Wage Law

One of the many pending bills seeking to curb the ability of employees to bring class actions to enforce their legal rights against employers is SB 1202 (Harman). SB 1202 would amend section 1021.5 of the Code of Civil Procedure to allow judges to withhold part of the plaintiff's attorney's fees in class action lawsuits until class members have been contacted and have received their portion of the settlement funds.

Existing law allows a court, upon motion, to award attorney's fees to a successful party against one or more opposing parties in any action that has resulted in the enforcement of an important right affecting the public interest, if certain conditions are met. This bill would authorize the judge in a class action to order a part of the attorney's fees awarded pursuant to this provision to be withheld until all class members have received their portion of the settlement funds.

The actual amendment looks like this:

Section 1021.5 of the Code of Civil Procedure is
amended to read:
1021.5. (a) Upon motion, a court may award
attorneys' attorney' s fees
to a successful party against one or more opposing parties in any
action which that has resulted in the
enforcement of an important right affecting the public interest if
: (a) a all of the following are met:
(1) A significant benefit,
whether pecuniary or nonpecuniary, has been conferred on the general
public or a large class of persons , (b)
the .
(2) The necessity and financial
burden of private enforcement, or of enforcement by one public entity
against another public entity, are such as to make the award
appropriate , and (c) such .
(3) Those fees should not ,
in the interest of justice , be paid out of the
recovery, if any. With
(b) With respect to actions
involving public entities, this section applies to allowances
against, but not in favor of, public entities, and no claim shall be
required to be filed therefor, unless one or more successful parties
and one or more opposing parties are public entities, in which case
no claim shall be required to be filed therefor under Part 3
(commencing with Section 900) of Division 3.6 of Title 1 of the
Government Code.
Attorneys'
(c) Attorney's fees awarded to a
public entity pursuant to this section shall not be increased or
decreased by a multiplier based upon extrinsic circumstances, as
discussed in Serrano v. Priest , (1977)
20 Cal. 3d Cal.3d 25, 49.
(d) In an action based on Section 382, the judge may order a part
of the attorney's fees awarded pursuant to this section to be
withheld until the class members have received their portion of the
settlement funds.

Section (d) is the major deal point. Frankly, we're not so sure why everyone is excited about this. We've never even tried to structure a class action settlement in such a way that we would get our money before the class members get their money. We did once present a settlement agreement for preliminary approval which was worded in such a way that the judge thought it ambiguous enough to possibly mean that the attorney's fees, which were being deducted from the gross settlement proceeds, would be the first thing paid, and the judge withheld preliminary approval until we cleared that up for him. Those fees were not based upon section 1021.5, but if there is a significant difference that, under current law, allows the lawyers to get their fees under section 1021.5 before class member shares get distributed, we've never heard of it.

Supposedly, Tom Harman advanced this bill to prevent abuses like one which occurred in a Kentucky case in which the judge and the class counsel cheated the class by letting millions of dollars get funneled into a charity that the judge oversaw. But the bill wouldn't prevent that sort of abuse at all, because it merely provides that the judge "may" order a part of the fees to be paid later. If your judge was crooked, he or she probably wasn't going to exercise a lot of discretion to protect the class in the first place. It sounds like yet another legislative "fix" offered by Senator Harman for a problem that is merely theoretical.

The bill was voted down in committee, 3-2, on March 25, but a motion for reconsideration passed 5-0 that same day. If someone can explain that process to us, by all means, leave a comment.

• failure to provide workers’ compensation insurance
• failure to provide itemized deduction statements to employees
• failure to obtain a California contractor’s license

You can obtain a complete list of the violations and businesses cited by emailing the Department of Industrial Relations at [email protected].

Robert Jones will not be confirmed as the Deputy Secretary for Policy and Enforcement in the Labor and Workforce Development Agency. Senate President pro Tem Don Perata announced yesterday that he will not bring the appointment back to the Rules Committee, having held two lengthy hearings on Jones' confirmation and having found Jones unsuitable. Here is the full text of Senator Perata's statement as stated in a press release issued Wednesday:

I do not intend to bring the appointment of Robert Jones back to the Rules Committee. He is the Deputy Secretary for Policy and Enforcement in the Labor and Workforce Development Agency.  We had two weeks of hearings on his appointment which resulted in dramatically different versions of events that occurred when he was Chief Counsel for the Division of Labor Standards and Enforcement in 2005-2006.

His job, among other things, is to advise the secretary of the agency on enforcement policy issues.  Yet, after only two months on the job, the ACLU had to remind him, in an exchange of letters, that a memorandum he authored and sent to the attorneys he oversees constituted "an overbroad prior restraint on speech". 

The Senate Rules Committee, with its appointing authority, does not hear many labor appointments because the Governor doesn't care enough about working people to the fill the jobs in the labor agency.

And on the rare occasion when the Governor does appoint someone to a position with broad oversight over labor policy, he chose someone who solves problems with a 2x4 rather than knowledge of the civil service system and the law.

Mr. Jones is either insensitive or unaware of the chilling effect he has on attorneys who are charged with enforcing the statutes and regulations protecting California's workforce. He sets the tone when it comes to protecting the rights of California's workers and the testimony before the Senate Rules committee shows that Mr. Jones is tone deaf. 

When Mr. Jones was asked during his confirmation hearing to reflect upon and reconsider the policy he had concocted and enforced – which was viewed by the ACLU as an infringement on the First Amendment rights of those he oversaw - Mr. Jones said he would do it all over again, given the opportunity.

I, for one, do not want to give him that opportunity.  His apparent disregard for the rights of the individuals he oversees and his philosophy of management by intimidation leave me no option but oppose his appointment.
 
Record of Gubernatorial Appointments to Key Positions Labor and Workforce Development Agency
Director of Department of Industrial Relations was vacant for three and a half years until John Duncan was appointed in August 2007. 

The labor commissioner job was vacant for 18 months until Angela Bradstreet was appointed in June 2007.  It was also vacant for the first year this Governor held office. 

The chief of the Occupational Safety and Health Division job was vacant for the entire time this Governor has been in office (since November 2003), nearly four years, until Len Welsh was appointed last October. 

Andrea Hoch left the job of director of the division of workers compensation in October 2005. This job was vacant for two years until Carrie Nevans was appointed in October 2007. 

There are five deputy directors for the Employment Development Department but only one is currently serving. 

The position of workers compensation court administrator was vacant for 18 months until it was filled in June 2005. 

A reader asked if there were any recent federal court decisions applying Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, to wage and hour class actions. There are two unpublished District Court decisions that we've seen:

Salazar v. Avis Budget Group, Inc. (S.D. Cal. 2007) 2007 WL 2990281 (defendant ordered to disclose class members' contact information after an “opt-out” notice given); and Hill v. Eddie Bauer (C.D. Cal. 2007) 242 F.R.D. 556, 563, 2007 U.S. Dist. LEXIS 35940 (order disclosing class member identities, including names and addresses).

In Salazar, Magistrate Judge McCurine made the obvious, yet still useful observation that the employer's declaration of concern for class members' privacy rights was "actually driven more by [the employer's own] self-interest."

Pioneer Electronics was also cited with favor in in Bible v. Rio Props., Inc. (C.D. Cal. 2007) 246 F.R.D. 614, 2007 U.S. Dist. LEXIS 80017, but only for general propositions regarding witness identification and balancing privacy interests. It was neither a class action nor a wage and hour case.

