate Employees for Missed Meal Periods "When Required"

In Safeway v. Superior Court (7/22/15) --- Cal.App.4th ---, the plaintiffs alleged that the defendants had a uniform practice of failing to compensate employees for missed meal periods, among other wage and hour violations. The trial court certified a class under the Unfair Competition Law, Business and Professions Code section 17200 (UCL) on the theory that the defendants had a practice of failing to pay for missed meal periods when required. The defendants filed a petition for writ of mandate to reverse the order, and the Court of Appeal denied the petition, holding as follows:

The legal viability of the plaintiffs' theory of recovery is not at issue on the motion for class certification, unless the merits are enmeshed with class action requirements. "Nonetheless, that determination may be proper when the defendants cannot attack the claim by demurrer or summary judgment following certification, or the parties jointly request a merits determination." The defendants did not show that either of these conditions applied.

The plaintiffs' theory of liability -- that the defendants had a system-wide practice of failing to pay meal break premium wages when required -- was capable of common proof. A UCL claim may be predicated on a practice of not paying premium wages for missed, shortened, or delayed meal periods "attributable to the employer’s instructions or undue pressure, and unaccompanied by a suitable employee waiver or agreement." Although an employer's failure to pay accrued meal period premiums, standing alone, does not violate section 226.7, nothing in the law "clearly permits" an employer to fail to pay meal period premiums. A UCL claim for failure to pay meal period premiums when required may stand even in the absence of an underlying claim for failure to provide meal periods.

The plaintiffs demonstrated that they could prove the alleged systemic unlawful practice and the damage caused thereby on a class-wide basis. The plaintiffs "did not seek accrued meal break premium wages owed to individual class members, but rather the loss of the 'compensation guarantee and enhanced enforcement' implemented by section 226.7." 

In our view, real parties demonstrated that the existence of the practice and the fact of damage were matters suitable for class treatment. Real parties’ evidence supports the reasonable inference that in the context of a class action, they could establish that petitioners engaged in the alleged practice, that is, they never paid meal break premium wages, even though a significant number of employees accrued them. Furthermore, in view of real parties’ theory of restitution, those facts would also suffice to demonstrate the fact of damage. Under that theory, the fact of damage does not require a showing that all -- or virtually all -- class members accrued unpaid meal break premium wages, but only that on a system-wide basis, petitioners denied the class members the benefits of the compensation guarantee and enhanced enforcement implemented by section 226.7.

The plaintiffs' proposed method of determining the amount of restitution did not create a barrier to certification. The plaintiffs argued that they could recover the "market value" of the loss of their statutory protections, rather than the value of the meal periods themselves. Although not entirely clear, it appears that the plaintiffs would measure this market value by the amounts that defendant paid when it began paying its employees meal period premiums. This measure did not require litigation of issues unsuitable for class treatment.

The opinion is available here. 

People ex rel. Harris v. Pac Anchor Transportation: FAAAA Does Not Preempt UCL Action Based on State Insurance and Wage Law

The California Supreme Court has announced its decision in People ex rel. Harris v. Pac Anchor Transportation, Inc. (7/28/14) --- Cal.4th ---. In Harris, the State of California alleged that the defendants misclassified truck drivers as independent contractors, thus denying them protections that state insurance and wage laws provide to employees, including the right to itemized wage statements. The issue, as described by the Court, is as follows:

Whether an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) (UCL) that is based on a trucking company’s alleged violation of state labor and insurance laws is “related to a price, route or service” (49 U.S.C. § 14501 (c)(1)) of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (Pub.L. No. 103-305 (Aug. 23, 1994) 108 Stat. 1569) (FAAAA).

The defendants made two preemption arguments. First, they argued that the FAAAA facially preempts all UCL claims against motor carriers. Second, they argued that the particular UCL claims at issue were preempted as applied to this case.

The Court rejected both arguments on essentially the same grounds. The Court held that the FAAAA does not preempt an action based on a trucking company’s alleged general violations of state labor and insurance laws. Such state laws do not focus on motor carriers, but regulate employer practices generally. They are "laws of general application whose effects on carriers' prices, routes, and services is remote." Even IWC Wage Order No. 9, which regulates the transportation industry, is not preempted because any effect on prices, routes, or services is indirect.

