Wage Law

In their weekly conference yesterday, the California Supreme Court denied a petition for rehearing in Californians for Disability Rights v. Mervyn's, LLC, and also denied a request for partial publication of the Court of Appeal opinion in Branick v. Downey Savings & Loan. The cases are now final. A remittitur was issued today in Branick. Presumably, one will be issued shortly in Mervyn's. Perhaps next week we will see orders in the many related cases in which the Supreme Court granted review pending the outcome of Mervyn's and Branick:

S132443  BENSON v. KWIKSET CORPORATION 
S132695  BIVENS v. COREL CORPORATION 
S133075  LYTWYN v. FRYS ELECTRONICS 
S133938  THORNTON v. CAREER TRAINING CENTER 
S134073  SCHULZ v. NEOVI DATA CORPORATION 
S135104  COHEN v. HEALTH NET 
S135587  CONSUMER ADVOCACY GROUP v. KINTETSU ENTERPRISES 
S138751  SCHWARTZ v. VISA INTERNATIONAL SERVICE ASSOCIATION 
S140272  HARTFORD FIRE INSURANCE v. S.C. (TURNER) 
S140396  BIVENS v. GALLERY CORPORATION 
S141766  YOUNG AMERICA CORPORATION v. S.C. (LYNCH) 

The Second District Court of Appeal published an opinion on Monday which reversed, on a writ petition, a trial court's order striking "statutory penalties" in a case where the plaintiff chose not to pursue remedies under the Labor Code Private Attorneys General Act of 2004. Dunlap v. Superior Court (2006) __ Cal.App.4th __ (B185247) follows the precedent set in the Caliber Bodyworks case, and makes it even more abundantly clear that employees need not follow PAGA's administrative procedures as long as they are not seeking PAGA civil penalties which would otherwise only be available to the Labor Commissioner.

Plaintiff Omar Dunlap, a former employee of defendant Bank of America, N.A. (“Bank”), seeks a writ of mandate directing the trial court to vacate its order granting the Bank’s motion to strike certain portions of Dunlap’s first amended class action complaint and to enter an order denying the motion to strike. The essential issue presented is whether the trial court properly struck Dunlap’s claims for statutory penalties on the ground he failed to exhaust his administrative remedies in accordance with the Labor Code Private Attorneys General Act of 2004 (PAG Act) (Lab. Code, § 2698 et seq.). Dunlap’s second through fifth causes of action, which are at issue herein, did not seek any penalties which previously were recoverable only by the Labor and Workforce Development Agency (LWDA). The only penalties being sought therein were various statutory penalties, which penalties already were recoverable by employees under the Labor Code prior to the adoption of the PAG Act. Therefore, Dunlap was not required to comply with the PAG Act’s administrative prerequisites to filing suit before pursuing statutory penalties in said causes of action. Accordingly, the trial court erred in granting the motion to strike. We grant the relief requested.

The opinion is a must read for employees' lawyers, as well as the few defense lawyers who have yet to review the cases and statutes, and continue to make the absurd contention that a party cannot seek claims for wages or penalties unless they try first to invoke the PAGA. The full opinion can be downloaded here in pdf or Word format.

We can't help but wonder if this is the case that all of those Paul Hastings lawyers kept referring to when they told trial judges and plaintiffs lawyers that the Court of Appeal was about to rule in their favor on the PAGA exhaustion issue. We think it is. If there is another, we'll believe it when we see it. For now, we simply congratulate Mark Yablonovich, Marc Primo and Shawn Westrick for their excellent work on the writ petition.

Isn't it interesting, too, that the employers who screamed bloody murder about the enactment of the PAGA are now complaining that employees are not using it in their lawsuits?

Starting to work its way through the courts is a case entitled Chindarah v. Pick Up Stix, Inc., et al. The "et al" include TGI Friday's, Inc. and Carlson Worldwide Restaurants. The issues in this case involve the validity of a release signed by employees who were told, during the pendency of an uncertified overtime class action, that they would be paid a certain amount if they signed a release of claims, which apparently included the overtime and other wage claims. The Orange County Superior Court found that the releases barred the class claims, finding no triable issue of fact as to whether the releases were invalid under Labor Code

The New Jersey Supreme Court has followed California's lead in refusing to enforce arbitration greements which bar classwide arbitrations. The New Jersey Supreme Court cited Discover Bank v. Superior Court (2005) 36 Cal.4th 148, in its published opinion in Muhammad v. County Bank of Rehoboth Beach, Delaware (2006) __ A.2d __. In so doing, the New Jersey High Court rejected an attempt by a payday lender charging 608% interest to use a class action ban to avoid accountability and struck down the ban as "unconscionable and unenforceable." The case involved a two-month $200 loan on which $180 accrued in interest, despite the fact that this APR of 608% far exceeded New Jersey's 30% usury limitiations.

