California Supreme Court Schedules Oral Argument in Unfair Competition Case

California's Unfair Competition Law ("UCL"), Business and Professions Code Section 17200 et seq., "was enacted to protect consumers as well as competitors from unlawful, unfair or fraudulent business acts or practices, by promoting fair competition in commercial markets for goods and services." Over the years, the UCL has been used to stop such practices as stores selling cigarettes to underage kids or selling re-packaged meat as new. It has been used succesfully in countless wage and hour cases.

On November 2, 2004, California voters passed Proposition 64, amending the UCL in several important ways. Among other changes, Prop. 64 amended Section 17204 to provide that only the Attorney General, district attorney, city attorney, or "any person who has suffered injury in fact and has lost money or property as a result of such unfair competition" could prosecute a UCL action.

The Supreme Court announced today that it will hear oral argument in In re. Tobacco II Cases, Case S147345, on March 3 at 9:00 a.m. in San Francisco. The case includes the following issues:

(1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, section 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered "injury in fact," or is it sufficient that the class representative comply with that requirement?

(2) In a class action based on a manufacturer's alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer's representations?

In a typical wage and hour case, all class members will have suffered "injury in fact," so the Tobacco case will not be as important in wage and hour litigation as in other areas, but the case remains of interest.

Layoffs Trigger More Employment Lawsuits

We've seen a number of articles recently talking about how the economic down-turn is increasing the amount of employment-related litigation. This makes sense and follows a pattern that we've seen for years.

People don't like to sue their employers. Even if things are bad at a job -- even if the employer doesn't pay for all overtime or there's discrimination -- most people don't like to complain and don't want to risk losing their job. Most people only step forward after there's been some kind of break in the employment relationship -- either the boss or supervisor does something that the employee just can't take any more, or the job ends. With all the lay-offs, it's no surprise that more people are filing law suits.

Here's an article from today's New York Times on this issue.

Undocumented Workers Have Equal Rights Under the Wage and Hour Laws

"Do not withhold the wages due to your poor or destitute hired hand, whether he is one of your brethren or a stranger living in a settlement in your land." Deuteronomy 24:14.

Statutory changes over the last several years and a 2007 Court of Appeal decision, Reyes v. Van Elk (2007) 148 Cal.App.4th 604, make clear that all workers have the right to enforce California’s wage and hour laws, regardless of their immigration status. Indeed, questions about immigration status have no place in wage and hour litigation, and discovery directed at a worker’s immigration status is expressly prohibited.

California Labor Code section 1171.5, enacted in 2002, "finds and declares" the following: 

(a) All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.

(b) For purposes of enforcing state labor and employment laws, a person’s immigration status is irrelevant to the issue of liability, and in proceedings or discovery undertaken to enforce those state laws no inquiry shall be permitted into a person’s immigration status except where the person seeking to make this inquiry has shown by clear and convincing evidence that the inquiry is necessary to comply with federal immigration law.

(c) The provisions of this section are declaratory of existing law.  

California Civil Code section 3339 and Government Code section 7285 contain similar language, but include civil rights and employee housing laws under the protection afforded by Labor Code section 1171.5. 

The Legislature enacted these statutes in response to Hoffman Plastic Compounds, Inc. v NLRB (2002) 535 US 137, 122 S Ct 1275, 152 L Ed 2d 271, the decision in which the United States Supreme Court held that the National Labor Relations Board ("NLRB") may not award "backpay" to undocumented workers. Hoffman concerned remedies available to undocumented workers under the National Labor Relations Act ("NLRA") and not their standing to file a claim before the NLRB. In fact, the Supreme Court in Hoffman reaffirmed its earlier holding in Sure-Tan, Inc. v. NLRB (1984) 467 US 883, 104 S Ct 2803, 81 L Ed 2d 732, that undocumented workers have standing to file claims under the NLRA and are considered "employees" within the meaning of that statute. 