The opinion is available here.

Rodriguez v. RWA Trucking: Federal Law Preempts Certain Claims in Action by Truck Drivers, Does Not Preempt Others

In Rodriguez v. RWA Trucking Company, Inc. (9/12/13) --- Cal.App.4th ---, the Court of Appeal considered a judgment rendered in favor of a class of truck drivers who were treated as independent contractors. The Court held that federal law preempts claims that the trucking company profited by charging the drivers for liability, physical damage, and cargo insurance, but it does not preempt the claim that the company unlawfully charged the drivers for workers compensation insurance.

Claim for Unlawfully Transacting Insurance

RWA required each of its drivers to maintain automobile liability insurance, physical damage insurance, and cargo insurance for his or her vehicle. RWA gave each driver the option of accepting coverage under RWA’s fleet policies; if the driver elected such coverage, RWA deducted the cost of the insurance from the driver’s earnings. During some years, RWA also deducted an additional administrative fee from the drivers’ earnings.

The plaintiff alleged that this practice constituted transacting insurance without a license in violation of the California Insurance Code. The trial court agreed, but the Court of Appeal reversed.

First, the Court assumed without deciding that the plaintiff was right, and RWA's practices constituted transacting insurance under California law. Second, the Court summarized a number of federal decisions and found that federal law permits motor carriers to charge back the cost of liability insurance to their drivers and to profit from such chargebacks. Third, the Court concluded that if California's Insurance Code prohibits RWA from charging back its liability insurance costs to its drivers, that law is preempted by federal law. Slip op. at 19.

Claim for Workers Compensation Chargebacks

RWA charged the drivers for its workers' compensation insurance. The plaintiff alleged that this practice violated California Labor Code section 3751 and the Unfair Competition Law (UCL). RWA argued that the the Federal Aviation Administration Authorization Act of 1994 (FAAAA), title 49 United States Code section 14501 et seq., preempted the workers compensation law in this respect. The trial court agreed with the plaintiff, and the Court of Appeal affirmed.

The Court summarized the law on FAAAA preemption as follows: 

FAAAA preempts state laws that “relate[]” to a “price, route, or service of any motor carrier.” Taken together, the cases discussed above hold that a state law “relates” to federal law if it has “a connection with” or “reference to” the subject of the federal law. Preemption may occur even if the state law’s effect “is only indirect,” but there is no preemption if that effect is only “tenuous, remote, or peripheral.” Generally applicable state labor laws are not preempted if they do not “acutely interfere[] with the forces of competition” or prevent carriers from making “their own decisions about [routes] and how many resources to devote to each route and service.” However, if the state labor laws are such that they “bind” the motor carrier’s prices, routes, or services, they interfere with competitive market forces and are preempted by the FAAAA. 

Slip op. at 36-37. The parties agreed that the workers compensation law did not "reference" RWA's prices, routes, or services, and the Court found that the law also did not "have a connection with prices, routes, or services. Slip op. at 37-39. 

Prejudgment Interest

Finally, the Court held that Civil Code section 3287 does not authorize prejudgment interest on an award of restitution under the UCL, but the trial court could award prejudgment interest on the UCL claim under its equitable powers. The Court remanded to the trial court to reconsider this issue. 

The opinion is available here. 

Wang v. Chinese Daily News: Ninth Circuit Vacates Prior Order, Again Remands to District Court for Reconsideration of Certification Order in Light of Wal-Mart

In 2004, the plaintiffs in Wang v. Chinese Daily News filed a putative class and collective action against defendant Chinese Daily News (CDN), alleging violations of the federal Fair Labor Standards Act (FLSA), the California Labor Code, and the Unfair Competition Law (UCL). The district court certified the FLSA claim as a collective action and certified the state-law claims as a class action under Federal Rule 23. After a sixteen-day jury trial and a three-day bench trial, the district court entered judgment for the plaintiffs for damages, but denied their request for injunctive relief.

