This one escaped our radar initially. Last month, the California Supreme Court denied a petition for review in Johnson v. Glaxosmithkline (2008) 166 Cal.App.4th 1497, which we discussed last month in a post found at this link. The case involved the applicability of collateral estoppel to prior orders denying class certification in actions brought on behalf of a similar putative class.
On Monday, Judge S. James Otero granted Sandeep Baweja's motion to withdraw as counsel for the class of employees from whom he took several million dollars in settlement money in the matter of Lubocki v. ZipRealty, Inc. In the order, Judge Otero expressly retains jurisdiction over Baweja.
On December 24, 2008, Baweja filed this Motion to Withdraw as Counsel for David Lubocki, et al. pursuant to California Rules of Professional Conduct 3-300 and 3-310. On December 30, 2008, this Court sent letters to Sal Hernandez, Assistant Director in Charge, FBI Los Angeles; Thomas P. O'Brien, United States Attorney; William J. Bratton, Chief of the Los Angeles Police Department; Steve Cooley, Los Angeles County District Attorney; Scott Drexel, Chief Trial Counsel of the State Bar of California; and the Standing Committee on Discipline for the Central District of California, notifying them of Baweja's admissions.
The order declares, quite matter-of-factly, that the court grants the motion because Baweja's interests are now adverse to his clients.
In secretly taking and investing $2.72 million of the class settlement funds, without notifying or seeking the permission of class members, Baweja acquired an interest adverse to his clients without their informed consent in violation of California Rule of Professional Conduct 3-300. See Connor, 791 P.2d at 317; Cal. R. Prof'l Conduct 3-300; Baweja Decl. ¶ 5. Because he currently owes his clients approximately $2 million, his own interests are likely to conflict with those of his clients and, thus, he cannot fulfill his duty of absolute and undivided loyalty to his clients.
Ernest J. Francheschi, Jr., who has not been accused of any wrongdoing, remains as class counsel "pending this Court's decision on any objection to his representation." The next status conference in the case is set for April 27.
We discussed the case in a post earlier this month, found at this link.
We've noticed that the Employment Law Roundtables in California Lawyer do not offer a particularly even or broad sampling of viewpoints. Given recent legal and political events, the January 2009 roundtable, in particular, seemed particularly worthy of an employee's representative or two:
This month, with the inauguration of Barack Obama as the country's 44th president, comes the promise of closely watched changes to U.S. employment law and policy. Most notably, the Employee Free Choice Act (EFCA), which President-elect Obama has pledged to sign if given the opportunity, would dramatically modify the National Labor Relations Act in ways likely to increase union membership and impact the collective bargaining process. Additionally, pending legislation such as the Lilly Ledbetter Fair Pay Act and the Working Family's Flexibility Act will introduce new challenges and opportunities for employers and legal practitioners.
Our panel of experts from Northern California discuss the potential effects of this legislation, as well as recent, influential cases and decisions, such as Brinker Restaurant Corp. vs. Supreme Court of San Diego, Harris vs. Superior Court, and Nadaf-Rahrov vs. Neiman Marcus. They are Mike D. Moye and Diane Marie O'Malley of Hanson Bridgett; JoAnna L. Brooks and Bradley Kampas of Jackson Lewis; and Tom McInerney of Ogletree, Deakins, Nash, Smoak & Stewart. The roundtable was moderated by freelance writer Bernice Yeung and reported for Barkley Court Reporters by Krishanna DeRita.
Even the one notable Barack Obama supporter was a defense lawyer whose firm specializes in representing management. These are all fine lawyers, from what I can tell, but the panel is single-minded, and the discussion is one-sided:
It will also be important for the court to articulate, with the Brinker and the Brinkley decisions, a standard that is sufficiently helpful to avoid class certification because, even under Brinker and Brinkley, sufficient room for an allegation of a practice amounts to a policy that would permit class certification. In talking to some plaintiffs' lawyers, there are a number of them who don't view Brinker as the end of the road as much as introducing a twist or turn.
The Court of Appeal (Second Appellate District) basically created such a high standard in Harris that it would be very difficult for any employee to be deemed an administrative employee. Thankfully, the supreme court granted review of it, and the hope is that the supreme court will limit the Court of Appeal decision. As it stands, the decision is not very helpful in the context of class certification; it would make it virtually impossible, except for the most senior employees at a company, to be deemed administratively exempt from overtime.
Nadaf-Rahrov v. Neiman Marcus is an unfortunate case from the Court of Appeal (First Appellate District). ... The recent Court of Appeal decision is certainly not a helpful case for the defense, but it's not surprising. What's troubling to me about this decision is that the court essentially said that when an employer is considering whether or not to terminate someone in this situation, they have to consider whether the company might have an appropriate job opening in a few months such that the employer would have to keep the employee on leave until that potential job possibly opens up.
Some, or even all, of these perspectives may prove correct. But they do not reflect an accurate sampling of views on these subjects, which is what a reader would reasonably expect from something called an Employment Law Roundtable. Moreover, this panel's composition is not an abberation. The two prior roundtables, in August 2008 and February 2008, had similar panels. last If they are going to invite only defense lawyers, and it's nothing more than a forum for promoting the viewpoints of the defense bar, they should at least have the decency to label it the Employment Defense Roundtable.
President Obama has designated Wilma Liebman as the next Chairperson of the National Labor Relations Board. First appointed by Bill Clinton, Liebman has served as a member of the NLRB since November 1997. After her first five-year term expired, she was reappointed by President Bush and confirmed by the Senate to a second and third term. Ms. Liebman is the former Deputy Director of the Federal Mediation and Conciliation Service. To view a sampling of testimony she has given concerning recent NLRB decisions, check out this link.You can read an article she wrote in March 2008 at this link.
Has a person suffered “damage” within the meaning of the Consumer Legal Remedies Act (Civil Code § 1780(a)), such as to allow that person to bring an action under the act, if that person is a party to an agreement containing an unconscionable term, but no effort has been made to enforce the unconscionable term? No; and without such damage, a person lacks standing to bring any action, including one for declaratory relief. Meyer v. Sprint Sprectrum L.P. (2009) __ Cal.4th __.
In this case, plaintiffs sued defendant cellular telephone company alleging that its arbitration agreement and other remedial provisions were unconscionable, although plaintiffs did not otherwise allege that these provisions had been enforced against them or caused them damage. There are two questions before us. First, whether under these circumstances, a plaintiff may obtain injunctive relief to compel the removal of the allegedly unconscionable provisions under the California Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.). Second, whether a plaintiff may obtain declaratory relief pursuant to Code of Civil Procedure section 1060 to declare these provisions unlawful and unenforceable.
We conclude that a plaintiff has no standing to sue under the CLRA without some allegation that he or she has been damaged by an alleged unlawful practice, an allegation plaintiffs do not sufficiently make here. Moreover, we conclude the trial court did not abuse its discretion in ruling that declaratory relief was not appropriate under these circumstances. We therefore uphold the Court of Appeal’s judgment affirming the trial court’s order sustaining a demurrer to plaintiffs’ complaint.
You can download the opinion in Meyer v. Sprint Sprectrum L.P. here in PDF or Word format. The opinion has little applicability to wage-and-hour class actions or labor law claims brought under the UCL, but we've been following it, so we followed it to its conclusion.
A prior release of various labor code claims might preclude later actions brought under the PAGA for the same underlying violations, but cannot preclude subsequent actions based upon continuing or repeated violations that occur after the release date. Deleon v. Verizon Wireless (2009) __ Cal.App.4th __.
Saul Deleon, on behalf of himself and other aggrieved employees, brought this action under the Labor Code Private Attorneys General Act (Labor Code § 2698) against AirTouch Cellular, doing business as Verizon Wireless, alleging various Labor Code violations. The trial court sustained without leave to amend the demurrer brought by Verizon Wireless ruling that Deleon’s lawsuit was barred by the doctrine of res judicata to the extent Deleon seeks relief on behalf of class members who settled a prior class action against Verizon Wireless that adjudicated the same claims. While we agree with the trial court’s analysis, we conclude that it abused its discretion in denying Deleon leave to amend to state claims that accrued after the date of the earlier action. Accordingly, we reverse.
In 2006, a class was certified, for settlement purposes, comprising “all individuals who worked for Verizon Wireless as an hourly commissioned sales employee ... who were subject at any time during the Class Period to Verizon Wireless’ policy providing that sales commission advances are not earned if the customer cancelled service for any reason within 365 days...." The class period was from March 6, 1999 to April 1, 2006. Class members who did not opt out released Verizon from all “Released Claims,” which were defined to include
all claims, actions, suits, causes of action, damages whenever incurred, liabilities of any nature whatsoever, including penalties arising out of “any conduct, events, or transactions occurring during the class period” that were alleged or which were required to have been alleged in the litigation under the doctrine of compulsory joinder in the prior suit.
In exchange for this release, Verizon agreed to pay a maximum settlement of $5.2 million. Deleon and a few others opted out of the settlement. Deleon then brought a complaint under the PAGA on essentially the same factual grounds as the original lawsuit. Deleon contended that the prior action made no PAGA allegations and “hence Plaintiff and the aggrieved employees are entitled to recover the civil penalties available under PAGA.” Verizon demurred, asserting res judicata.
Deleon opposed the motion “for one simple reason,” namely, that the element of privity was lacking. According to Deleon, the State or the Attorney General is the “real party in interest” in a PAGA action, not the employees on whose behalf the PAGA action is brought. Hence, the question is not whether he as private attorney general is in privity with the Evenson plaintiffs, but whether the State is in privity with the Evenson plaintiffs, Deleon reasoned. Also, Deleon argued that the Evenson plaintiffs had never exhausted the administrative prerequisites to sue under PAGA, and so unlike he, they were never authorized to pursue their action on behalf of the State
Next, after assuming the State is the interested party, Deleon argues that the State could not be in privity with the Evenson plaintiffs because Evenson made no attempt to demonstrate compliance with PAGA’s prerequisites. This same contention was rejected by the Federal District Court in Waisbein v. UBS Financial Services, Inc. (N.D.Cal. Dec. 5, 2007, No. C-07-2328) 2007 WL 4287334. There, the plaintiffs filed a prior class action against UBS for violations of various Labor Code provisions and pursuant to PAGA. In the ensuing settlement, the class released UBS for the state law claims. (Id. at p. *1.) As did Deleon here, Waisbein opted out of the class and filed his action against UBS on behalf of himself and “ ‘other aggrieved employees’ ” bringing, among other things, PAGA claims for many similar Labor Code violations. (Ibid.)