Education Code § 45028 requires that teacher salaries “shall be classified on the salary schedule on the basis of uniform allowance for years of training and years of experience.” To reduce salary stagnation among mid-level and upper-level teachers and stay competitive with other area school districts, the Stockton Unified School District and the Stockton Teachers Association entered into a collective bargaining agreement for a “compressed” salary schedule, allowing teachers to obtain merit increases in salary more quickly.

The district implemented the CBA by reassigning some teachers to “step” levels that did not correspond with their years of experience. In response, some of the affected senior teachers filed a petition for writ of mandate, claiming that the district’s actions violated Education Code § 45028. The trial court found that the district’s formulation of the compressed schedule constituted a uniformity violation; that no statutory exception to the uniformity requirement existed; and that the teachers had not waived their right to relief by virtue of the CBA's ratification.

The court ordered the district to restore the experience credit that the affected teachers had lost. The district appealed, and the Court of Appeal affirmed.

We agree with the trial court that the District’s implementation of the salary schedule violated the uniformity requirement of section 45028.  We also conclude that no exception applied and that the trial court did not exceed its powers in remedying the violation.  We shall affirm the judgment granting mandamus relief to the Teachers.

If that sort of holding affects you or your clients, you should read Adair v. Stockton Unified School District (2008) __ Cal.App.4th __. You can download the full text of the opinion here in pdf or word format.

• Failure to provide itemized deductions to employees;
• Failure to register;
• Failure to keep records and post labor notices as mandated by law;
• Failure to pay minimum wage;
• Failure to maintain workers’ compensation insurance;
• Failure to pay overtime.

For further details, you can request a complete list of the violations and businesses cited by sending an email to the Department of Industrial Relations at [email protected].

A provision in the recently passed Genetic Information Nondiscrimination Act of 2008 (H.R. 493) ("GINA"), increases certain penalties under the Fair Labor Standards Act ("FLSA") for child labor law violations. GINA was signed into law by President Bush on May 21, 2008. GINA passed the House by a vote of 414-1 and passed the Senate by a vote of 95-0. Congressman Ron Paul cast the only nay vote.

Section 302 of GINA amended Section 16(e) of the FLSA, raising the maximum penalty to $50,000 for each violation with the possibility of a penalty of up to $100,000 in cases where the employer's violation is a repeated or willful violation. The $50,000 penalty (doubled for repeated or willful violations) can be assessed for each child labor law violation that causes the death or serious injury of an employee under the age of 18 years. A “serious injury” is defined as the permanent loss or substantial impairment of one of the senses; permanent loss or substantial impairment of the function of a bodily member, organ, or mental faculty, including the loss of all or part of an arm, leg, foot, hand or other body part; or permanent paralysis or substantial impairment that causes loss of movement or mobility of an arm, leg, foot, hand or other body part. The amendment also increases the civil penalty for other child labor violations to $11,000 per affected employee; and increases the penalty for willful violations of FLSA overtime and minimum wage provisions to $1100 per violation.

The FLSA amendment is effective immediately. The increased penalties apply to violations and deaths or serious injuries that occur after May 21, 2008. Most of the other provisions in the act, pertaining to discrimination in employment on the basis of genetic information take effect November 21, 2009.

The full text of the FLSA amendment is as follows:

(a) In General- Section 16(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 216(e)) is amended to read as follows:

`(e)(1)(A) Any person who violates the provisions of sections 12 or 13(c), relating to child labor, or any regulation issued pursuant to such sections, shall be subject to a civil penalty not to exceed--

`(i) $11,000 for each employee who was the subject of such a violation; or

`(ii) $50,000 with regard to each such violation that causes the death or serious injury of any employee under the age of 18 years, which penalty may be doubled where the violation is a repeated or willful violation.

`(B) For purposes of subparagraph (A), the term `serious injury' means--

`(i) permanent loss or substantial impairment of one of the senses (sight, hearing, taste, smell, tactile sensation);

`(ii) permanent loss or substantial impairment of the function of a bodily member, organ, or mental faculty, including the loss of all or part of an arm, leg, foot, hand or other body part; or

`(iii) permanent paralysis or substantial impairment that causes loss of movement or mobility of an arm, leg, foot, hand or other body part.

`(2) Any person who repeatedly or willfully violates section 6 or 7, relating to wages, shall be subject to a civil penalty not to exceed $1,100 for each such violation.

`(3) In determining the amount of any penalty under this subsection, the appropriateness of such penalty to the size of the business of the person charged and the gravity of the violation shall be considered. The amount of any penalty under this subsection, when finally determined, may be--

`(A) deducted from any sums owing by the United States to the person charged;

`(B) recovered in a civil action brought by the Secretary in any court of competent jurisdiction, in which litigation the Secretary shall be represented by the Solicitor of Labor; or

`(C) ordered by the court, in an action brought for a violation of section 15(a)(4) or a repeated or willful violation of section 15(a)(2), to be paid to the Secretary.

`(4) Any administrative determination by the Secretary of the amount of any penalty under this subsection shall be final, unless within 15 days after receipt of notice thereof by certified mail the person charged with the violation takes exception to the determination that the violations for which the penalty is imposed occurred, in which event final determination of the penalty shall be made in an administrative proceeding after opportunity for hearing in accordance with section 554 of title 5, United States Code, and regulations to be promulgated by the Secretary.

`(5) Except for civil penalties collected for violations of section 12, sums collected as penalties pursuant to this section shall be applied toward reimbursement of the costs of determining the violations and assessing and collecting such penalties, in accordance with the provision of section 2 of the Act entitled `An Act to authorize the Department of Labor to make special statistical studies upon payment of the cost thereof and for other purposes' (29 U.S.C. 9a). Civil penalties collected for violations of section 12 shall be deposited in the general fund of the Treasury.'.

(b) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.

From the Connecticut Law Tribune:

Lawyers involved in the class action sex discrimination case against Fairfield, Conn.-based General Electric in 2007 would rather you not read passages from various filings.

After all, the plaintiffs' firm, Sanford, Wittels & Heisler in Washington, D.C., took the time and effort to black out reams of pages in numerous briefs to make them inaccessible to the public -- or so they thought.

But as of late last week, you could download several documents through PACER's federal court filing system, copy the black bars that cover the text on the screen and paste them into a Word document.

Voilà. Information about the inner-workings of GE's white, male-dominated management and their alleged discriminatory practices against women, which is supposed to be sealed by court order, appears with little technical savvy required.

They warn you about this in ECF training courses. Sloppy information management "has been a huge problem" for lawyers, said Connecticut Chief Disciplinary Counsel Mark Dubois. "Metadata is a fascinating area of developing law. It is much discussed in the fields of risk aversion and risk management."

Add this to the list of lessons were are glad we learned by watching the mistakes of others.

No real posts today. Hopefully, typepad won't eat any more posts this week.

From a press release issued by the California Division of Labor Standards Enforcement:

An Alhambra man who allegedly attempted to extort money from his former employer by posing as a deputy state labor commissioner has plead no contest to obtaining funds through false pretenses. He was sentenced to 16 months in state prison by Los Angeles Superior Court Judge Lisa B. Lench.

Gabriel Holguin, 30, was arrested in November 2007, after he posed as a deputy labor commissioner and demanded money by email and phone calls from his former employer, Jayco Acceptance Corp. According to investigators, Holguin tried to force the company to pay him $600 for hours worked or legal action would be taken against the company.

That works out to about a day in prison for every $1.25 he tried to recover. Lawyers aren't cheap, but they aren't nearly that expensive.

