Wage Law

The Ninth Circuit has reinstated an arbitration decision that had been vacated by the U.S. District Court. In SW Reg. Council of Carpenters v. Drywall Dynamics, Inc. (9th Cir. 14-55250 5/19/16), the arbitrator ruled that an employer was bound by a memorandum of understanding extending the term of a labor agreement. The district court vacated the arbitration award on the grounds that the arbitrator’s interpretation of the parties’ agreement was not plausible and was contrary to public policy. The Ninth Circuit held that the district court’s decision exceeded its narrow authority to determine whether the arbitrator’s award was based on the parties’ contract and whether it violated an explicit, well-defined, and dominant public policy. You can read the entire opinion at this link. [PDF]

In Corbin v. Time Warner (9th Cir. 13-55622 5/2/16), the 9th Circuit affirmed a district court’s summary judgment in favor of Time Warner Entertainment-Advance/Newhouse Partnership in a putative class action brought by a Time Warner employee.  In his rounding claim, plaintiff alleged that Time Warner's policy of rounding all employee time stamps to the nearest quarter hour deprived him of earned overtime compensation. The plaintiff also alleged that he was not compensated for one minute when he mistakenly opened an auxiliary computer program before logging into Time Warner’s timekeeping software.

The court held that Time Warner’s rounding policy complied with the federal rounding regulation, 29 C.F.R. § 785.48(b) and that the policy was neutral both on its face and as applied to plaintiff. They concluded that the district court properly interpreted and applied the regulation, and granted summary judgment to the employer.  The district court also properly granted summary judgment on plaintiff’s log-in claim and classified the one minute of uncompensated time as de minimis. The court held that all three factors in Lindow v. United States (9th Cir. 1984) 738 F.2d 1057, 1062 supported the district court’s conclusion that plaintiff’s one minute of uncompensated time was de minimis.

Finally, the 9th Circuit held that the plaintiff failed to demonstrate the existence of a material fact to his derivative California state law claims. Because the court affirmed the summary judgment to Time Warner on the rounding claim, there was no need for the district court to reconsider whether the claim can form the basis of a viable class action proceeding.

Following a January DC Circuit opinion that found the Obama's administration's recess appointments to the NLRB unconstitutional, GOP legislators have put forth a bill that proposes to prohibit the NLRB and the Consumer Financial Protection Bureau from enforcing or implementing decisions and regulations without a confirmed board or director.

According to this Reuters story, the bill, sponsored by senators Mike Johanns, Lamar Alexander and John Cornyn, "has little chance of becoming law", but "adds to pressure on the Obama administration to reach a compromise to keep both agencies operating and determine whether it will appeal the ruling."

"Any decisions or regulations made by the people who have no right to be there are invalid," Johanns, of Nebraska, said in a statement.

Among the decisions called into question is D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 6, 2012), in which the NLRB held that mandatory arbitration agreements requiring all employment disputes to be resolved through individual arbitrations violate Section 8(a)(1) of the National Labor Relations Act because they impair employees' ability to engage in concerted action for mutual aid or protection. Several district court rulings, including some in California, have rejected the NLRB decision in D.R. Horton as inconsistent with the Supreme Court ruling in AT&T Mobility v. Concepcion (2011) 563 U.S. ___, 131 S. Ct. 1740, which held that the FAA required enforcement of an arbitration agreement that included a class action waiver.

Dukes v. Wal-Mart, Inc. (9th Cir. 2007) 509 F.3d 1168 (one of very few pending cases to have an extensive wikipedia page) is no longer good law; the 9th Circuit is reviewing it en banc. The order provides:

Upon the vote of a majority of nonrecused active judges, it is ordered that this case be reheard en banc pursuant to Circuit Rule 35-3. The three-judge panel opinion shall not be cited as precedent by or to any court of the Ninth Circuit. Judges McKeown, Rawlinson and Bybee did not participate in the deliberations or vote in this case.

If the prior order permitting the case to proceed as a class action is upheld, the number of plaintiffs could approach two million.

The Ninth Circuit's opinion in Sullivan v. Oracle Corp. (9th Cir. 2008) 547 F.3d 1177, 14 Wage & Hour Cas.2d (BNA) 321, has been withdrawn, and the Ninth Circuit has certified three questions to the California Supreme Court. Sullivan v. Oracle Corporation (9th Cir. 06-56649 2/17/09).

We certify the following questions to the California Supreme Court, corresponding to the three claims presented by the plaintiffs.

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does (California Business and Professions Code) § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

By separate order, we today withdraw our published panel opinion in this appeal, pending a decision by the California Supreme Court on the questions of California law that we now certify. If the California Supreme Court decides any or all of the certified questions, we will accept and rely on the Court’s decision of that question or those questions in any further proceedings in this court.

The order certifying these questions can be found at this link. The order withdrawing the prior published opinion can be found at this link. Our previous post about the original opinion can be found at this link.

As we wait for the California Supreme Court to decide Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25, we can assume with a high degree of certainty that any state court opinion dealing with provide/permit issues or meal/rest break certification orders will be reviewed as a companion case to Brinker. For the next few months, therefore, we will have only Cicairos v. Summit Logistics (2005) 133 Cal.App.4th 949 as controlling authority in Superior Court, but in U.S. District Court, judges are free to guess what they think the California Supreme Court would decide.** When interpreting state law, federal courts are bound by decisions of the state's highest court (In re Kirkland (9th Cir.1990) 915 F.2d 1236, 1238), but in the absence of such a decision, a federal court shall apply the rule that it believes the state supreme court would adopt if faced with the same issue. Arizona Electric Power Cooperative, Inc. v. Berkeley (9th Cir.1995) 59 F.3d 988, 991.

The "make available" and/or denied certification cases that reject or distinguish Cicairos include:

** Well, maybe not entirely free to guess. As a reader points out, a Ninth Circuit case from Oregon holds that a federal court is obligated to follow the decisions of the state's intermediate appeallate courts, unless there is convincing evidence that the state supreme court would decide differently. Ryman v. Sears-Roebuck & Co. (9th Cir. 2007) 505 F.3d 993, 995. 

‘[W]here there is no convincing evidence that the state supreme court would decide differently, a federal court is obligated to follow the decisions of the state's intermediate appellate courts.’ ” Vestar Dev. II, LLC v. Gen. Dynamics Corp., 249 F.3d 958, 960 (9th Cir.2001) (quoting Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir.1996) (internal quotation marks omitted)). The district court did not cite any evidence that the Oregon Supreme Court would disaffirm Yeager. It merely disagreed with Yeager. FN1 Because there is no evidence that the Oregon Supreme Court would have decided the OFLA issue differently, the district court erred in not applying the Yeager rule.FN2

FN1. We note that the district court did cite opinions by other federal district judges expressing their disagreement with the Yeager rule. The opinions of other federal judges on a question of state law do not constitute “convincing evidence that the state supreme court would decide [an issue] differently,” Vestar, 249 F.3d at 960, nor do those opinions contain any relevant “convincing evidence.”

FN2. Although not dispositive, we note that the Oregon Supreme Court declined to grant review of Yeager. See Yeager v. Providence Health Sys. Or., 337 Or. 658, 103 P.3d 641 (2004) (table).