The Court of Appeal rejected Deleon's arguments concerning the PAGA claims, but held that Deleon must be given the opportunity to amend his complaint to allege violations of the Labor Code that accrued after the Evenson release period. Therefore, the judgment is reversed and remanded to allow Deleon to amend his complaint to allege violations that occurred after April 1, 2006. Deleon may continue to bring this lawsuit on behalf of himself and those Evenson plaintiffs who opted out of the Evenson settlement.
You can download the full text of Deleon here in PDF or Word format.
One of the few areas in which Governor Arnold Schwarzenegger is interested in enforcing labor law violations is where the violations contribute to the underground economy. To combat such violations, the Economic and Employment Enforcement Coalition conducts regular sweeps of certain high-violation industries, such as the agriculture industry. Last month, in a two-day enforcement sweep, investigators visited 47 agriculture businesses that included nurseries, greenhouses, landscapers, farm labor contractors, dairies and growers. Citations were issued to 30 of those businesses, resulting in $107,500 in penalties for failure to maintain workers’ compensation insurance, failure to provide itemized deductions to employees and failure to provide worker’s permit documentation for minors.
The Supreme Court of California has denied a depublication request by California Employment Law Council in Cundiff v. Verizon California, Inc. (2008) 167 Cal.App.4th 718, a case concerning Code of Civil Procedure § 384 and the disposition of unpaid residuals in claims-made settlements in class action lawsuits. We mentioned the case in a post earlier this month.
We aren't sure why we needed a published opinion to tell us this, but the Court of Appeal has determined that the arbitrator of a labor dispute cannot simply issue an order compelling the employer to make the employee whole, and then leave it to the parties to figure out what that entails. Mossman v. City of Oakdale (2009) __ Cal.App.4th __.
In this twist arising from a contractual arbitration proceeding, we address whether an arbitrator's award that concludes (1) the City of Oakdale violated its own personnel rules, and (2) then directing the employee to be made whole without more, is an enforceable award As sometimes happens, the arbitrator ordered the parties to work out the details of the make-whole remedy, which they did not do. This appeal flows from a judgment denying a motion to vacate the arbitration award pursuant to Code of Civil Procedure section 1286.2 on the ground the arbitrator did not specify an adequate remedy and therefore did not resolve all issues submitted to arbitration. Although we conclude that the arbitrator resolved issues presented in the arbitration, we order the judgment reversed because, in its current form, the judgment is unenforceable. We remand to enable the original arbitrator to determine the appropriate nature of the make-whole remedy.
So the case goes back to the arbitrator, who, it is worth noting, was held not to be bound by a 30-day time limit in the city personnel and arbitration rules. You can download the full text of Mossman here in Word or PDF.
Labor Code § 351 does not prohibit mandatory tip pooling in California casinos. Labor Code § 351 and Labor Code § 450 do not provide for a private right of action, but either may serve as predicates for suits under the unfair competition law (Business & Professions Code § 17200). Lu v. Hawaiian Gardens Casino (2009) __ Cal.App.4th __. Therefore, most of the trial court's order granting summary judgment of this casino worker wage-and-hour class action is upheld.
A triable factual issue about whether some tip pool recipients are “agents” in contravention of section 351 precludes summary judgment of the UCL cause of action based on that statute only. In all other respects, summary judgment was properly granted. Accordingly, we affirm the judgment in part and reverse it in part.
There was a prior District Court case holding that Labor Code § 351 does not contain a private right of action. Matoff v. Brinker Restaurant Corp. (C.D.Cal. 2006) 439 F.Supp.2d 1035. Labor Code § 351 reads:
“No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for. An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.”
Labor Code § 450 reads, in relevant part,
“No employer, or agent or officer thereof, or other person, may compel or coerce any employee, or applicant for employment, to patronize his or her employer, or any other person, in the purchase of any thing of value.”
We still believe that there is a private right of action under Labor Code § 450 as it applies to the compelled purchase of clothing that constitutes a uniform. See Department of Industrial Relations v. UI Video Stores, Inc. (1997) 55 Cal.App.4th 1084, 1088, 1091-1092 (where the employer requires its employees to wear uniforms at work, the employer must furnish the uniform and pay for its upkeep; these payments are "wages." 8 CCR § 11070, ¶9(A).) There is clearly a private right of action to recover wages. Labor Code § 218.
You can read the entire text of Lu v. Hawaiian Gardens Casino here in PDF or Word format.
A regulation promulgated by the city agency in charge of implementing Los Angeles's Living Wage Ordinance (Los Angeles Admin. Code, § 10.37 et seq.) is invalid because it limits the reach of the LWO to exclude workers who are covered by the plain language of the LWO. Aguiar v. Superior Court (Cintas) (2009) __ Cal.App.4th __.
Two years ago, in the same case, the Court of Appeal reversed and remanded an order denying class certification. Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121. However, that appeal dealt only with certification, and did not address the underlying validity of the so-called "20-hour rule" that spawned the litigation (“the validity of the 20-hour rule need not be resolved at this stage of the litigation and is not a bar to class certification because the putative class can be divided into subclasses of those employees who worked at least 20 hours per month on the DWP contracts and those who did not”). The dispute centered upon Regulation 5, which imposed limitations and exclusions to the LWO for certain workers.
Former Regulation No. 5, promulgated by the city agency entrusted with implementing the LWO, provided, prior to its rescission in 2006, if an employee of a private contractor works at least 20 hours during the month on a city service contract, he or she must be paid the appropriate wages mandated by the LWO for each hour worked on the subject agreement. If, however, the employee works less than 20 hours per month on a city service contract, he or she is not eligible for any LWO wages.
Pursuant to the parties’ stipulation, the trial court had vacated trial and scheduled a hearing to decide certain legal issues, including, most significantly, the threshold issue of Regulation 5’s validity. On May 21, 2008 the trial court held the hearing and found Regulation 5 valid, concluding it “appears to properly clarify the LWO.” The Second District reversed:
The plain language of the LWO, coupled with its legislative history, reflect an unmistakable intent to afford a living wage to employees of city service contractors who spend any time working on city service contracts, no matter how much or how little that participation may be. By limiting LWO eligibility to those who work 20 hours a month or more on city contracts and the amount of LWO wages to the hours actually spent on the city contract, Regulation 5 directly conflicts with the LWO’s articulated remedial purpose of raising wages for low wage service workers and ameliorating the burden placed on city social services caused by payment of inadequate compensation. Because the trial court erred in concluding Regulation 5 was a valid and enforceable clarification of the LWO, we grant the petition for writ of mandate ... and direct respondent Los Angeles Superior Court to vacate its order upholding Regulation 5 and to enter a new and different order invalidating Regulation 5 on the ground it conflicts with the LWO.
You can download the full text of the new opinion here in PDF or Word format.
Last week, the SCOTUS held that unions representing public employees can collect litigation costs as part of a compulsory fee authorized under state law, even if the litigation does not directly involve the collective bargaining unit. Locke v. Karass (2009) __ U.S. __. The vote was 9-0 with Justice Breyer writing the majority opinion and Justice Alito adding a concurring opinon in which Roberts and Scalia joined. The question presented was:
In Ellis v. Railway Clerks, this Court unanimously “determined that the [Railway Labor Act], as informed by the First Amendment, prohibits the use of dissenters’ [union] fees for extraunit litigation.” Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507, 528 (1991) (opinion of Blackmun, J., citing Ellis, 466 U.S. 435, 453 (1984)). In Lehnert, a four-member plurality therefore held “that the Amendment proscribes such assessments in the public sector.” Id. Moreover, Justice Scalia’s separate opinion, concurring in part in the judgment announced by Justice Blackmun, reasoned that “there is good reason to treat [Ellis and the Court’s other statutory cases] as merely reflecting the constitutional rule.” Id. at 555. May a State, nonetheless, consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of agency fees for purposes of financing a monopoly bargaining agent’s affiliates’ litigation outside of a nonunion employee’s bargaining unit?
The answer was yes, albeit a narrowly tailored yes.
the First Amendment permits a local union to charge nonmembers for national litigation expenses as long as (1) the subject matter of the (extra-local) litigation is of a kind that would be chargeable if the litigation were local, e.g., litigation appropriately related to collective bargaining rather than political activities, and (2) the charge is reciprocal in nature, i.e., the contributing local reasonably expects other locals to contribute similarly to the national’s resources used for costs of similar litigation on behalf of the contributing local if and when it takes place.
...
Applying Lehnert’s standard to the national litigation expenses at issue demonstrates that they are both appropriately related to collective bargaining activities and reciprocal, and are therefore chargeable. First, the record establishes that the kind of national litigation activity for which the local charges nonmembers concerns only those aspects of collective bargaining, contract administration, or othermatters that the courts have held chargeable. No one here denies that under Lehnert this kind of activity bears an appropriate relation to collective bargaining. See, e.g., 500 U. S., at 519. Second, although the location of the litigation activity is at the national (or extra unit) level, such activity is chargeable as long as the charges are for services that may ultimately inure to local members’ benefit by virtue of their membership in the national union. Ibid. Respondent local says that the payment of its affiliation fee gives locals in general access to the national’s financial resources—compiled via contributions from various locals—which would not otherwise be available to the local when needed to effectively negotiate, administer, or enforce the local’s collective bargaining agreements. Because no one claims that the national would treat respondent local any differently from other locals in this regard, the existence of reciprocity is not in dispute. Pp. 11–13. 498 F. 3d 49, affirmed.
You can download the Locke v. Karass opinion in PDF directly from the SCOTUS website at this link. The opinion will not affect workers in right-to-work states, as those workers are generally not subject to mandatory union dues or agency fees.
