Vranish v. Exxon Mobil Corp.: Parties to Qualifying CBA May Alter Labor Code Definition of "Overtime Hours"

In Vranish v. Exxon Mobil Corporation, --- Cal.App.4th --- (1/27/14), the plaintiffs were Exxon employees covered by a collective bargaining agreement (CBA) who alleged that Exxon owed them overtime compensation. 

Under the CBA, Exxon paid the plaintiffs an overtime premium rate of one and one-half times their regular rate of pay for hours worked over 40 hours in a workweek or over 12 hours in a workday. The CBA provided that overtime would not be paid for hours worked between eight and 12 in a workday, as normally required by Labor Code section 510.

At issue was whether section 510’s definition of “overtime” applies to employees covered by a valid CBA under Labor Code section 514. More specifically, the question was whether the CBA at issue satisfied the fourth requirement of section 514, in that it provided “premium wage rates for all overtime hours worked.”

The Court held that section 510's definition of "overtime" did not apply, and the CBA provided premium wage rates for overtime hours worked, thus satisfying section 514.

Section 514 does not incorporate expressly the definition of "overtime" provided in section 510. "When there is a valid collective bargaining agreement, employees and employers are free to bargain over not only the rate of overtime pay, but also when overtime pay will begin." Slip op. at 8. Parties subject to a qualifying CBA may consider all hours over eight in a day to be overtime, or they may agree to a different model, such as considering only hours over 40 in a week. 

The opinion is available here. 

Sandifer v. U.S. Steel: Supreme Court Clarifies FLSA Donning and Doffing Rules

In Sandifer v. United States Steel Corp., ___ U.S. ___ (1/27/14), the Supreme Court of the United States considered the meaning of the phrase "changing clothes" in the Fair Labor Standards Act (FLSA). 29 U.S.C. section 201 et seq.

Clifton Sandifer sued U.S. Steel under the FLSA for time spent donning and doffing various pieces of protective gear. U.S. Steel argued that the time was not compensable under the parties' collective bargaining agreement (CBA) and under section 203(o) of the FLSA, which allows parties to agree, as part of a CBA, that "time spent in changing clothes . . . at the beginning or end of each workday" is not compensable.

The district court granted summary judgment on those grounds and also on grounds that any time donning and doffing non-clothing protective gear was de minimis. The Seventh Circuit Court of Appeals affirmed, as did the Supreme Court, holding:

The term "clothes" is given its ordinary meaning in the FLSA: "items that are both designed and used to cover the body and are commonly regarded as articles of dress;" and "[c]overing for the human body; dress; vestments; vesture." "Clothes" does not include items such as tools and accessories, which would include necklaces and knapsacks.

The term "changing clothes" is not given the "usual meaning" of substituting certain clothing items for others, but takes on a broader meaning that includes "time spent in altering dress."

As a result, donning and doffing certain items, such as a flame-retardant jacket, pants, and hood; a hardhat; a snood; wristlets; work gloves; leggings; and metatarsal boots constitutes "changing clothes." Donning and doffing other items, such as safety glasses; earplugs; and a respirator, does not.

The court declined to apply the de minimis doctrine to the compensable time spent donning and doffing non-clothing items. Instead, the Court held:

If an employee devotes the vast majority of the time in question to putting on and off equipment or other non-clothes items (perhaps a diver's suit and tank) the entire period would not qualify as "time spent in changing clothes" under §203(o) , even if some clothes items were donned and doffed as well. But if the vast majority of the time is spent in donning and doffing "clothes" as we have defined that term, the entire period qualifies, and the time spent putting on and off other items need not be subtracted. 

Sandifer v. U.S. Steel is available here. 

Hawkins v. Taca Int'l Airlines: Court Dismisses Labor Code Section 2810 Contractor Claim as Too Speculative

Arlette Hawkins filed a class action complaint against her former employer (Sereca) and a number of airlines (the airline defendants), alleging that they violated Labor Code section 2810, which prohibits labor contracts that fail to "include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided."

The airline defendants demurred to the section 2810 cause of action, arguing that the plaintiff failed to state any facts to support the allegation that they knew or should have known that their contracts were underfunded. The plaintiffs argued that they had not been able to obtain the contracts, the terms of which were known to the airline defendants. The trial court sustained the demurrer without leave to amend.

The plaintiff appealed, and the Court of Appeal affirmed, holding:

The record did not demonstrate that the plaintiff had attempted to obtain the contracts from the airline defendants in formal discovery. Had she done so, she would have known whether the contracts complied with section 2810. 