Given the decision of the Supreme Court not to review Cicairos v. Summit Logistics (2005) 133 Cal.App.4th 949 and Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, and their decision to grant review in Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25, and Brinkley v. Public Storage, Inc. (2008) 167 Cal.App.4th 1278, in a case where the employer cannot clearly distinguish Cicairos, the District Court should feel obligated to follow it.

A California Labor Commissioner decision was upheld, and additional reparations awarded in a civil lawsuit totaling over $246,000 in a case appealing a DLSE award against Csardas, Inc. dba Csardas Restaurant and Bakery, in favor of four former restaurant workers. The workers were awarded $115,423.64 for unpaid minimum and overtime, meal and rest period violations under Labor Code 226.7, interest, and waiting time penalties under Labor Code 203. The restaurant appealed and proceeded to a trial de novo before a Los Angeles County Superior Court jury.

The jury awarded $87,373.01 in unpaid wages, leaving the judge to determine additional damages, interest and attorney fees. After the jury’s verdict, Judge Mary Thornton House awarded $27,827.16 in prejudgment interest, $50,278.68 in liquidated damages and post judgment interest and $80,986.00 in attorney’s fees and costs for a total award of $246,464.85. Csardas, Inc. and its CEO Julius Jancso were both found liable for all awards.

An interesting certification order was entered last year in a wage case entitled Otsuka v. Polo Ralph Lauren Corp. (N.D. Cal. 2008) 251 F.R.D. 439. For those of you who like to collect such orders, here is a link to the order by District Court Judge Susan Illston, who held that: (1) numerosity requirement was satisfied; (2) commonality requirement was satisfied with respect to main class; (3) commonality requirement was satisfied with respect to subclass that consisted of former sales associates who had been misclassified as exempt from premium overtime compensation; (4) commonality requirement was satisfied with respect to arrears subclass; (5) named plaintiffs who had been forced or coerced to skip rest breaks as part of culture established by employer that discouraged taking of rest breaks were typical of main class; (6) employer's payment of overtime to named plaintiffs did not prevent claims of those plaintiffs from being typical of absent class members; (7) disagreements that had arisen in past between class counsel and named plaintiff did not adversely affect adequacy of representation requirement; and (8) common questions predominated over individual questions.

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.

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.,

• In Martin v. City of Richmond (2007) 504 F.Supp.2d 766, the employer won a motion for summary judgment regarding the donning & doffing of uniforms, but denied the motion as to time spent donning & doffing protective gear which was ‘integral and indispensable’ to the work performed.
• In Abbe v. City of San Diego (S.D. Cal. 2007) 2007 WL 4146696), the court denied pay for the donning & doffing of both the uniform and protective gear.
• In Lemmon v. City of San Leandro (N.D. Cal. 2007) 538 F.Supp.2d 1200, 1204-06, the court held that donning and doffing of both the police officer’s uniform and special protective gear was compensable under the FLSA.

There will be more to come in 2009 or 2010, including possibly a decision by the 9th Circuit on these issues.

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.

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)

There is still no hearing date for oral argument in Martinez v. Combs (Cal. S. Ct. Case No. S121552) 2003 WL 22708950. The Supreme Court granted review on the following issue:

“Can the officers and directors of a corporate employer personally be held civilly liable for causing the corporation to violate the statutory duty to pay minimum and overtime minimum wages, either on the ground such officers and directors fall within the definition of "employer" in Industrial Welfare Commission Wage Order 9 or on another basis?”

The current appeal, which turns five years old today, was fully briefed in 2006. The only sniff of activity in the case since 2006:

Letter dated July 15, 2008 from William G. Hoerger, lead counsel for Appellants (Martinez et al.) requesting the court not to set oral argument during the period of September 25 through Nov. 7, 2008. He and wife have purchased non-refundable airline tickets for a trip departing 9/25/2008 and returning Nov. 7, 2008.

Perhaps sometimes in 2009 . . . .

Plaintiffs who opt-in during a collective action under the FLSA must disclose their computation of damages under Rule 26(a), just as any other plaintiff must, or risk exclusion of such evidence at trial. Hoffman v. Construction Protective Services, Inc. (9th Cir. 2008) 541 F.3d 1175.

The trial court certified an FLSA collective action, but there was no pre-trial disclosure of damage calculations for the individual opt-in plaintiffs. At trial, the court excluded all evidence of damage for the opt-ins, but allowed evidence regarding claims of the named plaintiffs. The class appealed the exclusion of damages evidence and an award of attorney fees. The Ninth Circuit affirmed.

Ralphs Grocery Company has lost some high profile attempts to enforce its employee arbitration ageements, but it recently won one in Macias v. Ralphs Grocery Co. (2nd App. Dist, Div 2, Case No. B202625) , wherein the trial court denied their petition to compel arbitration of an action for sexual harassment and retaliation under the FEHA, but the order was reversed on appeal. The Second District did not publish the opinion. No petition for review was filed, but Ralphs sought publication of the opinion, and the Supreme Court denied the publication request.

The Supreme Court will neither review nor publish the opinion in Gonzalez v. Western Pacific Roofing Corp. (2008) Case Number S162086. The Court of Appeal has reversed the sustaining of a demurrer in a Los Angeles County Superior Court class action case in which the Plaintiffs alleged they were not paid the correct wages in public works projects.

They set forth the hourly rate they were paid and the minimum wage they should have been paid. Their claims are on behalf of themselves and for others. Thus, the action is a class action. We hold that plaintiffs for themselves stated facts sufficient to state a cause of action with respect to each of the alleged causes of action, and that the validity of the class action allegations should await determination in a certification proceeding. Therefore, we reverse the judgment entered pursuant to a court order sustaining a demurrer.

The case had a good overview of prevailing wage law in California, and what it takes to plead such a case.

In general, publicly financed construction projects are governed by the prevailing wage law. (Lab. Code, §§ 90.5, 1720-1861; see Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 985-988.) With certain exceptions, a contractor on a public works project must pay workers "not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed." (Lab. Code, § 1771.) The Department of Industrial Relations ("DIR") is responsible for determining that wage for each "craft, classification, or type of worker." (Lab. Code, §§ 1770, 1773; Cal.Code Regs., tit. 8, § 16200; Pipe Trades Dist. Council No. 51 v. Aubry (1996) 41 Cal.App.4th 1457, 1466-1467.)

Plaintiffs allege the following: plaintiffs are sheet metal workers formerly employed by defendants to work on public works projects; the legal minimum wage for workers employed on California public works projects is known as the general prevailing rate of per diem wages (Lab. Code, § 1771) or the "prevailing wage"; the proper prevailing wage classification for plaintiffs, defined by the actual work they performed on the public works, is sheet metal worker, and defendants were required to pay plaintiffs the prevailing wage for such workers as published by the DIR; the two defendants are in reality a single company owned and operated by the same owner, with a common place of business, common management, common policies and procedures and common employees; plaintiffs would routinely receive paychecks from either company, without explanation, although their supervisors and managers remained the same; the defendants employed hundreds of workers on public works projects throughout California; as a matter of common company policy, defendants did not pay prevailing wages and other wages--overtime, travel time and subsistence--to the individual plaintiffs or to hundreds of other workers who were employed by public works projects; each plaintiff, as an individual, is owed back wages for work performed for defendants on California public works; in addition to their individual claims, plaintiffs seek to represent the claims of all other current and former employees of defendants who were subject to the common policy to deny workers their lawfully earned wages. The subclasses are for each defendant and for each type of compensation due.