The Ninth Circuit affirmed. Wang v. Chinese Daily News, 623 F.3d 743 (9th Cir. 2010) (discussed here). In 2011, the United States Supreme Court vacated that decision and ordered the Ninth Circuit to reconsider it in light of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011) (discussed here). On remand, the Ninth Circuit reversed the judgment for the class members on remanded to the district court to reconsider its certification order. Wang v. Chinese Daily News, 709 F.3d 829 (9th Cir. 3/4/13) (discussed here).

On September 3, 2013, the Ninth Circuit vacated its opinion of March 4, 2013, denied rehearing and rehearing en banc, and issued a new opinion, which largely tracks its earlier opinion.  The Court held as follows:

CDN could challenge the district court's finding that the commonality requirement of Federal Rule 23(a)(2) was satisfied, even though it originally did not brief the issue. "We conclude that the [Supreme] Court’s decision in Wal-Mart presents a sufficiently significant legal development to excuse any failure of CDN to discuss the commonality requirement of Rule 23(a)(2) in its opening brief." Slip op. at 9.

Although Wal-Mart differed substantially from Wang, the district court should reconsider its commonality finding in light of Wal-Mart:

On remand, the district court must determine whether the claims of the proposed class “depend upon a common contention . . . of such a nature that it is capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Plaintiffs need not show that every question in the case, or even a preponderance of questions, is capable of classwide resolution. So long as there is “even a single common question,” a would-be class can satisfy the commonality requirement of Rule 23(a)(2). Wal-Mart, 131 S. Ct. at 2556 (alteration and internal quotation marks omitted).

Slip op. at 11. The Court here deleted language from its earlier opinion that the plaintiffs must show "significant proof that [CDN] operated under a general policy of [violating California labor laws]."

The plaintiffs conceded that class certification for their monetary claims under Rule 23(b)(2) could stand in light of Wal-Mart, but the possibility of a Rule 23(b)(2) class seeking injunctive relief remained. As former employees, none of the named plaintiffs had standing to pursue injunctive relief, but "because the Rule 23(b)(2) class was certified by the district court while they were current employees, the class certification with respect to injunctive relief may survive if there are identifiable class members who are still employed by CDN." Slip op. at 12. In another change from its earlier opinion, the Court remanded this issue to the district court for reconsideration.

The Court remanded to the district court for reconsideration of the propriety of class certification under Rule 23(b)(3) for three reasons:

1. The district court must reconsider commonality under Rule 23(a)(2), as discussed above. 
2. The district court improperly "create[d] a presumption that class certification [was] proper when an employer’s internal exemption policies are applied uniformly to the employees," and the Ninth Circuit recently has held that an employer's uniform policy of classifying all reporters and account executives as exempt employees is not sufficient to support Rule 23(b)(3) certification in and of itself. See In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 958–59 (9th Cir. 2009) (discussed here); Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 944–48 n.14 (9th Cir. 2009). 
3. The district court should consider the impact of the California Supreme Court's decision in Brinker v. Superior Court (2012) 53 Cal.4th 1004 (discussed here). 

Slip op. at 13-16. 

Departing from its prior decision, the Ninth Circuit this time declined to address the calculation of damages, if the district court should find certification appropriate on remand. Slip op. at 16. 

The latest opinion is available here. 

Murphy v. DirecTV: Ninth Circuit Affirms In Part, Reverses In Part, Order Compelling Arbitration In Putative Class Action

A quick note on Murphy v. DirecTV, Inc., ___ F.3d ___ (9th Cir. 7/30/13).

The plaintiffs filed a putative class action, alleging that DirecTV and Best Buy misrepresented certain DirecTV equipment as being for sale at Best Buy, when the equipment actually was for lease. The plaintiffs alleged violations of the Unfair Competition Law (UCL) and the Consumer Legal Remedies Act (CLRA). The district court granted the defendants' motion to compel arbitration pursuant to DirecTV's customer agreement, which included a class action waiver. 