To state a cause of action, the plaintiff had to do more than merely "parrot" the language of the statute. Further, the plaintiff's admission that she had not seen the contracts at issue indicated that her claims were merely speculative. Finally, the complaint alleged that Sereca "had the ability to pay all wages" earned by the class members, contradicting the allegation that the contracts violated section 2810.

Hawkins v. Taca International Airlines, S.A. (1/27/14) --- Cal.App.4th ---, is available here. 

Rea v. Michaels Stores Inc.: Remand of Class Action to State Court Improper Under CAFA

In Rea v. Michaels Stores Inc., ___ F.3d ___ (2/18/14), the plaintiffs filed a wage and hour class action in state court, and the defendant removed to the district court under the Class Action Fairness Act (CAFA). The district court remanded because the plaintiffs disclaimed any recovery over $4,9999,999.99. After the US Supreme Court's decision in Standard Fire Ins. Co. v. Knowles (discussed here), the defendant again removed, and the district court again remanded, holding that the removal was untimely and that the defendant failed to demonstrate that the amount in controversy met the $5 million standard.

The defendant appealed, and the Ninth Circuit reversed, holding: 

First, the fact that the state court had certified a class did not bind the class members to the plaintiffs' earlier stipulation, nor did the fact that the certified class was smaller than the one originally contemplated it make it impossible that the amount in controversy would be under $5 million. 

Second, the defendant's second removal was not untimely. When the defendant removed the first time, the plaintiffs' stipulation re. amount in controversy was valid under Ninth Circuit precedent, and the defendant could not remove. Because the defendant removed the second time within 30 days of the Supreme Court's decision in Standard Fire, which held that such a stipulation was improper, the second removal was timely. 

Finally, because there was substantial, plausible evidence that the $5 million standard was met and no evidence to the contrary, the district court's finding that the standard was not met was clearly erroneous. 

The opinion is available here. 

Fahlen v. Sutter Central Valley Hospitals: Supreme Court Allows Physician To Bring Whistleblower Action

In Fahlen v. Sutter Central Valley Hospitals (8/14/12) (discussed here), the Court of Appeal held that a doctor claiming he lost his hospital privileges as a form of whistleblower retaliation need not exhaust his judicial remedy of pursuing review, via writ of mandate, of the hospital's action before he can file a whistleblower lawsuit under California Health and Safety Code section 1278.5.

On February 20, 2014, in a per curiam opinion written by Justice Baxter, the California Supreme Court affirmed in full. I normally don't like to quote opinions at great length, but the introduction to this opinion does an excellent job of setting forth the legal background and holding: 

In Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465 (Westlake), we held that, before a physician may bring a common law tort action directed against a hospital’s quasi-judicial decision to terminate the physician’s staff privileges, he or she must first exhaust all internal hospital procedures to reverse the decision, and, if this fails, must prevail in court in a mandamus proceeding to have the decision set aside. In two more recent decisions, however, we concluded that persons filing damage suits authorized by certain whistleblower statutes — laws forbidding employer retaliation against workers who have reported fraud, danger, corruption, waste, or malfeasance — did not have to exhaust available administrative and mandamus remedies before seeking relief in court. (Runyon v. Board of Trustees of California State University (2010) 48 Cal.4th 760 (Runyon); State Bd. of Chiropractic Examiners v. Superior Court (2009) 45 Cal.4th 963 (Arbuckle); but see Miklosy v. Regents of University of California (2008) 44 Cal.4th 876 (Miklosy).) 

Here, as in Westlake, defendant Sutter Central Valley Hospital, through its quasi-judicial peer review procedures, terminated plaintiff Mark T. Fahlen’s physician’s staff privileges. He sued the hospital and its chief operating officer, seeking damages, reinstatement, and other relief on multiple theories. Among other things, his complaint claims the hospital’s action constituted retaliation for his reports of substandard performance by hospital nurses, and thus violated Health and Safety Code section 1278.5.  

Defendants moved to dismiss the action on grounds, among others, that plaintiff could not bring a civil suit under section 1278.5 unless he first succeeded by mandamus in overturning the hospital’s action. The trial court denied the motion. In a published decision, the Court of Appeal reversed in part. The appellate court held that plaintiff could pursue those claims based on section 1278.5, rather than on the common law, even though he had not previously sought and obtained a mandamus judgment against the hospital’s decision. This holding conflicted with that of another appellate decision, Nesson v. Northern Inyo County Local Hospital Dist. (2012) 204 Cal.App.4th 65 (Nesson). We granted defendants’ petition for review for the sole purpose of resolving the conflict.  