Plaintiffs specifically alleged the two defendants are, in fact, the same entity; they were employed by the defendants, and worked on, one or more public works projects, including but not limited to 25 specifically identified projects; the hourly wage that they each were paid; and the prevailing hourly wage that the defendants were required by law and contract to pay them.

Specifically, plaintiffs alleged they were sheet metal workers. They alleged that the work they performed was that of a sheet metal worker, and they alleged the specific work they performed. They alleged that instead of the $39 to $46 per hour rate required by California law, they received as low as $11 per hour. They also alleged that defendants failed to pay overtime at all or travel time and subsistence pay, all required by law. They set forth the dates each of the named plaintiffs worked and the specific hourly rate each received. They listed all of the various projects on which one or more of the plaintiffs worked.

Plaintiffs set forth the prevailing wage for straight time, overtime, and Sunday and holiday work for sheet metal workers for 2001, 2002, 2003, 2004, and 2005. The rates begin at $39.76 per hour (straight time wage for 2001-2002) and top out at $ 78.84 per hour for Sunday and holiday overtime in 2005. The allegations are that Gonzalez and Sanchez were paid approximately $11.50 per hour, Alcantar approximately $20.00 per hour during the last four years of his employment, Allen approximately $ 14 per hour, and Smith approximately $11 per hour during the last four years of his employment. Plaintiffs alleged that they were paid less than required prevailing wage for holiday and overtime work and travel time, and that they were not paid overtime, travel time, or required subsistence at all. They alleged that defendants required them to work "excessive hours of overtime."

The prevailing wage law requires a contractor to keep records, verified under penalty of perjury, showing "the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid" for each employee on a public works project. (Lab. Code, § 1776.)

Plaintiffs are required only to set forth the essential facts of their case with reasonable precision and with particularity sufficient to acquaint a defendant with the nature, source and extent of his cause of action. (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 245.) Plaintiffs are not required to plead the specific amount of damages. (Furia v. Helm (2003) 111 Cal.App.4th 945, 957.)

The amount of unpaid wages due to each plaintiff is only a matter of proof (the number of hours worked on public works projects multiplied by the difference between the lawful wage and the wages actually paid). The amount of waiting time penalties under section 203 is also a simple matter of proof; the penalty is the amount of unpaid wages for a 30-day period. (Lab. Code, § 203.) Defendants should have full and complete records dealing with this subject. "Once an employee shows that he performed work for which he was not paid, the fact of damage is certain; the only uncertainty is the amount of damage. [Citations.] In such a case, it would be a perversion of justice to deny all relief to the injured person, thereby relieving the wrongdoer from making any restitution for his wrongful act. [Citation.]" (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, 726-727.)

We thought that last part would have made the case worthy of publication.

Back in May, we were talking about a Orange County Superior Court order holding that waiting time penalties under Labor Code § 203 were recoverable as restitution under Business & Professions Code § 17203. In Ybarra v. Aramark Corp., No. 30-2008-00180008-CU-OE-CXC, the court treated section 203's "wages of the employee [that] shall continue as a penalty" as ordinary wages. Apparently, I was busy recovering from my one of my serial surgeries when the followup was timely, but two months later, the 4th District summarily denied Aramark's writ petition in Aramark Corporation v. Superior Court.

 Petitioner's request for judicial notice is GRANTED. The petition for a writ of mandate is DENIED as petitioner has an adequate remedy at law. (Omaha Indemnity Co. v. Superior Court (1989) 209 Cal.App.3d 1266; 1271-1273; Code Civ. Proc., 904.1.) Sills, P.J., Fybel, J., and Ikola, J.

In a funny side note, petitioner's counsel, Thomas M. Peterson, was listed as being with the law firm of Brobeck, Phleger & Harrison, which disintegrated about five years ago.

Earlier this month, Federal District Court Judge Consuelo Marshall awarded attorneys fees of $3,515,985 in Wang et al v. Chinese Daily News Inc et al, U.S. District Court, Central District of California, case number 2:04-cv-01498-CBM-JWJ. Plaintiffs Lynne Wang, Yu Fang Ines Kai, and Hui Jung Pao, on behalf of themselves and all others similarly situated, filed this suit on March 5, 2004, alleging multiple labor violations by Defendant Chinese Daily News, Inc. pursuant to the Fair Labor Standards Act ("FLSA"), the California Business and Professions Code § 17200 et seq. and the California Labor Code. The plaintiffs were awarded a total of more than $5 million after a jury and bench trial verdict in favor of the Chinese Daily News workers. In the fee order, Judge Marshall applied a multiplier of 1.5 and affirmed hourly rates of $425 to $575 per hour. We previously talked about the case in posts here and here.

Off topic a bit: The statement of issues on review has been published in County of Santa Clara v. Superior Court (2008) 161 Cal.App.4th 1140 (Supreme Court no. S163681):

May a public entity retain private counsel to prosecute a public nuisance abatement action under a contingent fee agreement?

The issue is narrow. Although it remains possible that at some point, certain municipalities might be interested in using outside counsel to enforce living wage ordinances, it does not appear likely that this opinion will be broad enough to affect such cases, or any other wage and hour issues.

The Supreme Court will be publishing its decision tomorrow morning in Edwards v. Arthur Andersen, LLP (Case no. S147190). The case arises out of a non-competition agreement, but the scope of issues presented means that the opinion could have broader implications for employees with a variety of Labor Code claims. The case presents the following issues:

(1) Is a noncompetition agreement between an employer and an employee that prohibits the employee from performing services for former clients invalid under Business and Professions Code section 16600, unless it falls within the statutory or judicially created trade secrets exceptions to the statute? (2) Does a contract provision releasing “any and all” claims the employee might have against the employer encompass nonwaivable statutory protections, such as the employee indemnity protection of Labor Code section 2802?

For wage & hour litigants and their lawyers, the second half of the opinion might be important.

Angie Wei, the Legislative Director for the California Labor Federation, wrote a letter to Labor Commissioner Angela Bradstreet asking her to withdraw her one-sided July 25, 2008 Memorandum to DLSE Staff, regarding Brinker Restaurant Corp. v Superior Court of San Diego County (Hohnbaum) (2008) __ Cal App. 4th ___, 2008 WL 2806613. The letter is well written, and is must-read material for anyone unfortunate enough to be preparing for a Berman hearing on a meal period or rest period case right now. Unfortunately, we suspect that Ms. Bradstreet is taking orders from someone who makes sure that important decisions get the "green light" from lobbyists for the California Chamber of Commerce and/or the California Restaurant Association, so we would be surprised if the memorandum is withdrawn, even if the Supreme Court grants review of the Brinker case.

The Recorder had a blurb last week on its Ad Hominem (Opinion and Satire) page that overstated Brinker's effect dramatically. Under the "Bar-ometer", it reported that "A court says you can only file wage and hour cases on an individual basis. And no lawyer will take those cases." That's not a very accurate summation of the holding, and the claim that no lawyer will take those cases is quite untrue. Individual wage and hour cases are filed every day.

In a few days, we'll post links to the various blog posts, articles, client alerts and newsletters discussing the case. Legal updates, in and of themselves, are not billable, so it takes some of the defense firms a couple of weeks to get their articles, client alerts and newsletters out. We remember what it was like....

