Wage Law

Code of Civil Procedure § 1281.2 requires a party moving to compel arbitration to allege the existence of a written agreement to arbitrate. Must a trial court deny a petition to compel arbitration where the moving party fails to allege the existence of a written agreement containing an arbitration clause? Of course. Brodke v. Alphatec Spine, Inc. (2008) __ Cal.App.4th __.

The gist of the case: it's not enough to merely point out that the plaintiffs allege such an agreement exists.

the evidence offered by defendants to prove the existence of a written agreement to arbitrate consisted solely of counsel's declaration attaching a copy of plaintiffs' complaint, which in turn attached a copy of the Brodke agreement. In short, defendants did not allege, or attempt to prove, that defendants contended an agreement to arbitrate existed - only that plaintiffs alleged the existence of an agreement.

If you want to read the whole thing, you can get a pdf or word version of the opinion from the court's website.

As a general rule, under Code of Civil Procedure § 1033(a), the trial court has the discretion to deny attorney's fees as an element of costs of suit under Code of Civil Procedure § 1033.5(a)(10)(B) if the plaintiff recovers less than the minimum jurisdictional amount of the court. Thus, for example, if a plaintiff sues in unlimited civil court and recovers only $25,000, and not a penny more, the case could have been brought in the limited  civil division and therefore, some costs may be denied. In Chavez v. City of Los Angeles (2008) __ Cal.App.4th __,

a jury awarded appellant Robert Chavez $11,500 in a statutory retaliation action brought against his employer and a supervisor. Chavez then filed a motion seeking approximately $871,000 in attorney fees under the fee provisions of the Fair Employment and Housing Act (FEHA), Government Code section 12965, subdivision (b). Ignoring that statute, and instead exercising its discretion under Code of Civil Procedure section 1033, subdivision (a) to deny costs because Chavez’s recovery was below its jurisdictional minimum, the trial court denied the motion. Chavez appeals from the denial of the motion, contending the court applied the wrong statutory standard and abused its discretion by denying him fees. We agree and reverse the order.

The opinion contains a lengthy discussion regarding the court's proper exercise of discretion, the conflicting purposes of  Code of Civil Procedure § 1033(a) and Government Code § 12965, and the language in the latter which limits the exercise of discretion in a FEHA case. In certain important respects, the holding can be distinguished in a wage case, but significant elements of the opinion apply as clearly to a Labor Code case as to a FEHA case.

You can download Chavez v. City of Los Angeles here in pdf and word format.

...became slightly less thin with the publication of Chavez v. Netflix, Inc. (2008) __ Cal.App.4th __.

Frank Chavez sued Netflix, Inc. (Netflix) over its practice of advertising that it would send customers " 'unlimited' " DVD rentals with "1 Day Delivery" for a flat monthly fee. Alleging that both selling points were false, Chavez sought injunctive relief and damages on behalf of himself and a class of current and former Netflix subscribers. Before the class was certified, Netflix agreed to settle the class action by providing one month of free DVD rental services or upgrades to class members who claimed the benefit. The trial court approved the settlement and awarded attorney fees of $2,040,000 to be paid by Netflix to class counsel. The appellants in these consolidated appeals objected to the class action settlement and fee award in the trial court. They contend that the trial court abused its discretion in approving the settlement, affording notice to class members, and determining the amount of fees. Finding no abuse of discretion, we affirm the orders in issue.

The case is full of interesting language supporting settling parties. A detailed analysis has been posted over at the UCL Practitioner. We're in trial, so we'll just point you in that direction. You can download the case here in pdf or word format.

In an unusual opinion, the Second District Court of Appeal ordered Costco Wholesale Corp. to turn over some of its attorney-client communications during discovery in a putative class action alleging misclassification of Costco managers. In Costco Wholesale Corp. v. Superior Court (2008) __ Cal.App.4th __, the Court of Appeal held that the trial court was correct to order Costco to produce portions of a pre-litigation attorney-client memo prepared for Costco by its outside counsel. The memo analyzed whether Costco's department managers qualified for exempt status. Counsel took interviews, reviewed job descriptions, and prepared a detailed and lengthy memo analyzing the status of the managers. The trial court ordered an in-camera review by a referee, who determined that portions of the memorandum regarding the managers’ job duties were not privileged and should be produced.

Costco petitioned for a writ of mandate. After some odd procedural quirks, the Court of Appeal denied the writ, holding that Costco had not shown "irreparable harm” because the portions to be produced came from job descriptions and interviews with two managers; it was “inconsequential; and it did not “infringe on the attorney-client relationship.” The Court found that these were not work product, and that disclosure would cause no harm because the information would be readily available from other sources.

You can download the full text of Costco Wholesale Corp. v. Superior Court here in pdf or word format. A modification order was issued yesterday, which did not change the judgment. We read the whole thing, twice, and we might be incorporating a request for in camera review of much more from the privilege logs than ever before.

The Supreme Court published a case last year regarding the interplay between company expenses and losses and the payment of profit-sharing bonuses to employees. Prachasaisoradej v. Ralphs Grocery Company, Inc. (2007) 42 Cal.4th 217. We previously discussed the case in a post found at this link. A few months later, the court entered an order awarding $275,000 in attorney's fees to Ralphs Grocery. Prachasaisoradej appealed. The Supreme Court denied review. End of story.

A bill seeking to make it more difficult for employees to get meal breaks, or to sue, individually or collectively, for meal break wages made it out of committee on April 9, but was substantially amended on April 15 and set for hearing today. However, that hearing has been withdrawn.

SB 1539 (Margett) initially sought to specify that "providing" an employee with a meal break meant "giving the employee an opportunity to take" a meal break.

This bill would revise the statutory requirements for the provision of meal periods to specify that the requirements apply only to employees subject to the meal period provisions of an order of the IWC. The statutory requirements for providing the meal periods would be revised to specify that a meal period based on working more than 5 hours in a workday is required to be provided before the employee completes 6 hours of work, unless the existing waiver provision is invoked. The waiver provision for the 2nd meal period would be changed to provide an exception for different provisions within IWC wage orders in effect as of January 1, 2008, and to permit the employer and employee to agree to waive either the first or the 2nd meal period if the employee otherwise is entitled to 2 meal periods. The bill also would specify conditions under which on-duty meal periods are permitted rather than meal periods in which the employee is relieved of all duty. The meal period provisions of a valid collective bargaining agreement would be required to be implemented for covered employees rather than the statutory requirements. The bill would require that orders of the IWC be interpreted in a manner consistent with this section, and would require the Department of Industrial Relations to amend and republish specified IWC wage orders to be consistent with the revised meal period requirements. The bill also would declare that all those provisions are declaratory and not amendatory of existing law.