Even though existing precedent held that a refusal to sign an arbitration agreement was not a protected activity that could support a claim of retaliation, the Eleventh Circuit has published an opinion holding that an employee’s refusal to sign an agreement that applied to a pending charge of discrimination can support such a charge.

In Goldsmith v. Bagby Elevator Company (11th. Cir. 2008) 513 F.3d 1261, the plaintiff was willing to execute an amended dispute resolution agreement that would not have applied to his pending charge against the employer, but Bagby Elevator insisted that he sign an agreement that applied to the pending charge as well as future disputes, and fired him immediately after he refused to do so. The 11th Circuit held that Bagby Elevator was not entitled to a judgment as a matter of law against Goldsmith’s claim of retaliation because there was sufficient evidence of a causal relation between the filing of his pending charge and later termination. The case isn't very old, but has already been followed or cited seven times.

We've seen employers try that trick twice during pending wage and hour class actions. So far, no problem.

The California Labor Commissioner's Office has issued an order prohibiting Contemporary Floors, Inc. and its CEO and president, Timothy Allen Kennady, from bidding on or receiving any public works contracts for three years as part of a settlement in which Contemporary Floors agreed to pay more than $245,000 in wages due, liquidated damages and penalties. The debarment begins June 16, 2008, and bars the firm from bidding or acting as a contractor or subcontractor on a public works project until June 2011. The firm was found to have willfully and fraudulently failed to pay prevailing wages, overtime, medical and 401K contributions and travel time or reimbursements, and to have repeatedly provided false certified payroll records signed under penalty of perjury.

A recent memo to all DLSE Staff from chief counsel Robert Roginson notified the department that all prior precedent decisions have been withdrawn. Roginson wrote:

As a result of recently concluded litigation, it has been determined that the Labor Commissioner may not designate ODAs as precedent decisions. Accordingly, please be advised of the following:

1. The designation of each Order, Decision, or Award (ODA) previously designated as a precedent decision pursuant to Government Code section 11425.60 has been withdrawn by the Labor Commissioner.

2. Any ODA withdrawn as a precedent decision is not binding and is not to be relied upon in any manner in any other adjudication of employee claims by DLSE staff in section 98 proceedings.

3. The Labor Commissioner is not authorized to designate ODAs as precedent decisions.

The withdrawal follows the finality of the Corrales v. Bradstreet case, which we discussed last year in a post found at this link.

This opinion is over three months old, and isn't a wage case, but it could ruin the policy favoring and encouraging settlements, and it's up for review with the Supreme Court, so we thought we'd give it a mention. In Goodman v. Lozano (2008) 159 Cal.App.4th 1313, the court held that if a plaintiff settles with some, but not all, defendants, and then proceeds to trial against the non-settling defendant(s) and wins on liability, but recovers no net proceeds because the amounts collected in settlement exceed the amount of the liability of the nonsettling defendant, then it is the defendant who is the prevailing party, and it is the defendant who recovers costs. The holding is in conflict with Wakefield v. Bohlin (2006) 145 Cal.App.4th 963. An April-filed petition for review is pending. The conflict makes the case a strong candidate for review.

The second issue involves the interplay of both section 877 and section 1032: Where a plaintiff obtains a net zero judgment as a result of the operation of section 877, is that plaintiff nevertheless entitled to prevailing party status because that party was “the party with a net monetary recovery”? The answer is no. Again, the analysis is straightforward. A litigant cannot actually recover or “gain” anything without an order or a judgment. An award or verdict without a judgment is merely symbolic. The fact that the litigant may have had an award or verdict prior to a zero judgment is meaningless for purposes of whether that litigant qualifies as “the party with a net monetary recovery” if the award or verdict produces nothing tangible. “Recovery,” not “award,” is the word chosen by the Legislature.

This straightforward analysis, based on the plain meaning of the words actually used in the statute, vindicates Justice Mihara’s dissent in Wakefield v. Bohlin (2006) 145 Cal.App.4th 963 (Wakefield).  Alas, it also forces us to disagree with the majority opinion in Wakefield, and explain why several other cases followed by the Wakefield majority also erred.  The essential problem is that the Wakefield majority substituted its own words for the actual words in the statute.  The statute says “recovery.”  It does not say “award” or “verdict.”

If this one holds up, it will change the way the average reasonable lawyer negotiates settlements. Cases will not settle as often or as easily. We always have preferred a "global" settlement over a piecemeal patchwork of settlements. If Goodman remains good law, that will no longer be merely a preference; it will become the rule, to which few exceptions could be risked.

The most recent modification to the original opinion in Goodman v. Lozano can be seen here in pdf or word format.

Drifting a bit off topic today, if you haven't seen this departure memo from an associate leaving the San Francisco office of Paul Hastings, you've missed quite a story. She complains that the firm gave her great reviews until it decided to start a round of layoffs, and she blasts the firm for blindsiding her right after she suffered a miscarriage. Paul Hastings denies that it is laying off associates. Whether or not you enjoy legal soap operas, the original story, broken by Above the Law, is interesting because, inter alia, it includes a copy of the standard Paul Hastings separation agreement.

Last week, the Supreme Court denied a petition for review in Harrington v. Payroll Entertainment Services, Inc. (2008) 160 Cal.App.4th 589, wherein the Court of Appeal reversed the denial of attorney's fees to a prevailing wage and hour plaintiff, then mandated an award of just $500. We previously discussed the case in a post you can read at this link. The opinion can be found here in pdf or word format. A request for depublication was also denied.

The Supreme Court also denied a petition for review in Combs v. Skyriver Communications, Inc. (2008) 159 Cal.App.4th 1242, which upheld a summary judgment for the defense based upon the administrative exemption. We previously discussed the case in a post you can read at this link.

We've heard some strong praise for the lawyers who argued the Brinker case last week, especially Michael Singer. Already the court has received three requests for CD copies of the oral argument. We might make it four. In related news, all you need to do to get a CD of just about any oral argument in the Fourth District is to make a written request and send them a blank CD. They're fast, too.

The Supreme Court has granted a petition for review in Schachter v. Citigroup, Inc. (2008) 159 Cal.App.4th 10, which (temporarily) upheld the validity of a stock forfeiture plan in which participating employees who resign or are terminated for cause within a two-year vesting period forfeits the stock as well as the wages used to purchase it. We previously discussed the case in a post you can read at this link.

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.

Perhaps we weren't the only ones who saw too much of Kafka in that opinion. We would be very surprised to see the ruling upheld.

This month's edition of the California Lawyer includes a pretty good article on legal blogs (The Search for Intelligent Life in the Blogosphere). We were not among the intelligent life they found, but we enjoyed the article nonetheless.

Last week, we briefly discussed McCoy v. Superior Court (Kimco) (2007) 157 Cal.App.4th 225 (review denied) and its effect on the nature of waiting time penalties and the statutes of limitation that apply to them. This week, we found out about Hoffman v. Uncle P Productions, LLC (2008) 2nd Appellate District, Case Number B198477, an unpublished opinion that disagrees with McCoy's holding regarding the statute of limitations on pure waiting time penalty claims.

Section 203 provides in pertinent part:  "If an employer willfully fails to pay . . . any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; the wages shall not continue for more than 30 days. . . .  [¶]  Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise."  A claim for wages is subject to the three-year statute of limitations contained in Code of Civil Procedure section 338, subdivision (a).  (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1102.)  Thus, section 203 provides a three-year statute of limitations for a cause of action for waiting time penalties.