If you have been following the recent opinions concerning meal period and rest period class actions, you might also want to follow the progress in Savaglio v. Wal-Mart Stores, Inc., the largest such case yet tried in California. The appeal is fully briefed, and the First Appellate District has granted numerous requests for leave to file amicus briefs, which were filed on July 21, 2008. Today is the last day the court will entertain applications to file an amicus/amici curiae brief.

The following applications for permission to file an amicus/amici curiae brief in support of plaintiffs/respondents/cross-appellants Andrea Savaglio et al. are granted: (1) Asian Pacific American Legal Center of Southern California et al., (2) La Raza Centro Legal and Equal Rights Advocates, (3), California Employment Lawyers Association, and (4) Alameda County Central Labor Council et al. The following applications for permission to file an amicus/amici curiae brief in support of defendants/appellants/cross-respondents Wal-Mart Stores, Inc. et al. are granted: (1) Employers Group et al., (2) Chamber of Commerce of the United States of America, (3) Retail Industry Leaders Association, (4) California Employment Law Council, and (5) Civil Justice Association of California. The clerk of this court is directed to concurrently file this order and the proffered briefs. Any further applications to file an amicus/amici curiae brief must be filed no later than August 1, 2008.

An oral argument waiver notice went out on Tuesday. We doubt that the litigants will be waiving oral argument in this case. We previously discussed the case in several posts, which can be found here, here, here and here.

The Supreme Court declined to published an opinion in Hoffman v. Uncle P Productions, a small wage and hour case that proceeded by default in the Superior Court and at the Court of Appeal.

Terry Hoffman and Mary Jo Devenney appeal the judgment entered in their lawsuit seeking wages, expenses and penalties due from defendant Uncle P Productions, LLC ("Uncle P"). We agree with appellants' contention that the trial court applied the wrong statute of limitations to their continuing wages claim, and so reverse the judgment.

In essence, the Court of Appeal confirmed that waiting time penalties have a three-year statute of limitations, paystub penalties have a one-year statute of limitations, an employee who gets stiffed completely for 99 hours of work has a minimum wage claim, one who makes $250 a day does not, and you don't necessarily get a larger award of attorney's fees in a default case just the default judgment is increased, if you already received a much higher award than the default fee schedule provides. Nothing controversial. No publication order.

We've been told that there are several Superior Court judges, particularly in the Bay Area, who believe that a so-called "claims made" class action settlement should never be approved in a wage & hour case. If there was a Bible for such believers to follow, one of the Gospels would be the original opinion written by U.S. District Court Judge William Alsup in Kakani v. Oracle Corp. (N.D. Cal 2007) 2007 U.S. Dist. LEXIS 47515; 12 Wage & Hour Cas. 2d (BNA) 1308; 154 Lab.L.Rep. (CCH) 35,310.

Judge Alsop initially rejected a class action settlement in that case, a nationwide class involving "about ten job classifications (although the complaint remained unchanged and narrower)". Only after dramatic changes to the structure of the agreement did the parties obtain court approval for their deal. Why did he deny preliminary approval at first? Let him count the ways:

“Under the settlement, all wage-and-hour rights (not just overtime) of putative class members would be completely extinguished and replaced by an exclusive claims procedure. By expressly obligating itself only on a "claims-made" approach, Oracle would pay only those who submit claims up to a total of nine million dollars less all fees and expenses. Counsel wants $2.25 million in attorney's fees and $75,000 in expenses. In addition to their own shares of the settlement, $45,000 total would be paid to the three named plaintiffs as "incentive payments." Costs of administration would also be deducted. Because it will be a "claims-made" settlement, there will be no residue. All unclaimed amounts will revert to Oracle. Counsel now desire preliminary approval under Rule 23(e) and recommend notice be sent by mail to last known addresses of 1500 or so workers granting them a brief period for filing claims -- after which all of their claims and rights would be forever barred, even as to those who never receive actual notice or submit a claim.”

The release also forfeited "any and all claims that were asserted or could have been asserted" (language we've seen many a defendant try to negotiate) in the action. Judge Alsop explained that he was “at a loss to understand how counsel can portray the release as benignly as they have.” Instead, Judge Alsop used words like "draconian" and "unfair to class members" and rejected the agreement, but not before first pointing out that, in his opinion, all of the flaws in the deal should have been caught by the class counsel before they ever entered his courtroom.

“Virtually none of the foregoing problems were raised by counsel, illustrating the sad fact that once a collusive settlement is reached, counsel have no incentive to critique their joint proposal. The district judge must dig through the file on his or her own. No doubt, this Court has missed some further issues not having an advocate to call out the weak spots. … Preliminary approval is DENIED.”

In Kakani v. Oracle Corp. (N.D. Cal. 2007) 2007 U.S. Dist. LEXIS 58740, 154 Lab.Cas. (CCH) P35,323, the settlement was preliminarily approved.

For all of the above-stated reasons, plaintiffs' and defendant's motion for preliminary approval of the proposed settlement agreement is GRANTED, subject to the following conditions. First, the notice to class members must include a statement that named plaintiffs will be eligible to receive payments of up to 25% of the $ 15,000 paid to the California Labor Workforce Development Agency under the California Private Attorneys General Act and that these amounts will be over and above what the absent class members will receive. Second, after the deadlines to submit claims and opt-out notices have passed, class counsel and the claims administrator are ordered to submit a list of all class members by name, divided into categories of those who opted in, those who opted out, and those whose notices were returned undeliverable. At this time, the Court reserves the issue of final approval of the settlement agreement. In no way should the notice suggest that the Court has given approval to the settlement; instead the notice should state that the Court invites class members to comment on the adequacy of the settlement and it should state that the settlement represents about 15% of the maximum that might be recovered if the case went to trial. Counsel must submit a copy of the notice including the above-mentioned amendments no later than AUGUST 13, 2007.

The court later characterized the process like this:

There was no meeting of the minds as to the scope of the release -- defendants contended that it would bar all future state-law claims throughout America, while plaintiffs contended that it would only bar California and FLSA claims. The settlement also was on a "claims-made" basis. Oracle would make available a pool of nine million dollars from which all claims would be paid. Any residue would revert to Oracle. Regardless of the claims paid, however, plaintiffs' counsel would have received $ 2.25 million in fees (25% of the total amount theoretically "available"). Notice to class members would have been inadequate under the first settlement, and the period given to putative class members to learn about the case and to opt out or file claims was far too short. The settlement allowed only 35 days from the date of mailing of notice to file objections and opt-out notices, and 45 days to submit claims. The proposed notice was nearly incomprehensible, with its tangle of subclasses, inattention to the serious jurisdictional issues in the state-law claims, and general legalese rhetoric. Even class members who received no notice at all or received late notices because of delivery problems would lose everything and recover nothing. Under the original agreement, California claimants would have received at least twice as much as non-California claimants. No cogent reason was given to justify the disparity in treatment between Californian claimants and Non-Californian claimants. In addition, class members would forfeit about 87.7% of their maximum claims, settling for nine million dollars, while the maximum recovery was about $ 52.7 million. In short, the proposal was collusive. Oracle would have wiped out its national wage-and-hour liabilities off its books, counsel would have received a bonanza, and a vast number of absent class members would have received little or nothing in exchange for forfeiture of their actions. The proposal was rejected at the threshold by an order dated June 19. An amended settlement agreement was submitted on June 29, and a further hearing was held on July 5. Some of the Court's concerns had been addressed, but others remained. The parties agreed to submit a further amended settlement agreement, which was received on July 16. An order dated August 2 found that the parties had remedied many of the problems outlined above and had reached a settlement that was sufficiently fair and reasonable to warrant preliminary approval. Preliminary approval of the three subclasses was granted.

