Wage Law

Blogging to Resume in February

As much as we like to post something every business day, it has been impossible in January. Normally posting will resume soon, probably on Monday. Sooner if possible.

Opt-In Precertification Notice Rejected

After Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 and Belaire-West Landscaping, Inc. v. Superior Court (2007) 149 Cal.App.4th 554 is was clear that trial courts had the discretion to authorize a precertification notice to putative class members in a wage and hour case, as long as the employees could opt-out of having their contact information being disclosed to class counsel. Many employers, however, have argued that the courts could and should have such notices go out with the proviso that employee contact information would only be disclosed to workers who affirmatively opt-in. Is such an order within the court's discretion? This wee, in Puerto v. Superior Court (Wild Oats), the Court of Appeal says it was not, reversing an order by Los Angeles County Superior Court judge Ronald Sohigian.

"Petitioners Jason Puerto, Jeffrey Armstrong, Thomas J. Baer, Charles Allen Schreck, Kelvin Nettleton, John Heim, Dennis Tucker, and Christopher Michael Williamson filed suit against their former employer, Wild Oats Markets, Inc., alleging wage and hour violations. During discovery, the trial court partially granted a motion to compel Wild Oats to provide the telephone numbers and addresses of individuals previously identified by name by Wild Oats in response to a form interrogatory, adopting a procedure to protect their privacy by sending a notice that would have required those individuals to fill in a postcard authorizing a third party administrator to disclose their addresses and phone numbers to petitioners. We conclude that the opt-in notice unduly hampers petitioners in conducting discovery to which they are entitled by erecting obstacles that not only exceed the protections necessary to adequately guard the privacy rights of the employees involved but also exceed the discovery protections given by law to far more sensitive personal information. Based on this conclusion, we hold that the trial court abused its discretion, and grant the writ."

The context of the notice, curiously, came as part of an order to compel responses to Judicial Council form interrogatory 12.1 “State the name, ADDRESS, and telephone number of each individual: [¶] (a) who witnessed the INCIDENT or the events occurring immediately before or after the INCIDENT; [¶] (b) who made any statement at the scene of the INCIDENT; [¶] (c) who heard any statements made about the INCIDENT by any individual at the scene; and [¶] (d) who YOU OR ANYONE ACTING ON YOUR BEHALF claim has knowledge of the INCIDENT (except for expert witnesses covered by Code of Civil Procedure section 2034).”

Code of Civil Procedure section 2017.010 provides that unless the court imposes limits, “any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” “The scope of discovery is very broad”  [citation] and it includes the right to “obtain[] . . . the identity and location of persons having knowledge of any discoverable matter . . . .” (§ 2017.010.) The “expansive scope of discovery” [citation] is a deliberate attempt to “take the ‘game’ element out of trial preparation” and to “do away ‘with the sporting theory of litigation—namely, surprise at the trial.’”
...it is only under unusual circumstances that the courts restrict discovery of nonparty witnesses’ residential contact information.

The court made clear that this is not to say that the trial court was without the ability to enter a protective order:

Certainly the trial court may require that the information be kept confidential by the petitioners and not be disclosed except to their agents as needed in the course of investigating and pursuing the litigation. Moreover, should the trial court find that the record evidences discovery abuse warranting a protective order as to the manner and means of contacting witnesses, the trial court always retains the discretion to impose such an order. However, the procedure selected here, an opt-in letter, effectively gave more protection to nonparty witnesses’ contact information than the Discovery Act gives to much more sensitive consumer or employment records. We are aware of no logic or authority that would justify such disproportionate protection of this private but under these circumstances relatively nonsensitive information. We therefore hold that requiring petitioners to secure affirmative consent to the disclosure of their contact information via an opt-in letter mechanism exceeded the protections necessary to safeguard the legitimate privacy interests in the addresses and telephone numbers of the witnesses, and as such was an abuse of discretion.

Rejecting the defense argument that providing contact information leads to class counsel shopping for new plaintiffs, the court noted:

"Provided that counsel observes ethical rules in interactions with prospective witnesses, "[t]o the extent that plaintiff's attorney, on request, provides information to other claimants which causes them to 'recognize legal problems,' his [or her] behavior is laudable."

You can download Puerto v. Superior Court here in pdf or word format.

Another Rehearing in Ticconi

Back in July, we discussed Ticconi v. Blue Shield of California Life & Health (2007) 153 Cal.App.4th 1123 (Diverse Facts and Legal Arguments Concerning Equitable Defenses in UCL Claims Do Not Bar Class Certification). It held that unclean hands and other equitable defenses cannot be used to defeat class certification in an unfair competition lawsuit based upon violations of statute, even if the defenses might be taken into account when fashioning a remedy, and even if they involve the determination of facts and legal issues that vary greatly among class members. In August, on the Court granted rehearing on its own motion, to make non-substantive changes to the opinion. The holding remained undisturbed. On January 3, 2008, however, the court granted the defendant's petition for rehearing. A new opinion, briefing schedule or argument date is expected by February 4.