Our Supreme Court came to this same conclusion when it recently explained: "When an employer fails to pay an employee who has quit or been discharged, section 203 establishes that the unpaid wages continue to accrue as a 'penalty' for up to 30 days.  Knowing that remedies constituting penalties are typically governed by a one-year statute of limitations, the Legislature expressly provided that a suit seeking to enforce the section 203 penalty would be subject to the same three-year statute of limitations as an action to recover wages.  (§ 203.)"  (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at pp. 1108-1109.)

The trial court did not explain in its statement of decision why it concluded that the three-year statute of limitations contained in section 203 did not apply to this lawsuit.  Interestingly, however, subsequent to the trial court's ruling in this case, the Fourth District Court of Appeal in McCoy v. Superior Court (2007) 157 Cal.App.4th 225, came to a similar conclusion.  In McCoy, the plaintiff in a putative class action suit was seeking waiting time penalties under section 203.  His complaint alleged that the defendant, a "temp" agency, instead of paying its employees upon discharge or within 72 hours of resignation, paid them on the next scheduled pay day.  The Court of Appeal affirmed the trial court's ruling that the waiting time penalties were subject to a one-year statute of limitations under Code of Civil Procedure section 340, subdivision (a).

The McCoy Court determined that the statute of limitations language contained in section 203 was ambiguous, and so resorted to extrinsic aids to discern its meaning.  It then concluded that the Legislature meant for the three-year limitations period specified in section 203 for continuing wage claims to apply when such claims are brought with the underlying wage claim, but not when they are not accompanied by a wage claim.  We cannot concur in this analysis.

Section 203 specifically states:  "Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise."  There is nothing the slightest bit ambiguous or uncertain about those words.  The McCoy Court acknowledged the Supreme Court's statement in Murphy v. Kenneth Cole Production, Inc. that "'. . . the Legislature expressly provided that a suit seeking to enforce the section 203 penalty would be subject to the same three-year statute of limitations as an action to recover wages.  [Citation.]'  (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at pp. 1108-1109)."  (McCoy, supra, at p. 233.)  The Court of Appeal declared, however, that the statement was dicta, since the Court was not interpreting section 203, and that it provided no authority for a three-year limitations period for penalty-only claims, because the Murphy Court "does not purport to distinguish between an action where both wages and a waiting time penalty are sought as opposed to one for penalties only, as is the case here."  (McCoy, supra, 157 Cal.App.4th at p. 233.)  However, the statute of limitations for an action does not customarily change depending upon whether or not additional claims are included in the complaint.  Indeed, McCoy cites no authority at all for its application of a different statute of limitations based on its distinction between penalty-only claims and penalty-plus-wage claims, an interpretation of section 203 which disregards the express words contained in the statute and infers the Legislature's true meaning.

In sum, we find persuasive the Supreme Court's pronouncement of the statute of limitations for waiting time penalties in Murphy, notwithstanding the fact that the Court was not directly considering section 203, but analogizing to it in order to resolve the issue before it involving the statute of limitations for section 226.7 claims ["hour of pay" remedy for meal and rest period violations].  We conclude that, under the clear and unambiguous terms of the statute, a three-year limitations period applies to section 203 claims for waiting time penalties.  Plaintiffs' causes of action for those penalties were therefore timely. (our emphasis).

A request for publication was filed yesterday. For now, you can review Hoffman here in pdf or word format.

Most California casewatchers are focusing their attention this week on In re Marriage Cases. Wage and hour lawyers, however, are also busy talking about Bufil v. Dollar Financial Group, Inc. (2008) __ Cal.App.4th __.

Do you remember Alvarez v. May Department Stores Co. (2006) 143 Cal.App.4th 1223, the case that held collateral estoppel could apply to prevent future class actions once a court, any court, denies certification of a class? Well, what if the certification motion was denied because the group was too big and its putative members were too different to warrant certifying a class. Can you file a new class action and seek to pursue a smaller class, chosen from within the larger class that was denied certification? San Francisco Judge Peter Busch thought you could not. The Court of Appeal in Bufil suggests that you can and perhaps should.

On the heels of the denial of class certification against employer and respondent Dollar Financial Group, Inc. (Dollar), in a suit alleging violation of meal and rest break labor laws, appellant Caren Bufil pursued class certification in a new suit which significantly narrowed the class definition. Relying on the doctrine of collateral estoppel, the trial court granted judgment on the pleadings in favor of Dollar. Also relying on this doctrine as well as traditional concerns relevant to the issue of certification, the court denied Bufil’s motion for class certification. We reverse.

The trial court's two errors were (i) applying collateral estoppel to the earlier certification denial in another case and (ii) assuming that each class member would have to testify about their own understanding about meal period waivers.

Here the trial court denied the motion for class certification on the same basis it granted judgment on the pleadings—that is, on collateral estoppel grounds. Continuing, the court additionally indicated that liability as to the class involved substantial and numerous individual factual questions, giving, as the sole example, each employee’s understanding of his or her rights under the meal plan. Elaborating, the court explained: “Similar to the class in Nguyen, employees would have to individually testify as to their perceptions of their rights in signing or refusing to execute the meal agreement without suffering adverse consequences. These issues apply to both the rest period and meal period components of the class, thus the individual issues predominate over Plaintiff’s [claim that common issues predominate].” Finally, the court held that Bufil did not prove the existence of an ascertainable class of employees who purportedly missed off-duty rest periods.

The meal period waiver issue is one we often see. Trial courts don't seem to buy it, but defendants always argue that you can't litigate meal period claims as a class because they will be forced to frogmarch every single class member into court to cross-examine them to determine whether their intent to waive a meal period was the same as every other employees' intent. Bufil busts this myth.

The court made an erroneous assumption that each class member would need to testify as to his or her understanding of the meal period waiver. This was an issue in Chin/Nguyen but it is irrelevant to Bufil’s lawsuit. Bufil’s theory is that the two circumstances—single employee on duty or providing training—do not come within the “nature of the work” exception set forth in Wage Order No. 4-2001, so as to permit an “on-duty” meal period. This is a legal question concerning the liability of Dollar to each putative class member. Bufil is not concerned with whether a given employee signed a meal period waiver, does not assert that anyone was forced to sign anything, and does not attack the execution of the agreements or the intent and understanding of the parties regarding the same. Her position is that either the putative class employees were denied an off-duty meal for an improper purpose, or they were not. Under Bufil’s structuring of the case, the court could identify the class from Dollar’s records and determine liability as a matter of law. In this case Bufil proposes a class that on its face attempts to correct flaws identified in the Chin/Nguyen lawsuit resulting in denial of certification. The trial court here erred in ruling that the class proposed by Bufil involved “the same class problems involving liability” as were implicated in Chin/Nguyen, and thus erroneously concluded that issue preclusion should bar her quest for class certification. (See OShana v. Coca-Cola Bottling Co. (N.D. Ill. 2005) 225 F.R.D. 575, 579.)

The court also pointed out that one could ascertain a class of rest period claimants even though there are no records kept for the rest periods.

Arguing that the proposed class was not ascertainable as to rest period claims, Dollar states there are no records identifying whether any employee missed a rest period and it has no obligation to maintain such records. There is no disagreement on these points, but they are not pertinent to the issue of ascertainability because Bufil has defined a class precisely identified by Dollar records.