At the time of the final hearing, the $2.25 million in requested attorney's fees were reduced significantly. Kakani v. Oracle Corp. (N.D. Cal. 2007) 2007 U.S. Dist. LEXIS 95496:

In this action alleging violations of California labor laws and the federal Fair Labor Standards Act, plaintiffs move for approval of award of attorney's fees and costs as set forth in the second amended settlement agreement. The excessive amount of attorney's fees requested, however, cannot be justified. Accordingly, the motion for attorney's fees and costs is approved in the lower amount of $ 664,000 for fees and $ 75,000 for costs.

Any time you are negotiating the fine points of a class action settlement agreement, and you are certain that the defendant is overreaching, be sure to open up a copy of the opinions in Kakani v. Oracle Corp. before you agree to terms that seem too sweet for the defense. There's a good chance your judge is going to do the same thing when considering approval of the settlement and the fees.

Back in April, we mentioned two arbitration cases awaiting review by the U.S. Supreme Court. We were unaware, at the time, that one of the two cases had already been rejected. In IBEW, Local Union No. 21 v. Illinois Bell (7th Cir. 2007) 491 F.3d 685, the petititioners sought to reverse an opinion upholding an order to compel arbitration of a dispute over new employee performance evaluation guidelines. On March 17, 2008, the writ of certiorari was denied in Illinois Bell Tel. Co. v. IBEW, Local 21 (U.S. 2008) 128 S.Ct. 1696, 170 L.Ed. 2d 353, 2008 U.S. LEXIS 2405, 76 U.S.L.W. 3497, 183 L.R.R.M. (BNA) 2992.

On May 27, the Supreme Court also denied certiorari in T-Mobile USA, Inc. v. Laster (9th Cir. 2007) 252 Fed.Appx. 777 (2007 U.S. App. LEXIS 25265, 2007 WL 3194117), (S.Ct. No. 07-976, 2008 U.S. LEXIS 4492, 76 U.S.L.W. 3628) an unpublished Ninth Circuit decision. The question presented was:

Whether, under the Federal Arbitration Act, a federal court may refuse to enforce the terms of an agreement to arbitrate based upon a state-law policy that individual arbitration is unconscionable in cases involving small claims by a consumer.

The court had previously denied a similar petition for writ of certiorari taken from the California Supreme Court's decision in Circuit City Stores, Inc. v. Gentry (2007) 42 Cal.4th 443, decided by the California Supreme Court.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The result was very close to what we expected.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There will probably be more still.

Apparently, there are more than a few employers who are mining their email archives to search for email communications between employees and former employees and the attorneys representing them in claims against the employer. One judge in New York issued a ruling last year that such communications are not protected by attorney-client privilege. The case is Scott v. Beth Israel Medical Center, Inc. You can read the order here. We haven't researched whether any California cases are on point. We're just passing it along.

This is old news, but we just heard it and thought we'd pass it along. After remittitur in Murphy v. Kenneth Cole Productions, the plaintiffs moved for $1.5 million in attorney's fees for the law professors and law students' time. San Francisco Superior Court Judge Anne Bouliane reduced the attorney's proposed hourly rates from $525 to $425 and reduced the law students' rate from $125 to $90, and applied a lodestar multiplier of 1.8. She cut 70 hours from one attorney's total, and 12 hours from lead trial counsel's total. The final bill: although it was a lot, we're betting that it was significantly less than Seyfarth Shaw charged the defendant for its work.

A recent unpublished opinion could resolve a conflict in the law between a 1988 case and a 1957 case which has been cited by employers seeking to dismiss wage and hour cases on demurrer.

In Oppenheimer v. Robinson (1957) 150 Cal.App.2d 420, an employee filed a complaint to recover unpaid wages. The company filed a special demurrer alleging that the complaint was uncertain and ambiguous because it did not allege the amount of wages the employee earned nor the amount due at the time of his discharge. The employee argued that the precise amount of wages due was an evidentiary matter that did not need to be pled with specificity in the complaint. The trial court sided with the employer and the Court of Appeal agreed.

The mere allegation that plaintiff was damaged in the sum of $ 6,000 by reason of the failure to pay the wages earned is meaningless in the absence of any allegation as to the amount of wages due plaintiff. That allegation is an obvious attempt to claim a sum as damages that would give the superior court jurisdiction of the action, while suppressing facts that would determine whether the action was within the jurisdiction of the superior court. The court was not required to give any effect to the allegation of damage in the absence of the allegation of facts showing liability in damages, nor to proceed further in the action in the face of the refusal of plaintiff to plead essential jurisdictional facts.

We take that to mean that you must allege facts showing that the amount of wages due are within the jurisdiction of your court. In Superior Court, that can be satisfied, for example, by alleging that the amount of unpaid wages exceeds the minimum jurisdiction of the Superior Court. However, many defendants read that passage to mean that a wage and hour plaintiff must allege, to the dollar, if not the penny, exactly what wages and penalties are due, and why. So far, we've never encountered a judge who agreed, particularly because the 1988 case, Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, makes it clear that even at trial, the specific number of hours, and hence, the precise amount of wages due, need not be proven by the employee. In permitting an employee to meet his burden by alleging an estimate of the amounts due, the court held that

[o]nce an employee shows that he performed work for which he was not paid, the fact of damage is certain; the only uncertainty is the amount of damage. [Citations.] In such a case, it would be a perversion of justice to deny all relief to the injured person, thereby relieving the wrongdoer from making any restitution for his wrongful act.

Although last week's opinion in Gonzalez v. Western Pacific Roofing Corp. does not mention Oppenheimer, it appears that the trial court must have followed it, and if it did not, it followed its reasoning, granting a demurrer in a prevailing wage class action on uncertainty grounds. In reversing the order sustaining the demurrer, the Court of Appeal held:

Plaintiffs are required only to set forth the essential facts of their case with reasonable precision and with particularity sufficient to acquaint a defendant with the nature, source and extent of his cause of action. (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 245.) Plaintiffs are not required to plead the specific amount of damages. (Furia v. Helm (2003) 111 Cal.App.4th 945, 957.)

The amount of unpaid wages due to each plaintiff is only a matter of proof (the number of hours worked on public works projects multiplied by the difference between the lawful wage and the wages actually paid). The amount of waiting time penalties under section 203 is also a simple matter of proof; the penalty is the amount of unpaid wages for a 30-day period. (Lab. Code, § 203.) Defendants should have full and complete records dealing with this subject. “Once an employee shows that he performed work for which he was not paid, the fact of damage is certain; the only uncertainty is the amount of damage. [Citations.] In such a case, it would be a perversion of justice to deny all relief to the injured person, thereby relieving the wrongdoer from making any restitution for his wrongful act. [Citation.]” (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, 726-727.)

That makes perfect sense to us. If you don't have to prove the precise amounts at trial, you certainly would not be required to plead those amounts in your complaint, as long as the complaint alleges facts that establish Superior Court jurisdiction and each of the elements of the cause of action.