With the latest amendment, the bill looks quite different:

An act to amend Section 512 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL'S DIGEST

SB 1539, as amended, Calderon. Meal periods.

Existing law requires an employer to provide an employee who works more than 5 hours in a workday with a meal period of not less than 30 minutes, unless the employee works no more than 6 hours in a workday and the meal period is waived by mutual consent. An employer also is required to provide an employee who works more than 10 hours in a workday with a second meal period of not less than 30 minutes, unless the employee works no more than 12 hours, the first meal period was not waived, and the second meal period is waived by mutual consent. The Industrial Welfare Commission (IWC) of the Department of Industrial Relations adopts and amends wage orders that, among other things, specify how meal periods are required to be provided to covered employees within various industries, including the procedures for providing employees with on-duty meal periods.

This bill would declare the intent of the Legislature to enact
legislation to address issues related to meal periods in employment.

Instead of a massive overhaul of Labor Code section 512, the text of the bill now just reads:

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.   It is the intent of the Legislature to enact legislation to address issues related to meal periods in employment.

That's it for now. Senator Margett's other meal period bill, SB 1192, was withdrawn on April 8. That bill would have reduced the statute of limitations on meal and rest period pay to one year, and would have allowed employers to force their employees to wait as long as six hours to take a meal break.

The Supreme Court has denied a petition for review, but granted a request for depublication in Bell v. Superior Court (H.F. Cox, Inc.) (2007) 158 Cal.App.4th 147, a class certification opinion involving truck drivers with overtime, off-the-clock, meal/rest period and vacation pay claims.

The petition for review is denied. The requests for an order directing depublication of the opinion are granted. The Reporter of Decisions is directed not to publish in the Official Appellate Reports the opinion in the above-entitled appeal filed November 21, 2007, which appears at 158 Cal.App.4th 147. (Cal. Const., art. VI, section 14; rule 8.1125(c)(1), Cal. Rules of Court.) George, C.J., was absent and did not participate. Kennard J., is of the opinion the petition should be granted.

The Court of Appeal had affirmed in part and reversed in part a multiple-issue certification ruling by the Superior Court.

Four employees of a petroleum transportation company sought to bring a wage and hour class action against their employer, alleging: (1) the failure to pay overtime; (2) the requirement of off-the-clock work; (3) the failure to provide meal and rest breaks; (4) the incorrect calculation of vacation pay; and (5) the failure to pay pro rata vacation pay upon termination of employment. The plaintiffs filed a motion for class certification. The trial court granted the motion in part, certifying only a class with respect to the claim for failure to pay vacation pay upon termination of employment. In all other respects, the motion was denied. Plaintiffs sought review by means of a petition for writ of mandate. We issued an order to show cause why relief should not be granted and stayed further proceedings. We now conclude the trial court erred in failing to certify a class with respect to the overtime pay and vacation pay claims. We therefore grant the writ petition and direct the trial court to vacate its order, and enter a new and different order granting certification of a class with respect to those claims.

While on its face, the opinion had seemed to favor the plaintiff (who was the petitioner seeking Supreme Court review) the Court of Appeal's endorsement of the denial of certification in the off-the-clock and meal period causes of action had been embraced by the employers' bar, who will lament the depublication of the case.

We previously discussed the publication of and holding in Bell in a post here.

Employers engaged on public works projects must pay prevailing wages to their workers if the project is “paid for in whole or in part out of public funds.” Until now, it was unclear whether tax credits provided by the state to facilitate construction of low-income housing comes within this definition. In State Bldg. & Const. Trades Council v. Duncan (2008) __ Cal.App.4th __, the trial court determined that it does. The Court of Appeal reversed.

we conclude otherwise—that however worthy the policy goals of encouraging the construction of low-cost housing and ensuring compliance with the prevailing wage requirements, the statutory language in its present form cannot be construed to command that result. Tax credits are, at best, intangible inducements offered from government, but they are not actual or de facto expenditures by government. As such, they do not qualify as either the “payment of . . . the equivalent of money by the state” (subd. (b)(1), or as a “transfer by the state . . . of an asset for less than fair market price” (subd. (b)(3)), the portions of the definition of “paid for in whole or in part out of public funds” considered here. We thus reverse.

You can download the full text here in pdf or word format.

On Wednesday, a Senate filibuster blocked legislation to overturn the Supreme Court holding in Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. __. Hillary Rodham Clinton and Barack Obama each took time away from the campaign trail to speak in favor of the bill, but John McCain stayed away, expressing satisfaction over the bill's failure.

"I am all in favor of pay equity for women, but this kind of legislation, as is typical of what's being proposed by my friends on the other side of the aisle, opens us up to lawsuits for all kinds of problems. This is government playing a much, much greater role in the business of a private enterprise system."

In other words, he likes the equal pay laws, as long as few people actually get relief from the courts if the law is disregarded. Only six Republican senators supported the bill, which would have passed by a majority vote of 56-42, but could not be put to a vote without the 60 votes needed to end the filibuster. Had the filibuster failed, the White House vowed to veto the bill.

An on-duty meal period is not a "waived" meal period; consequently, an employee may take two on-duty meal periods in one shift, as long as the requirements for an on-duty meal period are satisfied, according to an unpublished U.S. District Court opinion rendered last month in McFarland v. Guardsmark, LLC (N.D. Cal. 2008) 2008 U.S. Dist. LEXIS 20296 (granting summary judgment for the employer in a wage & hour class action).

In deciding dueling summary judgment motions, the question for the court was whether, when an employee agrees to "on-duty meal periods," that employee is waiving his or her right to a meal period, or is simply agreeing to a particular type of meal period. Labor Code § 512 generally requires that employees working shifts of more than five hours be provided with a meal period, and that employees working shifts of more than ten hours be provided with a second meal period. In addition, section 512 states that an employee can "waive" his right to a meal period, subject to certain limitations - an employee can waive his first meal period if his work day does not exceed six hours, and can waive his second meal period if his work day does not exceed twelve hours and the first meal period was not waived:

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.