"The public interest at stake in [the plaintiff's] ability and the ability of her fellow consumers effectively to pursue their statutory rights under this State's consumer protection laws overrides the defendants' right to seek enforcement of the class arbitration bar in their agreement."

The vote was 5-1. You can download a syllabus and a full text copy of the opinion here. You can read several of the amici briefs here, here and here.

The Supreme Court refused last week to consider or depublish a recently published case that favors choice of forum clauses in employment agreements with out-of-state employers. In Olinick v. BMG Entertainment, the Court of Appeal upheld an agreement forcing a long-term employee to bring claims in New York, even though he transferred to the west coast several years before his discharge. The case is of some interest to wage and hour lawyers because it could affect the forum of cases involving employees who once worked for the same employer in a state outside California.

As reported in the L.A. Daily Journal last week,

An appellate panel criticized an Irvine law firm Tuesday for not playing fair while defending a company against an employee's discrimination complaint. "In this case, we deal with tactics which were heavy-handed at best, and at worst could be viewed as a deliberate attempt to deprive a pro per plaintiff the opportunity to air his grievance in any form," Acting Presiding Judge William W. Bedsworth wrote on behalf of the three-judge panel of the 4th District Court of Appeal. Zamani v. St. John Knits Inc., G035818. In its unpublished ruling, the panel unanimously reversed an Orange County Superior Court judge's dismissal of Behzad Zamani's complaint against St. John Knits Inc., where he had worked as head mechanic for five years. Zamani sued the company after being fired, alleging discrimination. Daniel F. Fears of the Irvine firm Payne & Fears represented the company. Before the trial court, the law firm cited arguments that were already defeated by the appellate court three years earlier, the panel said. Payne & Fears should have known about the ruling because the firm represented the prevailing party in that case. Kalai v. Gray 109 Cal.App.4th 768 (2003). "To characterize counsel's efforts as disturbing would be mild," Bedsworth wrote. Fears could not immediately be reached for comment Tuesday. © 2006 Daily Journal Corporation.

Remember 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, and its arbitration waiver issue? Dead forever is that part of the opinion which defense lawyers (and some trial judges) misquoted to claim that a person cannot demand a court determination of an arbitration agreement's validity without waiving the right to arbitrate should the agreement be found enforceable. Three years ago, in Kalai v. Gray (2003) 109 Cal.App.4th 768, the Fourth District Court of Appeal held that a plaintiff will not be deprived of his right to proceed with his claim in arbitration merely because he first attempted to litigate it in court. The Supreme Court had previously held that a waiver of the right to proceed in arbitration only occurs "when the merits of the dispute have been litigated by the parties” (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180), but the 24 Hour Fitness case suggested that one who "repudiates" the arbitration agreement may never again seek to arbitrate -- an absurd rule that would have rendered any unconscionable arbitration agreement into an ad terrorem clause. Though California law clearly provides parties the right to seek a determination regarding the validity of a contract, including a contract for arbitration, St. John Knits and its counsel, Payne & Fears, claimed that it did not. They cited 24 Hour Fitness and its progeny, Martinez v. Scott Specialty Gases, Inc. (2000) 83 Cal.App.4th 1236, but made no mention of Kalai, even though the losing counsel in the Kalai case was Payne & Fears. The Court of Appeal did not appreciate that tactic. We don't know of any sanction being issued, but the opinion contained a number of gems, which, if it is ever published, would make for powerful support of many common employee arguments:

Much as our legal system favors the resolution of disputes on their merits, we still sometimes run into a case in which a party manages to rope the trial court into the kind of “gotcha!” resolution that usually frustrates justice.  In this case, we deal with tactics which were heavy-handed at best, and at worst could be viewed as a deliberate attempt to deprive a pro per plaintiff of the opportunity to air his grievance in any forum. ...