We conclude that when a physician claims, under section 1278.5, that a hospital’s quasi-judicial decision to restrict or terminate his or her staff privileges was itself a means of retaliating against the physician “because” he or she reported concerns about the treatment of patients, the physician need not first seek and obtain a mandamus judgment setting aside the hospital’s decision before pursuing a statutory claim for relief. Section 1278.5 declares a policy of encouraging workers in a health care facility, including members of a hospital’s medical staff, to report unsafe patient care. The statute implements this policy by forbidding a health care facility to retaliate or discriminate “in any manner” against such a worker “because” he or she engaged in such whistleblower action. (§ 1278.5, subd. (b).) It entitles the worker to prove a statutory violation, and to obtain appropriate relief, in a civil suit before a judicial fact finder.  

Slip op. at 1-3. 

The Supreme Court's opinion is available here.

Jones v. Farmers Insurance Exchange: Court Reverses Order Denying Certification of Off-the-Clock Wage and Hour Class Claims

Jones v. Farmers Insurance Exchange (10/28/13, pub. 11/26/13) is another post-Brinker decision dealing with certification of wage and hour claims.

Kwesi Jones worked as an adjuster for Farmers Insurance Exchange (Farmers). He sued, alleging that Farmers should have paid him and his co-workers for "computer sync time" at home before the beginning of their scheduled shifts. 

Jones filed for class certification, and Farmers opposed, arguing that it had no uniform policy requiring unpaid pre-shift work and that individual issues thus predominated. The trial court denied certification, and the Court of Appeal reversed, finding as follows: 

Under Brinker and Sav-On, the question on commonality is "whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment," and the fact that individual class members will have to prove their damages does not defeat certification. Slip op. at 9-11. 

Although the trial court is "afforded great discretion in ruling on class certification" (slip op. at 11-12), the trial court here abused its discretion and applied improper criteria "by focusing on individual issues concerning the right to recover damages rather than evaluating whether the theory of recovery is amenable to class treatment." Slip op. at 14. Further, "the trial court erred to the extent that its ruling was based on its evaluation of the merits of Plaintiffs’ claim as to the existence of such a uniform policy." Slip op. at 15.

Plaintiffs’ theory of recovery is that Farmers applied a uniform policy to all putative class members denying them compensation for “computer sync time” work performed at home before the beginning of their scheduled shifts. The existence of such a policy is a factual question that is common to all class members and is amenable to class treatment. Whether such a policy, if it exists, deprives employees of compensation for work for which they are entitled to compensation is a legal question that is common to all class members and is amenable to class treatment.

Slip op. at 13. Farmers disputed that it had such a policy, but this argument raised a "common question amenable to class treatment." Slip op. at 13. Farmers' other evidence went to damages, which did not defeat certification. Slip op. at 13-14. Further, "Farmers’s liability depends on the existence of such a uniform policy and its overall impact on its APD claims representatives, rather than individual damages determinations." Slip op. at 15. 

Because of the predominance of common issues, class certification would "provide substantial benefits to the litigants and the courts," and a class action would be a superior method of resolving the dispute. Slip op. at 15. 

Substantial evidence supported the trial court's finding that Mr. Jones was not an adequate class representative because he did not file a declaration stating that he understood his fiduciary obligation to the class. Slip op. at 17. However, rather than deny certification on this basis, the trial court should have given the plaintiffs an opportunity to amend their complaint to name a suitable class representative. Slip op. at 17-18.  

The opinion is available here.

Duran v. US Bank: Cal. Supreme Court Schedules Oral Argument

In Duran v. U.S. Bank N.A., the Court of Appeal reversed a trial court judgment in favor of a class of allegedly misclassified bank officers and ordered the class decertified. Our blog post on the Court of Appeal's decision is here.

The California Supreme Court granted review and yesterday announced that oral argument will be held on Tuesday, March 4, 2014, at 9:00 a.m., in San Francisco.

The Court's web page (here) states the issues as follows:

This case presents issues concerning the certification of class actions in wage and hour misclassification litigation and the use of representative testimony and statistical evidence at trial of such a class action. 

The Court's decision should be published within 90 days of oral argument, which would be June 2, 2014.