The applicable IWC Wage Orders provide generally that employees must be provided meal periods if they work in excess of five hours, but that they can waive meal periods so long as they do not work more than six hours. In addition, the regulations provide that the employer can satisfy its obligation to provide meal periods by providing "on duty" meal periods, if those "on duty" meal periods are consistent with the nature of the work, if the meal periods are compensated, and if the employee expressly consents to the "on duty" meal period. In this instance, Paragraph 11 of Wage Order 4 provided, in part, that

(A) No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee. Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an "on duty" meal period and count as time worked. An "on duty" meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement between the parties shall state that the employee may, in writing, revoke the agreement at any time. (B) If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee's regular rate of compensation for each workday that the meal period is not provided.

Relying on the wage order, Labor Code § 512 and Labor Code § 219, Plaintiff argued that California law implicitly precludes second "on duty" meal periods, and that the second "on duty" meal periods he was provided (and was paid for) were legally insufficient under the statute; an "on duty" meal period is not a meal period at all. Guardsmark asserted that the underlined language in Wage Order 4 confirms that an "on duty" meal period is in fact a specific type of meal period; a "waived" meal period is one that has been abandoned or renounced, while a security guard who agrees to take an "on duty" meal period has simply agreed that he will be paid for the time he is allowed to eat, but will also be on duty to respond to any emergencies that might arise. Such an employee has not, according to Guardsmark, abandoned or renounced his right to a meal period.

The court held that Guardsmark's position was the correct one.

There is no support in § 512 for plaintiff's interpretation of "waiver" as applying solely to "on duty" meal periods, rather than to meal periods, generally. Section 512 plainly states that a second "meal period" may be waived only if the first "meal period" has not been waived. But where the employee agrees to take an "on duty" meal period, and gets paid for working during the time he is eating, there is no "waiver" of the meal period. The court reads "waiver of the meal period" to mean that the employee gives up his right to eat during that particular five-hour shift, period. The main problem with plaintiff's argument is that he appears to be confusing the concept of totally "waiving" a meal period with the concept of agreeing to take an "on duty" meal period in lieu of an "off duty" meal period. Because the word "waiver" in the first part of § 512(a) clearly means a waiver of any meal period, it cannot mean a waiver of a particular type of meal period later in the same statute. Moreover, neither the Wage Order nor § 226.7 establish that "on duty" meal periods are waived meal periods for purposes of § 512. The definition of "on duty" meal period in Wage Order P 11 makes no reference to the term "waiver." Similarly, § 226.7(a), which provides that no employer shall require any employee to work during any meal period or rest period mandated by an applicable order of the [IWC]," does not establish that "on duty" meal periods are waived meal periods, because "on duty" meal periods are by definition consensual.

Thus, the defendant's motion was granted, and the plaintiff's motion was denied.

Senate Bill 1283, which would have allowed employers to delay payment of final wages to terminated employees to as late as 24 hours following the start of the next business day after the termination, has been voted down in the California Senate. "Unfortunately, many California businesses are currently forced into the practice of immediately providing compensation when an employee is discharged for any cause," said a disappointed bill sponser Senator Harman, "for many discharged employees, the requirement on businesses creates an opportunity to take advantage of the employer by joining with other former employees to file a class action lawsuit, thereby unnecessarily clogging our already burdened court system with frivolous claims." We've never heard of even a single lawsuit, much less a class action, arising out of a single day's delay in the payment of final wages, so it sounded to us like a strong-handed solution to a problem that was merely theoretical. We think the failure of SB 1283 will have neither an effect on business nor an effect on any pending or future cases. The lesson for employers: fire at will, but don't send your discharged employee home empty-handed.

We missed this one in February, but the California Supreme Court denied a request for depublication of the prevailing wage opinion in Williams v. SnSands Corporation. We previously discussed the opinion in a post you can find at this link. In a nutshell, the opinion held that wages did not need to be paid at the prevailing rate for employees hauling materials to, and off-hauling materials from, a public works construction project.

A second U.S. District Court judge has decided not to follow the holding in Cicairos v. Summit Logistics (2005) 133 Cal.App.4th 949, endorsing the DLSE's interpretation of California regarding what it means to "provide" employees with meal breaks, instead following another District Court ruling (White v. Starbucks (N.D. Cal. 2007) 497 F.Supp.2d 1080). As a result, Judge Dale Fischer denied certification in Brown v. Federal Express Corporation (C.D. Cal. 2008) 2008 WL 906517, 2008 U.S. Dist. LEXIS 17125, a putative class action brought on behalf of a subclass of drivers who alleged that they were denied meal and rest breaks. The plaintiffs asserted that FedEx had an affirmative obligation to ensure that employees took meal breaks. Judge Fischer held that FedEx's duty to "provide" meal periods merely meant to make meal periods available to employees. "It does not suggest any obligation to ensure that employees take advantage of what is made available to them."

In the absence of California Supreme Court precedent, this Court must apply the rule it believes the court would adopt under the circumstances. ... The court does not believe that the California Supreme Court would adopt the enforcement rule advocated by Plaintiffs.

Consequently, the court determined that, applying this standard, to prevail, the plaintiffs would have to prove that FedEx forced them to forego the meal breaks, a burden which, to meet, would cause the trial to focus on individualized issues, making class action treatment inappropriate.

The decision has no precedential value, as unpublished federal decisions are unciteable in U.S. District Court, and California trial courts are bound to follow Cicairos v. Summit Logistics under the principle of stare decisis.