Darden Settles More Wage & Hour Class Actions

Darden Restaurants, Inc. has agreed to pay another $4 million to settle another two class action lawsuits involving California employees of Red Lobster and Olive Garden restaurants. The suits accused the company of requiring servers and bartenders to make up for cash shortages at the end of their shifts. The settlements were disclosed in recent S.E.C. filings. A company spokesman said the settlements the allegations were "almost impossible to prove one way or the other," but that the defending the cases would be too costly.

Fees and Costs in Action Brought Solely to Compel Arbitration

Where an action is brought solely to compel arbitration of contractual disputes between the parties, a party who succeeds in obtaining an order denying the petition to compel arbitration is a prevailing party in the action on the contract, even if the merits of the parties' underlying contractual disputes have not yet been resolved. Otay River Constructors v. San Diego Expressway (2007) __ Cal.App.4th __. In a secondary ruling, the court of appeal held that an order denying a request for costs and attorney's fees under such circumstances is appealable as a "special order after final judgment" under Code of Civil Procedure § 1294(e). You can download Otay River Constructors v. San Diego Expressway here in pdf or word format.

White Cap Construction Rest Period Case Certified

San Francisco County Superior Court Judge Robert L. Dondero has granted certification in a meal and rest break case brought on behalf of 345 truck drivers employed by White Cap Construction Supply (Castro v. White Cap Construction Supply, Inc., case no. CSC-05-446144). The court took into account the recent decision in Bell v. Superior Court (H.F. Cox, Inc.) (2007) __ Cal.App.4th __, and nonetheless exercised his discretion to grant certification. The order demonstrates that the defendant mounted considerable evidence to support its arguments, which were typical of those which defendants always raise when making the claim that rest period cases are not certifiable

There are now at least six contested rest period certifications we know of, some of which withstood appeal in unpublished decisions, one of which didn't.

On the issue regarding the employer's obligation to ensure that drivers take meal periods, Judge Dondero followed Cicairos v. Summit Logistics (2005) 133 Cal.app.4th 949 and Zavala v. Scott Bros. Dairy, Inc. (2006) 143 Cal.app.4th 585, and found White v. Starbucks Corp (N.D. Cal. 2007) 2007 WL 1952957. The meal period issue is perhaps the new "hottest" wage and hour issue out there, and perhaps we'll see Castro v. White Cap Construction Supply, Inc. again as a published appellate decision.

High Court Wage Hour Rulings Hurtful to Employers

That's the actual headline of this San Fernando Valley Business Journal article. It makes it sound like forcing employers to follow the damn law is deeply offensive to corporate folks. Perhaps we've come full circle, and now even the corporate moguls get to label themselves as victims.

Average Billing Rates

According to recent article in the National Law Journal, last year, 119 of the nation's 300 largest law firms provided billing rate information for the NLJ's annual survey. Among firms reporting average and median rates in both 2006 and 2007, average firmwide billing rates increased from $321 to $348 per hour last year, with the median rate jumping from $324 to $347 per hour.

IRS Raises Standard Mileage Rate to 50.5 Cents per Mile

The Internal Revenue Service has issued new standard mileage rates for 2008, used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning January 1, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

• 50.5 cents per mile for business miles driven;
• 19 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations.

The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire or for more than four vehicles used simultaneously. Revenue Procedure 2007-70 contains additional information on these standard mileage rates.

In California, the DLSE presumes that employers who reimburse mileage at the IRS rate have correctly reimbursed their employees for expenses incurred in the use of their cars and complied with Labor Code § 2802. However, under the recent Gattuso decision, the IRS standard mileage rate may not conclusively establish compliance with Section 2802. If an employee can show that his or her actual expenses exceed 50.5 cents per mile, an employer may have to pay the higher amount.

New Lower Rates in Effect For Computer Software Professionals

Effective January 1, 2008, the minimum hourly rate for exempt computer software professionals in California decreased from $49.77 per hour to $36 per hour. Under California Labor Code § 515.5, the computer professional overtime exemption in California applies only to employees who meet a duties test and a minimum hourly pay rate, as established each year by the California Division of Labor Statistics. For salaried workers, this equates to an annualized salary of not less than $74,880 (down from last year's $103,521.60), plus $36 for each hour worked in excess of 40 in a work week. The Division of Labor Statistics and Research will adjust the rate annually for inflation.

New Minimum Wage in Effect

Effective January 1, 2008, the minimum wage increased from $7.50 per hour to $8.00 per hour. The increased minimum wage increases the minimum salary that must be paid to exempt executive, administrative and professional employees, who must be paid no less than twice the minimum wage if they are to be denied overtime pay for work in excess of eight hours per day or forty hours per week. Thus, an employee who was paid an annual salary of $31,200 might have been exempt (assuming that the duties test was also met) last month, but now must make at least $33,280 annually to remain exempt from overtime pay.

Happy New Year, 2008!

We're at the Rose Bowl today. Fight On! Happy New Year!