The Ninth Circuit affirmed as to DirecTV. Applying Concepcion retroactively to the arbitration provision, the Court held that “the class action waiver is not unconscionable, and therefore, the arbitration provision is enforceable.” Slip op. at 9. The arbitration provision included a clause that if any part of it would not be found valid under controlling state law, the arbitration provision would not be enforced. The Court rejected the argument that the agreement was not enforceable under California law prior to Concepcion, triggering this "jettison clause." 

Section 2 of the FAA, which under Concepcion requires the enforcement of arbitration agreements that ban class procedures, is the law of California and of every other state.   

***  

It follows that, under the doctrine of preemption, the Discover Bank rule is not, and indeed never was, California law. 

Slip op. at 10-11. 

The Ninth Circuit reversed as to Best Buy, finding that it was not a signatory to any arbitration agreement with the plaintiffs and that it could not avail itself of equitable estoppel, agency, or third party beneficiary arguments.  

Under California contract law, Best Buy could not compel arbitration under the theory of equitable estoppel. Slip op. at 17-23. Neither of two required conditions was met: (1) the plaintiffs did not "rely on the terms of the written agreement" containing the arbitration provision, and their claims were not "intimately founded in and intertwined with the underlying contract;" and (2) the plaintiffs did not allege "substantially interdependent and concerted misconduct... founded in or intimately connected with the obligations of the underlying agreement."  

The theory of agency also did not require arbitration. Slip op. at 23-26. Agency requires that the principal maintain control over the agent’s actions, and retailers typically are not considered the agents of the manufacturers whose products they sell. The district court did not find that Best Buy was DirecTV's agent, and the only evidence on this point in the record suggested that the parties had disavowed an agency relationship.

Finally, Best Buy could not rely on a third party beneficiary theory to compel arbitration. Slip op. at 26-28. Best Buy could not show that either DirecTV or the plaintiffs intended it to benefit from DirecTV's customer agreement. 

The opinion is available here.  

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. 

Natalini v. Import Motors: Supreme Court Grants Review of Arbitration Unconscionability Decision

As anticipated, the California Supreme Court on May 1 granted review of Natalini v. Import Motors (1/7/13, pub. 2/5/13) (discussed here), in which the Court of Appeal held:

• Concepcion does not invalidate unconscionability analysis. 
• The arbitration agreement was procedurally unconscionable because: (a) the seller presented it on a take it or leave it basis, and the buyer could not negotiate it; and (b) it was located on the back of the purchase contract and was not pointed out to the buyer. 
• The arbitration agreement was substantively unconscionable because it was designed to benefit the seller in a number of ways: (a) it permitted an appeal only in case of an award of $0 or greater than $100,000; (b) it permitted an appeal if the award included injunctive relief; and (c) it allowed self-help remedies, including repossession. 

The Court has deferred briefing pending its decision in Sanchez v. Valencia Holding Co. (Case No. S199119), which raises the following issue:

Does the Federal Arbitration Act, as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?  

Sanchez is fully briefed.  The Court's web page for it is here.  

Natalini is case no. S209324. The Court's web page for it is 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.  

Natalini v. Import Motors: Court Affirms Order Denying Enforcement of Arbitration Clause Found To Be Unconscionable

Another quick note on a case from earlier this year. In Natalini v. Import Motors (1/7/13, pub. 2/5/13) --- Cal.App.4th ---, a car buyer filed an action action alleging individual and class claims against a car dealer, for, inter alia, violation of the Consumer Legal Remedies Act, the Rees-Levering Motor Vehicle Sales and Finance Act, the Unfair Competition Law.

The dealer filed a petition to compel arbitration pursuant to a provision in the car sales contract, but the trial court denied the petition because it concluded the arbitration provision was unconscionable. The Court of Appeal affirmed, holding:

• Concepcion does not invalidate unconscionability analysis. Slip op. at 3-7. 
• The arbitration agreement was procedurally unconscionable because: (a) the seller presented it on a take it or leave it basis, and the buyer could not negotiate it; and (b) it was located on the back of the purchase contract and was not pointed out to the buyer. Slip op. at 7-8. 
• The arbitration agreement was substantively unconscionable because it was designed to benefit the seller in a number of ways: (a) it permitted an appeal only in case of an award of $0 or greater than $100,000; (b) it permitted an appeal if the award included injunctive relief; and (c) it allowed self-help remedies, including repossession. Slip op. at 8-12. 