The Second District Court of Appeal has modified its opinion and denied rehearing in Marin v. Costco Wholesale Corp. (2008) 169 Cal.App.4th 804. The modification does not change the judgment. The modification is as follows:
It is ordered that the opinion filed herein on December 23 2008, be modified as follows:
- On page 13, the second full paragraph is modified to read: In sum, no California court decision, statute, or regulation governs bonus overtime, the DLSE Manual sections on the subject do not have the force of law, and the DLSE advice letters on the subject are not on point. Thus, there is no controlling California authority apart from the directive that overtime hours be compensated at a rate of no less than one and one-half times the regular rate of pay. (Lab. Code, § 510, subd. (a).) In deciding whether defendant’s bonus plan fulfills that directive, we are persuaded that the DLSE Manual provisions for overtime on production bonuses set forth a valid formula. (See Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 563 [court may adopt a DLSE statutory interpretation embodied in a void regulation if it independently determines that the interpretation is correct].) We conclude that defendant’s plan is consistent with that formula, and thus that the plan does not violate California law.
- On page 14, the third sentence in the first full paragraph is modified to read as follows (the citation following the sentence is unchanged): Therefore, as one commentator has observed, overtime on a bonus based on hours worked should be calculated in the same manner as overtime on a bonus based on production, under the formula set forth in section 49.2.4 of the Manual.
There is no change in the judgment. The petition for rehearing is denied.
We discussed the original opinion in a recent post found at this link.
The First District Court of Appeal has held that penalty wages (waiting time penalties) are not recoverable under the Unfair Competition Law as restitution. Pineda v. Bank of America (2009) __ Cal.App.4th __.
Plaintiff Jorge A. Pineda appeals an adverse judgment entered after the trial court granted a motion for judgment on the pleadings by defendant Bank of America, N.A. He contends that the court applied the wrong statute of limitations to his claim under Labor Code section 203 for penalties incurred for the late payment of wages; that the court erred in concluding that section 203 penalties are not restitution within the meaning of Business and Professions Code section 17203; and that the court abused its discretion in denying him leave to amend. ... In the published portion of the opinion we affirm the trial court’s conclusion that section 203 penalties may not be recovered as restitution under Business and Professions Code section 17203.
The plaintiff acknowledged that all wages due him were paid before the complaint was filed, therefore, the Court of Appeal followed McCoy v. Superior Court(2007) 157 Cal.App.4th 225, and rejected his contention that the court erred in applying the one-year statute of limitations on actions to recover penalties (Code of Civil Procedure § 340(a)). Furthermore, the Court of Appeal found that the trial court did not abuse its discretion in denying plaintiff leave to amend his putative class action complaint to substitute or add a plaintiff for whom the waiting time penalties would be timely under the one-year statute.
the dictum in Murphy, supra, 40 Cal.4th at pages 1108-1109 (“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”) does not require a contrary conclusion. (McCoy, supra, 157 Cal.App.4th at p. 233.)
...
Leave to amend a complaint is thus entrusted to the sound discretion of the trial court. ‘. . . The exercise of that discretion will not be disturbed on appeal absent a clear showing of abuse. More importantly, the discretion to be exercised is that of the trial court, not that of the reviewing court. Thus, even if the reviewing court might have ruled otherwise in the first instance, the trial court’s order will yet not be reversed unless, as a matter of law, it is not supported by the record.’ ” (Haley v. Dow Lewis Motors, Inc. (1999) 72 Cal.App.4th 497, 506.) Here, the trial court explained that “given that plaintiff has had several months to locate a substitute plaintiff/class representative and had thus far been unable to do so, if I granted leave to amend, this case would effectively become a lawsuit in search of a plaintiff, which while within my discretion to allow, I fail to see why I should. Plaintiff and his counsel have known since late November 2007 [when McCoy was decided] that there were serious questions as to the viability of the plaintiff as a class representative.”
The opinion was issued in December and ordered published last week. You can download the full text of Pineda here in PDF or Word format.
The Second District Court of Appeal has reversed Los Angeles County Superior Court Judge Michael L. Stern's order denying certification of a class action brought by a limousine driver against his employer for wage and hour violations arising from on-call time and related claims. In Ghazaryan v. Diva Limousine, Ltd. (2009) __ Cal.App.4th __, the court held that a proposed class of all drivers employed by the company during a specific period was ascertainable; a sufficient community of interest existed for class certification; and that a class action was the superior method for resolving the dispute.
Diva operates a limousine service in the Greater Los Angeles area. At the time Ghazaryan filed his class certification motion in May 2006, Diva indicated it had employed approximately 190 drivers during the previous four years; approximately 100 still worked for the company. On any given day Diva places between 40 to 45 drivers in the field, and those drivers are dispatched on 140 to 150 trips or runs. However, the number of trips can fluctuate between 100 on a slow day and more than 200 on days when special events occur (for example, the Academy Awards). Typically, Diva notifies drivers of their first few assignments before their shift begins in part to allow them to plan their gap time. Approximately 75 percent of Diva's drivers have permission to take their Diva vehicles home and commute to their first run using their Diva vehicles. After these initial runs have been completed, drivers are assigned by the dispatcher to additional trips according to location, availability and fairness among drivers. On a busy day a driver may receive six to eight assignments. On a slow day that number often falls below five trips. Drivers have no way of predicting the length of any particular period of gap time although, on occasion, dispatchers may accommodate requests to schedule assignments around the drivers' personal appointments. According to anecdotal and statistical estimates submitted by both sides, it is clear drivers were placed on-call daily for substantial periods of time.
...
Ghazaryan filed his lawsuit in May 2006 alleging Diva by its practice of paying drivers by the job, not by the hour, had failed to pay earned wages and overtime or to provide required rest breaks and meal periods in violation of multiple provisions of the Labor Code and implementing administrative regulations. He further also alleged Diva had engaged in unlawful business practices under Business and Professions Code section 17200 et seq. Although Ghazaryan's complaint originally identified one broad class with four subclasses, his motion sought to certify only two overlapping subclasses: (1) based on Diva's alleged failure to pay earned overtime and straight time, “All current and former employees of Defendant who worked as Limousine Drivers during the period of May 10, 2002 to the present”; and (2) targeting Diva's failure to provide mandatory rest breaks, “All current and former employees of Defendant who work as Limousine Drivers at any time during the period of May 10, 2002 to the present, worked one or more four-hour increments of time without being given a rest break for each such increment and who were not properly compensated therefor[ ].”
...
Diva opposed class certification principally because of the purported difficulties in identifying eligible members of the class and assessing the validity of Diva's compensation policy as applied to different drivers who may or may not have used their gap time for personal pursuits. Diva explained it has several categories of drivers, some of whom are paid for gap time. Thus, dedicated event drivers, L'Ermitage Hotel drivers and organ transplant drivers are paid on a strictly hourly basis including any on-call time. Diva also submitted declarations from a number of drivers who typically use unpaid gap time for their own purposes, such as working out at the gym, napping or eating at home or running personal errands. Several of those drivers stated they are not in favor of Ghazaryan's lawsuit and do not want Diva to change the way it compensates its drivers.The trial court found these declarations convincing and denied the motion on the ground certification would raise too many individualized issues.
Held: the trial court utilized improper criteria in analyzing the class certification request by evaluating class suitability as dependent on determination of the merits rather than evaluating whether the theory advanced by plaintiff was amenable to class treatment; and plaintiff proposed two classes which satisfied the ascertainability, community of interest and superiority of class treatment requirements. Reversed and remanded.
The court spent considerable time discussing the interpretation of the term “hours worked” under IWC Wage Order No. 9, which defined it as "time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” The court also considered two opinion letters from the Division of Labor Standards Enforcement ("DLSE").
The letter dated March 31, 1993, acknowledges the inquiry is “highly fact-driven,” but “[t]he bottom line consideration is the amount of ‘control’ exercised by the employer over the activities of the worker.... [I]mmediate control by the employer which is for the benefit of the employer must be compensated.” In a subsequent advisory letter dated December 28, 1998,, the DLSE summarized the factors relevant to this inquiry: “1. Whether there are excessive geographic restrictions on the employee's movements[;][¶] 2. Whether the frequency of calls is unduly restrictive[;][¶] 3. Whether a fixed time limit for response is unduly restrictive[;][¶] 4. Whether the on-call employee can easily trade his or her on-call responsibilities with another employee[;] and [¶] 5. Whether and to what extent the employee engages in personal activities during on-call periods.”
There is no question class treatment constitutes the superior mode of resolving Ghazaryan's claims in this action. Based on the evidence submitted by Diva in opposition to the motion, its compensation policy has been carefully drafted; and Diva very well may find its policy upheld as reasonable under the existing DLSE standard. We see no advantage to either party to resolution of this question on a piecemeal basis and agree with Ghazaryan such a prospect would jeopardize the ability of employees to find competent representation if restricted to their own individual claims. (See Harper v. 24 Hour Fitness (2008)167 Cal.App.4th 966, 976, 84 Cal.Rptr.3d 532.) In light of this conclusion, we need not accept Ghazaryan's invitation to decide whether a trial court has a duty to modify the class definition put forth by counsel for the putative class.
You can download the full text of Ghazaryan here in Word or PDF. Perhaps in the next appeal, we will get an interesting ruling on the merits, answering the question of whether an employer is obligated to pay an employee for such on-call time.
This is our 1,000th post. There isn't much to it, other than to mention that it is our 1,000th post.
CAOC's Third Annual Class Action Seminar: Class Action Hurdles From The Plaintiff’s Perspective will take place next Wednesday, January 28, 2009 at the Sir Francis Drake Hotel,450 Powell Street, San Francisco. Topics will include:
The seminar is presented by Consumer Attorneys of California College of Trial Arts and the San Francisco Trial Lawyers Association, sponsered by Gilardi & Company LLC and co-sponsored by the Bar Association of San Francisco and The Impact Fund. Attendees will received four hours of MCLE credit, including one hour of ethics. For a printable registration form, download the PDF at this link, or register online at this link.