A remittitur was issued last month in Konig v. U-Haul Company of California (2006) 145 Cal.App.4th 1243 (Not Citable—Superseded by Grant of Review). Upon the issuance of the Supreme Court's opinion in Gentry v. Superior Court (2007) 42 Cal.4th 443, the matter ws transferred to the Court of Appeal, Second Appellate District, Division Five, with directions to vacate its decision and to reconsider the cause in light of Gentry. An unpublished 2-1 decision affirming the order compelling arbitration and reversing the class action waiver, with directions to reconsider the order enforcing the class action waiver in light of Gentry, was issued in January. Thus, one of our least favorite pieces of dicta is forever put to rest. In the 2006 opinion, the court wrote:

For example, plaintiff's first cause of action alleges: he was regularly denied meal and rest breaks; this was pursuant to a “consistent and uniform policy”; and, as a result, he is entitled to unpaid compensation, penalties, and attorney fees. Plaintiff seeks Labor Code section 558 penalties which consist of $50 for the first violation and $100 for each subsequent failure to pay legally required compensation. If defendant in fact has a uniform policy of denying meal and rest breaks, in one month alone, the penalties payable to plaintiff would exceed $1,000. In plaintiff's Business and Professions Code section 17200 cause of action, he is seeking compensation and penalties for the four years preceding June 15, 2005, the filing date of the complaint.

Without doing the analysis, the court essentially declared that one could, theoretically, recover more than $48,000 per employee in Section 558 penalties. Although this was absurd (among other things, the penalty was limited to $100 per pay period under the code, the limitations period on such a penalty was one year, and there was not a clear private right of action) we had an objector take the theory and run, attempting to unwind a class action settlement on the grounds that we had recovered only a small fraction of the $113.6 billion in liability (the objector's math was as far off as his legal analysis) that the company faced if you took the Konig dicta at face value. Though the argument was truly ridiculous, to the casual reader of Konig v. U-Haul Company of California, it could have made sense, and we had to write two detailed briefs, in two separate disputes, to explain it. We're glad that opinion won't be coming back to life.

The Fourth District Court of Appeal has upheld a judgment in favor of an employer in an action for recovery of unpaid overtime compensation. In Combs v. Skyriver Communications, Inc. (2008) __ Cal.App.4th __, the plaintiff brought a claim against a wireless internet service provider, alleging that he was entitled to overtime for his work as manager of capacity planning and then as director of network operations. Combs asserted three causes of action against Skyriver and its CEO Tayebi for (1) violation of Labor Code sections 510 and 1194 and applicable Industrial Welfare Commission (IWC) wage orders; (2) violation of the Unfair Competition Law (the UCL) (Bus. & Prof. Code, § 17200 et seq.); and (3) penalties under the Private Attorneys General Act of 2004 (the PAGA) (§ 2698 et seq.). The CEO was pursued under an alter ego theory. The court granted summary judgment in favor of the CEO, then, at the conclusion of the plaintiffs' case-in-chief during the bench trial, the court granted Skyriver's motion for judgment under Code of Civil Procedure § 631.8 on all three causes of action, finding that Combs was exempt from overtime compensation under the administrative exemption set forth in IWC Wage Order No. 4-2001.

On appeal, Combs contended that (1) the court's failure to apply the "administrative/production worker dichotomy" pertaining to the administrative exemption from overtime compensation, which was announced in Bell v. Farmers Insurance Exchange (2001) 87 Cal.App.4th 805, cert. denied 534 U.S. 1041 (Bell II) (hereafter alternately referred to as the Bell II administrative/production worker dichotomy, the Bell II dichotomy, or the dichotomy), was reversible error; (2) application of the Bell II dichotomy would have resulted in a determination that Combs was a production worker, not an administrator, and thus he was not exempt from overtime compensation; (3) apart from the Bell II test, Combs's job duties did not otherwise meet the test of the administrative exemption outlined in IWC Wage Order No. 4-2001, and thus he was entitled to judgment in his favor; (4) the court's grant of summary judgment in favor of Tayebi conflicts with its own summary judgment minute order that (Combs asserts) "openly acknowledged liability"; (5) material issues of fact exist with regard to [CEO] Tayebi's liability in his capacity as an officer of Skyriver under the PAGA and the UCL, as he "was ultimately responsible for the conduct of the corporation during his watch"; (6) failing to pay Combs his overtime wages constituted an unfair business practice under the UCL for which Tayebi may be held liable; (7) Tayebi was not entitled to summary judgment or summary adjudication because material questions of fact exist as to whether he is the alter ego of Skyriver; and (8) the court erred when it denied Combs's motion to continue the hearing on Tayebi's summary judgment motion to permit Combs to conduct further discovery on matters material to the issue of alter ego liability, which should have been allowed according to Code of Civil Procedure section 437c, subdivision (h).

The Court of Appeal held that the trial court did not err in denying Combs's motion for a continuance to conduct further discovery, in granting summary judgment in favor of Tayebi, or in granting judgment in favor of Skyriver. The opinion discusses the administrative exemption at length, particularly the requirement that the employee exercise "discretion and independent judgment with respect to matters of significance."

"In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered.  The term 'matters of significance' refers to the level of importance or consequence of the work performed."  (29 C.F.R. § 541.202(a), italics added.)

Subpart (b) of 29 Code of Federal Regulations part 541.202 provides additional interpretive guidance regarding the phrase "exercise of discretion and independent judgment with respect to matters of significance":

"The phrase 'discretion and independent judgment' must be applied in the light of all the facts involved in the particular employment situation in which the question arises.  Factors to consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance include, but are not limited to:  whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee's assignments are related to operation of a particular segment of the business; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf of management; and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances."

Subpart (e) of that same regulation further explains that "[t]he exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources. . . .  The exercise of discretion and independent judgment also does not include . . . performing . . . mechanical, repetitive, recurrent or routine work."  (29 C.F.R. § 541.202(e), italics added.)

The opinion was originally unpublished, and was ordered published in February. A petition for review is pending before the California Supreme Court. You can download the full text of Combs v. Skyriver Communications, Inc. here in pdf or word format.

Today is Fair Pay Day, which marks the day of the year a typical woman’s earnings catch up with a typical man’s earnings from the previous year. Despite the enactment of the Equal Pay Act and the Civil Rights Act, women still make only 77 cents, on average, for every dollar a man makes. This year, Fair Pay Day coincides with Senate debate on a bill involving equal pay and the governing statute of limitations on equal pay claims.

On May 29, 2007, the Supreme Court of the United States ruled that Lilly Ledbetter, a 19-year employee of Goodyear Tire and Rubber Company, could not sue for wage discrimination because she had not filed a claim within 180 days of Goodyear’s decision to pay her unfairly. Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. __. The decision has already had a profound effect upon a large number of pending cases.