We loved this language:

Dollar does not notify its employees that they are authorized and permitted to take a 10 consecutive minute off-duty rest break every four hours. Nor does Dollar instruct supervisory personnel to take steps to provide employees with the opportunity to take the required rest breaks. The onus is on the employer to clearly communicate the authorization and permission to its employees. (citing Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 963.)

The myth that class actions are not superior ways to adjudicate wage and hour claims is also busted.

The trial court made a passing, perfunctory reference to superiority in its order denying class certification, finding that plaintiffs did not establish that the class action is a superior method for resolving the litigation. Courts regularly certify class actions to resolve wage and hour claims. (See Pressler v. Donald L. Bren Co. (1982) 32 Cal.3d 831, 837; see also Sav-On, supra, 34 Cal.4th at p. 340; Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 579-580; Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1423.) In this arena the class action mechanism allows claims of many individuals to be resolved at the same time, eliminates the possibility of repetitious litigation and affords small claimants with a method of obtaining redress for claims which otherwise would be too insignificant to warrant individual litigation. (Sav-On, supra, 34 Cal.4th at p. 340.)

Bufil was originally issued in April as an unpublished opinion, but the California Employment Lawyers Association prevailed Tuesday in a request to have the opinion published. You can download the full text of the opinion here in pdf or word format.

Don't have time to attend MCLE seminars? One alternative is to attend audio conferences. National Constitution Center Audio Conferences is offering a 60-minute audio conference next month on the subject of "FLSA Overtime Rules: Critical Issues in Employee Classification." The conference will take place tomorrow, Thursday, May 15, 2008 10:00-11:00 a.m. PDT. The cost of the conference is $199 (plus $65 if you are taking the course for MCLE credits, apparently good in all states but Kansas and Ohio). You can register and get more information at http://www.constitutionconferences.com/main.asp?G=1&E=1371. Their web page describes the conference in more detail, but here's their hook:

As more practitioners are finding themselves in the wage and hour arena, it is important that we keep apprised of recent developments and changes in the law. This 60-minute audio conference will provide you and your staff with the knowledge you need to comply with the overtime regulations – including the tests to apply to properly classify your employees and determine who does and doesn’t qualify for overtime.

We've never tried these conferences, and they aren't giving us a dime (or anything else, for that matter) for mentioning them here, so if anyone gives them a try, please leave a comment and let us know what you thought. They offer a guarantee of "a full refund if not satisfied from now until 7 days after the event."

IWC Wage Order 14, which governs hours and working conditions for farm workers, requires employers to "authorize and permit" employees to take meal periods and rest periods. This "authorize and permit" language appears in most other wage orders as to rest periods, but not meal periods. The language is in stark contrast to the meal period language of other wage orders ("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"), for which the DLSE policy is set forth in section 45.2.1 of the DLSE enforcement policy and interpretations manual.

A February 2007 DLSE memo defines the meaning of the phrase "authorize and permit" in the meal period requirement of Wage Order 14. Lupe Almaraz, who retired last year as Deputy Chief of DLSE, issued a memo to DLSE staff regarding the meal period requirement under Wage Order 14. It states that an employer must

"authorize the worker to take a meal period and not dissuade or deny the worker the opportunity for the entitled meal period..."

In essence, in DLSE enforcement actions, this shifts the burden to employees to prove not only that he or she was not permitted to take a meal period, but that the employer affirmatively dissuaded or denied the meal period. It leaves open to interpretation whether the employer is liable for meal periods that could not be taken simply because the workload does not leave any opportunity to take the break without the employee failing to perform necessary job duties. The memo is an "underground regulation" which the courts need not follow, but nonetheless is appearing more frequently in state court law and motion in support of employers' motions regarding pleadings, discovery, certification and summary adjudication.

At some point in the next month or two, we might get a ruling from the Fourth District Court of Appeal in the Brinker case, which is set for argument this afternoon, as to what it means to "provide" a meal period or "authorize and permit" a meal period or rest period.

Under the Fair Labor Standards Act, time spent commuting to and from the workplace is generally not compensable. Under the Portal-to-Portal Act, the FLSA excludes from compensable time all of the time spent "traveling to and from the actual place of performance of the principal activity" of employment. There are various exceptions, generally arising when an employee's commute is substantially changed for the benefit of the employer. However, the fact that an employee carries its employer's documents to and from work does not invoke such an exception, and employees who carry a briefcase during their commute are not entitled to be paid a wage for their commute time, even if that means lugging 20 pounds worth of documents home each night, according to a recent Second Circuit opinion.

Plaintiffs-appellants Rajkumar Singh, Thomas S. Matthews, Vivek N. Patil, Trushant Shah, Faramarz Robeny and Fredo Joseph (collectively the "plaintiffs") appeal from a June 2, 2006 judgment of the United States District Court for the Southern District of New York (Castel, J.), granting summary judgment to defendant-appellee City of New York (the "City") and denying the plaintiffs' cross-motion for summary judgment. The plaintiffs are fire alarm inspectors employed by the City who assert that they must be compensated under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., for their commuting time because the City requires them to carry inspection documents during their commutes. We hold that carrying inspection documents while commuting is not work under the FLSA except to the extent that it increases the duration of a commute. Because the record shows that such an increase in commuting time is de minimis as a matter of law, we AFFIRM the district court’s judgment that none of the plaintiffs’ commuting time is compensable under the FLSA.
...
In the commuting context, we believe that the appropriate application of the predominant benefit test is whether an employer's restrictions hinder the employees' ability to use their commuting time as they otherwise would have had there been no work-related restrictions.

Singh v. City of New York (2nd Cir. 2008) __ F.3d __ (Case No. 06-2960-cv).

Mark's on vacation this week, so the two-a-day posting we've maintained since April is going to stop. Have y'all taken your vacations yet this year? Do not eschew vacations. They are not just luxuries. They are necessities to keep you sane.

Some of the best ideas for the plaintiff's bar have come from defense lawyers. The latest example: Littler Mendelson has published an interesting report entitled Total Wage and Hour Compliance: An Initiative to End the Wage and Hour Class Action War. You can download the report directly from the firm's website. It isn't just a learning tool for employers. It also provides considerable food for thought if you are representing employees, and that's all we'll say about it.

Wage and hour lawyers are talking about a law and motion ruling made last week by Orange County Superior Court Judge David Velasquez, holding that waiting time penalties under Labor Code § 203 were recoverable as restitution under Business & Professions Code § 17203. In Ybarra v. Aramark Corp., No. 30-2008-00180008-CU-OE-CXC, the court treated section 203's "wages of the employee [that] shall continue as a penalty" as ordinary wages.

In similar fashion to the "additional hour of pay" [in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1108], the instant court observes that Labor Code § 203 does not provide that the employer is "subject to" the imposition of the waiting time penalty. Rather that section states "the wages of the employee shall continue" if the employer does not pay separation wages within 72 hours of the employee's termination. The employee is not required to do anything affirmative — "take action" — in order to be entitled to the continuing right to wages. The right to the waiting time penalty is self-executing, i.e., the employee's right to payment of the waiting time penalty arises immediately upon the satisfaction of the condition precedent, late payment of the last wages due to the employee at the time of termination from employment. In that respect, because the waiting time penalty becomes immediately due and payable to the employee, the right to receive the penalty becomes a vested property right of the employee and the proper subject of restitution. (Cf. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178 [wages which are due but unpaid are the proper subject of restitution].)