In this case, we reject St. John’s contention that plaintiff Behzad Zamani “waived” his right to pursue his claim in arbitration, merely because he first attempted to pursue it in court.  The fact he also stated, during the court proceedings, that he was “refusing” to arbitrate – at a time when no arbitration proceeding had ever been initiated, and St. John’s counsel had been badgering him to stipulate to it – changes nothing.  Zamani was entitled to “refuse” to arbitrate his own claims as part of his argument he was entitled to litigate in court.  As a practical matter, every party who files an opposition to a petition or motion to compel arbitration does that.  What Zamani might not be entitled to do, if he entered in to an enforceable arbitration agreement, is litigate those claims.  And that issue – whether Zamani could proceed with his claim in court – is the only issue which should have been determined below.

... the judgment is reversed, and the case is remanded with directions to modify the summary judgment order so as to delete any finding that Zamani waived his right to arbitrate.  The court is also directed to consider whether St. John’s conduct in attempting to deprive Zamani of any forum in which to adjudicate his claim amounts to a violation of the covenant of good faith and fair dealing, and warrants a finding that St. John itself relinquished its right to compel arbitration in this case.

First, we must address the conduct of St. John’s counsel in attempting to persuade the trial court of the merits of its summary judgment motion, without so much as acknowledging the existence of our prior Kalai opinion. Of course, counsel is always free to disagree with our published opinions (even to disparage them, privately); to distinguish them; or perhaps to argue they are inconsistent with other, more persuasive authority. What counsel cannot do is mischaracterize the state of the law. “An attorney has a duty ‘[t]o employ, for the purpose of maintaining the causes confided to him or her such means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by any artifice or false statement of fact or law.’ (Bus. & Prof. Code, § 6068, subd. (d).) Further, a member of the State Bar ‘[s]hall not seek to mislead the judge, judicial officer, or jury by an artifice or false statement of fact or law.’ (Rules Prof. Conduct, rule 5-200(B).) ‘“Honesty in dealing with the courts is of paramount importance, and misleading a judge is, regardless of motives, a serious offense.”’ (Paine v. State Bar (1939) 14 Cal.2d 150, 154; see also Di Sabatino v. State Bar (1980) 27 Cal.3d 159, 162-163; Garlow v. State Bar (1982) 30 Cal.3d 912, 917.) ‘Counsel should not forget that they are officers of the court, and while it is their duty to protect and defend the interests of their clients, the obligation is equally imperative to aid the court in avoiding error and in determining the cause in accordance with justice and the established rules of practice.’ (Furlong v. White (1921) 51 Cal.App. 265, 271.” (Williams v. Superior Court (1996) 46 Cal.App.4th 320, 330.) ...

No attorney in her right mind would have acceded to the stipulation shortening time for a summary judgment motion from 75 days to only 21 days, without knowing what St. John intended to do with it – and certainly would not have if she did know. ...

In 24 Hour Fitness, the court concluded, in accordance with Charles J. Rounds, that defendants were entitled to summary judgment based upon their arbitration agreement. It then went on to say, in a footnote contained in the disposition portion of its opinion, that: “[w]e recognize the result of our decision here is that Munshaw has no avenue for recourse against Nautilus, Rodriguez, Harmon or Cunningham. This consequence flows from her decision to repudiate the arbitration agreement.” (24 Hour Fitness, Inc. v. Superior Court, supra, 66 Cal.App.4th at p. 1216, fn. 12.) The court does not, however, make any effort to explain exactly why that would be the result. In Kalai, we attributed the court’s statement to the fact the arbitration provision at issue expressly required an arbitration be commenced within a year, which had not occurred. That factor distinguished 24 Hour Fitness from both Kalai and this case, and we consequently have no need to consider whether we might agree with the court’s conclusion on that basis. However, if the 24 Hour Fitness court meant to suggest that a plaintiff’s mere repudiation of the agreement would entitle defendant to avoid any adjudication of plaintiff’s claims, we simply disagree. That conclusion is inconsistent with both basic contract law and the precedents discussed above. ...