Within a few weeks of the decision, Congressman George Miller (D-Calif.) and 93 cosponsors introduced a bill in the House of Representatives to overturn the Ledbetter holding. H.R. 2831, The Fair Pay Restoration Act of 2007, passed the House by a margin of 225 to 119. Senator Edward Kennedy and 43 other Senators cosponsored a companion bill in the Senate, the Fair Pay Restoration Act (S. 1843). That bill will be debated on the Senate floor today.

The official summary states as follows:

Fair Pay Restoration Act - Amends the Civil Rights Act of 1964 to declare that an unlawful employment practice occurs when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to the decision or practice, or when an individual is affected by application of the decision or practice, including each time compensation is paid. Accrues liability, and allows an aggrieved person to obtain relief including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practice that has occurred during the charge filing period is similar or related to a practice that occurred outside the charge filing period.

Applies certain amendments made by this Act to claims of compensation discrimination under the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973.

Amends the Age Discrimination in Employment Act of 1967 to declare that an unlawful practice occurs when a discriminatory compensation decision or other practice is adopted, when a person becomes subject to the decision or other practice, or when a person is affected by the decision or practice, including each time compensation is paid.

Senator Feinstein has indicated her support for the bill. Senator Boxer is one of the cosponsors.

According to a new study published by a professor at the University of Illinois Law Center, and discussed in the National Law Journal today, courts are more commonly vacating or partially vacating arbitration awards for employees, and rarely disturbing awards that favor employers.

"When courts vacate many awards that rule for employees, the individual must either return to a lengthy and costly 'do over' arbitration -- or worse, be stuck with a useless award, and no other recourse ... [Court review is becoming] "an insurance program that protects employers from costly awards."

Arbitration reform could be a significant issue in 2009 if the Democrats win the White House in November.

This is double-hearsay, but attorney H. Scott Leviant, who authors the legal blog The Complex Litigator, published a Forum piece in last week's Daily Journal, entitled "Cutting Class". We can't link to the article for non-subscribers, but there's a nice summary of the article over at the UCL Practitioner. The article explains why A.B. 1905, which would have allowed defendants to immediately appeal orders granting class certification, appropriately died in committee last month.

A financial brokerage company offers qualifying employees an incentive compensation plan that allows participants the option of using a portion of their annual earnings to purchase shares in the company’s stock at a price below the stock’s publicly-traded market price.  If the participating employee resigns or is terminated for cause within a two-year vesting period, the employee forfeits the stock as well as the money used to purchase it. Do the forfeiture provisions of this voluntary incentive compensation plan violate Labor Code sections 201 and 202, which require an employer to pay its employee all earned but unpaid compensation following the employee’s discharge or his or her voluntary termination of employment? In a word, no. Schachter v. Citigroup. Inc. (2008) __ Cal.App.4th __.

As a matter of economic reality, employees who elect to participate in the plan’s stock-purchase program are paid all the wages they designate to invest in company stock. Thus, the plan’s forfeiture provisions do not violate the Labor Code; and the trial court in this case properly granted summary judgment in favor of the brokerage company.

We've read it, but we find the twisted reasoning in section three of the opinion ("Enforcement of the Plan’s Forfeiture Provisions Does Not Violate Sections 201 or 202") to be a little Kafkaesque. Read it yourself and tell us if you disagree. You can download the full text of Schachter v. Citigroup. Inc. here in pdf or word format. One thing is for sure, the Supreme Court is taking a little extra time to consider this one. The High Court has extended its time to grant or deny review in the case to May 27, 2008.

There is yet another published opinion applying both Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 and Best Buy Stores, L.P. v. Superior Court (2006) 137 Cal.App.4th 772, to wage and hour class actions with respect to obtaining class member identities and contact information, even for the purpose of "identifying class members who may become substitute plaintiffs in place of named plaintiffs who were not members of the class they purported to represent" (our emphasis).

In CashCall, Inc. v. Superior Court (2008) 159 Cal.App.4th 273, the Fourth District Court of Appeal held that the trial court correctly allowed precertification discovery in a class action for that purpose, following Pioneer Electronics and Best Buy Stores, and distinguishing First American Title Ins. Co v. Superior Court (2007) 146 Cal.App.4th 1564, in which the Court of Appeal rejected the idea of permitting such discovery to a class action representative who had never been a member of the class he purported to represent because, under the circumstances of that case, "the grant of such discovery would sanction an abuse of the class action procedure." In essence, the Court of Appeal limited the First American holding only to those situations in which the substitution of plaintiffs would constitute an abuse of the class action procedure. The court noted that in First American, the plaintiff had, for all intents and purposed "appointed himself enforcement officer for the California Department of Insurance settlement agreement" to piggyback his case onto a settlement agreement and perhaps generate attorney's fees for the plaintiff's counsel. 

In contrast, in the Cashcall case, there was no state or other investigation, much less a settlement pending. Absent continuation of the class action, there would likely will be no other investigation of CashCall's conduct or potential relief obtained by class members for its alleged violations of their privacy rights. Furthermore, because only CashCall had knowledge of which customers' calls were monitored, the plaintiffs could not be faulted for filing a class action based on the suspicion their privacy rights may have been violated and only later learning from CashCall that their particular calls had not been monitored, leaving them without standing.