If this is appealed, it must proceed by writ petition, but the writ will be submitted to the same appellate division that gave us McCoy v. Superior Court (2007) 157 Cal.App.4th 225 (review denied) last year. In McCoy (which we previously discussed at a post found at this link), the court ruled that the statute of limitations was one year on causes of action seeking section 203 penalties that do not arise in conjunction with the claims for the underlying wages. The McCoy court noted that its holding meant that the court didn't need to address the plaintiffs claim that the statute was four years under the alternate theory of unfair competition, which was unfortunate, because the issue has arisen in quite a few very large cases.

[Hat tip: The UCL Practitioner, which has a link to the order]

The second round of oral argument in Brinker Restaurant Corporation v. Hohnbaum is now set for May 13, 2008, before the Fourth District Court of Appeal, Division One, in San Diego. The latest developments:

Petitioner Brinker Restaurant corporation's request for leave to file a supplemental brief filed April 22, 2008, is GRANTED. The supplemental brief is deemed filed this date. Real parties in interest shall have seven days from the date of this order to file a supplemental reply brief addressing the issues raised in the supplemental brief. Real parties in interest Adam Hornbaum, Illya Haasf, Romeo Osorio, Amanda June Rader, and Santana Alvarado's motion and requests for judicial notice, filed on December 17, 2007 and April 22, 2008, are GRANTED in part and DENIED in part. Real parties in interest's motion requesting we take judicial notice of the depositions of plaintiffs' experts Jon A Krosnick and Harold S. Javitz is denied. Real parties in interest's request we take judicial notice of a February 16, 1999 Division of Labor Standards Enforcement (DLSE) Opinion Letter, a September 17, 2001 DLSE Opinion Letter, Industrial Welfare Commission Wage Order 5-76, a June 14, 2002 DLSE Opinion Letter and excerpts from the DLSE Enforcement Policies and Interpretations Manual is denied as unnecessary as these are items that we are entitled (but not required) to rely upon as authority, without having to formally take judicial notice. The denial as unnecessary of real parties in interest's request we take judicial notice of these items should not be construed as meaning this court will not consider them in ruling of the petition for writ of mandate in this matter. Real parties in interest's request we take judicial notice of the August 28, 2000 Senate Floor Bill Analysis and September 9, 2000 Assembly Floor Bill Analysis for Assembly Bill No. 2509 is granted.

Since then, several letters were written to the court informing the panel about the depublication of Bell v. Superior Court (H.F. Cox, Inc.), and the petitioner has filed a supplemental brief concerning the Brown v. Federal Express Corp. case.

We've been following the case closely, and have discussed it in several prior posts, including here and here.

The paperboy is an employee, not an independent contractor, according to an unpublished opinion issued in February that was ordered published last week by the Second District Court of Appeal. Antelope Valley Press v. Poizner (2008) __ Cal.App.4th __ poses the specific question whether, for purposes of worker’s compensation insurance, persons who make deliveries of newspapers for the Antelope Valley Press are independent contractors or employees. The issue arises not out of a claim for worker’s compensation benefits, but a dispute over insurance premiums. The court expressly noted that its ruling was limited to this context.

Our review of the facts of this case and relevant law convinces us that the trial court correctly ruled that the administrative record supports the conclusion that the carriers are employees for purposes of workers’ compensation law, not independent contractors. Therefore, we will affirm the trial court’s judgment.

As usual, the court addressed a laundry list of relevant factors that tilted toward employment:

• Home deliveries are made by the carriers, who are paid according to the number of copies of the Press they are given to deliver.
• the per copy rate paid to the carriers varies.
• There are written contracts
• they provide that papers must be delivered in a safe and dry condition.
• If a carrier chooses to wrap the Press in a plastic bag to keep it from getting wet or otherwise harmed, the bag must be yellow or white.
• The carriers also receive approximately 20 complementary copies of the Press each day.
• These free samples, called the “C’s,” are dropped off by the carriers at homes of nonsubscribers.
• The carriers are paid 3 cents for delivering each C. They are required to put the C’s in orange plastic bags, which are provided by AVP
• The routes are checked once a week.
• Carriers also deliver AVP’s magazine-type publication called “Lifestyles.”
• Carriers are required to put Lifestyles in the white plastic bags that AVP provides, and they receive 5 cents per copy they deliver.
• AVP also publishes a free “TMC” (total market coverage) advertisement paper which is called the A.V. As with the C’s, the carriers are required to place the A.V. Express in colored plastic bags (red) that are provided by AVP, and management checks the routes to verify that deliveries of the A.V. Express are made.
• The carriers receive 3 cents per copy of the A.V. Express they deliver, and are charged 23 cents for each copy they do not actually deliver.
• Deliveries by the carriers are made according to AVP’s time schedules.
• The carriers are expected to pick up their bundles of newspapers by a specific time from a specific location.
• If a carrier is late, he or she is charged $35 per hour ($0.58333 per minute) to cover AVP’s cost of having someone oversee the pick-up location until the carrier arrives.
• Additionally, personnel of AVP may begin folding and bagging the tardy carrier’s newspapers after the deadline for pickup so as to facilitate prompt delivery of papers to the customers, and the carrier is charged for the bags even though carriers are not required to put the Press in bags.
• For the pick up location that is not manned by AVP personnel, the carrier runs the risk that the newspapers will be stolen if the carrier is not on site when they are dropped off, and stolen papers are the financial responsibility of the carrier.
• On weekdays, carriers are required to finish their deliveries by 5:00 a.m. on in town routes and 6:00 a.m. on out-of-town routes. On weekends, the delivery deadlines are 6:00 a.m. and 7:00 a.m., respectively.
• The A.V. Express is to be delivered by noon on Saturday.
• Home delivery subscribers pay their subscription fees to AVP, not to the carriers.
• If a home delivery subscriber fails to pay his or her bill, the carrier is not docked unless and until a written stop delivery notice for that customer is given to the carrier.
• The carriers are charged a $2.50 complaint recording fee if a customer does not receive his or her copy of the Press, does not receive it in a timely manner, or it is damaged.
• If there are more than 2 complaints per one thousand paid deliveries and the carrier has elected to have AVP redeliver the Press, the carrier is also charged a $2.50 redelivery fee per complaint. If the carrier has elected to correct subscriber complaints by himself or herself but does not make the correction within one hour of being notified of the problem, or cannot be reached to receive such notification, then if AVP corrects the complaint the carrier is charged $35 per hour and $.31 per mile driven by an AVP employee to correct the problem.
• Invoices are issued to them every two weeks. The invoices list credits and charges.
• The only information the manager seeks from the prospective carrier is whether he or she has a California driver’s license, proof of vehicle insurance, and a social security number.
• The form contract is for a term of one year. Either party can terminate the contract without cause with 30 days written notice. Either party can terminate the contract, effective immediately with written notice, if the other party commits a material breach.
• there was an extreme disparity in bargaining position between the Carriers and AVP.
• "the Carriers wanted work, and they signed what they needed to in order to get it.”
• the lengthy, small print contract was “drafted by sophisticated lawyers and is in no sense the product of arm’s length negotiations, as might occur, for example, in hiring an independent contractor, specialized and sophisticated in the costs of his business, and able to garner trade from other actual and potential customers.”
• There was no evidence that any of AVP’s carriers hold themselves out as being an independent delivery service that happens to have AVP as one of its customers.
• Further, AVP does not cite evidence showing that the carriers have a substantial investment in their AVP delivery duties other than their time and the vehicles they use; and their vehicles are not shown to be other than the vehicles they use for their own personal activities.
• there was no evidence that any of the carriers have a delivery business through which they can distribute that risk and cost.
• Delivering papers requires no particular skill. A carrier’s remuneration is in very large part dependent on nonnegotiated financial terms in the contract rather than on the carrier’s initiative, judgment or managerial abilities.