Rather than employing the arbitration provision in the parties’ agreement as a means of resolving this dispute in arbitration, as is clearly intended, it appears St. John was attempting to spin it into a means of avoiding resolution altogether. If that is true, it would constitute grounds for concluding that it is St. John, rather than Zamani, that has waived its right to arbitration in this case. As explained in Davis v. Blue Cross of Northern California (1979) 25 Cal.3d 418, 427, the covenant of good faith and fair dealing, which “requires each contracting party to refrain from doing anything to injure the right of the other to receive the benefits of the agreement” is implied in arbitration agreements as well as others. And conduct by one party which amounts to a deliberate effort to deprive the opposing party of those arbitration benefits can be construed as a violation of the covenant of good faith and fair dealing, and can be used to preclude the first party from thereafter seeking to enforce the arbitration agreement. We remand this case to the trial court with directions to consider whether St. John’s conduct rises to that level, and to determine whether, as a consequence, St. John has relinquished its own right to compel arbitration.

Zamani v. St. John Knits, Inc. can be downloaded here in pdf or word format.

California's minimum wage will increase from $6.75 per hour to $8.00 per hour over the next two years under a deal reached Monday between Governor Schwarzenegger and Democratic leaders. The raise is larger than those previously vetoed by the governor, but does not include the automatic cost-of-living increases proposed by Democrats. Formal passage of the bill, and signature by the governor, will be required before the agreement becomes law.

On Monday, we argued our appeal of the dismissal of our original Dollar Tree Stores meal period and rest period class action. The primary issue is whether a putative class member has the right to intervene or amend a complaint when the original class representative tentatively releases his claims as a part of a settlement which does not address the claims of his entire class. A secondary issue involves the question of when the trial court can dismiss a class action without notice to the class. Frankly, we thought the law was well settled already, but at least one Superior Court judge disagreed with us and dismissed the case over our objection. We'll be quite surprised if a majority of any appellate panel upholds the dismissal.

A few months ago, the Second District Court of Appeal affirmed an order denying a motion to certify a meal and rest period class action in Nguyen v. Dollar Financial Group, on the ground the trial court could properly rule the action was not suitable for class treatment because the common questions of law and fact did not predominate over individualized issues. A petition for review in the same case, albeit entitled, Chin v. Dollar Financial, was denied last month. A petition for publication, filed by non-party Radio Shack Corp., was denied this week by the California Supreme Court.

In an unpublished opinion, the Second District Court of Appeal has upheld the enforceability of El Torito Restaurants, Inc.'s employee arbitration agreement. In a typical Armendariz/Little analysis, the court ordered stricken the unconscionable portion of the agreement requiring employees to share in the cost of the arbitration, but otherwise ordered the agreement enforced. There are several pending class actions against El Torito Restaurant arising from meal and rest period claims, including one which our office recently settled. The appeal did not involve any class action cases.

Wal-Mart filed two post-trial motions in the Savaglio case in Alameda County, seeking to decertify the class after trial, and, alternatively, seeking for force the class to elect remedies, under the premise that the hour of pay is a penalty, and one cannot recover both penalties and punitive damages for the same wrong. The motions were heard and taken under submission on July 13, 2006. Judge Sabraw denied both motions on August 3, 2006, holding that the case is still suitable for class adjudication, and that the hour of pay under Labor Code 227 is compensation, not a penalty, and hence, no election of remedies is required. His his original decision is available on Westlaw. I'll try to scan and post the new orders soon.

You can check the latest developments and view documents right from the court's website here. (The Wal-Mart case number is C-835687). Wal-Mart has vowed to appeal. The Court of Appeal denied a prior writ petition and the Supreme Court denied review, but neither of those defeats prevents Wal-Mart from challenging the verdict and soon-to-be-entered judgment in a new appeal.

Rent-A-Center Inc. (RCII) has agreed to pay $4.95 million to settle a wage and hour class action lawsuit involving its California locations. Approximately 6,000 employees who worked in California from August 1998 through the date of the preliminary court approval will share in the recovery. The amount could increase by up to $750 per employee if the class size exceeds 6,250. The plaintiffs alleged claims arising from unpaid overtime, meal and rest break violations and delays in delivery of final paychecks. The case still requires court approval from a Los Angeles County Superior Court judge.

On August 4, 2006, the Industrial Welfare Commission 2006 Minimum Wage Board met to discuss various proposals, including a minimum wage increase. The group of thirteen included six employee representatives, six employer representatives, and a non-voting chair. A series of motions were introduced, and each failed with a 6-6 deadlock. The transcript and voting summary are posted on the IWC website.