The Second District Court of Appeal has further clarified the broad discovery rights that class action litigants enjoy. In Crab Addison v. Superior Court (2008) 169 Cal.App.4th 958, the employer's tactics, after a wage-and-hour class action was filed, included having employees sign forms indicating whether or not they wanted their personal information disclosed to third parties. Not surprisingly, many employees chose the privacy option. This, argued the employer, meant that the plaintiffs could not have access to such personal data as the putative class members' contact information, because the completion of those forms gave the employees a "heightened expectation of privacy as to their contact information."
The trial court weighed the privacy interests of potential class members against the compelling need for discovery of their names and contact information, and found that plaintiffs were entitled to the requested information subject to an ‘opt-out’ notice. The employer sought a writ of mandate directing the trial court to vacate the two discovery orders that pertained to the issue. The Court of Appeal denied the petition. The primary issue on appeal was whether Puerto v. Superior Court (2008) 158 Cal.App.4th 1242 applied to the case against Crab Addison (CAI).
There are two significant differences between Puerto and the instant case. First, in Puerto, the employer voluntarily disclosed the identities of the witnesses but sought to protect addresses and telephone numbers. Here, CAI seeks to protect identities as well as addresses and telephone numbers. Second, in Puerto there was no release form like the one utilized by CAI. We attach no great significance to the fact that CAI did not voluntarily disclose the identities of the witnesses whose contact information it sought to protect. As noted in Pioneer Electronics (USA), Inc. v. Superior Court [(2007) 40 Cal.4th 360], at page 373, “[c]ontact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case. [Citations.]
...
This brings us to the key question in this case: the effect of the release forms. CAI argues that these forms gave their employees a heightened expectation of privacy in their contact information, requiring that the contact information be given greater protection and making an “opt in” notice procedure proper. We are unconvinced by this argument. ... Gentry also highlights the dangers of placing in the employer’s hands the responsibility for notifying employees of the pending litigation and requiring employees to opt in to the litigation. Current employees may decline to opt in to the litigation for fear of retaliation by their employer. This in turn could immunize the employer from liability for violation of statutory wage and overtime requirements. This would violate the public policy protecting employee rights. The public policy concerns expressed in Gentry weigh against enforcing a release form that may have the effect of waiving an employee’s right to notice of a pending class action lawsuit concerning the employer’s alleged violations of overtime and wage statutes. Gentry did not stop its analysis with public policy concerns, however. ... The language of the release forms was not sufficient to apprise employees that by checking the “no” box they were declining to have their contact information released to “plaintiffs seeking relief for violations of employment laws in the workplace that they shared.” (Puerto v. Superior Court, supra, 158 Cal.App.4th at p. 1253.) The release forms stated that CAI “may be asked to provide such information in the context of legal proceedings, including class action lawsuits.” We do not believe that a lay employee reading this language would realize that the reference to “class action lawsuits” meant lawsuits intended to vindicate their rights, rather than lawsuits by third parties against CAI that would be of no benefit to the employees. In other words, any “heightened” expectation of privacy the employees may have does not extend to situations in which CAI is required by law to disclose their contact information, including in the course of litigation.
Furthermore, reading the note in the context of the release form as a whole, an employee reasonably would interpret the form to mean that checking the “no” box meant that CAI would not provide employee contact information to third parties seeking it for use “in the context of legal proceedings, including class action lawsuits,” unless compelled to do so by law. The trial court’s discovery order falls within this exception. Thus, the court followed Puerto and upheld the opt-out notice procedure.
The form, for what it's worth, reads as follows:
RELEASE OF CONTACT INFORMATION
From time to time, Joe’s Crab Shack (the “Company”) may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.
We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.
___ No, I do not consent to the Company’s disclosure of my contact information to third parties.
___ Yes, I consent to the Company’s disclosure of my contact information to third parties.
___ I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.
You can download the full text of Crab Addison here in PDF or Word format. A petition for rehearing is pending. A request for leave to seek a modification of the opinion was denied.
Unless we find something really interesting that we haven't seen before (perhaps a District Court or out-of-state decision), this is the last of the 2008 cases we'll be discussing. Next week, we'll start posting about the first half-dozen wage and hour cases of 2009.
Public school adult education teachers are exempt under IWC Wage Order 4, and Los Angeles Unified School District's pay structure for them has been found to comply with Education Code § 45025. Kettenring v. Los Angeles Unified School District (2008) 167 Cal.App.4th 507.
LAUSD pays adult education teachers a regular periodic amount, identified as a “salary” in the applicable collective bargaining agreement, figured by multiplying a flat hourly rate for each hour of classroom teaching. LAUSD does not pay for additional time spent outside of classroom instruction for preparation, grading or other tasks in connection with the class. Ernest Kettenring, an adult education teacher in the District, filed a class action lawsuit alleging that the compensation structure violates state minimum wage laws. At the parties’ request, the trial court ruled on “threshold legal issues” based on stipulated facts, and determined that the Labor Code’s minimum wage provisions did not apply to the District. Kettenring then filed a petition for a writ of mandate arguing that the structure as applied to part-time adult education teachers violated the Education Code. The trial court denied the petition. Kettenring appealed. We conclude that adult education teachers fall within the professional exemption to Wage Order 4-2001. We also affirm the court’s conclusion that the salary structure does not violate Education Code § 45025, which requires proportional compensation for part-time employees.
You can download the full text of Kettenring here in PDF or Word format. A petition for review was denied by the Supreme Court.
By a vote of 61-36, the Senate has passed the Lilly Ledbetter Fair Pay Act (S. 181). As explained in a press release from the bill’s lead sponsor, Senator Barbara Mikulski (D-MD), the bill will “remedy the 2007 Ledbetter v. Goodyear Tire & Rubber Co. decision in which a divided Supreme Court held that workers must sue for pay discrimination within 180 days after the original pay-setting decision, no matter how long the unfair pay continues.” It amended Title VII of the Civil Rights Act of 1964 so that the statute of limitations runs from the date of the actual payment of a discriminatory wage, not just from the time of hiring. Thus, employees can seek a remedy based on each discriminating paycheck, not just during the first 180 days of pay discrimination.
All 36 nays were cast by Republicans. Five Republicans voted for the bill. The bill does not have to be returned to the House because the Senate approved the bill in the same form passed by the House. Here is the text of the bill:
Democratic Policy Committee Bill Summary
Republican Policy Committee Bill Summary
We expect President Obama to sign the bill promptly.
A police officer's activity of donning and doffing protective equipment constitutes an integral and indispensable part of officer's principal activities; it is not preliminary or postliminary within meaning of Portal-to-Portal Act, as required to support officer's claim for compensation for such activity. Because the equipment allowed police department to insure that officers were kept safe, allowed officers to complete their principal duties, was required to be worn, and, for all practical purposes, had to be donned and doffed at assigned station, the time spent donning and doffing that equipment is compensable under the FLSA. Maciel v. City of Los Angeles (C.D. Cal. 2008) 569 F.Supp.2d 1038.
However, several recent District Court cases have come down with widely varied holdings in the past two years, e.g.,
There will be more to come in 2009 or 2010, including possibly a decision by the 9th Circuit on these issues.
Another trial court denial of class certification was reversed in Medrano v. Honda of North Hollywood (2008) 166 Cal.App.4th 89, a consumer case involving the sale of new and used Honda, Suzuki and Yamaha motorcycles, allegedly in violation of sections 11712.5 and 24014 of California’s Vehicle Code, which require sellers to attach a label, or “hang tag”, setting forth the manufacturer’s suggested retail price for the motorcycle and defendant’s added charges.
The class representative brought claims under California’s Unfair Business Practices Act and its Consumer Legal Remedies Act, seeking injunctive and restitutionary relief. The trial court denied class certification on the grounds that dealers are not obligated to attach hang tags unless they are supplied by the manufacturer, the sales agreement plaintiff signed set forth the dealer-added costs, putting her on notice of those costs, and the class was not ascertainable because defendant’s records did not indicate which motorcycles had hang tags attached and which did not.
Citing well-worn authorities, the Court of Appeal rejected each of the three bases. The defenses on the merits were not grounds for denial of certification, and on the ascertainability issue, a class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description. Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828. Therefore, the order denying certification was reversed, and on remand, the trial court is directed to certify the class.
You can download the full text of the opinion here in PDF or Word format. A petition for review was denied by the Supreme Court.
If the only claim invoking federal court jurisdiction fails, do not count on the court exercising supplemental jurisdiction over remaining state law claims. Rojas v. Brinderson Constructors Inc. (C.D. Cal. 2008). 567 F.Supp.2d 1205.
In Rojas, a wage and hour class action, the defendant moved for a dismissal under Rule 12(b)(6) on the plaintiff's Labor Code § 2810 claim, which the district court had previously dismissed with leave to amend. That claim was the only one, among plaintiff's six claims, over which the District Court had original jurisdiction. Judge Otis D. Wright II granted the motion, holding that the plaintiff failed to state a claim on which relief could be granted. That left nothing but five causes of action over which the U.S. District Court lacked original jurisdiction. "Where the federal head of jurisdiction has vanished from the case, and there has been no substantial commitment of judicial resources to the nonfederal claims, it is … akin to making the tail wag the dog for the District Court to retain jurisdiction." Murphy v. Kodz (9th Cir. 1965) 351 F.2d 163, 167-68. Therefore, the court declined to exercise supplemental jurisdiction over the state court claims, and the entire case was ordered dismissed.
Plaintiffs fail to state a claim under California Labor Code section 2810, and this sixth cause of action is hereby DISMISSED WITHOUT LEAVE TO AMEND. The court declines to exercise supplemental jurisdiction over the remaining state law claims against Brinderson and, accordingly, claims one through five are also DISMISSED. Brinderson’s motions to dismiss, stay and/or strike are all rendered MOOT.
You can download a copy of the Rojas order here in PDF.
