If you get a judgment against a contractor in California and the contractor doesn't pay, you can have its contractor's license suspended. Just send a copy of the judgment or an abstract to the Contractors State License Board and the license will be suspended within 90 days.
An article published in the Winter 2009 edition of the Harvard Law & Policy Review concludes that employees in employment discrimination lawsuits tend to do much better in state court than federal court. In “Employment Discrimination Plaintiffs in Federal Court: From Bad to Worse?”, professors Kevin M. Clermont & Stewart J. Schwab report that plaintiffs in non-employment lawsuits win half of the time, but win just 15 percent of the time in employment discrimination cases in federal courts. On appeal, the circuit courts reverse 41% of the district courts' pro-employee decisions, and only reverse 8.7% of the district courts' pro-employer decisions. The article doesn't specifically address wage and hour case results. It does not the increase in wage cases, however, which contrast with a marked decline in the volume of other employment cases from 1999 to 2007.
Instead, there have been reports of a recent spike in employment class actions, as well as reports of increases in other kinds of employment litigation. E.g., Julie Kay, Employers Start to Push Waivers, Nat’l L.J., June 9, 2008, at 8 (“overtime lawsuits have become the most common form of employment lawsuit”); Sheri Qualters, Firms Beef Up Employment Practices, Nat’l L.J., Mar. 17, 2008, at 10 (“Employment cases are increasingly likely to be labor-intensive class actions, instead of individual employees bringing grievances to court . . . .”); Fourth Annual Workplace Class Action Litigation Report from Seyfarth Shaw Notes Significant Growth in High Stakes Litigation at State Court Levels: Volume of Wage and Hour Litigation Continues to Increase Exponentially; Employment Discrimination Class Actions Theories and Remedies Continue to Evolve and Expand; and the Size of ERISA Class Action Settlements Outpace all Other Types of Class Action Resolutions, http://www.seyfarth.com/dir_docs/news_item/2a69ffe5-df15-475f-a78a-da0661200731_documentupload. pdf (Jan. 14, 2008). Although class actions constitute only about a third of one percent of the number of cases in code #442, see Nielsen & Nelson, supra note 6, at 692, an increase in class actions could account for part of the drop in individual actions, unless the class actions mainly mobilized new sorts of plaintiffs. Additionally, the AO does not categorize wage-and-hour or equal-pay suits as discrimination suits under code #442, but rather under code #710.
Another interesting, if not light, read.
One dirty trick we have been seeing more frequently is a bit of gamesmanship that permits a defendant to avoid the one deposition rule. In California, absent a court order providing otherwise (and upon a showing of good cause), a party is limited to taking only one single deposition of a party who is a natural person, i.e., a wage and hour plaintiff. Code of Civil Procedure § 2025.610(a); Fairmont Ins. Co. v. Superior Court (Stendell) (2000) 22 Cal.4th 245, 254.
"Once any party has taken the deposition of any natural person, including that of a party to the action, neither the party who gave, nor any other party who has been served with a deposition notice pursuant to Section 2025.240 may take a subsequent deposition of that deponent."
Certain firms will often try to circumvent the one-deposition rule by noticing the plaintiff's deposition for a single day, with the proviso that it shall "continue from day to day thereafter until completed." Then, at the end of that first day, or perhaps at the end of the second day, the attorney will declare that more time is needed, and the deposition will have to resume at some future mutually convenient date, usually one which cannot be determined at that moment, because the attorney doesn't have a calendar, or is about to begin a very important trial or other time-consuming project.
Sometimes, this is the result of an unexpectedly slow deposition. More often than not, however, what the attorney is trying to do is have the advantage of taking an early deposition, to cement and discover, for themselves and their witnesses, what plaintiff's testimony will be, but preserve the ability to take a later deposition after more information and evidence can be gathered. Be ready for this tactic. Before the deposition, inquire as to counsel's availability for the days following the deposition, and advise counsel, in writing, that the deposition will be day-to-day, as noticed, and you will not produce the witness for another day of deposition if those days are non-consecutive, so that Plaintiff's deposition can be concluded in one sitting. If that doesn't work, consider bringing an immediate motion for a protective order requiring counsel to begin Plaintiff's deposition only on a date on which it can be finished within X number of consecutive weekdays.
Have any of you been curious about what happened on remand in On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079? That was a case in which an employee, as a cross-complainant, sued his former employer for unpaid wages. The action was settled pursuant to a statutory offer of compromise under Code of Civil Procedure § 998, and the employee moved for attorney fees. The Superior Court denied the motion for attorney fees, and the employee appealed.
Cross-complainant David Mazur appeals from an order denying his motion for attorney’s fees after settling his action for unpaid wages pursuant to a statutory offer of compromise. (Code Civ. Proc., § 998.) Because the trial court erred in ruling that the Labor Code provisions ensuring an employee’s right to payment of wages did not apply to salaried corporate executives, we reverse and remand for further proceedings.
So the employee is entitled to seek attorney fees after settling his action pursuant to statutory offer of compromise, and the Labor Code provisions ensuring an employee's right to payment of wages applied to employee, as a salaried corporate executive, not just to hourly workers. Great. But what happened on remand?
Nothing.
A month later, On-Line Power, Inc. filed for bankruptcy and nothing more happened in the case.
Case Number: BC294513
ONLINE POWER INC VS MILTON HANSONFiling Date: 04/23/2003
Case Type: Other Employment Complaint (General Jurisdiction)
Status: Other Judgment 10/20/2005
Future Hearings
None06/26/2007 Remittitur (REVERSED AND REMANDED REMITTITUR ISSUED ON 6-21-07 S/T D-30 6-29-07 )
Filed by Clerk05/21/2007 Notice of Bankruptcy Stay
Filed by Atty for Defendant and Cross-Compl
It would have been interesting, perhaps.
This one escaped our radar initially. Last month, the California Supreme Court denied a petition for review in Johnson v. Glaxosmithkline (2008) 166 Cal.App.4th 1497, which we discussed last month in a post found at this link. The case involved the applicability of collateral estoppel to prior orders denying class certification in actions brought on behalf of a similar putative class.
If you lose a summary adjudication motion and motion for class certification, you cannot settle all of your individual claims and stipulate to the entry of a judgment bawed upon that settlement while still preserving your right to appeal the summary adjudication and class certification issued. If you try, your appeal will be dismissed as moot. Larner v. L.A. Doctors Hosp. Assocs. (2008) 168 Cal.App.4th 1291.
Josephine Larner, a nurse, sued her former hospital employer for violation of overtime laws, purporting to represent a class of current and former nonexempt employees. The trial court granted in part the hospital’s motion for summary adjudication of Larner’s claim that the hospital failed to pay for overtime hours. Larner then amended her complaint, stating individual and class claims for failure to properly calculate overtime pay rates and for failure to keep accurate and complete wage records. The trial court denied Larner’s motion for class certification. The parties entered into a settlement agreement and stipulated to the entry of final judgment in favor of the hospital. Larner appeals both the summary adjudication of her overtime hours claim and the denial of her certification motion. We dismiss the appeal as moot.
“Generally, courts decide only ‘actual controversies’ which will result in a judgment that offers relief to the parties. [Citations.] Thus, appellate courts as a rule will not render opinions on moot questions . . . . The policy behind this rule is that courts decide justiciable controversies and will normally not render advisory opinions. [Citations.] [¶] One such event occurring for which a reviewing court will dismiss an appeal is when the underlying claim is settled or compromised.” (Ebensteiner Co., Inc. v. Chadmar Group (2006) 143 Cal.App.4th 1174, 1178-1179.) When a case has settled, dismissal of the appeal is the appropriate disposition because “settlement operates as a merger and ban as to all preexisting claims and those alleged in the lawsuit that have been resolved.” (Id. at p. 1179, citing Armstrong v. Sacramento Valley R. Co. (1919) 179 Cal. 648, 651].)
This may not mean that a plaintiff cannot settle a case individually and still proceed with some classwide claims on behalf of others. See La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 871. Individual relief to the named plaintiffs in a class action does not, in itself, render those plaintiffs unfit per se to represent the class. Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582, 594. A defendant’s offer to settle, by waiving its right to enforce a complained-of clause in a contract against class representatives, or by offering the named plaintiff reimbursement of fees the class action challenged as improperly deducted, does not necessarily end the class action. Even after an offer of individual relief, the named plaintiff may retain an interest in proceeding on behalf of the other members of the class who are similarly situated. If, because of such relief, the court concludes that the named plaintiff is no longer a suitable representative, the court should grant the plaintiff leave to amend the complaint to redefine the class, or add new class representatives, or both.
You just can't do it by stipulating to a final judgment on the settlement after losing your class certification motion, and then appealing, as they did here. You can download the full text of Larner here in PDF or Word format.
Peculiar procedural detail: "After a number of continuances, the court set a final trial date of July 11, 2007 on Larner’s remaining claims. On May 23, 2007, Larner moved for certification of two separate classes, one for each of her two remaining issues: improper calculation of overtime rates and failure to keep accurate and complete wage records. The trial court denied the motion on June 20, 2007, because the motion was unduly tardy, because Larner’s claims were not typical of the proposed classes, and because the class definitions were overbroad." A certification motion set for hearing three weeks before trial? That must have been a nightmare.
In 2007, the California Supreme Court held in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, that a trial court has the discretion to authorize a pre-certification communication to members of a putative class in a consumer case, informing the putative class members that their names and addresses would be released to the attorneys for the putative class unless they affirmatively objected. Pioneer Electronics was quickly applied to a wage and hour case in Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554.
Since Belaire-West, there have been several cases strengthening the right to discovery and access to witnesses in class actions. The latest: Alch v. Superior Court (2008) 165 Cal.App.4th 1412, involving subpoenas to third parties. The need for balancing of privacy rights is not a sufficient ground to prevent plaintiffs from access to data necessary to their attempt to prove their case, and a statistical study need not be proven valid in advance simply because the underlying data is subject to privacy claims.
Television writers filed class action lawsuits against studios, networks, production companies and talent agencies, asserting an industry-wide pattern and practice of age discrimination. The writers served subpoenas on third parties, including the Writers Guild of America, seeking data on Writers Guild members from which they could prepare a statistical analysis to support their claims of age discrimination. A privacy notice was sent to 47,000 Writers Guild members, advising them of their right to object to disclosure of personal information on privacy grounds. Some 7,700 individuals filed objections. The writers moved to overrule the objections. The trial court sustained the objections in their entirety. The writers sought a writ directing the trial court to vacate its order and allow access to certain of the requested information, arguing the information was critical to proving their claims and privacy concerns were minimal. We grant the writ petition.
Thus, notwithstanding the privacy objections of the members, the plaintiffs get work history information and demographic data. You can download the full text of Alch here in PDF or MS Word format. A petition for review was denied.
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.