The minimum raise increase that was discussed would have raised the minimum wage to $9.78 per hour. This odd amount was reached by determining the current value of the amount a single woman needed to earn to support herself in 1961, based upon a hypothetical formula ("Minnie's budget") used by labor representatives 45 years ago to determine the appropriate minimum hourly wage. The $9.78 figure represents the inflation-adjusted value of the 1961 sustaining level of $1.37.

On August 10, 2006, the Fourth District  Court of Appeal, Division One, denied two writ petitions filed by Starbucks in the Chou v. Starbucks tip-pooling case after the trial court granted class certification and denied a defense summary judgment motion. In the latter proceeding, the Fourth District requested a letter brief concerning whether Labor Code § 351 provides a private right of action and whether restitution is available under the UCL for such claims. After considering the petition, a letter brief and preliminary reply, the court denied both petitions without formal briefing, argument or opinion.

The petitions represented to the court that there were a great many tip pooling cases pending statewide and several trial courts have ruled there is no private right of action under section 351. We have difficulty believing that, especially after Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal. App. 4th 138, but maybe there are judges out there who think that labor laws were made to be broken and there isn't a damn thing employees can do about it. If you know of such a judge, let us know.

The First District Court of Appeal has reconsidered its decision not to publish Dunbar v. Albertson's, Inc., and it is now a published opinion. The Dunbar decision is interesting for two reasons. First, it reinforces the reality that certification is won or lost at the Superior Court level. Reversing an order granting or denying certification after Sav-On is going to be a daunting task for either side. Second, we believe it has confirmed an expanded scope of pre-certification discovery, which has traditionally been limited to "certification-based" issues and not "merits-based" issues if discovery on liability issues would be expensive and time-consuming. Carabini v. Superior Court (King) (1994) 26 Cal.App.4th 239, 241.

In Dunbar, the Court of Appeal refused to overturn an order denying certification because, although the trial court has an obligation to consider the use of "innovative procedural tools proposed by a party to certify a manageable class," the party seeking class certification "must explain how the procedure will effectively manage the issues in question". Because the court found that Dunbar had not really done so, the trial court decision stood.

Imposing this burden -- showing specifically how the proposed procedure would aid the court -- at the certification stage means that, when the manageability of a large or complex class is disputed, a trial court cannot deny a putative class representative the right to inquire as to the merits of at least a sampling of the putative class. One cannot explain to a trial court how a suggested procedure will effectively manage the issues in question without conducting some discovery that addresses the merits of the claims, and how "exemplar plaintiffs, survey results, subclassing, or other means" would yield an accurate assessment of, and a fair trial on, the claims of the putative class and the defenses of the employer or other class defendant.

Many trial courts have viewed the scope of pre-certification discovery this way for years. Others, however, have automatically denied class representatives any inquiry that addresses liability, regardless of the expense or time involved in such discovery, following Carabini v. Superior Court without careful analysis. If Dunbar stands, those courts will need to reassess their views on pre-certification discovery. When that happens, the numerous employers and employer-side firms who begged for this decision to be published may second-guess their decision to request publication of this decision.

The California Rules of Court changed, effective July 1, 2006, so as to require each party to an appeal to serve and file a Certificate of Interested Entities or Persons at the time it files its first document in an appellate court. Each party must also include a copy of the Certificate of Interested Entities or Persons in its principal brief. The certificate must appear after the cover and before the tables. A party that learns of changed or additional information that must be disclosed must promptly serve and file a Supplemental Certificate of Interested Entities or Persons. See Rule 14.5. Also effective July 1, 2006, similar requirements apply to writ petitions. See Rules 56(i), 57(c), 58(c), 59(d).

A model Certificate of Interested Entities or Persons used by the First District Court of Appeal can be downloaded here.

Wage and hour class actions are not drying up, and the trend is spreading from California to other states, as noted in a recent firm newsletter published by Chicago defense firm Vedder Price. Some reasons: Thomas M. Wilde suggests three: merit; likelihood of success; and a willingness by trial judges to certify these cases.