Because Kagan and the other cases discussed above recognize the general rule liberally allowing amendments of complaints to substitute new plaintiffs who have standing and, in particular, allowing an original plaintiff without standing to substitute in a new plaintiff with standing (whether in a class action or otherwise), an original plaintiff who lacks standing in a class action should be allowed to file a motion for, and potentially obtain, precertification discovery of the identities of actual class members (i.e., potential plaintiffs with standing who may elect to serve as substitute class representative plaintiffs). There is no reason to necessarily treat original plaintiffs who never had standing differently from, and more favorably than, original plaintiffs who had, but lost, standing. We conclude the Parris balancing test should be applied by trial courts in exercising their discretion whether to grant or deny an original plaintiffs' precertification motion for discovery of the identities of class members regardless of whether that original plaintiff had standing at the beginning of the action. (See, e.g., Best Buy Stores, L.P. v. Superior Court, supra, 137 Cal.App.4th at p. 779; Parris, supra, 109 Cal.App.4th at pp. 300–301; Budget Finance Plan v. Superior Court, supra, 34 Cal. App. 3d at p. 799; Pioneer Electronics (USA), Inc. v. Superior Court, supra, 40 Cal.4th at p. 373.) Accordingly, we reject CashCall's contention that a bright-line rule should apply in class actions to require trial courts to necessarily reject precertification discovery motions by plaintiffs who never had standing. First American, supra, 146 Cal.App.4th 1564, and Cryoport Systems v. CNA Ins. Cos. (2007) 149 Cal.App.4th 627 [57 Cal. Rptr. 3d 358], cited by CashCall, are factually inapposite and do not persuade us to conclude otherwise. Furthermore, neither case adopted or applied the bright-line rule proposed by CashCall in its petition.
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Accordingly, unlike in First American, the potential for abuse of the class action procedure in this case is minimal. Neither the reasoning nor the result in First American persuades us that the trial court in this case abused its discretion by granting plaintiffs' motion for precertification discovery of the identities of class members. Rather, we conclude the trial court, in applying the Parris balancing test, did not abuse its discretion.

You can download the full text of CashCall, Inc. v. Superior Court here in pdf or word format. A petition for review and application for stay were denied by the California Supreme Court earlier this month.

Applying the California Supreme Court decision in Reynolds v. Bement (2005) 36 Cal.4th 1075 to actions in which the Labor Commission is the plaintiff, the Court of Appeal has upheld a trial court decision in favor of the officers and directors of a corporation that had failed to pay wages to its employees.

In Bradstreet v. Wong (2008) __ Cal.App.4th __ (formerly entitled Lujan v. Wong), as action by the Labor Commissioner to collect wages due to employees of three San Francisco garment manufacturing companies, the complaint relied exclusively on a provision in the Industrial Welfare Commission (IWC) wage order applicable to the garment industry that defines “employer” as: “[A]ny person as defined in Section 18 of the Labor Code, who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person” (Cal. Code Regs., tit. 8, § 11010, subd. 2(F)). The Commissioner alleged that defendants employed or exercised control over the wages, hours, and working conditions of the corporations' employees and therefore were personally responsible for the unpaid wages. No proof was submitted that allowed the Commissioner (or the employees themselves) "pierce the corporate veil." The defendants did not make personal use of corporate assets, or commingle personal and corporate assets; the corporations were not inadequately capitalized; the defendants had “put far more personal funds into the corporations in the form of capital infusions and loans than were alleged to have been improperly taken out;” and the mere fact that the corporations ultimately "went broke” did not establish that the corporations were undercapitalized.

The Commissioner argued that Reynolds is distinguishable because the judicial proceedings were initiated by employees under Labor Code § 1194, whereas here, the Commissioner filed suit on the employees’ behalf pursuant to Labor Code § 1193.6. That argument had also failed in Jones v. Gregory (2006) 137 Cal.App.4th 798. The court held, "for reasons similar to those stated in Jones, supra, 137 Cal.App.4th 798, that the mere reference in section 1193.6 to 'the orders of the commission' does not evince a clear and unequivocal legislative intent to depart from the established common law meaning of these terms." The court's reasoning was threefold:

First, the plain language of section 1193.6 does not support the Commissioner’s construction because the phrase “orders of the commission” does not modify, qualify or otherwise define the word “employee.” Instead, it modifies “unpaid minimum wages or overtime compensation” that are owed “under this chapter or the orders of the commission.” The reference to the “orders of the commission” merely makes explicit that, in addition to statutory provisions of “this chapter,” the IWC orders contain regulations establishing overtime exemptions (§ 515) and fixing the minimum wage (§ 1197) that are relevant to determining whether minimum wages and overtime compensation are “owed” (§ 1193.6).

Second, both before and after the enactment of section 1193.6, when the Legislature has intended to deviate from the common law that insulates corporate agents from personal liability for obligations or duties imposed on the corporate employer, it has done so explicitly. For example, section 1199, enacted in 1937, imposes misdemeanor criminal liability on “[e]very employer or other person acting either individually or as an officer, agent, or employee of another person” for violation “of this chapter or any order or ruling of the commission.” (Stats. 1937, ch. 90, § 1199, pp. 217-218, italics added.) Section 1175, also enacted in 1937, imposes criminal liability on “any person, or officer or agent thereof.” (Stats 1937, ch. 90, § 1175, p. 214, italics added.) The Legislature continued to use similar language when, in 1983, it enacted section 1197.1, to specify that a civil penalty for minimum wage violations may be imposed on “[a]ny employer or other person acting either individually or as an officer, agent, or employee of another person. . . .” (Stats. 1983, ch. 1145, § 1, italics added; see also § 1199.5 [“Every employer or other person acting either individually or as an officer, agent or employee of another person” is guilty of a misdemeanor for certain violations].) The absence of any similar language in section 1193.6 further bolsters our conclusion that the mere reference to “orders of the commission” does not evince any legislative intent to deviate from the common law meaning of “employer” or “employee.”

We also note that section 1197.1, like section 1193.6, includes a reference to “an order of the commission.” If the mere reference to “an order of the commission” meant the Legislature intended the term “employer” to include a corporate employer’s agents, the phrase “or other person acting either individually or as an officer, agent, or employee of another person” would be unnecessary surplusage. (See People v. Cole (2006) 38 Cal.4th 964, 980-981 [statutes should not be construed to render a part surplusage].)

The court also rejected alternative theories including the claim that the defendants could be held personally liable as “deemed” employers pursuant to Labor Code § 2677, and claims under the Unfair Competition Law. You can download Bradstreet v. Wong here in pdf or word format.

[Update] This case is related to the sweatshop case against Jimmy Quan, et al., discussed in previous posts, including this one.

Public entities are permitted to enter into contingency-fee agreements with outside counsel. County of Santa Clara v. Superior Court (Atlantic Richfield Co.) (2008) __ Cal.App.4th __. A Santa Clara County Superior Court judge had previously ruled that such arrangements were "antithetical to the standard of neutrality that an attorney representing the government must meet when prosecuting a public nuisance abatement action." The decision was based upon a 1985 case, Clancy v. Superior Court (1985) 39 Cal.3d 740, in which the California Supreme Court called the contingent fee agreement between a city government and a private attorney in a lawsuit against an adult bookstore “inappropriate under the circumstances.”