You can download the full text of Gonzalez v. Western Pacific Roofing Corp. here in pdf or word formats. We anticipate that requests for publication will be filed.

In January 2007, after 16 days of trial, a jury returned a unanimous verdict awarding $2.5 million to a group of employees of the Chinese Daily News, Inc. for violations of state and federal labor laws concerning overtime, meal and rest breaks. We first discussed the case in a post that can be found here: http://wagelaw.typepad.com/wage_law/2007/01/employees_preva.html. On February 28, 2008, Federal District Court Judge Consuelo B. Marshall issued a post-trial ruling and entered a judgment awarding the employees $3,514,998.00 in damages and penalties plus $1,676,019.74 in interest. The newspaper published announced last week that it intends to appeal.

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

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

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

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

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

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

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

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

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

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

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

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

It would break the company, it would give the class a windfall, and the judge doesn't like the law.

Perhaps we oversimplify, but the heart of the order denying class certification in Spikings v. Cost Plus, Inc. (C.D. Cal. May 25, 2007) 2007 U.S. Dist. LEXIS 44214, a case we saw in a year-end class action roundup, seems to come down to those three factors. In Spikings, the plaintiff filed a motion for certification under Rule 23, and the court found the superiority element required under Rule 23(b)(3) lacking.

The case was filed under the FACTA (Fair and Accurate Credit Transactions Act), alleging a violation of the rule that requires that no more than the last 5 digits of a credit card number be shown on customer receipts, and that the expiration date of the credit card not be disclosed on the receipt. 15 U.S.C. § 1681c(g). Spikings bought an item at Cost Plus on December 19, 2006, and filed her putative class action just a few hours later. Apparently, the judge thought those facts didn't pass the smell test. "[T]he superiority requirement allows the Court to exercise its considerable discretion in deciding whether or not to certify a class for a category of cases for which a class action may not be the best method.”

[C]ourts may refuse to certify class action treatment where the defendant’s liability ‘would be enormous and completely out of proportion to any harm suffered by the plaintiff.’

In these cases, certification is not denied solely because of the possible financial impact that it would have on a defendant, but based on the disproportionality of a damage award that has little relation to the harm actually suffered by the class, and on the due process concerns attendant upon such an impact. (Citations omitted.) Put simply, class action treatment may be denied where the damages would be ‘ad absurdum.’
...
Plaintiff’s class action sought to represent an estimated 3.4 million people nationwide, at $100-$1000 per violation; thus, “statutory damages alone would range from a minimum of $340 million to a maximum of $3.4 billion,” Defendant’s net worth, however, is only $316 million, Id. “Thus, an award of even the minimum statutory damages of $340 million would put Defendant out of business,” Id. Such an outcome is particularly absurd in light of plaintiff’s admission that “she did not suffer any actual damage, such as identity theft, as a result of her expiration date appearing on her credit card receipt from Defendant’s store, and there is no evidence that any customer making a purchase from Defendant’s store...suffered any actual harm due to the inclusion of the expiration date on credit card and debit card receipts.”

Since then, several other cases involving identical violations of FACTA's truncation requirement have been denied class treatment on the same ground. Serna v. Big A Drug Stores, Inc., 2007 U.S. Dist. LEXIS 82023, (C.D. California, October 9, 2007); Lopez v. KB Toys Retail, Inc. 2007 U.S. Dist. LEXIS 82025 (C.D. Cal. July 17, 2007); Najarian v. Avis Rent A Car Sys. LLC, 2007 U.S. Dist. LEXIS 59932 (C.D. Cal. June 13, 2007); Torossian v. Vitamin Shoppe Indus. 2007 U.S. Dist. LEXIS 81961 (C.D. Cal. Aug. 9, 2007); Soualian v. Int'l Coffee & Tea LLC, 2007 U.S. Dist. LEXIS 44208 (C.D. Cal. June 11, 2007).

This ground would not likely be a basis for denial of class certification in a wage and hour case, but we can envision some jurists applying it to PAGA claims.

The U.S. District Court has granted a partial summary judgment motion filed by a group of police officers seeking compensation under the FLSA for time spent donning and doffing uniforms and equipment. Lemmon v. City of San Leandro, 2007 U.S. Dist. LEXIS 902.

The Portal-to-Portal Act of 1947 relieves employers from compensating employees for "activities which are preliminary or postliminary to [the] principal activity or activities." 29 U.S.C. § 254(a). The Supreme Court ruled that "activities performed either before or after the regular work shift" are compensable "if those activities are an integral and indispensable part of the principal activities for which [the] workmen are employed." Steiner v. Mitchell (1956) 350 U.S. 247, 256. In Steiner, production employees at a battery plant were required to don protective work clothes before commencing work and to shower and change back at the end of the work day. The Court held that employees should be compensated for the time spent donning and doffing their protective work clothes because the process was "integral and indispensable" to allay the dangers inherent in the principal activity of battery production. The Ninth Circuit has held that donning and doffing of both unique and non-unique protective gear are integral and indispensable to the employee's principal activities if they are: (i) necessary to the principal work performed; and (ii) done for the benefit of the employer. The standard has been applied to, among other situations, liquid-repelling sleeves, aprons and leggings used by meat workers, and "bunny suits" worns by employees working in so-called "clean rooms."

In Lemmon, the court applied the same standard to the donning and doffing of police uniforms, and found the time compensable. The decision is particularly interesting because it reaches a different conclusion than others decided earlier this year, including Judge Breyer's decision in Martin v. City of Richmond, No (N.D. Cal. Aug. 10, 2007) 2007 WL 2317590 ("police officer's uniform, in and of itself, does not assist the officer in performing his duties.") and Judge Sabraw's decision in Abbe v. City of San Diego (S.D. Cal. Nov. 9, 2007) 2007 WL 4146696 ("the relevant inquiry is not whether the uniform itself or the safety gear itself is indispensable to the job - they most certainly are - but rather, the relevant inquiry is whether the nature of the work requires the donning and doffing process to be done on the employer's premises.")

Statement of issues on review have finally been posted in Arias v. Superior Court (Angelo Dairy), no. S155965:

Petition for review after the Court of Appeal granted a petition for peremptory writ of mandate. This case presents the following issues:

(1) Must an employee who is suing an employer for labor law violations on behalf of himself and others under the Unfair Competition Law (Bus. & Prof. Code, section 17203) bring his representative claims as a class action?

(2) Must an employee who is pursuing such claims under the Private Attorneys General Act (Lab. Code, § 2699) bring them as a class action?

Apparently, Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2007) 148 Cal.App.4th 39, is the lead case. The first issue looks like an interesting one. The second one looks like a no-brainer.

A summary judgment in favor of UPS on a wage & hour misclassification case has been reversed by the Ninth Circuit. Here's the order is Marlo v. United Parcel Service, Inc. There wasn't much analysis needed:

Appeal from the United States District Court for the Central District of California, Dean D. Pregerson, District Judge, Presiding

Argued and Submitted October 17, 2007 Pasadena, California Before: KOZINSKI and McKEOWN, Circuit Judges, and JONES, District Judge.