The Court declined to sever the unconscionable aspects of the agreement. Slip op. at 12-13.

The seller has filed a petition for review, and I assume that the California Supreme Court will grant and hold pending its decision in Iskanian v. CLS Transportation of Los Angeles (Case No. S204032) (discussed here).

Natalini v. Import Motors is available here.

Flores v. West Covina Auto Group: Supreme Court Issues Another Iskanian Grant-and-Hold

In Flores v. West Covina Auto Group (1/11/13) (discussed here), the Court of Appeal affirmed an order granting individual arbitration in an action alleging individual claims and putative class claims under the Consumer Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), the Automobile Sales Finance Act (ASFA) (Civ. Code, § 2981 et seq.), and the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.). 

Not surprisingly, the California Supreme Court on April 10 granted review and deferred briefing pending Iskanian v. CLS Transportation of Los Angeles (Case No. S204032) (discussed here).  

Flores is Case No. S208716, and the Court's web page for it is 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.

Kilgore v. KeyBank: Ninth Circuit Schedules Oral Argument

An en banc panel of the Ninth Circuit Court of Appeals will hear Kilgore v. KeyBank, N.A. (Case No. 09-16703) on December 11, 2012, 10:00 a.m., in Pasadena.  

In Kilgore v. KeyBank, N.A., 673 F.3d 947 (3/7/12) (discussed here), a three-judge panel held that the Federal Arbitration Act ("FAA") preempts California's Broughton-Cruz rule, which prohibits the arbitration of claims for broad, public injunctive relief. See Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066 (prohibition on compelling arbitration in public injunctive relief cases under the Consumer Legal Remedies Act); Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 (prohibition on compelling arbitration in public injunctive relief cases under the Unfair Competition Law). The plaintiffs in Kilgore are student loan borrowers who filed a putative class action against lenders seeking to enjoin them from collecting loans or reporting loan balances to credit reporting agencies. 

The docket is available through the PACER system here.  

Kilgore v. Key Bank: Ninth Circuit Grants En Banc Review of Holding That FAA Preempts California's Broughton-Cruz Rule In Public Injunction Cases

In Kilgore v. KeyBank, N.A., 673 F.3d 947 (3/7/12) (discussed here), a three-judge panel of the Ninth Circuit Court of Appeals held that the Federal Arbitration Act ("FAA") preempts California's Broughton-Cruz rule, which prohibits the arbitration of claims for broad, public injunctive relief. See Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066 (prohibition on compelling arbitration in public injunctive relief cases under the Consumer Legal Remedies Act); Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 (prohibition on compelling arbitration in public injunctive relief cases under the Unfair Competition Law). The plaintiffs in Kilgore are student loan borrowers who filed a putative class action against lenders seeking to enjoin them from collecting loans or reporting loan balances to credit reporting agencies.

On Friday, the Ninth Circuit granted the plaintiffs' petition for en banc review of the decision. The Court's order is available here. The docket is available through the PACER system here. Kilgore is Case No. 09-16703. 

I have added Kilgore to our Watch List of important pending cases.

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.

Hoover v. American Income Life: Court of Appeal Affirms Order Denying Arbitration Based on Waiver and Labor Code Section 229 -- Supreme Court Denies Review

Hoover v. American Income Life Insurance Company (6/13/12) --- Cal.App.4th --- is yet another battle in the Arbitration Wars.

Plaintiff Martha Hoover worked as a sales agent for defendant American Income Life Insurance Company ("AIL"). She filed a putative class action alleging that AIL misclassified her as an independent contractor and violated California's wage laws and the Unfair Competition Law ("UCL"). Cal. Bus & Prof. Code 17200. The trial court (San Bernardino County Superior, Judge Richard Oberholzer) denied AIL's petition to compel arbitration of Hoover's individual claims, and the Court affirmed:

If Hoover was an employee with viable statutory labor claims, her claims are not subject to arbitration. If Hoover was an independent contractor she cannot assert statutory labor claims as an employee and therefore the question of arbitration seems irrelevant. In either instance, the trial court correctly denied AIL's petition to compel arbitration. Additionally, AIL's 15-month delay in petitioning for arbitration constituted a waiver of the right to compel arbitration.