Where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing his regular hourly rate of pay and overtime compensation. No difficulty arises in computing overtime compensation if the bonus covers only one weekly pay period. The amount of the bonus is merely added to the other earnings of the employee (except statutory exclusions) and the total divided by total hours worked. Under many bonus plans, however, calculations of the bonus may necessarily be deferred over a period of time longer than a workweek. In such a case the employer may disregard the bonus in computing the regular hourly rate until such time as the amount of the bonus can be ascertained. Until that is done he may pay compensation for overtime at one and one-half times the hourly rate paid to the employee, exclusive of the bonus. When the amount of the bonus can be ascertained, it must be apportioned back over the workweeks of the period during which it may be said to have been earned. The employee must then receive an additional amount of compensation for each workweek that he worked overtime during the period equal to one-half of the hourly rate of pay allocable to the bonus for that week multiplied by the number of statutory overtime hours worked during the week. 29 C.F.R. § 778.209(a).
Applying that standard, the Court of Appeal in Marin v. Costco Wholesale Corp. (2008) 169 Cal.App.4th 804 reviewed the bonus/overtime payment plan of Costco, and reversed a $5.3 million class action judgment.
This case concerns the lawfulness of defendant Costco Wholesale Corporation’s formula for computing overtime compensation on semi-annual bonuses paid to hourly employees. The trial court determined that defendant’s bonus overtime formula for the class of employees who qualify for the maximum base bonus (plaintiffs) violates California law, and ordered use of a different formula. We conclude that defendant’s formula violates neither California nor federal law, and reverse the judgment with directions to enter judgment for defendant.
The description of the bonus and overtime payment plan goes on for several pages. If you have a bonus/overtime case that could be affected by the holding in Marin v. Costco, you can download the full text of the opinion here in PDF or Word format. A petition for rehearing is pending. A petition for review would appear likely.
An association for county deputy sheriffs brought an action on behalf of retired members who were on disability leave in the year prior to their retirement, challenging Los Angeles County's policy that denied them the option of cashing out accrued vacation pay when they retired immediately after their disability leave. This policy caused a reduction in retirement benefits as compared to other retiring members. The trial court found for the plaintiffs, and the Court of Appeal affirmed. The policy violated workers' compensation statutes that entitle public safety officers to take leaves of absence for disability without any loss of salary. Los Angeles County Professional Peace Officers' Ass'n v. County of Los Angeles (2008) 165 Cal.App.4th 63.
Labor Code section 4850 provides that when a public safety officer (like each plaintiff here) "is disabled, whether temporarily or permanently, by injury or illness arising out of and in the course of his or her duties, he or she shall become entitled, . . . to a leave of absence while so disabled without loss of salary" ... The principle question in this case is whether Los Angeles County 's policies concerning payment for excess accumulated vacation hours violate section 4850. This is the problem: normally, a deputy Sheriff who has accumulated more than 320 hours of vacation time may defer the hours in excess of 320 to the following year. If the excess hours are not used by the end of that year, in reliance on the County Code , the County pays the deputy for the hours. If this "cash out" payment takes place during the deputy's final compensation measurement period (the period used to determine salary for purposes of retirement benefits), the cash out payment is "pensionable income." It is reported to the Los Angeles County Employees' Retirement Association and is part of the calculation of the deputy's salary for purposes of retirement benefits. ( Ventura County Deputy Sheriffs' Assn. v. Board of Retirement (1997) 16 Cal.4th 483 .) Such a cash out payment will effectively increase the deputy's retirement benefit for years to come. However, a deputy who retires in the year following a 4850 leave, that is, the year following a work-related injury, is compensated for the excess hours differently. The County will not cash out deferred excess hours if the deputy is on 4850 leave at any time during the deferral year. The hours remain in the deputy's account ( Los Angeles County Professional Peace Officers' Assn (2004) 115 Cal.App.4th 866, 868 ), but if the deputy retires in the year following 4850 leave, he or she will never have the opportunity to cash out or use the hours. That deputy is compensated for the hours at retirement. Under established law, that payment is not pensionable income. ( In re Retirement Cases (2003) 110 Cal.App.4th 426, 474-477 .) It is not reported to the Los Angeles County Retirement Association and does not become part of the pension calculation. This means that, for example, a deputy who has accumulated excess vacation hours, but who has never been injured on duty, might collect more in retirement benefits than a deputy who has been injured on duty, even if the two have the same employment history in terms of rank, years of experience, and so on. It also means that a deputy who retires after taking leave due to a non-job-related injury, perhaps a ski accident, might collect more than a deputy who retires after having suffered an injury in the course of his or her duties, even if the deputies are in other respects identical. Plaintiffs' theory is that this different treatment violates section 4850. The trial court agreed, as do we.
You can download the full text of the opinion here in PDF or Word format. A modification can be found at this link. There was no petition for review filed.
If you lose a summary adjudication motion and motion for class certification, you cannot settle all of your individual claims and stipulate to the entry of a judgment bawed upon that settlement while still preserving your right to appeal the summary adjudication and class certification issued. If you try, your appeal will be dismissed as moot. Larner v. L.A. Doctors Hosp. Assocs. (2008) 168 Cal.App.4th 1291.
Josephine Larner, a nurse, sued her former hospital employer for violation of overtime laws, purporting to represent a class of current and former nonexempt employees. The trial court granted in part the hospital’s motion for summary adjudication of Larner’s claim that the hospital failed to pay for overtime hours. Larner then amended her complaint, stating individual and class claims for failure to properly calculate overtime pay rates and for failure to keep accurate and complete wage records. The trial court denied Larner’s motion for class certification. The parties entered into a settlement agreement and stipulated to the entry of final judgment in favor of the hospital. Larner appeals both the summary adjudication of her overtime hours claim and the denial of her certification motion. We dismiss the appeal as moot.
“Generally, courts decide only ‘actual controversies’ which will result in a judgment that offers relief to the parties. [Citations.] Thus, appellate courts as a rule will not render opinions on moot questions . . . . The policy behind this rule is that courts decide justiciable controversies and will normally not render advisory opinions. [Citations.] [¶] One such event occurring for which a reviewing court will dismiss an appeal is when the underlying claim is settled or compromised.” (Ebensteiner Co., Inc. v. Chadmar Group (2006) 143 Cal.App.4th 1174, 1178-1179.) When a case has settled, dismissal of the appeal is the appropriate disposition because “settlement operates as a merger and ban as to all preexisting claims and those alleged in the lawsuit that have been resolved.” (Id. at p. 1179, citing Armstrong v. Sacramento Valley R. Co. (1919) 179 Cal. 648, 651].)
This may not mean that a plaintiff cannot settle a case individually and still proceed with some classwide claims on behalf of others. See La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 871. Individual relief to the named plaintiffs in a class action does not, in itself, render those plaintiffs unfit per se to represent the class. Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582, 594. A defendant’s offer to settle, by waiving its right to enforce a complained-of clause in a contract against class representatives, or by offering the named plaintiff reimbursement of fees the class action challenged as improperly deducted, does not necessarily end the class action. Even after an offer of individual relief, the named plaintiff may retain an interest in proceeding on behalf of the other members of the class who are similarly situated. If, because of such relief, the court concludes that the named plaintiff is no longer a suitable representative, the court should grant the plaintiff leave to amend the complaint to redefine the class, or add new class representatives, or both.
You just can't do it by stipulating to a final judgment on the settlement after losing your class certification motion, and then appealing, as they did here. You can download the full text of Larner here in PDF or Word format.
Peculiar procedural detail: "After a number of continuances, the court set a final trial date of July 11, 2007 on Larner’s remaining claims. On May 23, 2007, Larner moved for certification of two separate classes, one for each of her two remaining issues: improper calculation of overtime rates and failure to keep accurate and complete wage records. The trial court denied the motion on June 20, 2007, because the motion was unduly tardy, because Larner’s claims were not typical of the proposed classes, and because the class definitions were overbroad." A certification motion set for hearing three weeks before trial? That must have been a nightmare.
Speaking of better labor laws, here are the recent vote tallies for H.R. 11 (Ledbetter) and H.R. 12 (Paycheck Fairness). The votes were largely along party lines. To successfully filibuster these bills in the Senate, the GOP will actually need a higher percentage of votes in the Senate than it got in the House.
Martin Luther King, Jr. is remembered by all Americans as a champion of racial equality. Less widely known is that he was equally concerned with workers' rights and fair wages. Most well-informed Americans know that King was assassinated in Memphis on April 4, 1968. Not as many are aware that the reason he was in Memphis was to show support for underpaid city garbage workers.
Memphis sanitation workers earned only about $1.70 per hour, on average. Almost half made so little that they qualified for welfare benefits despite having jobs. On February 12, 1968, approximately 1,300 garbage workers walked off their jobs and demanded recognition of the American Federation of State, County and Municipal Employees, AFSCME as their collective bargaining unit. They sought, among other things, the right to overtime pay, and a wage increase.
On March 18, Martin Luther King spoke at a rally of 17,000 supporters, drawing national attention to the strike.
"It is criminal to have people working on a full-time basis ... getting part-time income ... We are tired of working our hands off and laboring every day and not even making a wage adequate with daily basic necessities of life."
King called for a March to take place ten days later. After King returned to lead the march, President Lyndon Johnson and AFL-CIO President George Meany tried to intervene, but were rebuffed by Memphis Mayor Henry Loeb. King returned again to Memphis on Wednesday, April 3. He delivered his final speech before a gathering of 10,000 supporters at the Masonic Temple.
"Memphis Negroes are almost entirely a working people. Our needs are identical with labor's needs -- decent wages, fair working conditions, livable housing, old age security, health and welfare measures, conditions in which families can grow, have education for their children and respect in the community. That is why Negroes support labor's demands and fight laws which curb labor. That is why the labor-hater and labor-baiter is virtually always a twin-headed creature spewing anti-Negro epithets from one mouth and anti-labor propaganda from the other mouth."
"I would like to live a long life. Longevity has its place. But I'm not concerned about that now. I just want to do God's will. And he's allowed me to go up to the mountain, and I've looked over, and I've seen the promised land. I may not get there with you. But I want you to know tonight that we as a people will get to the promised land."
The following morning, James Earl Ray shot King on the balcony outside his room at the Lorraine Hotel. Twelve days after the assassination, union leaders and Memphis officials reached an agreement that brought better working conditions and wage increases of 15 cents per hour before the end of 1968.
In 1966, King had called upon Congress to increase the minimum wage.