First and foremost, plaintiffs' lawyers have discovered that most employers do not follow the law. Nothing feeds a frenzy of litigation like a culture of lawlessness, which is what one finds at many places of employment, at least as it pertains to a wage and hour law. There are quite a few widespread practices in various industries that violate wage and hour laws. Often, employees do not know that the practices are illegal, and so they do not consult attorneys. Hence, attorneys are unaware that the practices exist. At some point, the crucial exchange of knowledge passes between employee and attorney, often in the context of an evaluation of wrongful termination claims; and the result is often sweeping litigation.

Second, the cases are easier to win than many other kinds of plaintiffs' cases. Often, by the time a plaintiff leaves our office for the first time, we know with 99% certainty that the case is a winner (or, conversely, we know that it is not and the prospective client does not become a plaintiff), and we usually know roughly what the case is worth. We also know that the attorney's fee award will increase if the employer forces us to spend a great deal of time on a case. Consequently, we can afford to hold out for a good settlement, and, if forced to do so, we can try these cases economically.

Third, as more and more of these cases are successfully managed and settled or tried, courts are becoming more willing than before to treat these cases collectively.

We once worked for a law firm where every single female associate earned less than every single male associate of equal seniority. Amazingly, none of the aggrieved and underpaid females complained. Had they done so (especially the ones who were planning to hang out a shingle soon anyway) they would have had a good case for a violation of Labor Code § 1197.5.

(a) No employer shall pay any individual in the employer's employ at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

(b) Any employer who violates subdivision (a) is liable to the employee affected in the amount of the wages, and interest thereon, of which the employee is deprived by reason of the violation, and in an additional equal amount as liquidated damages.

(g) Any employee receiving less than the wage to which the employee is entitled under this section may recover in a civil action the balance of the wages, including interest thereon, and an equal amount as liquidated damages, together with the costs of the suit and reasonable attorney's fees, notwithstanding any agreement to work for a lesser wage.

Though we are aware of no criminal prosecutions ever arising out of a violation of section 1197.5, Labor Code § 1199.5 provides that every employer "or other person acting either individually or as an officer, agent, or employee of another person" is guilty of a misdemeanor and is punishable by a fine of not more than ten thousand dollars ($10,000), or by imprisonment for not more than six months, or by both, who willfully does any of the following: (a) Pays or causes to be paid any employee a wage less than the rate paid to an employee of the opposite sex as required by Section 1197.5. (b) Reduces the wages of any employee in order to comply with Section 1197.5.

Thus, no employer can respond to a complaint by dropping everyone else's salary to match that of the lower-paid female. Bravo! Curiously, there is a "warning" provision in the statute, which says that no person shall be imprisoned under this statute for a first offense.

The reason we mention this, of course, is that we recently had a prospective client come in with what we believe to be a pretty good case. Any readers who would like to have their situations reviewed to see if they have a claim should never inquire by posting a comment. Instead, drop us an email and we would be happy to give you a free evaluation of your potential equal pay act violation.

While we rarely recommend that clients take their claims to the Labor Commissioner unless their claims are very small and cannot be aggregated with those of other employees, we still review the DLSE Enforcement Manual on a regular basis. The manual, and the opinion letters it references, changes from time to time. The changes themselves, and reasons for the changes, can be found at the DLSE's website in pdf or MS Word format. Current opinion letters can be downloaded here. For a list of recently withdrawn opinion letters, click here. The most recent opinion letter was issued on July 6, 2006; it discussed electronic transmission of wage statements.

This story is old. You got the email, didn't you? The one that purports to tell people about the "new [bathroom] sheriff in town" who would be policing people's potty breaks? Well, we did, and it has been sitting in our "to be posted" folder for months, just waiting for a day like today. A day when we were closing down the office and taking a Friday off.

Many of our most significant cases involve workers, especially restaurant workers and retail store employees, who do not get breaks. "If you've got time to lean, you've got time to clean" was the mantra at one chain store we sued. Apparently Allegedly, however, not all employees have this problem. Last October, a memo was distributed to workers at a Ford manufacturing plant in Wayne, Michigan, announcing an end to casual and excessive use of restrooms. Plant managers claimed that too many of the factory's workers spent more than 48 minutes per shift in the bathroom.

"In today's competitive environment, it is important that Michigan Truck plant immediately address this concern to avoid the risks associated with safety, quality, delivery, cost and morale,"

Workers were understandably annoyed. Though Ford is not the first large employer to regulate potty breaks, not all of its brethren were prepared to follow suit. Daimler Chrsyler was quick to point out that it lets employees use the toilet whenever the need arises. Meanwhile, we are only half-joking when we say that it might be a good idea for some employers to track the time. When it shows that hardly any of the bartenders get more than 2 minutes to respond to nature's call, maybe some member of management might grow a conscience at certain places of employment which we shall not name.