The court was not concerned about the parties' written arrangements characterizing the relationship as one involving contractors.

The Borello and JKH Enterprises courts also determined that the workers in those cases were employees despite their having signed agreements (migrant farm workers in Borello) or other writings (delivery service drivers in JKH Enterprises) that stated they are independent contractors.

Even though the case arose out of an insurance premium dispute, because the contractor/employee issue arises frequently with wage and hour implications, the opinion is a worthwhile read. You can download the full text of Antelope Valley Press v. Poizner here in pdf or word format.

In Alan v. American Honda Motor Co. Inc. (2006) 131 Cal.App.4th 886, the Supreme Court reviewed the dismissal of an appeal and considered a discreet issue: Did the Statement of Decision and Minute Order dated January 2, 2003, trigger the 60-day period within which to notice an appeal under California Rules of Court, rule 8.104. They concluded that it did not, and so the case was remanded to the Court of Appeal for a review on the merits. On remand, in an unpublished opinion, they still ruled against the plaintiffs. Alan v. American Honda Motor Co. Inc. (2008 Cal. App. Unpub. LEXIS 829).

As explained in Massachusetts Mutual, we will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used; or (2) erroneous legal assumptions were made. (Massachusetts Mutual, supra, 97 Cal.App.4th at p. 1287.)

In this case, we conclude that the trial court finding that Alan did not make a sufficient showing of class-wide damages is supported by substantial evidence and that the trial court did not use improper criteria or make erroneous legal assumptions. As noted by the trial court, Alan's exhibits failed to show commonality as to damages. Alan failed to present sufficient evidence that purported class members knew of the alleged service concealment or relied upon it and then suffered damages as a result of the reliance. Without awareness of the alleged concealment and a detrimental change of position because of the alleged concealment, there can be no injury. Thus, there are no facts showing a common injury. In conclusion, the trial court finding that commonality does not exist with respect to damages is supported by substantial evidence.

DISPOSITION The order is affirmed. Defendant Honda is awarded costs on appeal.

You can download the full text of the two earlier opinions in Alan v. American Honda Motor Co. Inc. here: the 2005 opinion and the Supreme Court opinion are still posted. Last week, the Supreme Court denied a request to publish. We last talked about it in January, 2007.

In a short, unpublished opinion, the Ninth Circuit has reversed a significant portion of District Court order denying class certification in a wage and hour class action against Wal-Mart. In Sepulveda v. Wal-Mart Stores, Inc., a group of assistant managers asserting various wage and hour claims (overtime and meal and rest period pay) brought a putative class action against against the retailer. The District Court denied the plaintiffs' motion for class certification in Sepulveda v. Wal-Mart Stores, Inc. (C.D.Cal. 2006) 237 F.R.D. 229, because the claims for monetary relief in the class action complaint were not incidental (failing the requirements for certification under Rule 23(b)(2)) and the duties of assistant managers were not susceptible to collective proof (failing the requirements for certification under Rule 23(b)(3)). On appeal, the Ninth Circuit held:

Plaintiffs, current and former Assistant Managers of Defendant, Wal-Mart Stores, Inc., appeal the district court’s order denying their motion for class certification. We have jurisdiction under 28 U.S.C. § 1292(e) and Federal Rule of Civil Procedure 23(f).

The district court misapplied Ninth Circuit precedent when, relying on its conclusion that Plaintiffs’ claims for monetary relief were non-incidental, it denied class certification under Federal Rule of Civil Procedure 23(b)(2). See Molski v. Gleich, 318 F.3d 937, 949–50 (9th Cir. 2003) (refusing to adopt the incidental damages approach set forth by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998)). The district court must focus on the intent of the Plaintiffs in bringing suit. Id. at 950. We therefore hold that the district court abused its discretion in denying class certification. See Sw. Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003) (en banc) (per curiam). On remand the district court shall reconsider class certification under Federal Rule of Civil Procedure 23(b)(2), and, in the alternative, also reconsider using Rule 23(c)(4) to certify specific issues under the Rule 23(b)(2) standard. See Society for Individual Rights, Inc. v. Hampton, 528 F.2d 905, 906 (9th Cir. 1975). In reconsidering these issues, the district court may find the California Supreme Court’s decision in Gentry v. Superior Court, 42 Cal. 4th 443, 457–59, 462, 464–65 (2007), instructive.

The district court did not abuse its discretion in denying class certification under Federal Rule of Civil Procedure 23(b)(3), and we therefore affirm that portion of its order. Each party shall bear its own costs on appeal.

We previously discussed the case in a January 2007 post that can be found at this link, where we observed:

The appeal is noteworthy because, unlike several other pending appeals in similar cases, this is a discretionary, interlocutory appeal, rather than a standard, post-judgment appeal. The standard for allowing such an appeal is extremely high, and the fact that the Ninth Circuit allowed the appeal suggests that the District Court’s decision to deny certification will be reversed.

The result was very close to what we expected.

Last week's decision in Negrete v. Allianz Life Insurance Co. (9th Cir. 2008) __ F.3d __ is not a wage and hour case, but its holding concerning class action procedure could affect every wage and hour class action filed in the State of California. Essentially, the case holds that the mere risk that someone will file on top of an existing class action, even one which has been certified, and will then attempt to undermine the class by pursuing a so-called "reverse auction" settlement does not empower the court to issue orders which amount to an injunction against other courts and other proceedings which have overlapping parties, claims or issues.

Vida F. Negrete filed this class action lawsuit against Allianz Life Insurance Company of North America. Allianz appeals a district court order that effectively prevents it from proceeding with any settlement negotiations on similar class action claims raised in any federal or state court without first obtaining permission from Negrete’s Co-Lead Counsel, and from finalizing a settlement in any other court “that resolves, in whole or in part, the claims brought in [the Negrete] action,” without first obtaining the district court’s approval. We reverse.

It is important to note that there were "no facts before the district court that supported the notion that some kind of collusion was afoot."

Negrete Counsel floated out the specter of a reverse auction, but brought forth no facts to give that eidolon more substance. A reverse auction is said to occur when “the defendant in a series of class actions picks the most ineffectual class lawyers to negotiate a settlement with in the hope that the district court will approve a weak settlement that will preclude other claims against the defendant.” Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 282 (7th Cir. 2002). It has an odor of mendacity about it. Even supposing that would be enough to justify an injunction of one district court by another one, there is no evidence of underhanded activity in this case. That being so, if Negrete’s argument were accepted, the “reverse auction argument would lead to the conclusion that no settlement could ever occur in the circumstances of parallel or multiple class actions — none of the competing cases could settle without being accused by another of participating in a collusive reverse auction.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1189 (10th Cir. 2002) (internal quotation marks omitted). In short, the district court’s order must be set aside. There simply was no proper support for the district court’s enjoining of proceedings in other courts.

The court wouldn't necessarily have endorsed the idea of an injunctive even if there were some reverse acution shenanigans going on, adding that they "need not decide whether reverse auction evidence would justify an injunction of state court proceedings, as opposed to leaving correction up to the usual appellate processes." Parsons Steel, Inc. v. First Ala. Bank, 474 U.S. 518, 525, 106 S. Ct. 768, 772-73, 88 L. Ed. 2d 877 (1986); Atl. Coast Line, 398 U.S. at 287, 90 S. Ct. at 1743.