The Class Action Fairness Act of 2005 provides, at 28 U.S.C.A. § 1715(b), for notice of class action settlements to be given by the defendant to the appropriate federal and state attorneys:
In General.— Not later than 10 days after a proposed settlement of a class action is filed in court, each defendant that is participating in the proposed settlement shall serve upon the appropriate State official of each State in which a class member resides and the appropriate Federal official, a notice of the proposed settlement consisting of—
(1) a copy of the complaint and any materials filed with the complaint and any amended complaints (except such materials shall not be required to be served if such materials are made electronically available through the Internet and such service includes notice of how to electronically access such material);
(2) notice of any scheduled judicial hearing in the class action;
(3) any proposed or final notification to class members of—
(A) (i) the members’ rights to request exclusion from the class action; or
(ii) if no right to request exclusion exists, a statement that no such right exists; and
(B) a proposed settlement of a class action;(4) any proposed or final class action settlement;
(5) any settlement or other agreement contemporaneously made between class counsel and counsel for the defendants;
(6) any final judgment or notice of dismissal;
(7)
(A) if feasible, the names of class members who reside in each State and the estimated proportionate share of the claims of such members to the entire settlement to that State’s appropriate State official; or
(B) if the provision of information under subparagraph (A) is not feasible, a reasonable estimate of the number of class members residing in each State and the estimated proportionate share of the claims of such members to the entire settlement; and(8) any written judicial opinion relating to the materials described under subparagraphs (3) through (6).
An order giving final approval of a proposed settlement may not be issued earlier than 90 days after the later of the dates on which the appropriate federal official and the appropriate state official are served with the required notice. 28 U.S.C.A. § 1715(d). If the notices are not provided, a class member may choose not to be bound by a settlement agreement or consent decree in a class action. Take it from a defense attorney whom we will not name: This is one of those many lessons in life that are best learned by observing the mistakes of others, rather than learning from one's own mistakes.
Can a company defeat several of an employee's claims and still be on the hook for all of his attorney's fees if the employee wins on just one substantial claim? Yes. "The law does not mandate . . . that attorney fees bear a percentage relationship to the ultimate recovery of damages in civil rights cases." Harman v. City and County of San Francisco (2007) 158 Cal.App.4th 407. In Harman, a jury found in favor of the employee on a discrimination claim, and even though the court had dismissed most of the employee's claims, the jury award of $30,300 in damages justified an award of attorney's fees, and the trial court found $1.1 million to be the reasonable amount of fee incurred pursuing the case. Aside from $144,170 spent on a prior appeal, the Court of Appeal upheld the award.
In conclusion, we borrow from Justice Powell's observations in his concurring opinion in Riverside: “On its face, the fee award seems unreasonable. But [we] find no basis for this Court to reject the findings made and approved by the [court] below.” (Riverside v. Rivera, supra, 477 U.S. 561, 581 (conc. opn. of Powell, J.).) Although we may have exercised our discretion differently, we “cannot conclude that the detailed findings made by the [trial court] … were clearly erroneous, or that the [trial court] abused its discretion in making this fee award.”
We have a case headed in this direction, not out of a lack of trying to settle it early.
Can a defendant bring a motion to decertify a class action before the court has certified the class in the first place? The answer, it appears, is sometimes. In re BCBG Overtime Cases (2008) 163 Cal.App.4th 1293.
Christina Denkinger appeals from the order granting the motion made by the defendant, AZ3, Inc., to strike class allegations from her complaint. She contends the trial court erred in granting the motion to strike based on evidence outside the pleadings; at the least, she contends, the trial court should have given her leave to amend the 2 complaint. Alternatively, Denkinger contends if the trial court properly relied on evidence outside the pleadings, it erred in striking the class allegations without affording her an opportunity to test the evidence through discovery. We find the trial court correctly handled the motion under class certification guidelines, properly receiving evidence on the class certification issue and exercising its discretion in denying certification. Accordingly, we affirm.
More than four years after the action was filed, the defendant filed a motion to strike the class allegations. The Plaintiffs opposed the motion, contending it was an improper attempt to circumvent the class certification process. At oral argument, the plaintiffs requested leave to amend, time to conduct further depositions, and a Pioneer notice. The trial court refused, and granted the motion to strike the class allegations, finding the motion was properly before it because “class certification issues may be determined at any time during the litigation.” It found that BCBG had met its burden to show that the action is not suitable for class certification by producing “substantial evidence which establishes that Plaintiffs cannot prove the elements of typicality or commonality necessary for class certification.”
On appeal, plaintiffs contended the motion to strike was improper because (i) evidence outside the pleadings cannot be considered on a motion to strike; and (2) the motion was a premature challenge to class certification. THe Court of Appeal rejected both arguments. First, a
motion filed under rule 3.767 was not an attack on the pleadings ... a traditional motion to strike; rather, it was a request to initiate the class certification process. The motion was timely, and the trial court properly took evidence outside the pleadings and denied the belated discovery request. Trial courts are given broad flexibility when dealing with the certification of class actions. (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1087.) In fact, our Supreme Court has urged trial courts “to be procedurally innovative, encouraging them to incorporate procedures from outside sources in determining whether to allow the maintenance of a particular class suit.” (City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 453.) motion and when discovery on the issue is still on-going.” (Ibid.)
Second,
The record in the case before us presents a different procedural posture. BCBG’s motion was filed 22 months after the filing of Plaintiffs’ coordinated complaint, 33 months after Denkinger’s complaint, and four years after Williams and Thornhill’s complaint. During the time between the filing of the coordinated complaint and the motion, Plaintiffs had, as Deckinger puts it, been engaged in “an extensive law and motion battle regarding the identity of members of the putative class and the declarations filed in support of Respondent’s Motion ....
Had this motion been brought at the beginning of the case, it almost certainly would have been denied. See, e.g., Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410 (motion to determine class representatives’ adequacy was an "end-run around the certification procedures and an attempt to deny plaintiffs the ability to present their case.") But because the plaintiffs had the benefit of several years of prosecuting their case, the court was willing to entertain an evidentiary motion on certification filed by either side.
The record on appeal wasn't clear, but there appear to have been some discovery motions rendered moot by the order granting the motion to strike. However, the Court of Appeal was not swayed by this detail, for a variety of procedural reasons:
BCBG’s motion to strike the class allegations was not made before the Plaintiffs had a chance to conduct discovery on class certification issues. Such discovery had been going on for some time, although some of the plaintiffs’ efforts had apparently been thwarted by adverse rulings from the court. The propriety of these rulings is not before us. The Plaintiffs received proper notice of BCBG’s motion and had the opportunity to respond with evidence of their own. They presented nothing to counter BCBG’s evidence that the action did not meet the requirements of a class action. Deckinger complains Plaintiffs have not had the opportunity to test the veracity of the declarations submitted by BCBG in support of its motion; she argues they should have been granted leave to depose the declarants. But she could have asked for leave to conduct discovery and a continuance after she received notice of the motion. The only discovery request Plaintiffs made was at oral argument, and that request was for an opportunity to explore their suspicion that BCBG had engaged in misrepresentations to the declarants.
One bit of dictum in this opinion is noteworthy for anyone seeking a class representative enhancement award, particularly in Orange County. During oral argument, Judge Sundvold remarked
“[T]his is frankly when a class rep ought to be out there dialing for dollars, talk[ing] to their friends and former employees, . . . and saying what’s going on out there, what have you heard. And that’s the kind of investigative work that would really, to me, make a class rep worth their weight in gold.”
A class rep's weight in gold is a lot less than most receive in some courts.
The Supreme Court denied a petition for review and a request for depublication. Justice Kennard voted in favor of review. You can download In re BCBG Overtime Cases here in pdf or MS Word format.
It isn't a wage & hour case, but this is the most ridiculous b.s. settlement tactic we've ever seen in an employment dispute: Nelson v. American Apparel, Inc. In an unpublished opinion, which should be published if for no other reason than so that people will read the facts, the Second District enforced an arbitration agreement under the most bizarre of circumstances:
Defendants, American Apparel, Inc., Dov Charney, and Martin Bailey, appeal from an order denying their petition to compel arbitration under a settlement agreement. Defendants seek to arbitrate two issues. First, defendants seek to arbitrate the issue of whether plaintiff, Nancy Nelson, and her attorneys breached the settlement agreement by failing to appear in San Francisco at an “arbitration” with foreordained facts and a predetermined award which would be followed by the issuance of a misleading press release. Second, defendants seek to compel arbitration of whether plaintiff or her attorneys breached the confidentiality provisions of the settlement agreement. We conclude the language in the arbitration clauses in the settlement agreement required the petition to compel arbitration of these two disputes be granted. We emphasize defendants are not seeking to compel arbitration of the questionable “arbitration” with foreordained facts and a predetermined award which would be followed by the issuance of a misleading press release.
Here are the facts:
On May 4, 2005, plaintiff filed an action against defendants American Apparel, Inc., its chief executive officer, Mr. Charney, and a vice president, Mr. Bailey. Plaintiff alleged that during her employment as a sales manager for American Apparel, Inc., Mr. Charney subjected her to a hostile work environment based on her gender by regularly making unwelcome, inappropriate comments, and suggestive non-verbal gestures, and ultimately wrongfully terminating her employment. In her first amended complaint, filed on September 19, 2005, plaintiff asserted causes of action for violations of the Government, Labor, and Business and Professions Codes, wrongful termination in violation of public policy, and defamation. The matter was set for trial on January 24, 2008.
On January 23, 2008, however, the parties entered into the settlement agreement. In the settlement agreement, defendants, without admitting liability, agreed to pay plaintiff $1.3 million. Also, plaintiff agreed to release all of her claims against defendants and to dismiss the present lawsuit.[1] Additionally, the parties agreed that an arbitrator selected by and paid for by defendants would enter a specified award (stated word for word) in defendant’s favor based on a stipulated record.
Paragraph 7 of the settlement agreement provided in part: “Confidential Arbitration [¶] The parties agree to conduct a confidential arbitration pursuant to the following terms and conditions: [¶] (a) The Arbitrator shall be selected by American Apparel at its sole and unfettered discretion. The Arbitrator’s fee will be paid by American Apparel. [¶] (b) The issue presented to the Arbitrator will be, ‘Did American Apparel or Dov Charney subject Mary Nelson to unlawful sexual harassment in violation of the California Fair Employment & Housing Act.’ [¶] (c) The Arbitrator will issue a decision based solely on the following stipulated record: [¶] (i) The Supreme Court’s decision in Lyle v. Warner Brothers Television Productions, including the concurring opinion by Justice Chin, 38 Cal.4th 264 (2006), is the governing law. [¶] (ii) Nelson complains that she was unlawfully harassed by American Apparel’s marketing materials, as well as the use of sexual speech by employees of American Apparel. [¶] (iii) Dov Charney never sexualized, propositioned or made any sexual advances of any nature whatsoever towards Mary Nelson. [¶] (iv) The marketing materials, sexual speech and much of the conduct about which Nelson complains are protected under the First Amendment’s guarantee of free speech. [¶] (v) The remainder of the speech and conduct about which Nelson complains was not directed at her or other women because of their gender. [¶] (d) The Arbitrator’s decision will state only the following: [¶] ‘Mary Nelson was not subjected to unlawful sexual harassment in violation of the California Fair Employment & Housing Act. Dov Charney never sexualized, propositioned or made any sexual advances of any nature whatsoever towards Mary Nelson. The marketing materials, sexual speech and much of the conduct about which Nelson complains are protected under the First Amendment’s guarantee of free speech and cannot form the basis for any claim. The remainder of the speech and conduct about which Nelson complains was not directed at her or other women because of their gender and therefore was not actionable.’”