"We know of no more crucial civil rights issue facing Congress today than the need to increase the federal minimum wage and extend its coverage. ... A living wage should be the right of all working Americans."
The federal minimum wage reached its historic high in 1968. Adjusted for inflation, it was equivalent to more than $9.00 today. As tomorrow's inauguration of Barack Obama demonstrates, the fight for racial equality has taken great strides in the past 40 years. The fight for fair pay for working class Americans, less so. As you remember Dr. Martin Luther King, Jr. today, recall that we didn't just lose a champion for racial equality when he died; we also lost a champion of the working man.
Does the California Labor Code protect out-of-state residents who work in California? Can the California Unfair Competition Law be used as a long-arm statute to pursue remedies for FLSA violations that occur outside of California? Yes. And no. Non-Californians may invoke the Labor Code or the UCL for labor they perform in California, but cannot assert a cause of action under California’s UCL for violations of the FLSA which occurred outside the State of California. Sullivan v. Oracle Corp. (9th Cir. 2008) 547 F.3d 1177, 14 Wage & Hour Cas.2d (BNA) 321.
We reverse the district court’s grant of summary judgment on Plaintiffs’ first two claims. We hold that California’s Labor Code applies to work performed in California by nonresidents of California. We affirm the district court’s grant of summary judgment on Plaintiffs’ third claim. We hold that § 17200 does not apply to allegedly unlawful behavior occurring outside California causing injury to nonresidents of California.
You can download the full text of the case here in PDF.
Effective January 19, 2009, San Francisco employers are required to offer a commuter benefits program to encourage employees to use public transit or vanpools. Employers can offer commuter tax benefits as a payroll deduction, a subsidized benefit, or a combination of the two. Employers can administer the benefit themselves, purchasing the transit tickets or vouchers each month and distributing them to employees, or may hire a third-party administrator to manage their program.
The new program requires all employers in San Francisco that have 20 or more persons performing work for compensation on a full-time, part-time, or temporary basis and who work an average of at least 10 hours a week while working for the same employer within the previous calendar month, to offer one of the following options:
As far as we've heard, the ordinance is the first of its kind. Employers who fail to comply may be issued administrative citations and fines by San Francisco’s Department of the Environment. You can find more information on the Commuter Benefits Ordinance on San Francisco's Department of Environment website.
Code of Civil Procedure § 384 governs the disposition of unpaid residuals in class action lawsuits. When a claims-made settlement results in some of the checks being returned as undeliverable, and some of the checks are never cashed, the unpaid funds constitute "unpaid residue" required to be paid under Code of Civil Procedure § 384 to "nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons," notwithstanding the claims-made nature of the settlement. Cundiff v. Verizon California, Inc. (2008) 167 Cal.App.4th 718.
In Cundiff, the parties reached an agreement for a claims-made settlement. Some of the class members submitted claims, but then did not receive or did not cash their settlement checks. At the end of the administration, more than $400,000 in funds remained undisbursed. Verizon wanted that money returned to Verizon, to be treated as if the intended recipient of the uncashed checks had never submitted a claim in the first place. Instead, the money must go to a charitible organization.
Consider the possibility, however, that in wage and hour class actions, a different rule may apply. Code of Civil Procedure § 1513 provides that
“Subject to Sections 1510 and 1511, the following property held or owing by a business association escheats to this state: … (g) Any wages or salaries that have remained unclaimed by the owner for more than one year after the wages or salaries become payable.”
Adhering to that provision, it would appear that any unclaimed checks in a wage and hour settlement should escheat to the State of California’s unclaimed property program, at least to the extent that the checks represented wages.
You can download a copy of Cundiff here in PDF or Word format. A depublication request was filed in December 2008 by the California Employment Law Council.
The Supreme Court has denied review in Dimon v. County of Los Angeles (2008) 166 Cal.App.4th 1276, a meal/rest period case in which the court held that charter counties are not bound by Industrial Welfare Commission wage orders concerning such breaks. We briefly discussed the case last week.
Slightly offtopic: The Supreme Court also denied review yesterday in Nelson v. American Apparel, Inc., the unpublished sham employment arbitration settlement case we discussed back in November in a post we called "You have to read this load of %$^*&! to believe it." Apparently, no request for publication was made.
A petition for review has been granted in Brinkley v. Public Storage, Inc. (2008) 167 Cal.App.4th 1278, the paystub violation and meal and rest break case that was published on October 28, 2008. As we predicted, the case was given a Rule 8.512(d) grant-and-hold review, and is now a companion case to Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25.
The petition for review is GRANTED. Further action in this matter is deferred pending consideration and disposition of a related issue in Brinker Restaurant Corp. v. Superior Court, S166350 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520, is deferred pending further order of the court.
George, C.J., was absent and did not participate. Votes: Corrigan, A.C.J., Kennard, Baxter, Werdegar, Chin and Moreno, JJ.
We previously discussed Brinkley in posts that can be found here and here.
Brinkley is no longer good law and cannot be cited in California courts. California Rules of Court, Rule 8.115 prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, and Rule 8.1105(e)(1) provides that unless otherwise ordered, an opinion is no longer considered published if the Supreme Court grants review.
Briefing in the Brinker case gets underway next week.
This morning, the California Supreme Court denied a petition to publish the opinion in Martinez v. WIld Oats Markets, Inc., which upheld a trial verdict finding that store manager was misclassified as exempt, under the executive exemption, when she worked more than 50% of her time on nonexempt tasks. The employer claimed that this did not comport with their "realistic expectations" of her job duties, and that her work on the nonexempt tasks came after "concrete expressions of displeasure" by her superiors.
While the primary issue in this case was whether Wild Oats had properly classified Martinez as exempt, by closing arguments the defense had conceded that Martinez did not spend the majority of her time on managerial or executive duties. However, Wild Oats argued it did not intend Martinez to spend her time on nonexempt activities, and that she did illustrated her incompetence and poor job performance. The parties therefore agreed that Ramirez was on point. Ramirez analyzed the outside sales exemption to overtime requirements, and addressed whether a court should determine the applicability of the exemption based on how the employee should be spending his or her working hours, or on what the employee actually does on a daily basis. The court noted that if trial courts were to rely solely on the employer's job description, “the employer could make an employee exempt from overtime laws solely by fashioning an idealized job description that had little basis in reality.” [citing Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785].
The primary focus of the opinion centered around whether the judgment was supported by sufficent evidence. The Court of Appeal concluded that it was. The trial judge was Los Angeles County Superior Court Judge Ronald Sohegian. The appellate court's link to the opinion (http://www.courtinfo.ca.gov/opinions/nonpub/B195749.DOC) no longer works.
MARTINEZ v. WILD OATS MARKETS, INC. Case: S168412, Supreme Court of California: 2009-01-14 Event Description: Publication request denied (case closed) Notes: George, C.J., was absent and did not participate. Not Reported in Cal.Rptr.3d, 2008 WL 4572161, Nonpublished/Noncitable (Cal. Rules of Court, Rules 8.1105 and 8.1110, 8.1115), Cal.App. 2 Dist., October 15, 2008 (NO. B195749)
A provision giving the arbitrator the authority to decide the enforceability of the arbitration agreement itself is unenforceable. Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App .4th 494. The determination of the arbitration agreement's enforceability belongs to the courts, not the arbitrator, as the existence of other unconscionable provisions may rendered the entire arbitration agreement voidable under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.
Defendant DHL Express (USA), Inc. appeals the trial court’s order denying its motion to compel arbitration after plaintiff Gina Ontiveros filed a lawsuit against defendant DHL and four other defendants, raising various claims related to sex discrimination, harassment, and retaliation arising from her employment with defendant. Defendant claims that plaintiff’s lawsuit is precluded by an arbitration agreement previously entered into by both parties. Because we conclude the trial court properly found the arbitration agreement was unconscionable, and therefore unenforceable, we shall affirm the order.
An agreement to have the arbitrator decide enforceability is invalid. "[T]he potential for the inequitable use of such arbitration provisions in areas, such as employment, where the parties are not at arm’s length and do not have equal bargaining power. In such situations, in which one party tends to be a repeat player, the arbitrator has a unique self-interest in deciding that a dispute is arbitrable.” Other improper terms in the agreement included limiting depositions to one percipient witness per side plus any expert witnesses, and requiring the parties to share the costs of arbitration. The cumulative effect of these improper provisions justified the trial court's determination that the entire agreement was unconscionable.
You can download the Ontiveros opinion here in PDF or Word format.
The following are some Assembly Bills, potentially of interest to wage and hour attorneys, that were passed in 2008, but were vetoed by Governor Arnold Schwarzenegger:
_____________________________
AB 124 - Price - Meal and rest periods.
This bill would have extended protections afforded to employees covered by an order of the Industrial Welfare Commission to pool lifeguards and stage assistants who employed in the public sector. The bill specified that pool lifeguards and stage assistants employed by a city, county, or special district, shall not be required to work during any meal and rest period required for non-exempt employees under existing law. The bill specified that if the public sector employer failed to provide a meal or rest period, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation. In addition, the bill specified that should these requirements be in conflict with the provisions of a memorandum of understanding (MOU) reached between an employer and a recognized employee organization, the provisions of the MOU shall control.
_____________________________
AB 435 – Brownley - Wage discrimination: gender.
This bill would have required that all employers maintain their records of wages, wage rates, job classifications, and other terms and conditions of employment for five years, and would have extended the statute of limitations for a civil action to collect back wages to 4 years, or, in the case of willful misconduct, to 5 years.
_____________________________
AB 448 – Arambula - Compensation recovery actions: liquidated damages.
This bill would have allowed employees to recover liquidated damages in complaints brought before the Labor Commissioner alleging payments of less than the state minimum wage. Specifically, this bill would have ensured that an employee received liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon when seeking to recover unpaid minimum wages by filing a complaint with the Labor Commissioner; which is what is currently available to those employees choosing to file a civil action to recover unpaid minimum wages. This bill would have made sure that workers received the same relief for minimum wage violations regardless of whether they pursued their claims administratively or through the courts.
_____________________________
AB 504 – Swanson - Lockouts.