In Abouab v. City and County of San Francisco, the petitioners filed a mandamus action against the City and County of San Francisco, its recorder, tax collector, and assessor, seeking to compel the City to investigate an unreported change in ownership of a San Francisco property and reassess it. The reassessment happened, and $64,000,000 in tax revenue resulted, even though the writ. The petitioners then sought attorney's fees. The trial court rejected all four of the theories on which the fee claim was based, including the private attorney general doctrine, the common fund theory, the substantial benefit theory, and the catalyst theory.

Of interest to wage and hour class action and UCL practitioners, the Court of Appeal applied the analysis of Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553 (fees can be recovered under the catalyst theory only if the plaintiff made a pre-lawsuit attempt to resolve the dispute) to all pending cases, rejecting the petitioners' argument that they did not seek a pre-litigation resolution only because they filed their action before the Supreme Court established the standard in Graham. The moral of this story for plaintiff's lawyers: start sending out demand letters and invitations to mediate before every class action or UCL filing.

You can download the full text of Abouab here in pdf or Word format. [Hat tip: The UCL Practitioner]

Wilma B. Liebman, one of two Democrats on the five member National Labor Relations Board has been nominated for another five-year term. She has served on the Board since 1997.

The Court of Appeal, Second District, has dismissed an appeal in an employment class action against Labor Ready, Inc., arising out of alleged conflicts of interest between class counsel and individual parties. In Balandran v. Labor Ready, Inc., the defendant sought to disqualify class counsel by asserting an actual conflict of interest caused by the concurrent representation of a class of employees and two cross-defendants that the employer blamed for the alleged basis of the class action. The trial court granted the motion in part, concluding a potential for a conflict existed and requiring plaintiffs’ counsel to choose between representing the class and representing the cross-defendants. Plaintiffs’ counsel chose to continue representing the class, and withdrew from the representation of the cross defendants.

The defendants appealed, arguing plaintiffs’ counsel possessed an actual conflict and should have been disqualified from representing both the class and the cross-defendants. While the appeal was pending, plaintiffs’ counsel withdrew from the representation of the class and sought to dismiss the appeal as moot. The defendants opposed, claiming that the disqualification issue was still ripe because it should serve to disallow any subsequent attempt by the class counsel to recover attorney's fees.

The Court of Appeal disagreed. "As plaintiffs’ counsel no longer represents any party in the litigation, the issue of whether the trial court erred in failing to order disqualification is moot. We therefore dismiss the appeal." Moreover, the class counsel is not necessarily unentitled to recover fees at a later date.

The issue presented by this appeal is whether, at the time the trial court ruled on the motion for disqualification, class counsel had a disqualifying conflict of interest. The issues that may be presented by a subsequent motion for attorney’s fees are: (1) at what point in time did any conflict of interest arise; and (2) whether the conflict of interest is serious enough to compel a forfeiture of fees. Neither inquiry is controlled by whether the conflict was disqualifying. Cal Pak Delivery, Inc. v. United Parcel Service, Inc., supra, 52 Cal.App.4th 1 is illustrative. In that case, counsel for the plaintiff class offered to dismiss the action in exchange for a payment to him of ten million dollars. The trial court correctly concluded this was a sufficient conflict of interest to mandate counsel’s disqualification. (Id. at pp. 5 6.) However, at the time the trial court ordered the disqualification, the court also entered an order denying counsel all attorney’s fees he had incurred. This constituted an abuse of discretion. ... In other words, the appellate court in Cal Pak affirmed the order disqualifying counsel but reversed the order denying him fees because counsel’s entitlement to fees is not controlled by whether counsel had a disqualifying conflict of interest. Similarly, the issue raised by this appeal -- whether class counsel had a disqualifying conflict of interest in this case -- is not the issue that would arise if class counsel eventually seeks attorney’s fees. As such, the issue is not likely to recur, and there is no exception to the mootness doctrine.

Class counsel recovered their costs of appeal, and may recover more later, if the class action ends well for the class. The opinion is unpublished, but interesting reading for both plaintiff's lawyers and defense lawyers.