The settlement agreement contemplated that following defendants’ receipt of the arbitrator’s order, and concurrent with receipt from plaintiff of a fully executed request for dismissal with prejudice—no later than February 7, 2008—defendants would deliver the $1.3 million to plaintiff.
Finally, the parties agreed American Apparel, Inc. would be allowed to issue a press release stating an arbitrator had ruled in defendants’ favor. Paragraph 7(e) of the settlement agreement provided: “Following issuance of the Arbitrator’s decision and order, American Apparel may issue the following press release:
‘American Apparel and its CEO Dov Charney announced today that an Arbitrator has ruled in their favor in the highly-publicized action brought by former sales manager Mary Nelson. The Arbitrator ruled that the marketing materials, sexual speech and much of the conduct about which Nelson complained are protected under the First Amendment’s guarantee of free speech and could not form the basis for any claim. The Arbitrator further ruled that Dov Charney never sexualized, propositioned or made any sexual advances of any nature whatsoever towards Mary Nelson, and the remainder of the speech and conduct about which Nelson complained was not directed at her or other women because of their gender, and therefore was not actionable. The decision puts an end to the sexual harassment claims against Charney and the Company. ‘I am pleased that we have been able to bring clarity to the role of the First Amendment in the American workplace,’ Charney stated.”
[1] Defendants, without admitting liability, agreed to compensate plaintiff as follows: “In consideration of the covenants undertaken and releases given herein by Plaintiff, specifically including but not limited to, the Arbitrator’s Award referenced in Paragraph 7 below, the Company shall provide Plaintiff with the following consideration in full and final settlement of any and all matters of any kind or nature which were alleged by, or could have been alleged by, Plaintiff against the Company and/or any of the Releasees identified in Paragraph 4 below: following receipt by the Company of the decision and order of the Arbitrator pursuant to Paragraph 7, below, and concurrent with the receipt by counsel for the Company of a fully executed Request for Dismissal with prejudice, as set forth in Paragraph 3, below (and in no event later than February 7, 2008), the Company will pay the total amount of One Million Three Hundred Thousand Dollars ($1,300,000.00), for alleged emotional distress damages . . . .”
Apparently, $1.3 million can buy you a fair amount of free speech, but it didn't really turn out to be so free.
Next week: we'll be reviewing 24 cases that came down in the last quarter and haven't yet been discussed here.
In many overtime cases, even if liability is clear, if the employee was salaried, or alleges other off-the-clock hours, the parties often spend enormous amounts of time, energy and money trying to quantify damages by proving exactly how many hours of overtime an employee worked. Where the employer's pay or time records are inaccurate or incomplete and the employee cannot offer "convincing substitutes," the employee satisfies his or her burden by producing evidence sufficient to permit a just and reasonable inference regarding the extent of the overtime work. Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, 687, 66 S.Ct. 1187, 1192. However, the more detailed and reliable the evidence, the stronger the inferences you can draw about your time estimates.
Sometimes, the proof comes from unusual sources. Have you considered GPS? This article from Law Technology News suggests you might be using GPS more in the future.
Geopositioning will aid civil cases, too. The day is not long off when we will be able to place price fixers or cheating spouses in the same room, or calculate the speed, path and braking action of colliding drivers. We'll gauge exposure to environmental toxins, challenge a witness' ability to observe, calculate wage and hour abuses, prove an employee was asleep at the switch and precisely determine a claimant's proximity to an explosion.
As GPS-enabled cell phones become a 24/7 possession for more and more employees, the ability to determine exactly where employees were, and for how long, becomes more prevalent. Soon, it might be easy to figure out exactly how late those salaried non-exempt workers were staying at the office every day.
In light of last month's decision in Brinker Restaurant Corp. v. Superior Court (2008) __ Cal.App.4th __, we've heard from quite a few plaintiffs' lawyers who are planning to make PAGA allegations a routine part of every meal and rest period case they file or continue to pursue. There is currently no requirement to certify a class in a PAGA case, but the Supreme Court has that issue under review in Arias v. The Superior Court of San Joaquin County (Angelo Dairy) (Supreme Court case no. S155965), which is now fully briefed.
That tactic may be less prevalent if the Brinker decision is reviewed by the California Supreme Court. Brinker became final 30 days after the decision was published. That date was August 21, 2008. Ordinarily, a petitition for review is due ten days after the decision becomes final. In fact, the petition for review was filed today. The Supreme Court now has 60 days (until October 28, 2008) to grant or deny review. The Supreme Court makes such decisions in its weekly conferences each Wednesday. In effect, this means the decision will come by Wednesday, October 22, 2008. However, the Supreme Court can grant themselves 30 day extensions, and they often do. It could easily, therefore, be the end of November before Brinker becomes non-citable, or remains citable. For now, it is good law.
Here's a novel way to improve your bottom line:
Sooner or later, we'll find out whether it works. Sushi Sharon filed its lawsuit against the Labor Commissioner as a class action, on behalf of “all California employers who are presently subject to or in the future may be subject to an administrative action before the California labor commissioner in which an award of wages is sought by a person not illegally authorized to work in the United States.”
We're assuming that the double-negative is a typo.
It will be interesting to see how they ascertain such a class. How many employers are going to line up to admit that they hire undocumented workers, entitling them to share in the fruits of the case as "California employers who ... in the future may be subject to an administrative action before the California labor commissioner in which an award of wages is sought by a person not [legally] authorized to work in the United States”?
When an employee sues for overtime wages, but cannot accurately provide an accounting of all hours worked, because neither the employee nor the the employer kept a record of the employee's time, who bears the burden of proving exactly how many hours were worked? The answer is that the employee bears only the burden of proving that some unpaid compensable time was worked, and then providing some estimate of how many hours. Then the burden shifts to the employer to establish a more certain number.
.
Labor Code § 1174 requires every employer to maintain "payroll records showing the hours worked daily by and the wages paid to employees." Similarly, Section 7 of each Industrial Welfare Commission (IWC)wage order requires employers to keep accurate information, including time records showing when the employee begins and ends each work period, meal periods, split shift intervals, and total hours worked. "It is the employer’s responsibility to keep accurate records of the time that employees work. If the employer fails to maintain accurate time records, the employee’s credible testimony or other credible evidence concerning his hours worked is sufficient to prove a wage claim. The burden of proof is then on the employer to show that the hours claimed by the employer were not worked." DLSE Enforcement Policies and Interpretative Manual, § 29.1.1. Failure to do so can have quite significant evidentiary consequences for the delinquent employer.
"Where the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages." Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16. See also Anderson v. Mt. Clemens Pottery Co. (1945) 328 U.S. 680, 688 ("Due regard must be given to the fact that it is the employer who has the duty to keep proper records of ...hours.... If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.")
If a trial court concludes that an employee's offer of proof of the number of overtime hours would cause the court to guess at the amount of damages, and therefore the employee cannot meet his burden at trial, is an error of law. "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. 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." Hernandez v. Mendoza (1988) 199 Cal.App.3d 721.
The lesson to be learned: keep records of the hours worked by all employees, even the ones you think are exempt.
A developing defense trend in class action litigation involves defense firms and, at their urging, courts looking more closely for pre-existing relationships between class action plaintiffs and their lawyers, including searches for plaintiffs who have been "improperly" solicited. Defendants tend to believe that it is difficult to find a "clean class representative", especially after class action guru-turned-felon William Lerach commented earlier this year that illegal kickbacks were widespread among all class action lawyers.
Last year, in Bodner v. Oreck Direct, LLC (N.D. Cal. 2007) 2007 U.S. Dist. LEXIS 30408, 2007 WL 1223777 (Case No. 3:06-cv-04756-MHP) Judge Marilyn Hall Patel denied a motion to certify a class of more than 75,000 buyers of air purifiers from Oreck Direct because the plaintiff knew little about the case and had simply answered an ad in the San Francisco Bay Guardian looking for plaintiffs.
"The conduct in this action does not look good, does not sound good, and does not smell good. In fact, it reeks ... In light of plaintiff's undeniable and overwhelming ignorance regarding the nature of this action, the facts alleged, and the theories of relief against defendant, the court cannot conclude that he has met the threshold typicality or adequacy requirements. ... It is clear from the record that plaintiff's counsel, and not plaintiff, is the driving force behind this action."
The record reflects that the plaintiff filed a motion for reconsideration, but nothing on PACER suggests whether the court has ruled on that motion. Curiously, the Bodner opinion relied upon a 1996 New York case that is in conflict with California law. Meachum v. Outdoor World Corp. (1996) 654 N.Y.S.2d 240, 369 (“Solicitation of clients for the commencement or continuation of a class action is improper, sufficient to warrant denial of class action certification.”); cf La Sala v. American Sav. & Loan Assn (1971) 5 Cal.3d 864 (plaintiff who is no longer a member of the class generally must be granted leave to amend the definition of the class and/or to substitute a new class representative to preserve the claims of putative class members.) Bodner is not citeable in federal court, and in state court, it's effect is devastated by a citation to La Sala.
But in most wage and hour class actions, this whole problem is non-existent. Some consumer class actions begin with advertisements, and some securities class actions apparently begin with offers of kickbacks by crooked lawyers, but most wage and hour class actions start the same way: by recently terminated employees calling attorneys to find out if they have a good wrongful termination case. Sooner or later, the conversations turn to wage and hour violations, and frequently, those discussions uncover one or more widespread violations. (see, e.g., Storm's California Employment Law: "in any intake situation involving an employee, the attorneys quickly turn to wage and hour topics, no matter what the conversation starts with.").
Those conversations, of course, are privileged. We recently had a defendant attempt to find out how our client had learned of the wage and hour violations and how he came to become a class representative. After establishing that, of the client's own volition, he had contacted our firm to ascertain his rights concerning his employment relationship, the scope of non-privileged inquiry ground to a halt. The ambush doesn't work so well in wage and hour cases that begin with client-driven inquiries, rather than lawyer-driven case development.