In March of 2007, in Reyes v Van Elk (2007) 148 Cal.App.4th 604, the Second District Court of Appeal held that the Immigration Reform and Control Act of 1986 ("IRCA") and Hoffman do not preclude undocumented workers from asserting claims for unpaid prevailing wages, and do not preempt California’s immigration status privacy statutes. In a case brought by employees on public works projects subject to California’s prevailing wage law, (Lab Code, §§ 1720-1861), the Court began by recognizing that prevailing wages are minimum wages, and that an employee has a private statutory right to recover unpaid prevailing wages from an employer. The court then wrote: "Earned but unpaid salary wages are vested property rights, [cite omitted]. Noncitizens are guaranteed the same property rights as citizens. (Cal Const, art I, § 20)." Hoffman, the Court continued, "does not prohibit plaintiffs from having standing to raise claims for prevailing wages, as those claims are ... for work already performed." See also Patel v. Quality Inn South (11th Cir 1988) 846 F.2d 700 (IRCA does not limit remedies for unpaid wages available to undocumented workers under the Fair Labor Standards Act).  

Concerning preemption by the IRCA, the Second District emphasized that the historic police powers of the states are not to be superseded by federal act unless that is the clear and manifest purpose of Congress. The Court further explained: 

We conclude there is no actual conflict between the IRCA and the prevailing wage law as the state law is not an obstacle to the accomplishment and execution of the full purposes and objectives of the IRCA.... [¶] The ultimate goal of the IRCA is to control illegal immigration into the United States by prohibiting the employment of unauthorized aliens... Allowing employers to hire undocumented workers and pay them less that the wage mandated by statute is a strong incentive for the employers to do so, which in turn encourages illegal immigration...

Reyes confirms a number of important points for California employees, both documented and undocumented. First, employees have a private right of action to pursue prevailing wage claims, just as they do to pursue other wage claims. Second, undocumented workers have the same right as documented workers to enforce California’s wage and hour laws. Finally, all workers have the right to prosecute such actions without intrusive and irrelevant inquiries into their immigration status. 

Post-Judgment Costs of Collection and Bankruptcy

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

Class Member Contact Information is Discoverable

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

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

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

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

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

Second, the Court reviewed the Supreme Court's recent decision in Gentry v. Superior Court (2007) 42 Cal.4th 443, which held that, under certain circumstances, an arbitration agreement that forces employees to give up their right to pursue class action litigation (a class action waiver) "would result in a de facto waiver of statutory rights 'and would impermissibly interfere with employees' ability to vindicate unwaivable rights and to enforce the overtime laws.'" The Court of Appeal drew the following lessons from Gentry:

Gentry highlights the importance placed on the rights of employees to bring class action lawsuits to enforce their statutory rights to overtime pay. So high is the importance of these rights that courts may invalidate contractual provisions that infringe upon them.

Gentry also highlights the dangers of placing in the employer's hands the responsibility for notifying employees of the pending litigation and requiring employees to opt in to the litigation. Current employees may decline to opt in to the litigation for fear of retaliation by their employer. This in turn could immunize the employer from liability for violation of statutory wage and overtime requirements. This would violate the public policy protecting employee rights.
The public policy concerns expressed in Gentry weigh against enforcing a release form that may have the effect of waiving an employee's right to notice of a pending class action lawsuit concerning the employer's alleged violations of overtime and wage statutes.

Turning its attention from public policy concerns to the specifics of the documents that the Crab Addison employees had signed, the Court noted that they were signed after the litigation was filed, but "there is nothing in the record to suggest that the employees who indicated they did not want their contact information disclosed to third parties, or they wanted to consider disclosure on a case-by-case basis, did so knowingly, that is, with knowledge of the pending litigation and the fact the release form would affect their ability to be included in the class." Given this concern that the employer should have advised the employees of the litigation before asking them to sign the forms, the Court held:

Employees indicating that they did not want their contact information disclosed, or wanted disclosure on a case-by-case basis, were unaware at the time they signed the forms of the pending litigation to enforce their statutory wage and overtime rights through a class action lawsuit. We may presume that, had they known about the litigation, their response on the form would have been different.

Given the public policy concerns that favor providing class member contact information to plaintiffs and the concerns about the forms signed by some of the Crab Addison employees, the Court of Appeal upheld the trial court's order requiring the employer to turn over the class members' contact information without further delay.

Welcome

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

You can get more information about me and The Pearl Law Firm at our web site: http://www.sgpearl.com/

Supreme Court Takes Brinker Off the Table

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

The Supreme Court's docket for Brinker is here.