Would have required restitution for employees whose employer commits specified crimes during a lockout. Specifically, the bill would have required a private employer convicted of a crime involving fraud, misrepresentation, or misconduct during (and in furtherance of) a lockout to make restitution to the locked-out employees of any wages and benefits, including interest thereon, they would have received had there been no lockout. The bill would not have applied to the state, its subdivisions, or any city, county, city and county, or special district.
_____________________________
AB 537 – Swanson - Family and medical leave.
This bill would have increased the circumstances under which an employee is entitled to protected leave pursuant to the California Family Rights Act (CFRA). Specifically, this bill would have (1) eliminated the age and dependency elements from the definition of “child,” thereby permitting an employee to take protected leave to care for his or her independent adult child suffering from a serious health condition, (2) expanded the definition of “parent” to include an employee’s parent-in-law and, (3) permitted an employee to also take leave to care of a seriously ill grandparent, sibling, grandchild, or domestic partner, as defined.
_____________________________
AB 628 – Price - Meal and rest periods: pool lifeguards.
This bill would have extended protections afforded to employees covered by an order of the Industrial Welfare Commission to pool lifeguards who are employed in the public sector. The bill specified that pool lifeguards employed by a city, county, or special district shall not be required to work during any meal and rest period required for non-exempt employees under existing law. The bill specified that if the employer failed to provide a meal or rest period, the employer would have to pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest period was not provided. In addition, the bill specified that if these requirements were in conflict with the provisions of a memorandum of understanding (MOU) reached between an employer and a recognized employee organization, the provisions of the MOU shall control. This bill was very similar to AB 124 (Price) from the previous year which addressed meal and rest period requirements for both pool lifeguards and stage assistants, however, this bill targets only pool lifeguards.
_____________________________
AB 1112 – Torrico - School district and community college district bonds.
Re-referred to Com. on RLS. pursuant to Senate Rule 29.10. Re-referred to committee on Education.
This bill was amended, became a school bond-related bill, and was vetoed by the Governor, but as heard by the Senate Labor Committee it would have required the director of the Department of Industrial Relations to regularly post on the department’s website all available prevailing wage rates on residential projects that are public works, as defined in Labor Code §1720. This requirement would have applied to those rates that are established by DIR on or after January 1, 2007.
_____________________________
AB 1666 – Price - Meal and rest periods: stage assistants.
This bill would have extended protections afforded to employees covered by an order of the Industrial Welfare Commission to stage assistants who are employed in the public sector. The bill specified that stage assistants employed by a city, county, or special district shall not be required to work during any meal and rest period required for non-exempt employees under existing law. The bill specified that if the employer failed to provide a meal or rest period, the employer would have to pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest period was not provided. In addition, the bill specified that if these requirements were in conflict with the provisions of a memorandum of understanding (MOU) reached between an employer and a recognized employee organization, the provisions of the MOU shall control. This bill was very similar to AB 124 (Price) from the previous year which addressed meal and rest period requirements for both pool lifeguards and stage assistants; however, this bill targets only stage assistants.
_____________________________
AB 1707 – Committee on Labor and Employment. - Private employment: employment records.
This bill would have revised requirements of existing law concerning an employee’s right to inspect personnel records. Specifically, this bill would have required employers to maintain employment records for a specified time and to provide inspection and copies within a specified time to current and former employees or their representatives. In addition, this bill would have authorized employees to recover a $750 penalty from an employer for failure to provide access to personnel records and to bring an action to obtain compliance, and it would have provided that a violation of these provisions would have constituted an infraction.
_____________________________
AB 1709 – Hancock - Local government: community facilities districts.
Re-referred to Com. on RLS. pursuant to Senate Rule 29.10. Re-referred to Com. on Local Government.
This bill was amended, became a community facilities districts-related bill, and was vetoed by the Governor, but as heard in the Senate Labor Committee it would have required the Labor and Workforce Development Agency (LWDA) to submit a report to the Legislature by March 1st of each year concerning the effectiveness of the Economic and Employment Enforcement Coalition.
_____________________________
AB 1710 – Swanson - Temporary services employees: wages.
This bill would have required that temporary services employers, with certain exceptions, pay their employees weekly, regardless of when the assignment ends, as well as hold both the client and the temporary services employer or leasing employer either jointly or severally liable for damages, unless the client secures payment of worker’s compensation for all employees, including the employees of a temporary services employer or leasing employer.
_____________________________
AB 2002 – De Leon - Public works: payments.
This bill would have:
• Increased the penalty on contractors and subcontractors from $50 to $100 per day per worker, plus interest from the date of violation as provided and determined by the Labor Commissioner, for failure to pay prevailing wage rates;
• Increased the penalty on contractors and subcontractors from $25 to $50 per day per worker, plus interest from the date of violation, for failure to provide payroll records, as specified;
• Provided that a contractor is not subject to a penalty assessment due to the failure of a subcontractor to comply with the requirement to supply awarding bodies and/or the public with the required payroll records unless the contractor had knowledge, or should have had knowledge, of the failure of a subcontractor to comply with the requirement.
_____________________________
AB 2369 – Fuentes - Apprenticeship programs: prevailing wage enforcement.
Would have provided that an awarding body (i.e., a local or state agency letting contracts/funds for public works) that implements a labor compliance program shall, with the approval of the Chief of the Division of Apprenticeship Standards, assist the Director of Department of Industrial Relations in the enforcement of specified provisions of law [L.C. Sections 1777.5 & 1777.6] related to the employment of apprentices on public works projects.
_____________________________
AB 2386 - Nunez - Employment: Agricultural labor.
This bill, as originally heard in the Senate Labor Committee, would have required the annual report filed by the Agricultural Labor Relations Board to include information concerning the status of the Agricultural Employee Relief Fund. The bill, however, was significantly amended to provide for a new collective bargaining representational election process. The final language would have mandated a representational election upon the collection of signed cards by 50% of employees of a farm labor employer and would have established a procedure for a regular ballot booth election and a “mediated election.” A mediated election was defined as a representative election that is mediated by a neutral mediator and that permits a bargaining unit to either select a labor organization as its representative for collective bargaining purposes without holding a ballot booth election or to choose to hold a ballot booth election.
_____________________________
AB 3062 – Committee on Labor and Employment. - Employment: termination: garnishment of wages.
This bill would have prohibited the termination of an employee because garnishment of an employee’s wages has been threatened or ordered in one or more instances.
The following are some Senate Bills, potentially of interest to wage and hour attorneys, that were passed in 2008, but were vetoed by Governor Arnold Schwarzenegger:
_____________________________
SB 18 – Perata - Public works: labor compliance programs.
This bill would have added the Kindergarten-University Public Education Facilities Bond Act of 2006 (Proposition 1-D) as a source of funds for a public works project that would require an awarding body, if it chooses to use those funds, to initiate and enforce, or contract with a third party to initiate and enforce, a labor compliance program. Specifically, this bill would have required a school and community college district, a campus of the California State University, or a campus of the University of California applying for funds from the 2006 school bond to monitor the project through a Department of Industrial Relations approved labor compliance program (LCP).
_____________________________
SB 180 – Migden - Labor elections: farm workers.
This bill would have created a new election process for agricultural workers to select their representatives for collective bargaining, and also would have increased the penalties on employers engaged in unfair labor practices.
_____________________________
SB 191 – Padilla - Public works: State Public Works Enforcement Fund.
This bill would have authorized an awarding body, an aggrieved employee or a contractor to file a complaint with the director of Department of Industrial Relations (DIR) that an approved private entity, contracted to initiate and enforce a labor compliance program (LCP) for a public works project, had not competently performed the responsibilities required by statute and state regulations for an LCP. In addition, the bill would have required that the director provide notice of the complaint, determine if it appears meritorious, hold a hearing and issue a written decision regarding the complaint. This bill would have authorized the director to order the approved private entity to return the fees paid by an awarding body and to suspend the approval of the private entity to initiate and enforce a labor compliance program until a petition of revocation of the approval is heard and determined as provided.
This bill was subsequently amended to create an alternative mechanism to fund enforcement of prevailing wage and apprenticeship requirements applicable to specified public works projects. Specifically, when amended, the bill would have established the State Public Works Enforcement Fund (Fund) and specify that money in the fund shall, upon appropriation by the Legislature, be used by DIR to administer and enforce the prevailing wage and apprenticeship requirements of current law. The bill would have required specified state agencies or school districts that choose to use the Kindergarten-University Public Education Facilities Bond Act of 2006 or any subsequent education facilities bond act as a source of funds for a public works project, to pay a fee levied by the director of DIR to be deposited into this fund. In addition, this bill would have required the California High-Speed Rail Authority and any other recipient of funds from the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century to pay those administrative fees, if that act were approved by the voters at the statewide general election held on November 4, 2008.
_____________________________
SB 549 – Corbett - Bereavement leave.
Would have given employees in California the right to take up to four days of unpaid leave from work upon the death of specified relatives.
_____________________________
SB 622 – Padilla - Employment: misclassification of employees as independent contractors.
Would have made it unlawful for any person or employer to willfully misclassify an employee as an independent contractor. Would have assessed a civil penalty of not less than $5,000 and not more than $15,000 in addition to any other penalties or fines permitted by law for such willful misclassification. Also, any person found guilty of a repeated pattern of these behaviors would have been assessed a civil penalty of not less than $10,000 and not more than $25,000 in addition to any other penalties or fines permitted by law.
_____________________________
SB 1583 - Independent Contractors
This bill would provide that a person (excluding attorneys) who knowingly advises another person to treat an individual as an independent contractor to avoid employee status for the individual shall be jointly and severally liable with the employer if the individual is not found to be an independent contractor.
_____________________________
There was an interesting Second Circuit case last year criticizing the "lodestar" method, and claiming it should be abandoned because it creates confusion. Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany (2d Cir. 2008) 522 F.3d 182. Judges should use their "considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney's fees in setting a reasonable hourly rate" so that fee awards should approximate market rates. You can download our copy of Arbor Hill here in pdf. Maybe we should have posted this yesterday, too, in keeping with the theme.