A collective bargaining unit's attorneys can represent employees (who are not members of the unit) in a wage and hour class action even if the unit is subsidizing the litigation costs, as long as the attorneys' representation complies with Rule 3-310's disclosure and consent requirements. Sharp v. Next Entertainment, Inc. (2008) __ Cal.App.4th __.
The Writers Guild of America (the Guild) had reason to believe that reality television production companies and television networks violated wage and labor laws. The Guild held meetings during which employees of reality television discussed the purported violations. Some who participated in the meetings, along with other reality television employees, agreed to be the named plaintiffs in two wage and labor law class action lawsuits against the production companies and the networks (collectively defendants). Thereafter, the trial court denied defendants’ motion to disqualify plaintiffs’ counsel, but did disqualify some plaintiffs from acting as representatives of the putative classes.
On appeal from the trial court’s order denying the disqualification order, defendants rely on California Rules of Professional Conduct of the State Bar, rule 3-310 (Rule 3-310) to contend that the trial court erred in failing to disqualify counsel for plaintiffs. This contention is based upon the facts that the firm who represented the Guild was also counsel for plaintiffs, the Guild paid for plaintiffs’ attorney fees and costs, and the litigation was conceived by the Guild as part of its organizing campaign, a campaign which many plaintiffs supported. Defendants use many of the same facts to further contend that the trial court erred in failing to disqualify all plaintiffs from their roles as representatives of the uncertified classes.
In the published portion of this opinion (pts. I., II., III.A. & IV.), we hold that the trial court did not err in failing to disqualify class counsel and the trial court did not err in refusing to disqualify all plaintiffs from acting as the named representatives of the putative classes.
In their cross-appeal, plaintiffs appeal from the trial court’s orders directing their counsel to ask them certain questions relating to their association with the Guild. In the unpublished portion of this opinion (pt. III.B.), we hold that the trial court’s orders were vague.
Thus, we affirm in part and reverse in part.We don't get many published opinions concerning disqualification of class counsel, so Sharp v. Next Entertainment, Inc. is interesting reading even if you don't have a union issue in your case. You can download the full text from the court's website here in pdf or word format.
From the Connecticut Law Tribune:
Lawyers involved in the class action sex discrimination case against Fairfield, Conn.-based General Electric in 2007 would rather you not read passages from various filings.
After all, the plaintiffs' firm, Sanford, Wittels & Heisler in Washington, D.C., took the time and effort to black out reams of pages in numerous briefs to make them inaccessible to the public -- or so they thought.
But as of late last week, you could download several documents through PACER's federal court filing system, copy the black bars that cover the text on the screen and paste them into a Word document.
Voilà. Information about the inner-workings of GE's white, male-dominated management and their alleged discriminatory practices against women, which is supposed to be sealed by court order, appears with little technical savvy required.
They warn you about this in ECF training courses. Sloppy information management "has been a huge problem" for lawyers, said Connecticut Chief Disciplinary Counsel Mark Dubois. "Metadata is a fascinating area of developing law. It is much discussed in the fields of risk aversion and risk management."
Add this to the list of lessons were are glad we learned by watching the mistakes of others.
From a press release issued by the California Division of Labor Standards Enforcement:
An Alhambra man who allegedly attempted to extort money from his former employer by posing as a deputy state labor commissioner has plead no contest to obtaining funds through false pretenses. He was sentenced to 16 months in state prison by Los Angeles Superior Court Judge Lisa B. Lench.
Gabriel Holguin, 30, was arrested in November 2007, after he posed as a deputy labor commissioner and demanded money by email and phone calls from his former employer, Jayco Acceptance Corp. According to investigators, Holguin tried to force the company to pay him $600 for hours worked or legal action would be taken against the company.
That works out to about a day in prison for every $1.25 he tried to recover. Lawyers aren't cheap, but they aren't nearly that expensive.
This opinion is over three months old, and isn't a wage case, but it could ruin the policy favoring and encouraging settlements, and it's up for review with the Supreme Court, so we thought we'd give it a mention. In Goodman v. Lozano (2008) 159 Cal.App.4th 1313, the court held that if a plaintiff settles with some, but not all, defendants, and then proceeds to trial against the non-settling defendant(s) and wins on liability, but recovers no net proceeds because the amounts collected in settlement exceed the amount of the liability of the nonsettling defendant, then it is the defendant who is the prevailing party, and it is the defendant who recovers costs. The holding is in conflict with Wakefield v. Bohlin (2006) 145 Cal.App.4th 963. An April-filed petition for review is pending. The conflict makes the case a strong candidate for review.
The second issue involves the interplay of both section 877 and section 1032: Where a plaintiff obtains a net zero judgment as a result of the operation of section 877, is that plaintiff nevertheless entitled to prevailing party status because that party was “the party with a net monetary recovery”? The answer is no. Again, the analysis is straightforward. A litigant cannot actually recover or “gain” anything without an order or a judgment. An award or verdict without a judgment is merely symbolic. The fact that the litigant may have had an award or verdict prior to a zero judgment is meaningless for purposes of whether that litigant qualifies as “the party with a net monetary recovery” if the award or verdict produces nothing tangible. “Recovery,” not “award,” is the word chosen by the Legislature.
This straightforward analysis, based on the plain meaning of the words actually used in the statute, vindicates Justice Mihara’s dissent in Wakefield v. Bohlin (2006) 145 Cal.App.4th 963 (Wakefield). Alas, it also forces us to disagree with the majority opinion in Wakefield, and explain why several other cases followed by the Wakefield majority also erred. The essential problem is that the Wakefield majority substituted its own words for the actual words in the statute. The statute says “recovery.” It does not say “award” or “verdict.”
If this one holds up, it will change the way the average reasonable lawyer negotiates settlements. Cases will not settle as often or as easily. We always have preferred a "global" settlement over a piecemeal patchwork of settlements. If Goodman remains good law, that will no longer be merely a preference; it will become the rule, to which few exceptions could be risked.
The most recent modification to the original opinion in Goodman v. Lozano can be seen here in pdf or word format.
As a general rule, under Code of Civil Procedure § 1033(a), the trial court has the discretion to deny attorney's fees as an element of costs of suit under Code of Civil Procedure § 1033.5(a)(10)(B) if the plaintiff recovers less than the minimum jurisdictional amount of the court. Thus, for example, if a plaintiff sues in unlimited civil court and recovers only $25,000, and not a penny more, the case could have been brought in the limited civil division and therefore, some costs may be denied. In Chavez v. City of Los Angeles (2008) __ Cal.App.4th __,
a jury awarded appellant Robert Chavez $11,500 in a statutory retaliation action brought against his employer and a supervisor. Chavez then filed a motion seeking approximately $871,000 in attorney fees under the fee provisions of the Fair Employment and Housing Act (FEHA), Government Code section 12965, subdivision (b). Ignoring that statute, and instead exercising its discretion under Code of Civil Procedure section 1033, subdivision (a) to deny costs because Chavez’s recovery was below its jurisdictional minimum, the trial court denied the motion. Chavez appeals from the denial of the motion, contending the court applied the wrong statutory standard and abused its discretion by denying him fees. We agree and reverse the order.
The opinion contains a lengthy discussion regarding the court's proper exercise of discretion, the conflicting purposes of Code of Civil Procedure § 1033(a) and Government Code § 12965, and the language in the latter which limits the exercise of discretion in a FEHA case. In certain important respects, the holding can be distinguished in a wage case, but significant elements of the opinion apply as clearly to a Labor Code case as to a FEHA case.
You can download Chavez v. City of Los Angeles here in pdf and word format.
In an unusual opinion, the Second District Court of Appeal ordered Costco Wholesale Corp. to turn over some of its attorney-client communications during discovery in a putative class action alleging misclassification of Costco managers. In Costco Wholesale Corp. v. Superior Court (2008) __ Cal.App.4th __, the Court of Appeal held that the trial court was correct to order Costco to produce portions of a pre-litigation attorney-client memo prepared for Costco by its outside counsel. The memo analyzed whether Costco's department managers qualified for exempt status. Counsel took interviews, reviewed job descriptions, and prepared a detailed and lengthy memo analyzing the status of the managers. The trial court ordered an in-camera review by a referee, who determined that portions of the memorandum regarding the managers’ job duties were not privileged and should be produced.
Costco petitioned for a writ of mandate. After some odd procedural quirks, the Court of Appeal denied the writ, holding that Costco had not shown "irreparable harm” because the portions to be produced came from job descriptions and interviews with two managers; it was “inconsequential; and it did not “infringe on the attorney-client relationship.” The Court found that these were not work product, and that disclosure would cause no harm because the information would be readily available from other sources.
You can download the full text of Costco Wholesale Corp. v. Superior Court here in pdf or word format. A modification order was issued yesterday, which did not change the judgment. We read the whole thing, twice, and we might be incorporating a request for in camera review of much more from the privilege logs than ever before.
This is double-hearsay, but attorney H. Scott Leviant, who authors the legal blog The Complex Litigator, published a Forum piece in last week's Daily Journal, entitled "Cutting Class". We can't link to the article for non-subscribers, but there's a nice summary of the article over at the UCL Practitioner. The article explains why A.B. 1905, which would have allowed defendants to immediately appeal orders granting class certification, appropriately died in committee last month.
There is yet another published opinion applying both Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 and Best Buy Stores, L.P. v. Superior Court (2006) 137 Cal.App.4th 772, to wage and hour class actions with respect to obtaining class member identities and contact information, even for the purpose of "identifying class members who may become substitute plaintiffs in place of named plaintiffs who were not members of the class they purported to represent" (our emphasis).
In CashCall, Inc. v. Superior Court (2008) 159 Cal.App.4th 273, the Fourth District Court of Appeal held that the trial court correctly allowed precertification discovery in a class action for that purpose, following Pioneer Electronics and Best Buy Stores, and distinguishing First American Title Ins. Co v. Superior Court (2007) 146 Cal.App.4th 1564, in which the Court of Appeal rejected the idea of permitting such discovery to a class action representative who had never been a member of the class he purported to represent because, under the circumstances of that case, "the grant of such discovery would sanction an abuse of the class action procedure." In essence, the Court of Appeal limited the First American holding only to those situations in which the substitution of plaintiffs would constitute an abuse of the class action procedure. The court noted that in First American, the plaintiff had, for all intents and purposed "appointed himself enforcement officer for the California Department of Insurance settlement agreement" to piggyback his case onto a settlement agreement and perhaps generate attorney's fees for the plaintiff's counsel.
In contrast, in the Cashcall case, there was no state or other investigation, much less a settlement pending. Absent continuation of the class action, there would likely will be no other investigation of CashCall's conduct or potential relief obtained by class members for its alleged violations of their privacy rights. Furthermore, because only CashCall had knowledge of which customers' calls were monitored, the plaintiffs could not be faulted for filing a class action based on the suspicion their privacy rights may have been violated and only later learning from CashCall that their particular calls had not been monitored, leaving them without standing.