Federal government agencies will continue to avoid such arrangements, under an executive order signed by President Bush barring the federal government from entering contingent-fee arrangements to compensate lawyers or witnesses. If you are interested in this kind of work, you can download the opinion here in pdf or word format.

After several public admonishments, Superior Court Judge James M. Brooks has agreed to resign effective April 30, 2008. Earlier this month, the state Commission on Judicial Performance publicly admonished Brooks for failing to uphold order and decorum in his courtroom during a 2005 employee-discrimination case (Haluck vs. Ricoh Electronics, Inc. (2007) 151 Cal.App.4th 994) in which his judicial misconduct resulted in the reversal of a defense verdict after a jury trial. Brooks used hand-lettered signs to overrule objections and encouraged the defense attorney in such tactics as hummed the theme to "The Twilight Zone” during the plaintiff's case. We previously weighed in on the case and the initial reaction to it in posts here and here.

We've added another good new legal blog to the blogroll: thecomplexlitigator.com. Check it out.

Upon remand, a plaintiff whose case was wrongfully removed under the Class Action Fairness Act is generally entitled to recover reasonable attorney's fees incurred in connection with the wrongful removal and remand. However, when the right to remove is unsettled at the time of the removal, the District Court has the discretion to deny fees to the plaintiff. Lussier v. Dollar Tree Stores, Inc. (9th Cir. 2008) __ F.3d __.

John Lussier and Mary Hawks, putative class representatives in litigation against Dollar Tree Stores, Inc., appeal the district court’s denial of their request for attorney’s fees following their successful motion to remand the underlying action after it had been removed by Dollar Tree pursuant to the recently enacted Class Action Fairness Act of 2005 (CAFA). 28 U.S.C. § 1332(d)(2) (2005). We conclude that the district court did not abuse its discretion in finding that, given the lack of clarity in the law at the time, Dollar Tree’s removal arguments were not unreasonable. Accordingly, we affirm.

Of course, since the case arises out of unpaid wages, the plaintiffs can ultimately still recover those fees if they prevail in the action.

When parties to a class action notify the District Court that they have reached a settlement, the court is required to review and approve or disapprove the settlement under Rule 23(e)(2)'s preliminary approval process, even if the court has taken dispositive motions under submission, and even if the court has already drafted an order or memorandum of decision. In re: Syncor Erisa Litigation, Pilkington v. Cardinal Health, Inc. (9th Cir. 2008) __ F.3d __ (February 19, 2008). Thus, Judge R. Gary Klausner abused his discretion by granting the defendant's pending summary judgment motion rather than permitting the parties to file a motion for preliminary approval of the settlement.

the requirement that the district court approve a class action settlement does not affect the binding nature of the parties’ agreement. See Collins v. Thompson, 679 F.2d 168, 172 (9th Cir. 1982) (“Judicial approval of a [class action settlement] is clearly a condition subsequent, and should not affect the legality of the formation of the proposed [settlement] as between the negotiating parties.”) At the time of the settlement, Defendants knew they had dispositive motions pending and chose the certainty of settlement rather than the gamble of a ruling on their motions. Thus, Defendants chose to forego the chance that the district court would grant summary judgment in their favor. Because the parties bound themselves to a settlement agreement subject only to court approval (which they had agreed to seek) and gave the required notice of the agreement, the district court should not have (1) filed its order granting the motions for summary judgment and (2) entered final judgments against the Class.
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That the district court had already drafted a summary judgment order is not justification for refusing to approve an otherwise enforceable settlement agreement between the parties.

In a second holding of less interest to wage and hour lawyers and litigants, the Ninth Circuit added that there were triable issues of material fact and the court should not have granted the summary judgment motion anyhow.

Resident property managers are not entitled to be paid for time spent on personal activities, even if they are "on-call" around the clock, according to a recent Second District Court of Appeal case entitled Isner v. Falkerberg/Gilliam & Assoc., Inc. (2008) __ Cal.App.4th __. Isner involved a married couple who worked as resident managers for various group facilities, and were on-call on designated evenings from 5:00 p.m. until 8:00 a.m. and on designated weekends from 5:00 p.m. Friday evening until 8:00 a.m. Monday. The policy required them to remain on the facility premises, within hearing distance of an emergency alarm system and telephone. Personal time away from the facility had to be during periods when another resident manager was on-call. All time spent in responding to emergencies counted as hours worked, but no other on-call hours were counted as hours worked, with one exception that credited an employee with eight hours of time worked if he or she was unable to have five hours of uninterrupted sleep due to an emergency.

The resident managers brought an action for unpaid wages based upon the time they were on-call, and restricted to the premises, but not responding to emergencies. The trial court granted summary judgment in favor of the employer. The Court of Appeal affirmed, adopting the reasoning behind section 47.3.2.1 of the DLSE manual and Brewer v. Patel (1993) 20 Cal.App.4th 1017 (only "time spent carrying out assigned duties shall be counted as hours worked" for motel clerk). The court rejected the managers' arguments that distinguished their circumstances from the circumstances of the motel clerk in Brewer and found a December 28, 1998 DLSE opinion letter regarding "Compensability of Resident Apartment Managers' 'On-Call Time' " unpersuasive with respect to distinguishing between apartment managers who are required by the employer to reside on the premises and those who choose to live on the premises but are not required to do so.

You can download the full text of the opinion in Isner here in pdf or word format.

As this interesting article suggests, there is always a new wage & hour issue coming along. The WSJ Law Blog is asking whether Blackberrys and other PDAs may result in a new wave of wage-and-hour litigation. The potential for overtime claims is obvious, as management lawyers have noted:

“We’ll see it; it’s only a matter of time,” said Jeremy Roth, a lawyer in the San Diego office of Littler Mendelson. Roth said he has cautioned several clients about the issue in the last year, advising them to get policies in place. Added Roth: “Before there was at least an argument that no, the employee is not being truthful when they say, ‘I did all this work after hours.’ But now, that swearing contest is taken out of the mix.”