The U.S. Department of Labor’s Wage and Hour Division announced that it recouped back wages totaling $185,287,827 in fiscal year 2008, for 228,645 workers, nationwide. The recovery actually represents a decrease from fiscal year 2007. But congratulations to the Department of Labor nonetheless. In 2008, they collected almost 11 times as much in unpaid wages as our law firm did.
Here's the third of three 2008 cases we'll mention today that pertain to attorney's fees, which often present an important issue in wage and hour cases. This one comes from New York. In Barfield v. New York City Health and Hospitals Corp., Case No. 06-4137-cv, the Second Circuit upheld a District Court order cutting a $340,375 fee request to $49,889, because the attorney had been unable to certify an overtime collective action.
So how much did the plaintiff get in her individual case? You'll be surprised at how little it takes to justify the fee award.
Having concluded, as a matter of law, that Bellevue was liable under the FLSA for Barfield’s overtime compensation, the district court awarded her compensatory overtime in the amount of $887.25. See Barfield v. N.Y. City Health & Hosps. Corp., 2006 WL 2356152. Further, having observed that nothing in the record indicated that defendants had made any effort to ensure that their employment of temporary health care workers complied with the FLSA, see Barfield v. N.Y. City Health & Hosps. Corp., 432 F.Supp. 2d at 395, the district court ordered defendants to pay Barfield liquidated damages in an equal amount, for a total damages award of $1,774.50, See Barfield v. N.Y. City Health & Hosps. Corp., 2006 WL 2356152.
The plaintiff also recovered $6,565.79 in costs. With the $49,889 in attorney’s fees, the compensatory and liquidated damages and costs, plaintiff recovers a total award of $58,229.29. You can download the opinion in Barfield here in pdf. Curiously, the case was argued in December 2007, but the opinion was not issued until August 2008.
Here's the second of the 2008 cases we'll mention today that pertain to attorney's fees In Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, which did not involve wage and hour issues, Plaintiff accepted an offer to compromise pursuant to Code of Civil Procedure section 998, agreeing to dismiss her tort action in exchange for a monetary payment. After entry of the order of dismissal, the trial court awarded costs to plaintiff, but denied recovery of attorney fees. Plaintiff appeals the award of costs, contending that she is entitled to additional costs and an award of attorney fees based on a broadly worded attorney fee provision in her lease agreement and as the prevailing party with a net monetary recovery under the cost provisions of section 1032.
A section 998 compromise agreement that requires a dismissal of the action and waives the defendant’s costs is silent as to a plaintiff’s ability to recover costs. However, here, defendants are the prevailing parties for the purposes of an award of costs under section 1032, because a dismissal was entered in defendants’ favor. Regardless of which party is entitled to an award of costs under section 1032, the trial court has discretion after a voluntary pretrial dismissal to determine whether there is a prevailing party for the purpose of an award of contractual attorney fees incurred in a tort action.
Therefore, the Court of Appeal reversed the portion of the judgment denying plaintiff’s motion for entitlement to attorney fees as against the defendant and remanded that issue to allow the trial court to exercise its discretion. In all other respects, the trial court's rulings were affirmed.
A petition for review was filed, and was denied by the Supreme Court. You can download the full text of the opinion here in PDF or Word format.
Here's the first of three 2008 cases we'll mention today that pertain to attorney's fees, which often present an important issue in wage and hour cases and class actions. In and unpublished case entitled Fernandez v. Victoria’s Secret Stores, LLC (CD Cal. 2008) Case 2:06-cv-04149-MMM-SH, the U.S. District Court gave final approval to a wage and hour class action settlement in a case against Victoria’s Secret stores, alleging a failure to pay wages, unfair trade practices and unfair competition, and conversion of wages. The basic underlying claim was the the company required job applicants to participate in a sales tryout during which they are trained and directed to work in Victoria’s Secret stores without pay.
The settlement included payment to class members in the form of $67.50 in store gift cards ("Each class member who submits a valid claim form will receive a gift card from Victoria’s Secret in the amount of $67.50. This gift card will not expire, will be freely transferrable, and can be used to purchase products sold at any Victoria’s Secret store or online."). The agreement calls for Victoria’s Secret to pay up to a maximum of $10 million, with $3.5 million going toward attorney fees. Because the settlement involved gift cards, the court reduced the actual cash value of the settlement to $8.5 million. At that amount, the attorney fee request represented 39.4% of the total settlement compensation. The court found this to be too high, and cut the fees to $2.9 million, or 34% of the value of the settlement. The amount reflected a lodestar multiplier of 1.82.
It is quite uncommon to see "coupon settlement" in a wage and hour case, particularly a case that was removed from Superior Court under CAFA. The only kind of wage and hour case in which this is common is when the claims include "wardrobing" claims, whereby clothing stores (Gap, Polo, J. Jill, Chico's, etc.) require their employees to buy clothes from their employer. We've had restaurants offer food coupons as part of meal and rest break settlements, but we've never accepted such offers.
The order also reflects an interesting tactic the class counsel used to increase notice. In additional to mailings to 77,411 class members, a notice was published in five major California newspapers and a Facebook flyer was also made available to visitors at Facebook.com. "According to Facebook, the flier was viewed 584,000 times." Approximately 4.4% of the notices were returned as undeliverable. There were 7,280 timely claim forms, a 9.4% response rate. There were 29 opt-outs and three objectors, one of whom objected because she felt she had been treated well as a Victoria’s Secret employee and would like to be rehired.
You can download the order here.
The Supreme Court of the United States last month denied certiorari in a 3rd Circuit FLSA case entitled Philadelphia v. Lawrence. The issue involved whether paramedics trained in — but found not to be responsible for — fire suppression are exempt from overtime requirements under the Fair Labor Standards Act. The Third Circuit Court ruled that the paramedics were not exempt from overtime pay under federal law.
We got a copy of the WARN Act class action complaint against Thelen. The case is entitled Bergman v. Thelen LLP et al., U.S District Court case no. 3:2008cv05322, filed: November 24, 2008, assigned to Magistrate Judge Elizabeth D. Laporte. The complaint alleges causes of action for violation of the WARN Act, breach of contract and promisory estoppel. The first case management conference is set for March 3, 2009.
Employees working for a charter county are not governed by any IWC Wage Orders, and the county has exclusive authority to provide for the compensation and conditions of employment of its employees. Therefore, the employees cannot state a cause of action for failure to provide meal periods. Dimon v. County of Los Angeles (2008) 166 Cal.App.4th 1276.
the County has exclusive authority, as a charter county, to provide for the compensation and conditions of employment of its employees, and has done so with respect to probation officers through a collective bargaining agreement adopted by resolution. It is thus exempt from state statutes and regulations governing meal breaks.
You can download the full text of Dimon (for a while, at least), at links here in pdf or word format.
We were shocked by this story about Sandeep Baweja, an Irvine attorney who admits he stole most of the money from a $3.55 million wage and hour class action settlement in a case against ZipRealty. Lubocki, et al. v. ZipRealty, Inc., Case No. CV 07 2959 SJO (JCX) (C.D. Cal.)
As resumes and accomplishments go, Irvine attorney Sandeep Baweja was a superstar. Then, in the span of a few months this year, he threw it all away. In an unfolding case that has stunned colleagues, Baweja, 38, has admitted to burning through almost all of a $2.7-million settlement that was supposed to be shared by about 1,000 plaintiffs he represented in a class-action labor lawsuit. In legal filings, Baweja cites his inexperience as a stock market investor and this year's market freefall for the massive losses — money he had no right to transfer without court approval, according to legal documents.
We'd never met or heard of him, but apparently "superstar" Baweja is a ten year lawyer, active in politics and civic matters. And apparently, ZipRealty and/or the claims administrator Garden City Group released all of the settlement money to Baweja, who then spent several months playing the stock market with the money. Unfortunately for Baweja and his clients, mid-2008 was a bad time to be playing the stock market. He blew all but $54,846.90 of the settlement money.
Baweja and his co-counsel have taken down most of their website about the ZipRealty case, and replaced it with an update informing class members that Baweja is withdrawing due to a conflict of interest.
On December 24, 2008, Mr. Baweja filed a Motion to Withdraw as counsel in Lubocki v. Zip Realty, Inc. Case No. CV 07-2959-SJO (JCx). Mr. Baweja is asking to be removed as class counsel due to a conflict of interest. All class members should expect to receive a letter explaining the basis of the conflict of interest, with a copy of the Motion to Withdraw. The hearing on the Motion to Withdraw is currently set for January 26, 2009.
That motion will be granted. He also sent an email to class members that same day, confessing what he had done with their money. For a cached version of the site, check here. For a copy of the class notice, check out this blog post. There is no evidence that Ernest J. Franceschi or any of the other lawyers involved in the case played any role in the disappearance of the money.
What's next? A new class action to represent the class members in the pursuit of their class settlement money. Disciplinary proceedings are also a certainty. Playing with and losing your clients' money is about as serious a violation as a lawyer can commit. As one lawyer asked about the case and the rule Baweja violated put it this way: "That's Ethics 101." Actually, that's one you learn in kindergarten. Don't take what doesn't belong to you. Don't borrow without permission. You don't have to be a lawyer to know that.
On a side note, as further evidence that Avvo.com ratings are worthless, here's a link to his Avvo rating. "No ratings yet. ... We have not found any instances of professional misconduct for this lawyer." Perhaps when the angry clients and newspaper readers find out about Avvo, that will change. Baweja does have a wikipedia page now, though. Baweja was also the treasurer in Irvine for the Yes on Measure R and Yes on Measure S campaign committees. You can't help but wonder how clean those campaign accounts were kept.
The legislature also passed AB 2075 in 2008, effective January 1, 2009, which modifies California Labor Code § 206.5 to expand the meaning of the word “release.” A “release” shall now include “requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.”
Arnold Schwarzenegger has vetoed the Democrats state budget for 2009. Although Schwarzenegger had insisted upon a "stimulus package" that would include a revision to state labor laws, including elimination of the 8-hour workday and loosening of the state's meal and rest period claims, the governor's press release made little mention of labor laws or wage and hour issues, except as they pertained to cutting hours of state workers to decrease government spending.