Because Kagan and the other cases discussed above recognize the general rule liberally allowing amendments of complaints to substitute new plaintiffs who have standing and, in particular, allowing an original plaintiff without standing to substitute in a new plaintiff with standing (whether in a class action or otherwise), an original plaintiff who lacks standing in a class action should be allowed to file a motion for, and potentially obtain, precertification discovery of the identities of actual class members (i.e., potential plaintiffs with standing who may elect to serve as substitute class representative plaintiffs). There is no reason to necessarily treat original plaintiffs who never had standing differently from, and more favorably than, original plaintiffs who had, but lost, standing. We conclude the Parris balancing test should be applied by trial courts in exercising their discretion whether to grant or deny an original plaintiffs' precertification motion for discovery of the identities of class members regardless of whether that original plaintiff had standing at the beginning of the action. (See, e.g., Best Buy Stores, L.P. v. Superior Court, supra, 137 Cal.App.4th at p. 779; Parris, supra, 109 Cal.App.4th at pp. 300–301; Budget Finance Plan v. Superior Court, supra, 34 Cal. App. 3d at p. 799; Pioneer Electronics (USA), Inc. v. Superior Court, supra, 40 Cal.4th at p. 373.) Accordingly, we reject CashCall's contention that a bright-line rule should apply in class actions to require trial courts to necessarily reject precertification discovery motions by plaintiffs who never had standing. First American, supra, 146 Cal.App.4th 1564, and Cryoport Systems v. CNA Ins. Cos. (2007) 149 Cal.App.4th 627 [57 Cal. Rptr. 3d 358], cited by CashCall, are factually inapposite and do not persuade us to conclude otherwise. Furthermore, neither case adopted or applied the bright-line rule proposed by CashCall in its petition.
...
Accordingly, unlike in First American, the potential for abuse of the class action procedure in this case is minimal. Neither the reasoning nor the result in First American persuades us that the trial court in this case abused its discretion by granting plaintiffs' motion for precertification discovery of the identities of class members. Rather, we conclude the trial court, in applying the Parris balancing test, did not abuse its discretion.
You can download the full text of CashCall, Inc. v. Superior Court here in pdf or word format. A petition for review and application for stay were denied by the California Supreme Court earlier this month.
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.
We recently had a defense lawyer demand, during privileged mediation discussions, that we agree not to pursue other claims, nor represent other employees in connection with any future lawsuits against the defendant company seeking to settle a class action we had brought against it. We refused, of course, citing California Professional Conduct Rule 1-500, which prohibits an attorney from offering, making or participating in an agreement that restricts the right of any attorney to practice law. Rule 1-500(A) expressly includes such deals that are part of settlement agreements. The rule is not limited to California. ABA Model Rule 5.6 contains a similar prohibition. Does anyone ever really do that, and if so, do they get into trouble for agreeing not to represent someone suing a company in the future? Absolutely, they do.
Last year, the Florida Supreme Court disbarred one lawyer and suspended another for two years for taking a $6.4 million fee from the defense to file no more cases against E.I. du Pont de Nemours & Co. Attorneys Roland R. St. Louis Jr. and Francisco R. Rodriguez of Miami law firm Friedman, Rodriguez, Ferraro & St. Louis had sued DuPont on behalf of about 20 clients for injuries caused by exposure to a dangerous fungicide. After winning a major procedural battle, they persuaded DuPont to pay the plaintiffs $59 million for a stipulation to vacate and seal an order, and settlement of the two key cases and, contingent upon approval of those, the other 18 cases, all to be kept strictly confidential. St. Louis and Rodriguez then agreed to a side deal by which the firm would receive a separate $6,445,000 fee from DuPont to refrain from further litigation against the company and to serve as counsel and/or consultants for the company in future matters, essentially conflicting them out of future engagements. For this, the state Supreme Court disbarred St. Louis and ordered him to disgorge more than $2 million in fees (Florida Bar v. St. Louis, No. SC04-49) and suspended Rodriguez for two years plus a fine (Florida Bar v. Rodriguez, No. SC03-909). Their partners who were not involved in the case also received discipline ranging from a public reproval to a brief suspension.
We couldn't find a story about what happened to DuPont's lawyers, but if it had happened in California, they would have been in trouble, too.
Many wage and hour lawyers do not know that a plaintiff with a claim for unpaid wages can apply for a right to attach order and obtain a prejudgment writ of attachment, and then levy upon the employer's assets to satisfy the eventual judgment.
In general, an unsecured claim for a certain or reasonably ascertainable sum, based upon an express or implied contract, can be secured by a right to attach order. Code of Civl Procedure § 483.010(a); Korea Water Resources Corp. v. Lee (2004) 115 Cal.App.4th 389. Even claims based upon quasi-contract qualify. "Implied contract" covers restitutionary obligations; e.g., where defendant has acquired plaintiff's property through fraud, conversion or mistake and refuses to return it. Klein v. Benaron (1967) 247 Cal.App.2d 607, 610. An attachment will lie upon an employment contract. Lewis v. Steifel (1950) 98 Cal.App.2d 648; Rose v. Pearman (1958) 163 Cal.App.2d 480, 483. Arguably, any wage claim arising out of the Labor Code can justify an attachment, because statutory obligations arise out of contract in their nature. Arcturus Manufacturing Corp. v. Rork (1962) 198 Cal.App.2d 208, 210.
However, by obtaining an attachment, the plaintiff is electing non-tort remedies for those particular claims. Because attachment lies only on contract claims, a plaintiff with alternative tort and contract claims based on the same set of facts waives the tort claim by obtaining a writ of attachment, or, to be more precise, the plaintiff is equitably estopped by virtue of having obtained an advantage by proceeding on the contract claim. Baker v. Superior Court (San Diego Best Builders, Inc.) (1983) 150 Cal.App.3d 140, 145. Hence, punitive damages cannot be recovered once a right to attach order and writ of attachment have been issued.
Don't be fooled by defense counsel who will argue that prejudgment attachment of earnings is prohibited under Code of Civl Procedure § 487.020(c). Some of our adversaries have cut and pasted language to that effect from Rutter's Practice Guide, without understanding that the prohibition applies not to an employee seeking attachment, but rather, to an employee's creditors seeking to attach the employee's wages.
In addition to the primary purpose of securing the satisfaction of an employee's inevitable judgment for unpaid wages, a prejudgment right to attach order is also a powerful settlement tool and one of the best discovery devices out there. When you serve interrogatories, the defense often begins with boilerplate frivolous objections, triggering the meet and confer process, followed by motions to compel. It can be months before you really find out what defenses are being asserted and what supports them. Apply for a right to attach order and the defense will lay their cards out on the table, all of them, in the opposition. It's better than a half dozen motions to compel.
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.
Do defense lawyers owe any duty to putative class members when interviewing them on behalf of their employer prior to certification of the class? While there is still little guidance from the courts of appeal on the subject, if you've never read it before, you might consider reviewing a September 2005 order by Judge Brick (Alameda County Superior Court) in a case called Shahrokhshahi v. Round Table Pizza. Although Judge Brick denied the plaintiff's motion to disqualify the defense firm for conducting interviews of putative class members without making full and fair disclosures to them beforehand, he did rule that the firm had violated ethical rules by not disclosing to putative class members when they first contacted them that:
Because the defense firm failed to make any such disclosures, he ordered the distribution of a curative letter, on employer letterhead, to all putative class members. The firm's writ petition was summarily denied in Round Table Pizza, Inc. v. Superior Court, Case No. A111674. We've had the issue come up several times recently, and our judges have all been receptive to Judge Brick's rationale.
While an undocumented alien generally cannot recover front pay in employment litigation, anyone, documented or not, is generally entitled to recover wages due for actual labor performed, even if they laborer lacked the requisite papers for lawful employment. Employers who discover that they owe wages to undocumented aliens often do not know how to process the payroll without a valid social security number. There is, however, a way to do it. The employee needs to obtain an individual taxpayer identification numbers (ITIN).
Since May 29, 1996, the IRS has assigned ITINs to aliens who are otherwise ineligible for SSNs but who need taxpayer identification numbers for tax purposes. 61 Fed. Reg. 26,788. A valid ITIN is a nine-digit number, like a social security number or any taxpayer identification number, and always begins with a 9. An ITIN is a tax processing number for both resident and nonresident aliens, as well as their spouses and dependents. It can be used only for income tax purposes. It does not entitle them to social security benefits or the earned income tax credit. It does not create any inferences regarding their immigration status. It bestows upon them no right to work in the U.S. Aliens must apply for an ITIN on IRS Form W-7 (Application for IRS Individual Taxpayer Identification Number). IRS Tax Topic 857.
The application must show a federal tax purpose for seeking the ITIN. In most cases, this will require attaching a federal tax return to the most current revision of the Form W–7 available. Along with the completed Form W-7, they will submit identity documents, and either a federal tax return, or other documentation to show the federal tax purpose for which they need the ITIN.
The identity documents are needed to verify both identity and foreign status; one must include a recent photograph. If one submits an original valid passport (or a notarized or certified copy of a valid passport) there is no need to submit any other documents. If one does not submit a passport document, one must provide a combination of documents (at least two or more) that are current and that (1) verify identity (that is, contains a name and a photograph), and (2) support your claim of foreign status.
If the ITIN is for a dependent, the documentation must prove that the dependent lives in the United States, Mexico, Canada, Japan, The Republic of Korea, and India. If the dependent is a minor, the documentation must establish the relationship between the dependent and the representative signing the application on the dependent's behalf. Such documentation could include a birth certificate, adoption papers, or other court-appointed papers showing legal guardianship.
In addition to a passport, examples of acceptable documentation include: national identification card (showing photo, name, current address, date of birth and expiration date); civil birth certificate; foreign driver's license; or visa. A complete list of acceptable documentation can be found in the instructions to the Form W-7. The documents must be originals or certified copies.
Aliens can apply for an ITIN by mail or in person at most IRS offices in the United States. If they apply in person, the documents will be reviewed and returned to them. Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number, has a list of IRS offices abroad which can accept Form W–7. If applying by mail, use the address shown in the Form W–7 instructions and in Publication 1915. If the original documents have not been returned within 60 days, call 1–800–829–1040 (in the United States), or 1–215–516–2000 (outside the United States), to find out about the status. It takes approximately 4 to 6 weeks for the IRS to notify the application in writing of his or her ITIN. For more information, refer to Publication 1915. You may also want to obtain Publication 519, U.S. Tax Guide for Aliens. For information about who qualifies to be claimed as a dependent, refer to Topic 354.