Michael Marlo appeals the district court’s grant of summary judgment in favor of United Parcel Service (“UPS”) on his claim that UPS misclassified its FILED OCT 25 2007 CATHY A. CATTERSON, CLERK U.S. COURT OF APPEALS Full-Time Supervisors (“FTS”) as nonexempt employees. Summary judgment is appropriate where, viewing the evidence in the light most favorable to the nonmoving party, there is no genuine issue of material fact. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Marlo has raised material issues of fact related to whether the FTS “customarily and regularly exercise[] discretion and independent judgment.” Cal. Code Regs. tit. 8, § 11090(1)(A)(1)(d) (2005). Accordingly, summary judgment as to that issue was improper.

REVERSED AND REMANDED.

You can listen to the oral argument by going to the court's website at http://www.ca9.uscourts.gov/ca9/media.nsf/Media%20Search?OpenForm&Seq=2. Enter case number 05-56446 to download or launch the audio file. While both sides performed admirably during their remarks, it was quite apparent that there were triable issues that compelled the court to reverse the summary judgment. Judge Kozinski's parting words to Mr. Wilcox were: "Let me give you two words of advice: Set-tle." That ended any meaningful drama for parties waiting for the opinion.

Michael Hassen of Jeffer, Mangels, Butler & Marmaro, who publishes the Class Action Defense Blog put up an interesting post last month about a case called Guevarra v. Progressive Financial. In it, the U.S. District Court ofr the Northern District of California denied class certification without prejudice, and ordered the putative class counsel to show cause why the case shouldn't be referred to the California State Bar. Ultimately, United States District Chief Judge Vaughn Walker did not refer the matter for discipline, but the fact that a District Court Judge pondered the idea is interesting, to say the least.

The plaintiff's counsel's "offense" was to agree to divide a putative class to separate the prosecution of claims under the Fair Debt Collection Practices Act (FDCPA) under circumstances where the putative class could seek more damages in multiple proceedings than in a single proceeding. The reason for this was a peculiarity in the FDCPA which capped damages in any class action at one percent of a company's net worth in . The District Court was outraged, and considered this a move done solely to increase attorney's fees. The court ignored the fact that the tactic also dramatically increased the potential recovery by the class because of the quirk in the FDCPA.

In response to the court’s order to show cause, counsel cites Mace v. Van Ru Credit Corp. (7th Cir 1997) 109 F.3d 338 as authorizing their tactics. But in Mace, the court declined to impose a duty on the plaintiff to bring suit on behalf of the broadest possible class. Mace does not, however, condone post-suit collusion between counsel in separate actions in order to cut a class in two.

Mace nevertheless highlights a troubling aspect of the FDCPA, 15 USC §§ 1692 et seq, which provides that:

(a) [A]ny debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of:
(1) any actual damage sustained by such person as a result of such failure;
(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $ 1,000; or (B) in the case of a class action,
(i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and
(3) ... the costs of the action, together with a reasonable attorney fee....

(15 USC § 1692k)

The problem lies with the statutory limit on damages in § 1692k(a)(2)(b)(ii), which applies to each FDCPA class action, not to all FDCPA class actions involving a particular debt collector. This encourages the multiplication of proceedings. If the debt collector has a net worth of less than $50 million, then the class may recover only 1 percent of that amount. Accordingly plaintiffs might divide into 100 classes which each take 1 percent. If the debt collector is worth more than $50 million, then each class may recover only $500,000, and plaintiffs might divide into an increasing number of classes, each taking a bite at the golden apple until the company is broke.

Maybe we're missing something, but it appears to us that the class counsel was entirely in the right here, and that a class action was appropriate, and it was a superior means of litigating these claims, but that, according to the best interests of the class, it was logical and appropriate to separate the classes into logically related smaller groups so that fewer class members would have their claims reduced by the recovery cap under the FDCPA. We can see why a defendant wouldn't like this, but that's how Congress designed the statute.

The case, incidentally, was dismissed with prejudice after the show cause hearing, pursuant to a stipulation filed three months earlier.

In the first published post-Gentry class action arbitration case, the First District Court of Appeal has affirmed an order denying a motion to compel arbitration. Murphy v. Check 'N Go of California, Inc. (2007) __ Cal.App.4th __. In Gentry, the Supreme Court set forth a standard for reviewing arbitration clauses with class action waivers, requiring lower courts to consider several factors which inherently favor employees seeking to invalidate the provisions, including: the modest size of any potential individual employee's wage claim, the possibility that putative class members would be retaliated against if they pursued individual claims, the fact that absent class members might not be well informed about their rights, and the difficulties in enforcement of putative class members' rights through individual arbitrations. After considering these factors, if the court finds that class arbitration is likely to be a significantly more effective means of enforcing employee rights, it must invalidate the class action waiver.

In Check ‘N Go, the court of appeal applied those factors and concluded that the agreement was both substantively and procedurally unconscionable with respect to the mandatory arbitration provision, the class action waiver and a third provision that bestowed upon the arbitrator the right to determine whether the arbitration agreement was enforceable.

Defendant Check ’N Go of California, Inc., appeals from an order denying its motion to compel arbitration of a wage and hour case filed by plaintiff Lisa Murphy.  The main issues are whether the class action waiver in the arbitration agreement is unconscionable, a question we review with the benefit of the recent decision in Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry), and whether that question should be resolved by the court, rather than an arbitrator appointed under the agreement.  We conclude that the court was empowered to decide the unconscionability issue, agree with its ruling that the class action waiver is unconscionable, and affirm the order denying the motion to compel arbitration.

The court found that the agreement was a contract of adhesion. It was undisputed that employee received the agreement through interoffice mail, the terms were never explained to her, and she was never told that the agreement was optional or negotiable, supporting an inference, under the Gentry standards, that the employee reasonably expected that she was required to sign the contract as a condition of continued employment. The provisions were one-sided, and exculpatory, given the relatively small size of individual claims and the need for the class action remedy to deter the employer from misclassifying employees. Furthermore, the trial court did not abuse its discretion in refusing to enforce the entire arbitration agreement, rather than just severing the unconscionable provisions, because the agreement was permeated with unconscionability.

You can download the full text of Check ‘N Go here in pdf or word format.

More than ten requests for publication were filed in the Brinker case: Cross Country Healthcare, California Employment Law Council, Atkinson, Andelson, Loya, Ruud & Romo, Paul, Plevin, Sullivan, etc., Akin, Gump, Strauss, etc., Winston & Strawn, McKenna, Long & Aldridge, Sheppard Mullin, Wells Fargo, Proskauer Rose and Manatt Phelps Phillips. And the DIR. Proving that it is now little more than a political spoil, Labor Commissioner Angela Bradstreet also sought publication of the opinion, even though it contradicted a long-standing DLSE position (taken when the GOP did not control the DLSE's policies). The 4th District responded to the requests, and a petition for review, by sending a letter to the Supreme Court saying this:

Enclosed are 10 requests to publish the opinion in the above matter, together with a copy of the opinion. By separate letter, this court is requesting that the Supreme Court grant review and transfer the case to this court. This court recommends the opinion not be published on the ground it does not yet meet the standards for publication.

The separate letter said:

Chief Justice George: In the matter of Brinker Restaurant Corporation v. Superior Court of San Diego County/Hohnbaum, et al. (S157479, D049331), the Fourth Appellate District, Division One issued an opinion on October 12, 2007, stating the opinion is final as to this court immediately. The portion of the opinion stating it is final immediately is a clerical error, therefore this court respectfully requests that the Supreme Court grant review and transfer the case to this court. Please note a Petition for Review was filed on October 22, 2007. By separate letter from Acting Presiding Justice Gilbert Nares in response to the 10 requests to publish the opinion in the above matter, the court has recommended the opinion not be published on the ground that it does not yet meet the standards for publication.