The district court was troubled by the fact that settlements in other courts might draw the fangs from at least a portion of the class action case that it was then considering. Perhaps they will. But in this instance it was improper for the district court to react by issuing an injunction against other federal and state court proceedings. Rather, the district court must live with the vicissitudes and consequences of our elegantly messy federal system. The restrictions inherent in the All Writs Act and explicit in the Anti-Injunction Act have helped to concinnate the elements of our national polity; this is not the time to disrupt the harmony.

You can download the full opinion at this link.

We've removed a few links from the side column. If you had a blog we listed, but haven't posted to it since 2007, or posted fewer than five times in the last twelve months, you got removed. As always, we're interested in posting links to other good legal blogs, and particularly employment-related blogs. This week we added four legal blogs, none of which are employment blogs per se.

• The California Blog of Appeal
• ClassActionBlawg.com
• Overlawyered
• Class Action Defense Blog

If you know of any we should include, especially if it is yours, leave a comment or drop us an email.

While here in California, May 1 (which was also Law Day) was the day for friends of labor to abandon work and school to march in the streets, in many places, they do all that on another May Day, which falls today, May 5. We will instead celebrate Mexico's 1862 victory over the French (which at the time, was thought impressive) by tossing back margaritas at our local Mexican eatery.

Happy Cinco de Mayo. We might celebrate with a happy hour margarita at one of many restaurant chains where we represented classes or other large groups of employees in wage and hour claims. But that's not the only thing making us happy today. Today's a lucky day of sorts for us.

Google digs blogs. Go to Google and do a search for wage law, and click the "I'm feeling lucky" button.

We'll see you back here in a moment.

For the first time, we've skipped ahead of the U.S. Department of Labor on the Google result page for this and a few other wage & hour related searches. We're still third fourth for searches on "wage and hour law" however. We now have a real B.L.O.G. (best listing on Google). Soon, we will have the domain name www.CaliforniaWageLaw.com publishing this blog, too, and we'll be even easier to find.

At 1:40 this morning, a pipe bomb exploded at the Edward J. Schwartz Federal Courthouse in downtown San Diego. A significant amount of damage occurred, but no structural damage was found and no one was injured. The bombing will cause all proceedings tomorrow to be continued. The Southern District has issued the following notice:

May 4, 2008 - The United States federal courthouse in the Southern District of California, located in downtown San Diego, will be closed to the public on Monday, May 5th, 2008 due to damage caused by a bomb explosion at the courthouse entrance. All federal court activity in San Diego has been cancelled. The U.S Courthouse in El Centro, California will remain open. The Clerk's Office for the federal court will be open for business on Monday.

Jurors that are scheduled for federal court jury duty on Monday, May 5th are asked not to report as required. Jurors should call 800-998-9035 after 6:00 PM on Monday evening to check the status of their jury duty for Tuesday, May 6th, 2008.

All federal court employees are required to report to work as usual. All employees must use the Federal Building entrance at 880 Front Street.

A dispute over whether a group of workers were properly organized by a union lead to an interesting Ninth Circuit opinion earlier this year, discussing how Friendly Cab Co.'s cab drivers were employees, not independent contractors, and therefore were properly organized by the union. NLRB v. Friendly Cab Co. (9th Cir. 2008) 512 F.3d 1090 thoroughly discusses the federal test for determining independent contractor status. In spite of cab lease agreements and several other factors that appeared to favor the employer, the court found the workers to be employees after considering the economic realities of the relationship. We'd have mentioned it sooner, but this was another post we never got around to sharing while Mike was out on medical leave.

It shouldn't be too much longer before we hear from the SCOTUS on Richlin Security Service v. Chertoff (US 06-1717) regarding the ability to recovery all of your paralegal billings when you win in a case where the prevailing party gets attorney's fees. The unresolved issue among the circuits is whether paralegal services can be recovered at the market rate, or just at the level of actual cost. The case was argued on March 19, 2008.

The Fourth District Court of Appeal has invalidated the arbitration agreement used by Ralphs Grocery Co. in California. In Metters v. Ralphs Grocery Co. (2008) __ Cal.App.4th __ (originally issued as an unpublished opinion, and but ordered published in April), the trial court found evidence that the employee had not been aware that he was agreeing to mandatory arbitration, and thus could not be bound by a "dispute form" used by Ralphs Grocery for its dispute resolution process.

The company's policy provides an agreement to arbitrate as part of the request for dispute resolution. The form is entitled "Notice of Dispute and Request for Resolution Form." Among other things, the court noted, the form does not resemble a contract, and its title does not alert employees to the nature of the document; it does not clearly warn employees to pay special attention to the arbitration provisions; no one tells employees they are signing an arbitration agreement. For these and other reasons, the trial court found no meeting of the minds, and therefore no contract to arbitration.

The court was not persuaded by language in the form which clearly stated that employees were not required to sign do so in order for their complaints to be investigated. "A transactional attorney sitting in an office somewhere…[could] figure out what it meant," but it wasn't likely that an employee would.

The court observed, “It could be that a transactional attorney sitting in an office somewhere could have this form, start kind of pulling on the string and follow it back somehow and maybe figure out what it meant, if that is possible. . . . [¶] . . . [¶] [I]t does appear to be an attempt to sort of backdoor . . . this employee through this kind of ambiguous, nebulous form and say, well, if you want your . . . complaint investigated, just sign this and life will be good. [¶] I don’t think I can find there is . . . in the real world a meeting of the minds between Mr. Metters and Ralphs based on this.”

Thus,

The record contains substantial evidence to support the trial court’s finding that there was no valid agreement to arbitrate Metters’ discrimination claim. The order denying the motion to compel arbitration is affirmed.

You can download the full opinion of Metters v. Ralphs Grocery Co. here in pdf or word format.

Another case that came down during our January downtime involved the enforceability of California Labor Code §§ 232 and 232.5, which protect the rights of employees to discuss their compensation and working conditions with coworkers without fearing retaliation from an employer. Labor Code § 232 provides:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.
(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.
(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.

Labor Code § 232 provides:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing information about the employer's working conditions.
(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose information about the employer's working conditions.
(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses information about the employer's working conditions.
(d) This section is not intended to permit an employee to disclose proprietary information, trade secret information, or information that is otherwise subject to a legal privilege without the consent of his or her employer.

In Luke v. Collotype Labels USA, Inc. (2008) __ Cal.App.4th __, the Court of Appeal held that an employee's wrongful termination claim under section 232.5 was preempted by the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151 et seq. The employee had been fired after soliciting signatures for a letter denouncing management, telling his supervisor's boss that there were troubles brewing, encouraging others to record the problems they encountered and express their concerns to management, and offering help and support to other employees who complained about working conditions. The defendant moved for summary judgment, claiming that these activities were protected "concerted activity" under 29 U.S.C. § 157, such that the claim was therefore preempted.  See Linn v. Plant Guard Workers (1966) 383 U.S. 53, 60 (The NLRA impliedly preempts state regulation of activity which is arguably protected by section 7). On these facts, the Court agreed. If the conduct is protected by section 301 of the LMRA (29 U.S.C. section 185) and there is a collective bargaining agreement which governs, the wrongful termination action is preempted.

The opinion was issued in January, and ordered published a month later. No review was sought and a remittitur has been issued. You can download the full text of Luke v. Collotype Labels USA, Inc. here in pdf or word format.