Anyone who litigates exempt misclassification cases is familiar with the issue of concurrent duties. Plaintiff's lawyers like to argue a head-and-hands analysis, which essentially urges the court to pay attention to what the hands are doing. A manager who is wiping up spilled soda while simultaneously observing that his employees are not stripping off their mandatory work uniforms, beating customers with sticks and leaving work early isn't really doing management tasks while his hands grip the mop, notwithstanding his eyes darting across the store every few seconds. Employer's lawyers focus on concurrent duties, suggesting that a manager who wears many "hats" is engaged in management activities whenever one of those "hats" is a manager's hat.
One of the best published opinions regarding the executive exemption was Murphy v. Kenneth Cole Productions, Inc. (2005) 134 Cal.App.4th 728. In it, the First District Court of Appeal wrote a seven page analysis, at pages 7-14 of the slip opinion, under the sections entitled Overtime Compensation and Exempt Employees, Governing Regulations – Executive Exemption, Authority to Hire or Fire, Exercises Discretion and Independent Judgment, and Primarily Engaged in Exempt Duties. The analysis is great, and it includes one of our favorite lines ever written in any such analysis:
"Murphy was a nominal coxswain who performed most of the time as an oarsman alongside the rest of the crew."
Once the Supreme Court granted review of Murphy, under the California Rules of Court, it became improper to cite the Court of Appeal's opinion. The Supreme Court did not address the exempt/non-exempt issue on review, so it all that wonderful language just disappeared into the dustbin. Or did it?
We were arguing one of the appeals in our class actions a few months back when we saw another lawyer in another case stammer a bit when arguing a point on which his brief had relied heavily upon a case that had since been ordered reviewed. "Argue the rationale," the Justice told him. "You need not cite the case." So certainly one can argue the points raised in the Murphy opinion. But should you mention where you got that analysis?
There was an interesting discussion a few weeks ago on the Volokh Conspiracy regarding an attorney named Peter Cannon, who was sanctioned by a court in Iowa for plagiarizing in his briefs from a law review article that he did not mention. The case is In re Burghoff (S.D. Iowa Aug. 21). The U.S. Bankruptcy Court had this to say about Mr. Cannon using another person's analysis without attribution:
It is a violation of the Iowa Rules of Professional Conduct for an attorney to "engage in conduct involving dishonesty, fraud, deceit, or misrepresentation." Iowa Rules of Prof'l Conduct R. 32:8.4. Plagiarism, which is "[t]he deliberate and knowing presentation of another person's original ideas or creative expressions as one's own," Black's Law Dictionary (8th ed. 2004), is a form of misrepresentation. Iowa Supreme Court Bd. of Prof'l Ethics & Conduct v. Lane, 642 N.W.2d 296, 300 (2002); accord In re Lamberis, 443 N.E.2d 549 (Ill. 1982) (finding plagiarism constitutes deceit under Illinois Code of Professional Responsibility); cf. United States v. Jackson, 64 F.3d 1213, 1219 n.2 (8th Cir. 1995) (disapproving of a brief that "directly track[ed]" a circuit court opinion which the attorney did not cite)....
Mr. Cannon's acts of plagiarism burden the Court, undercut his client's cause, and generate criticism of the legal profession. Moreover, parroting a scholarly article in this way is not an effective type of advocacy. See Frith, 325 N.E. 2d at 189. More fundamentally, Mr. Cannon's disregard for the true authors' property rights in their ideas reveals a lack of integrity that reflects poorly on the legal profession. Lane, 642 N.W.2d at 300; Lamberis, 443 N.E.2d at 551. The egregiousness of Mr. Cannon's conduct requires an appropriate sanction....
Although one cannot "cite" was Murphy v. Kenneth Cole Productions, Inc. (2005) 134 Cal.App.4th 728, one certainly is free to borrow heavily from its analysis, and if one does so, wouldn't the obligation to attribute require at least letting the court know that you were using the words of the First District Court of Appeal, albeit from an opinion which is no longer citeable, but which was not reversed? After all, you wouldn't want to suffer the fate of Peter Cannon. You aren't trying to deceive the court through a blatant act of plagiarism. You just want to argue you point as eloquently as the First District Court of Appeal put it in 2005. Right?
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.
Former Labor Commissioner Donna Dell has been popping up as a hired expert in wage and hour cases recently, for the purpose of testifying on behalf of defendants regarding the “standard of care” of classifying workers as exempt or non-exempt. If anyone has declarations signed by Donna Dell or any other former DLSE officials regarding such subject matters, we'd appreciate it if you would pass those along.
The Supreme Court has issued a grant-and-hold review order in Arias v. The Superior Court of San Joaquin County (Angelo Dairy). We discussed the case in a July 2007 post:
The Third District Court of Appeal has ruled that, under the Proposition 64 revisions to the Unfair Competition Law [UCL] (Business & Professions Code § 17203), a representative claim must be brought as a class action because the UCL now requires compliance with the class action provisions of Code of Civil Procedure § 382; however, the Private Attorneys General Act [PAGA] expressly allows a person to prosecute a representative claim without requiring that it be brought as a class action. In Arias v. The Superior Court of San Joaquin County (Angelo Dairy) (2007) __ Cal.App.4th __, plaintiff brought an action for overtime wages, and meal and rest period claims on behalf of a group of dairy workers. He did not style the complaint as a class action, but alleged claims under the UCLA and PAGA.
The petition, filed by Arias, did not seek review of the holding that authorized PAGA claims outside of class action litigation, but instead challenged only the portions of the holding addressing the pleading of UCL claims without meeting class action pleading requirements. The granting of review renders the entire opinion uncitable under Rules of Court 8.1105(e).
Every so often, we get sent to arbitration on a wage and hour claim. It happens rarely, because wage and hour cases have none of the "runaway jury" risks that discrimination and other kinds of employment cases present to employer defendants. In addition, under Armendariz, the employer almost always has to pay virtually all of the arbitration costs. We tend to file even more motions, demurrers to answers and the like when we are in arbitration than when we are in Superior Court.
Nonetheless, we sometimes end up in arbitration, and although we have yet to lose one of those arbitrations, it could happen. When it does, there is always the risk that the employee will be stuck with an adverse award for the employer's attorney's fees.
Often, in wage and hour cases, the reason the defendant broke the law in the first place was because it was headquartered outside California, and its wage and hour policies were designed to comply with FLSA, but not California standards. When that happens, it is not uncommon for the defendant to use its favorite outside firm to handle the case (we've had Florida, Georgia and Massachusetts lawyers on the other side in several recent cases), while retaining local counsel solely to facilitate the pro hac vice application. From time to time, however, the out-of-state lawyers don't bother with the pro hac vice applications when the case has been sent to arbitration. The presents and interesting shift in the allocation of litigation risks.
When the opposing attorney is not licensed to practice in California, before defending the arbitration, they need to comply with Code of Civil Procedure § 1282.4. If they do not, their attorney's fees are not recoverable. In general, that section requires them to file papers with the California State Bar, pay a fee, and notify all counsel and the arbitrator. The full text of the code provides as follows:
(a) A party to the arbitration has the right to be represented by an attorney at any proceeding or hearing in arbitration under this title. A waiver of this right may be revoked; but if a party revokes that waiver, the other party is entitled to a reasonable continuance for the purpose of procuring an attorney.
(b) Notwithstanding any other provision of law, including Section 6125 of the Business and Professions Code, an attorney admitted to the bar of any other state may represent the parties in the course
of, or in connection with, an arbitration proceeding in this state, provided that the attorney, if not admitted to the State Bar of California, satisfies all of the following:
(1) He or she timely serves the certificate described in subdivision (c).
(2) The attorney's appearance is approved in writing on that certificate by the arbitrator, the arbitrators, or the arbitral forum.
(3) The certificate bearing approval of the attorney's appearance is filed with the State Bar of California and served on the parties as described in this section.
(c) Within a reasonable period of time after the attorney described in subdivision (b) indicates an intention to appear in the arbitration, the attorney shall serve a certificate in a form prescribed by the State Bar of California on the arbitrator, arbitrators, or arbitral forum, the State Bar of California, and all other parties and counsel in the arbitration whose addresses are known to the attorney. The certificate shall state all of the following:
(1) The case name and number, and the name of the arbitrator, arbitrators, or arbitral forum assigned to the proceeding in which the attorney seeks to appear.
(2) The attorney's residence and office address.
(3) The courts before which the attorney has been admitted to practice and the dates of admission.
(4) That the attorney is currently a member in good standing of, and eligible to practice law before, the bar of those courts.
(5) That the attorney is not currently on suspension or disbarred from the practice of law before the bar of any court.
(6) That the attorney is not a resident of the State of California.
(7) That the attorney is not regularly employed in the State of California.
(8) That the attorney is not regularly engaged in substantial business, professional, or other activities in the State of California.
(9) That the attorney agrees to be subject to the jurisdiction of the courts of this state with respect to the law of this state governing the conduct of attorneys to the same extent as a member of the State Bar of California.
(10) The title of the court and the cause in which the attorney has filed an application to appear as counsel pro hac vice in this state or filed a certificate pursuant to this section in the preceding two years, the date of each application or certificate, and whether or not it was granted. If the attorney has made repeated appearances, the certificate shall reflect the special circumstances that warrant the approval of the attorney's appearance in the arbitration.
(11) The name, address, and telephone number of the active member of the State Bar of California who is the attorney of record.
(d) The arbitrator, arbitrators, or arbitral forum may approve the attorney's appearance if the attorney has complied with subdivision (c). Failure to timely file and serve the certificate described in subdivision (c) shall be grounds for disapproval of the appearance and disqualification from serving as an attorney in the arbitration in which the certificate was filed. In the absence of special circumstances, repeated appearances shall be grounds for disapproval of the appearance and disqualification from serving as an attorney in the arbitration in which the certificate was filed.
(e) Within a reasonable period of time after the arbitrator, arbitrators, or arbitral forum approves the certificate, the attorney shall file the certificate with the State Bar of California and serve the certificate as described in Section 1013a on all parties and counsel in the arbitration whose address is known to the
attorney.
(f) An attorney who fails to file or serve the certificate required by this section or files or serves a certificate containing false information or who otherwise fails to comply with the standards
of professional conduct required of members of the State Bar of California shall be subject to the disciplinary jurisdiction of the State Bar with respect to that certificate or any of his or her acts occurring in the course of the arbitration.
(g) Notwithstanding any other provision of law, including Section 6125 of the Business and Professions Code, an attorney who is a member in good standing of the bar of any state may represent the parties in connection with rendering legal services in this state in the course of and in connection with an arbitration pending in another state.
(h) Notwithstanding any other provision of law, including Section 6125 of the Business and Professions Code, any party to an arbitration arising under collective bargaining agreements in industries and provisions subject to either state or federal law may be represented in the course of, and in connection with, those proceedings by any person, regardless of whether that person is licensed to practice law in this state.