In response, the Supreme Court quickly vacated the opinion:

At the request of the Court of Appeal, review is granted on this court's own motion. The cause is transferred to the Court of Appeal, Fourth Appellate District, Division One, with directions to vacate its opinion and reconsider the matter as it sees fit. The petition for review is denied as moot. The requests for publication are denied as moot. Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno and Corrigan, JJ.

As a result, the opinion is, for the time being, not only unpublished, but vacated. When and in what form the final opinion will be published is anyone's guess. The court's website says a remittitur will be issued on November 13, 2007, but that clearly will not happen. Whether further briefing or argument will be permitted in connection with the reconsideration is unclear.

More than 125,000 Wal-Mart workers involved in a wage and hour class action pending in Philadelphia will have $500 in waiting time penalties tacked on to their earlier collective award of $78.5 million. According to an Associated Press report:

Wal-Mart workers in Pennsylvania who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages, a judge ruled Wednesday.

About 125,000 people will receive $500 each in damages under a state law invoked when a company, without cause, withholds pay for more than 30 days.

A Philadelphia jury last year awarded the workers the exact amount they had sought, rejecting Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work here and there was insignificant.

In his written opinion, Philadelphia Common Pleas Judge Mark Bernstein wrote "The law in its majesty applies equally to highly paid executives and minimum wage clerks." By this time next week, google searches for the phrase "the law in its majesty" will be leading you mostly to this Wal-Mart story, rather than the amusing old quip by Anatole France: “The law in its majesty equally forbids the rich as well as the poor to sleep under bridges."

A Wal-Mart spokesperson decried the award. "Many employees testified that they skipped rest breaks by choice. While we discourage that practice, employers should not be penalized when employees do that on their own," said the spokeswoman, Sharon Weber. That defense tactic failed in Wal-Mart's meal break class action in California last year, but it did help the retailer avoid certification of the rest period portion of the California class action.

Los Angeles Superior Court Judge William MacLaughlin has ruled that Huntington Memorial Hospital violated California Labor Code § 510 by paying its nurses and other employees a lower, hourly, rate-of-pay when they worked overtime shifts of 10 hours or more in a day. Huntington Memorial Hospital set up a pay scheme under which received a “short shift bonus” of 16.66667% whenever they worked less than 10 hours per day. Virtually all nurses worked either 8-hour shifts or 12-hour shifts. The mechanics of the practice were such that employees working 8 hours, with their "short shift bonus" earned the same hourly rate as they did when they worked a 12 hour shift without the
short shift bonus." The hospital, represented by Littler Mendelson, argued that the “short shift bonus” plan was really designed to confer an "extra benefit" upon employees when they were not afforded the wonderful opportunity to work a 12-hour shift with overtime pay. Attorneys for the class argued that the true purpose and effect of the plan was to reduce employees' pay on long shifts so as to negate the overtime rate required under California law.

The case was certified in 2004, and the issue was tried in the first part of a bifurcated trial that wrapped up in July. Judge MacLaughlin's memorandum of decision can be read in the attachment found here. The findings and determinations were as follows:

• (1) Defendant's pay system during the class period is an artifice or subterfuge which evaded and failed to comply with the overtime laws;
• (2) the regular rate of pay for 12-hour employees does not need to be computed in a "wholly unrealistic and artificial mannet' in the circumstances of this case to prove a violation of the wage laws; in this instance, Defendant's failure to include the SSP in the calculation of the regular rate violated the law and its purposes;
• (3) the amounts paid to the Class after the 8th and 12th hour of the work day, or 80 hours in a pay period, did constitute payment for overtime (although not based on the correct regular rate) and do not have to be included in the calculation of the regular rate;
• (4) the short shift premium was remuneration based on the hours worked and any other reason for its payment does not exclude it from calculation of the regular rate; and
• (5) the evidence produced by Plaintiffs established that the short shift premium must be included in the calculation of the regular rate of pay for 12 hour employees who worked 10 or more hours in a scheduled 12-hour shift during the class period.

On the legal issues, the Court found that the evidence produced establishes by a preponderance of the evidence that Defendant's pay system during the class period violated California Labor Code Section 510 and that such violation warrants restitution to members of the Class of the amounts representing the difference between what was actually paid and the amount that should have been paid as overtime to 12-hour employees who worked 10 or more hours in a shift.

The decision is not binding on any other court, and cannot be cited, but it is an interesting read nonetheless. Short shift bonuses are not common, but not unheard of in California, either. Absent a settlement, this case could result in a published opinion sometime in 2008 or 2009.

Judge Charles R. Breyer of the Northern District of California has granted in part and denied in part a defense motion for partial summary judgment regarding an FLSA collective action for donning and doffing police uniforms and equipment.

The Court concludes that Plaintiff and his fellow consenting officers are not entitled to compensation for the time they spend donning and doffing their police uniforms. Insofar as their claims purport to recoup compensation for such activity, Defendant’s motion for summary judgment is GRANTED in part. As for the donning and doffing of required “duty equipment,” the Court concludes that summary judgment is unwarranted, notwithstanding Defendant’s formal policy of permitting officers to put on and take off their protective gear at home. In the Court’s view, a triable issue of fact exists about whether the “nature of [a peace officer’s] work” actually requires them to don and doff their gear at the station. 29 C.F.R. § 790.8(c) n.65. For this reason, Defendant’s motion for summary judgment in DENIED in part.

There is no sure indication that this case will be appealed, but Martin v. City of Richmond is nonetheless interesting reading if you have donning/doffing cases. You can download it in pdf here.

Q: May a party lose its contractual right to compel arbitration if, when negotiating and seeking approval of a class action settlement, it misrepresents the benefits of the proposed settlement to the court, opposing counsel and others?
A: Yes.

In Aviation Data, Inc. v. American Express Travel Related Services Company, Inc., the trial court refused to approve a class action settlement when it concluded that counsel for defendant American Express Travel misled the plaintiffs in the course of negotiations by offering to make significant modifications to its travel insurance program that, unbeknownst to the plaintiffs, it had already made for reasons unrelated to the lawsuit. The trial court then ruled that, that due to its misleading conduct, Amex lost its right to compel arbitration. The Court of Appeal affirmed.

By soliciting amendment of the complaint to allege a nationwide class and then crafting a proposed settlement structured around largely illusory relief, Amex forced ADI to intervene in the California action and required ADI and the plaintiff class to engage in protracted and costly discovery and appearances before the court as its deception about the implementation of the TAA code gradually surfaced. Only after the truth was unearthed and the settlement failed did Amex move to compel arbitration. Amex’s conduct smacks both of “substantive” prejudice “such as when a party loses a motion on the merits and then attempts, in effect, to relitigate the issue by invoking arbitration”; and of the situation in which a party “too long postpones his invocation of his contractual right to arbitration, and thereby causes his adversary to incur unnecessary delay or expense.” (Thyssen, Inc. v. Calypso Shipping Corp., S.A., supra, 310 F.3d at p. 105.)

It's interesting reading for anyone who does class action litigation or needs, from time to time, to challenge an arbitration agreement. You can download the full opinion here in pdf or word format.