Slip op. at 2-3. 

Huh? Someone has to decide whether Hoover was an independent contractor or employee. The issue is whether that should be a jury or an arbitrator. This is the hottest issue in employment law right now, and I do not understand how the court could call it irrelevant. Regardless, here is the Court's analysis:

First, it found substantial evidence to support the trial court's decision that AIL waived its right to compel arbitration by litigating the case for over a year, removing it to federal court twice, and conducting discovery in court. Slip op. at 10-15.

Second, the Court held:

As a general rule, state statutory wage and hour claims are not subject to arbitration, whether the arbitration clause is contained in the CBA or an individual agreement.... An individual arbitration agreement also does not apply to an action to enforce statutes governing collection of unpaid wages, which "may be maintained without regard to the existence of any private agreement to arbitrate...." An exception to the general rule occurs when there is federal preemption by [the Federal Arbitration Act or] FAA, as applied to contracts evidencing interstate commerce. 

Slip op. at 15-17, citing Labor Code section 229 and Perry v. Thomas (1987) 482 U.S. 483, 490. Because AIL failed to show that the contract at issue involved interstate commerce, the FAA did not apply, 229 was not preempted, and AIL could not compel arbitration. Slip op. at 17-18. Further, the arbitration agreement did not mention the arbitration of statutory wage claims or identify any statutes. Slip op. at 19. Finally, AIL could not compel arbitration of the UCL injunctive relief claim. Ibid., citing Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316; Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 500-501.

The opinion is available here.  

Thank you to Michael Singer for pointing out that the California Supreme Court denied petitions for review and depublication on September 12, 2012.  

Tucker v. Pacific Bell: Court of Appeal Issues Mixed Ruling on Demurrer to Consumer Class Action

In Tucker v. Pacific Bell Mobile Services (8/7/12) --- Cal.App.4th ---, the plaintiffs alleged that the defendants misrepresented the number of usable minutes in their cellular phone plans. The trial court sustained defendants' demurrer to the class allegations without leave to amend, holding that there was "no reasonable possibility that Plaintiffs can establish a community of interest among the potential class members and that individual issues predominate over common questions of law and fact." Slip op. at 3.

The Court of Appeal reversed as to the plaintiffs' claims under the Unfair Competition Law and otherwise affirmed.

First, the Court reviewed the cases on demurrers to class allegations and held that a trial court may sustain such a demurrer where there is no "reasonable possibility the plaintiffs can plead a prima facie community of interest among class members." Slip op. at 4-10.

Next, the Court took note of an almost identical action, filed in a different county by the same attorneys representing the plaintiffs in this action. The trial court in the prior action had denied certification, finding that common issues did not predominate. The Court of Appeal had affirmed because the defendants made the alleged misrepresentations in a variety of ways, and the putative class members "stand in a myriad of different positions [sic] insofar as the essential allegation in the complaint [the alleged misrepresentations] is concerned." Slip op. at 12-14.  

The Court then turned to whether the plaintiffs had a "reasonable possibility" of showing commonality in this case.  The Court held that the plaintiffs could not proceed with their common law fraud and Consumer Legal Remedies Act claims because they would have to show actual reliance to sustain an award of damages.  Slip op. at 18-22.  

The Court then held that the plaintiffs could proceed with their UCL claims, at least to the extent that they sought injunctive relief.  Distinguishing In re Tobacco II Cases (2009) 46 Cal.4th 298, the Court held that the record did not support a common inference of reliance.  Slip op. at 23-26.  Further, the Court held that the plaintiffs could not seek class-wide restitution.  Slip op. at 26-27.  However, the Court held that they plaintiffs could seek other equitable relief, including an injunction against further alleged misrepresentations. Slip op. at 28-29.  

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.