(i) Nothing in this section shall apply to Division 4 (commencing with Section 3201) of the Labor Code.
(j) (1) In enacting the amendments to this section made by Assembly Bill 2086 of the 1997-98 Regular Session, it is the intent of the Legislature to respond to the holding in Birbrower v. Superior
Court (1998) 17 Cal.4th 117, as modified at 17 Cal.4th 643a (hereafter Birbrower), to provide a procedure for nonresident attorneys who are not licensed in this state to appear in California arbitration proceedings.
(2) In enacting subdivision (h), it is the intent of the Legislature to make clear that any party to an arbitration arising under a collective bargaining agreement governed by the laws of this state may be represented in the course of and in connection with those proceedings by any person regardless of whether that person is licensed to practice law in this state.
(3) Except as otherwise specifically provided in this section, in enacting the amendments to this section made by Assembly Bill 2086 of the 1997-98 Regular Session, it is the Legislature's intent that nothing in this section is intended to expand or restrict the ability of a party prior to the decision in Birbrower to elect to be represented by any person in a nonjudicial arbitration proceeding, to the extent those rights or abilities existed prior to that decision. To the extent that Birbrower is interpreted to expand or restrict
that right or ability pursuant to the laws of this state, it is hereby abrogated except as specifically provided in this section.
(4) In enacting subdivision (i), it is the intent of the Legislature to make clear that nothing in this section shall affect those provisions of law governing the right of injured workers to elect to be represented by any person, regardless of whether that person is licensed to practice law in this state, as set forth in Division 4 (commencing with Section 3200) of the Labor Code.
(k) This section shall be operative until January 1, 2011, and on that date shall be repealed.
Rumor has it that defendants and out-of-state counsel get very angry when they first learn of those code section after prevailing at arbitration in a case with fee-shifting statutes, but like we said, we've never lost a wage and hour case, so we don't have any firsthand knowledge.
A very interesting opinion was recently published by the Second District Court of Appeal in Acosta v. Kerrigan, affirming an order awarding interim attorney fees in connection with his successful petition to compel arbitration of a dispute between the parties arising under a lease agreement and denying a petition to compel arbitration of the actual request for those same attorney fees. Acosta and Kerrigan had a lease agreement that including an arbitration clause and the following fee-shifting provision regarding petitions to compel arbitration:
Should any party to this Agreement hereafter institute any legal action or administrative proceeding against the other by any method other than arbitration, the responding party shall be entitled to recover from the initiating party all damages, costs, expenses and attorneys' fees incurred as a result of such action.
We've been seeing more and more of these. For now, at least, they are enforceable. In all likelihood, under Civil Code section 1717, a losing petitioner would also be on the hook for fees if the trial court found the arbitration agreement to be unenforceable, but that is another case for another day. We recently filed an opposition to an arbitration agreement in which our opposition prayed for interim fees under an identical fee-shifting provision, and the petitioner took the petition off calendar.
You can download the full text of Acosta v. Kerrigan here in pdf or word format.
Why do employers like arbitration so much? In a bit of a Jerry Maguire moment, Cory J. King, a lawyer with the defense firm of Fine, Boggs & Perkins, LLP, admits that it is because whether an employer wins a case depends almost as much on the forum as it does on the facts, and they tend to win arbitrations, and lose trials. Two of the slides in his presentation entitled "Top Secret! Owners Eyes Only! Dealing with the Entitlement Generation (go to page six of the ppt) boast that "when the judge sits as an arbitrator, statistics show that employer prevails 76% of the time" but "when the jury has a case, statistics show the employers prevail at best 50% of the time." In other words, half of all winning plaintiffs would have lost their case had they gone to arbitration.
Of course, that is never offered as a reason why arbitration agreements should be enforced. If an employee's attorney were to make such a claim in a pleading, 99.9% of defense attorneys would argue that it is not true, or at least unproven. In open court, it has almost become sacrilege to deny that arbitration is every bit as "separate but equal" as a courtroom with a jury.
While arbitration doesn't present nearly the same problems to wage and hour plaintiffs as it presents to other employee plaintiffs, the arbitration fight is always an important one. Does anyone out there know what statistics Mr. King is citing? We'd love to read those studies.
[If the link gets removed, you can check the page here, via google cache.]
One of the things we discussed at last week's wage & hour seminar in Costa Mesa was the long list of questions that remain unanswered after Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094. Here's one we hadn't mentioned before:
Must meal and rest period premium wages be included in the "regular rate of pay" upon which overtime is calculated?
The DLSE originally said that such pay should not be included in the regular rate of pay, and most practitioners considered the question answered. However, with the way the Supreme Court analyzed the wage-penalty issue, some people think the answer is no longer so clear, and an argument can be made that such pay increases an employee's regular rate of pay for the purpose of calculating the correct overtime rate. We haven't seen any briefs arguing the point, and we haven't briefed the issue ourselves, but the point seems well worth raising.
It isn't a wage and hour case, but because wage and hour cases often end up in arbitration, the just-published holding in Eternity Investments, Inc. v. Brown could be useful to wage and hour practitioners. Under the California Arbitration Act (Code of Civil Procedure §§ 1280–1294.2), a petition or response seeking to correct or vacate an arbitration award must be brought in the superior court within 100 days after service of a signed copy of the award (C.C.P. § 1288). However, a petition to confirm the award may be brought within four years after service.
In Eternity Investments, Inc., the arbitrator issued an award in favor of the plaintiff. Plaintiff then sat on the award for about four months. During the 100-day period, the defendants did not file any petition or response in the trial court to correct or vacate the award. Three weeks after that period expired, the plaintiff filed a petition to confirm the award. The defendants opposed the award, arguing that the arbitrator's ruling was invalid. The trial court disregarded those points and entered a judgment confirming the award. On appeal, the trial court's order was affirmed.
We conclude that, because defendants did not bring a timely petition or response to correct or vacate the award, the trial court had no choice but to disregard defendants’ challenge and “confirm the award as made.” (§ 1286.) We therefore affirm.
When an employee wins an arbitration, one's first instinct is to rush into court to get the award confirmed so that the employee can collect right away. However, this case illustrates how it might be a better tactic to wait 101 days before doing so, if there is any irregularity in the award that could potentially result in an order vacating or correcting the arbitrator's ruling.
You can download the full text of Eternity Investments, Inc. v. Brown here in pdf or Word format.
Though we never had a trial court shave our meal and rest period complaints down to a single year's worth of claims, many cases in Los Angeles, Riverside and elsewhere have proceeded after motions were granted striking references in the pleadings to any meal and rest periods that were missed more than a year before the filing of the complaint. Now that the Supreme Court has confirmed that the hour of pay due for a meal period or rest period violation is a wage, those complaints should be able to reach back farther than one year. Reconsideration is appropriate. In general, motions to reconsider must be made within ten days after notice of the applicable order is served. However, Code of Civil Procedure § 1008(c) states in pertinent part:
"If a court at any time determines that there has been a change of law that warrants it to reconsider a prior order it entered, it may do so on its own motion and enter a different order."
Most plaintiffs are reacting by bringing Murphy to the attention of the court in writing, often in connection with a motion for leave to amend to add waiting time penalties to the claim, including, among other things, allegations (i.e., class definitions) that would effectively restore the claims the court previously struck. In support of the motion, there is a mention and "request" that the court reconsider its prior rulings regarding the statute of limitations in light of Murphy. Such a request is appropriate to invoke the court's inherent power to correct prior rulings under section 1008(c) and LeFrancois v. Goel (2005) 35 Cal.4th 1094. In anyone has obtained rulings granting or denying such motions, we'd like to know how various judges are ruling.
Suppose a plaintiff files a class action complaint in state court alleging aggregate damages "in an amount less than $5 million." What must the defendant do to invoke the Class Action Fairness Act and keep the case in U.S. District Court. In Tate v. U.S. Bank National Association (D. Or. 2007) 2007 WL 1170608, an Oregon judge has followed a 9th Circuit case, Lowdermilk v. U.S. Bank National Association (9th Cir. 2007) 479 F.3d 994, slip op. at 10, and remanded a case back to state court, finding that
Where, as here, there is no evidence of bad faith on the part of the plaintiff, defendant must not only contradict the plaintiff's own assessment of damages, but must overcome the presumption against federal jurisdiction by showing that plaintiff is legally certain to recover at least five million dollars.
"Legally certain to recover." We're bound to see those words pop up quite a bit in future proceedings.
We've also found two or three important implications that we may have overlooked in our initial reading of Fireside Bank.
In addition to the holding refusing to find an exception to the one-way intervention rule, and upholding class certification nonetheless, and in addition to some favorable language which could be useful to anyone moving for certification, if the facts fit, there are two other very interesting implications that could broadly affect standing requirements under the UCL, and the scope of discovery in any class action.
With respect to the UCL angle, the Supreme Court appears to have endorsed an aggrieved party's right to seek injunctive relief even if they suffered no loss of money or property, even after Proposition 64. The court wrote that the named class representative would have standing to seek injunctive relief under the unfair competition law even if she was not entitled to restitution. The court wrote that if the plaintiff could show that she was deprived of a fair opportunity to redeem the financed vehicle, "followed by an unlawful demand for payment" she would be able to proceed under the unfair competition law. We do not see a loss of money or property under those facts unless the plaintiff paid money in response to the demand. Perhaps showing a wrongful demand for money or property, or a threatened loss of money or property is enough.
Second, near the end of the opinion's discussion of the typicality analysis for class certification, the court writes:
Fireside Bank objects to inquiry into the substance of these defenses by noting our conclusion in Linder that a court, in determining class certification, should not consider the merits. (Linder v. Thrifty Oil Co., supra, 23 Cal.4th at pp. 439-443.) But there, we said only that a plaintiff need not establish a likelihood of success on the merits in order to obtain class certification. It does not follow that, in determining whether the criteria of Code of Civil Procedure section 382 are met, a trial or appellate court is precluded from considering how various claims and defenses relate and may affect the course of the litigation, considerations that may overlap the case’s merits. (See Hanon v. Dataproducts Corp., supra, 976 F.2d at p. 509 [court may consider “evidence which goes to the requirements of [Fed. Rules Civ.Proc.,] Rule 23 even though the evidence may also relate to the underlying merits of the case”].) Indeed, in Linder we expressly recognized that “whether the claims or defenses of the representative plaintiffs are typical of class claims or defenses” was an issue that might necessarily be intertwined with the merits of the case, but which a court considering certification necessarily could and should consider. (Linder, at p. 443; see Hardy v. City Optical Inc. (7th Cir. 1994) 39 F.3d 765, 770 [rejecting challenge to typicality based on arguable unique defense on basis that defense was not arguable in light of defendants’ factual concessions].)