As the article also demonstrates, the creative ideas often come from defense firms, eager to find new kinds of cases to defend. [Hat tip: LaborProf Blog]

We recently had a defense lawyer demand, during privileged mediation discussions, that we agree not to pursue other claims, nor represent other employees in connection with any future lawsuits against the defendant company seeking to settle a class action we had brought against it. We refused, of course, citing California Professional Conduct Rule 1-500, which prohibits an attorney from offering, making or participating in an agreement that restricts the right of any attorney to practice law. Rule 1-500(A) expressly includes such deals that are part of settlement agreements. The rule is not limited to California. ABA Model Rule 5.6 contains a similar prohibition. Does anyone ever really do that, and if so, do they get into trouble for agreeing not to represent someone suing a company in the future? Absolutely, they do.

Last year, the Florida Supreme Court disbarred one lawyer and suspended another for two years for taking a $6.4 million fee from the defense to file no more cases against E.I. du Pont de Nemours & Co. Attorneys Roland R. St. Louis Jr. and Francisco R. Rodriguez of Miami law firm Friedman, Rodriguez, Ferraro & St. Louis had sued DuPont on behalf of about 20 clients for injuries caused by exposure to a dangerous fungicide. After winning a major procedural battle, they persuaded DuPont to pay the plaintiffs $59 million for a stipulation to vacate and seal an order, and settlement of the two key cases and, contingent upon approval of those, the other 18 cases, all to be kept strictly confidential. St. Louis and Rodriguez then agreed to a side deal by which the firm would receive a separate $6,445,000 fee from DuPont to refrain from further litigation against the company and to serve as counsel and/or consultants for the company in future matters, essentially conflicting them out of future engagements. For this, the state Supreme Court disbarred St. Louis and ordered him to disgorge more than $2 million in fees (Florida Bar v. St. Louis, No. SC04-49) and suspended Rodriguez for two years plus a fine (Florida Bar v. Rodriguez, No. SC03-909). Their partners who were not involved in the case also received discipline ranging from a public reproval to a brief suspension.

We couldn't find a story about what happened to DuPont's lawyers, but if it had happened in California, they would have been in trouble, too.

Several emails have asked what we meant on Wednesday by "other cases" with arbitration issues pending. We were talking about two, in particular:

1. In T-Mobile v. Laster (9th Cir. 2007) 252 Fed.Appx. 777 (2007 U.S. App. LEXIS 25265, 2007 WL 3194117), (S.Ct. No. 07-976), the issue presented is whether, under the FAA, a federal court may refuse to enforce the terms of an agreement to arbitrate based upon a state-law policy that individual arbitration is unconscionable in cases involving small claims by a consumer.

2. In IBEW, Local Union No. 21 v. Illinois Bell (7th Cir. 2007) 491 F.3d 685, the petititioners seek to reverse an opinion upholding an order to compel arbitration of a dispute over new employee performance evaluation guidelines.

If you want to follow the SCOTUS without waiting for the information to turn up in blogs or the Daily Journal, you can access the Court's orders here.

The California Employment Lawyers Association, a statewide organization of attorneys representing employees in employment matters, is holding its 4th Annual Advanced Wage & Hour Seminar. It is open to members and non-members alike. The seminar will be held Friday, May 9, 2008, from 9:00 a.m. to 6:30 p.m. at the Hilton Oakland Airport. The full-day advanced seminar will address discovery in wage and hour class actions, as well as wage and hour litigation in the transportation industries and precertification conduct and communications.  The seminar also will include an update on new legislation and case law pertaining to individual and class action wage and hour cases.  The seminar will qualify for 6 hours MCLE credit.

The US Supreme Court has denied certiorari in Circuit City Stores, Inc. v. Gentry, No. 07-998 (U.S. Mar. 31, 2008, cert. denied) on a petition filed to review the California Supreme Court's ruling in Gentry v. Superior Court (Circuit City Stores) (2007) 42 Cal.4th 443. We previously discussed the case is several posts, including this post regarding the argument and this post regarding the opinion:

In a 4-3 decision, the Supreme Court has reversed an appellate decision upholding a ban on class actions in wage and hour arbitrations, holding that, in certain cases, class action waivers/bans are unenforceable, even if the arbitration agreement itself was not procedurally unconscionable as a whole. The key part of the holding in Gentry v. Superior Court provided that:

[C]lass arbitration waivers should not be enforced if a trial court determines, based on [certain] factors ... that class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration. We therefore reverse the judgment of the Court of Appeal upholding the class arbitration waiver and remand for the above determination.

The questions presented by the petition were:

1.  Whether the Federal Arbitration Act permits a court to refuse to enforce an agreement calling for individual arbitration based on state labor law policies that do not apply generally to "any contract." 9 U.S.C. § 2.

2.   Whether the Federal Arbitration Act permits a state court to refuse to enforce an agreement to arbitrate based upon an unconscionability analysis "that takes its meaning precisely from the fact that a contract to arbitrate is at issue." Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987).

For employers, this certainly looked like the best chance they had to get the SCOTUS to come to their rescue on this issue, using the Federal Arbitration Act. The court is currently packed with as pro-business and pro-arbitration a panel as we've seen in many decades, there were amicus briefs filed by the Chamber of Commerce of the United States, Ace American Insurance Company, et al., and the Pacific Legal Foundation. Circuit City was represented by veteran Supreme Court advocate Carter G. Phillips.

Gentry v. Superior Court looks like it will be the controlling law in California for the foreseeable future. The other arbitration-related petitions pending in the U.S. Supreme Court are procedurally and substantively distinguishable.

Starbucks is not planning to pay its California baristas back for tips they shared with shift supervisors, nor to obey a San Diego Superior Court order to stop the practice. In a voicemail message to employees last week, Chief Executive Howard Schultz said the ruling "would take away the right of shift supervisors to receive the tips they earn for providing superior customer service" and the company executives "strongly believe that this ruling is extremely unfair and beyond reason."

We already discussed our take on the ruling last month. For the perspective of an employer-side blog, check out Entertaining Employment Law.

Meanwhile, some workers and lawyers in Massachusetts heard about the lawsuit, presumably, and decided to pursue similar claims there:

A former Boston-area Starbucks worker claims he was shortchanged by the coffee company's tips policy and he is now taking the coffee giant to court, claiming his managers swiped his tips. The lawsuit filed in Suffolk Superior Court comes days after the Seattle-based coffee company was ordered to pay millions in a similar case.

There will probably be more still.