This is the second opinion in the last year (the first being Dunbar v. Albertson's, Inc.) that appears to chip away at the long-held belief that discovery that gets into the merits of the case are out-of-bounds prior to certification in a class action. For many years, the scope of pre-certification discovery has traditionally been limited to "certification-based" issues and not "merits-based" issues if discovery on liability issues would be expensive and time-consuming. Carabini v. Superior Court (King) (1994) 26 Cal.App.4th 239, 241. However, in Dunbar, the Court of Appeal held that the party seeking class certification "must explain how [a] procedure will effectively manage the issues in question". Imposing that burden necessarily must mean that a plaintiff must have the due process right of inquiring into the facts and evidence that could be used to address that burden. That means at least some meaningful merits-based discovery. Here, the Supreme Court has expressly noted that “whether the claims or defenses of the representative plaintiffs are typical of class claims or defenses” was an issue that might necessarily be intertwined with the merits of the case, but which a court considering certification necessarily could and should consider. If the court can and should consider issues intertwined with the merits at the certification hearing, that means discovery must be permitted into such intertwining issues prior to the certification motion being filed.
Finally, Fireside Bank does away with the argument that a class action might not be superior to the simpler alternative of a non-class action representative action under Business & Professions Code S 17200. After Proposition 64, there is no longer any such beast under California law. [Hat tip to the UCL Practitioner.]
An underused tactic that often benefits employees with good wage and hour claims is the reference check. At the onset of a dispute, getting a paid reference check can often be quite valuable. There are a few companies who provide this service for a small fee, and the results can be quite valuable.
Many wage and hour plaintiffs first seek an attorney when they are terminated, and often, an experienced employment attorney can explain why the employee might not have a meritorious wrongful termination claim, but offer the good news that, although there is no claim for wrongful termination, there is a substantial wage claim against the former employer. These employees are often still in the job search stage, and knowing what their former employer is saying about them can aid them in interviewing and resume writing.
Every once in a while, the admissions made by the employer during the reference check can be crucial to a case. We've had several instances in which the former supervisor said that, for all their faults, the plaintiffs were hard working, and willing to put in long hours. When the contention invariably arrived from the employer declaring that the plaintiff rarely if ever worked past 5:00 p.m., the reference check was worth its weight in gold. Two service providers we are familiar with are Allison Taylor, and Documented Reference Check. If you know of any others, or have good or bad experiences (for employees or employers) with any of these service providers, drop us an email or leave a comment.
Most of the cases we've seen, and all of the cases we've been involved with, regarding the Littler Mendelson drafted DRP (dispute resolution procedure) and its mandatory arbitration provision, have ended up with trial courts and courts of appeal finding the agreements unenforceable under the Armendariz standards. A recent article by Marlene S. Muraco, published on Littler Mendelson's website in August, suggests that Littler's clients might soon abandon the tactic of seeking arbitration, and may try instead to accomplish the same goals with agreements for judicial reference. The article spins a recent decision in the Woodside Homes case and analogizes it to employment contracts as a way to give employers a shot at judicial review if they fail at arbitration.
Last year, the holding in Reynolds v. Bement (2005) 36 Cal.4th 1075 put to rest most direct wage claims employees might make against individuals in connection with any failure by a corporate defendant to pay wages. The Supreme Court deferred, however, expressing any opinion about whether employees could assert penalty claims against the corporate officers and individuals responsible for the wage violations. Some plaintiffs still pursue such claims, while employers invariably discount any reasonable likelihood that individuals will be held personally liable for any part of any wage claim against a corporation, absent a finding of alter ego; but amazingly, not all employers and not all employers' counsel argue against such personal liability.
In our pending class action against Dollar Tree Stores, Inc., the employer and its counsel (attorneys with the defense firm Thelen, Reid & Priest, LLP) argued vociferously that Dollar Tree's managers could be found liable, individually, for civil penalties, writing that
Plaintiff ... overlooks key sections of the Labor Code which provide for the imposition of penalties against corporate agents ... if they fail to permit employees to take rest and meal breaks. See Cal. Lab. Code §§ 558, 2966.
Plaintiff ... completely misconstrues the holding in Reynolds v. Bement (2005) 36 Cal.4th 1075. ... While the Reynolds court did conclude that "corporate agents acting within the scope of their agency are not personally liable for the corporate employer’s failure to pay its employees’ wages," the court also noted that its holding did not preclude employees ... from recovering penalties against corporate agents. Reynolds, supra, 36 Cal.4th at 1087 and 1089. Specifically, the court stated that "pursuant to section 558, subdivision (a), any 'person acting on behalf of an employer who violates, or causes to be violated' a statute or wage order relating to working hours is subject to a civil penalty, payable to the affected employee, equal to the amount of any underpaid wages." Id. at 1189. The court further stated that "the Legislature has provided that aggrieved employees may under certain circumstances maintain civil actions to recover such penalties." Id. Accordingly, under Reynolds, Plaintiff could conceivably seek to recover penalties ... pursuant to Sections 558 and 2699 of the Labor Code for ... alleged failure to provide her rest and meal breaks.
Why would an employer want to argue such a thing? In this case, it was a lawyer's tactical maneuver, trying (unsuccessfully) to disqualify a member of our legal team who had previously represented a Dollar Tree manager. Nonetheless, it was a curious move that probably wouldn't be well received by most managers and officers at most corporate employers.
We recently had a judge insist upon dismissing all fictitious ("Doe") defendants at the trial setting conference. It is a case with potential "dual employer" relationship between a managing subsidiary and an asset-holding parent corporation. Because of this, we insisted that the court leave the unnamed defendants in the case. The judge didn't want to hear it until we quoted Government Code § 68616(h):
“Unnamed (DOE) defendants shall not be dismissed prior to the conclusion of the introduction of evidence at trial, except upon stipulation or motion of the parties.”
All of our defendants, named and unnamed, are still in the case.
Lately, we've had to defend a number of frivolous motions claiming that plaintiffs cannot proceed with wage claims until they have exhausted their remedies under the Labor Code Private Attorneys General Act of 2004 (PAGA). We're starting to work on a sanctions motion form that we are going to start filing when we see these things in the future.
The defendants typically raise both issues in a motion to strike and/or a demurrer, claiming that (as if they really want this to happen) the plaintiffs are first required to give notice under Labor Code § 2699 before proceeding with an action for wages or penalties under the Labor Code. The motions were always denied, even before Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal. App. 4th 365.
Labor Code § 2699(a) allows "an aggrieved employee on behalf of himself or herself" to recover civil penalties in addition to the Labor and Workforce Development Agency. Subsection (f) defines the amount of the penalties. ($100 for each aggrieved employee per pay period for the initial violation and $200 for each aggrieved employee per pay period for each subsequent violation.) Such penalties may only be sought after notice to the employer and to the Labor and Workforce Development Agency.
However, if a plaintiff is not seeking penalties under Labor Code § 2699, there is no requirement that notice be given to the state, nor any requirement that defendants be given notice or an opportunity to cure. Exhaustion of administrative remedies is only required where a civil action is brought by an aggrieved employee "pursuant to subdivision (a) or (f) of Section 2699 alleging violation of any provision listed in Section 2699.5…"Labor Code § 2699.3(a).
In Caliber, the employees did not allege that they had satisfied the pre-filing notice and exhaustion requirements of Lab. Code, § 2699.3, subd. (a), before initiating their lawsuit, and their complaint made no reference to the PAGA. The court logically held that the employees could not maintain a private action under Labor Code § 2699, because the pre-filing notice and exhaustion requirements were mandatory as to causes of action that alleged a violation of one of the provisions listed in Labor Code § 2699.5, and that sought recovery of a civil penalty assessable by the California Labor and Workforce Development Agency. However, the court also held that workers could maintain private causes of action for unpaid wages, statutory penalties, including unfair business practice claims, because those were not subject to the notice and exhaustion requirements.
Because Caliber is now final (no petition for review was filed), employers and their counsel can not longer argue that they are making a good faith argument on an unsettled area of law. Sanctions under Code of Civil Procedure § 128.7 should be granted every time this ridiculous tactic is employed.
We recently had an employer raise, as a defense to a claim for unpaid wages, that the employee was negligent in the performance of some of his job duties, and that the employer should be entitled to an offset for "unclean hands." This is a defense which says that "one who seeks equity must do equity." It can prevent plaintiffs from seeking equitable relief if they have engaged in unequitable conduct themselves. Essentially, when you strip away the labels and look at what the employer was really arguing, the claim was that an imperfect employee is not entitled to wage and hour law protections, including minimum wage, overtime pay or breaks for meal periods or rest periods.
Fortunately, the court saw right through this claim. An unlawful violation of a statute imposes “strict liability,” (State Farm v. Superior Court (1996) 45 Cal. App. 4th 1093, 1102), and, “principles of equity cannot be used to avoid a statutory mandate.” Ghory v. Al-Laham (1989) 209 Cal. App. 3d 1487, 1492. The defense was stricken from the pleadings.
There are certain defense firms in California who are starting to use this tactic:
Employee has a claim, be it for wages, discrimination, wrongful termination or anything else employment related. He hires a lawyer, who, being the reasonable sort, tries first to see if the case can settle.
Settling a case without litigation offers a number of advantages to the employer: it keeps the dispute private; it saves almost all of the costs of defense; it frees managers to do their jobs, rather than focus energy and time to litigation; and it often results in a lower payout than an employee will demand after going through the litigation process (and sometimes paying a higher fee to his lawyer).
So the employee's lawyer sends out a "demand letter," which is intended to put the employer on notice of the opening settlement offer, explain the facts and evidence underlying the claim, and give the employer fair notice that litigation could result if the matter isn't resolved to everyone's mutual satisfaction.
These certain defense firms (whom I will not identify), who have advised their clients to respond to such letters by filing a suit for declaratory relief in Superior Court, against the employee.
There are three primary reasons employers might do this: (i) it gives the employers the title of "plaintiff," which they seem to covet; (ii) it lets the employer choose the venue, which is sometimes significant; and (iii) it puts word on the street to existing workers: complain to us, and we'll just sue you.
So far, those we have heard about have been thrown out quickly, either on demurrer or on an anti-SLAPP motion. But a very bad precedent has been set. We will never write a pre-litigation demand letter again, because we do not know, before filing suit or sending the letter, who the defense lawyer will be. And if we do not know that it won't be one of these firms, we can't be sure we won't have to "defend" one of these bad faith declaratory relief cases first. And that's a risk we will no longer take.
So when an employer or its lawyers complain that "we could have resolved this without resort to litigation," we will tell them that frivolous employer lawsuits have driven us to file first and ask [settlement] questions later.
And the next time you hear about plaintiff's lawyers filing frivolous suits, don't forget that some of those "plaintiffs" are employers who sue employees to get a "declaration" of whether the employer violated a worker's rights; and also don't forget that those "plaintiff's lawyers" include some of the largest so-called defense firms in the state.