The California Wage and Hour Law Blog

Bridgeford v. Pacific Health: Class Cert Denial Does Not Establish Collateral Estoppel Against Absent Class Members

2012-01-27T15:46:00.000-08:00

In Smith v. Bayer Corp., 564 U.S. ---, 131 S.Ct. 2368, 2011 WL 768649 (6/16/11) (blogged here) the Supreme Court of the United States held that a District Court's denial of a Rule 23 class certification motion does not prevent separate plaintiffs from seeking certification in a separate state court action.

In Bridgeford v. Pacific Health Corporation (1/18/12) --- Cal.App.4th ----, 2012 WL 130615, the California Court of Appeal held that denial of class certification in one action does not prevent absent class members from filing a second class action making the same allegations.

The plaintiffs filed a putative class action alleging minimum wage, overtime, and other wage and hour violations. The defendants demurred, arguing that the plaintiffs were collaterally estopped from seeking class certification because the issue of class certification was decided in an earlier putative class action. The trial court (Los Angeles Superior, Judge Zaven V. Sinanian) sustained the demurrer without leave to amend, holding that the trial court in the earlier action had rendered a final decision on the merits of “the issue of class certification,” and the plaintiffs could not bring a class action on either the same causes of action or additional causes of action against the same defendant or additional defendants because such causes of action could not have been asserted in the prior litigation. Slip op. at 6-7.

The Court of Appeal reversed. It rejected those cases in which "California courts have held or suggested that the denial of class certification can establish collateral estoppel against absent putative class members on issues that were actually decided in connection with the denial." Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1236; Bufil v. Dollar Financial Group, Inc. (2008) 62 Cal.App.4th 1193, 1202-1203; Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1510-1513 & fn. 8. The Court concluded, "to the contrary that if no class was certified by the court in the prior proceeding, the interests of absent putative class members were not represented in the prior proceeding and the requirements for collateral estoppel cannot be established...." Slip op. at 11.

Relying on the Supreme Court's decision in Smith v. Bayer, the Court held that "the denial of class certification cannot establish collateral estoppel against unnamed putative class members on any issue because unnamed putative class members were neither parties to the prior proceeding nor represented by a party to the prior proceeding so as to be considered in privity with such a party for purposes of collateral estoppel." Slip op. at 12-13.

The opinion is available here.

Zelasko-Barrett v. Brayton-Purcell: Supreme Court Grants Review and Holds Pending Kirby v. Immoos

2012-01-20T12:53:00.000-08:00

In Zelasko-Barrett v. Brayton-Purcell, LLP (8/17/11) 198 Cal.App.4th 582, the Court of Appeal held that a law school graduate who was not licensed to practice law but who worked for a law firm and performed tasks customarily performed by junior attorneys was exempt as a learned professional. My post on Zelasko-Barrett is here. I thought the Supreme Court would grant and hold pending its decision in Harris v. Superior Court (12/29/11) --- Cal.4th ----, 2011 WL 6823963, which most people thought would shed light on the white collar exemptions. (As it turned out, Harris shed little light on anything, but that's a different story.)

Yesterday, the Supreme Court did in fact grant review in Zelasko-Barrett, but on a different point. The back story is this: after the Court of Appeal issued its August 17 decision, it issued an unpublished decision (available here) on October 24, 2011, holding that the successful employer could not recover its attorney fees under Labor Code section 218.5. This is at issue in Kirby v. Immoos Fire Protection, Inc., which will address the following:

Does Labor Code section 1194 apply to a cause of action alleging meal and rest period violations (Lab. Code 226.7) or may attorney's fees be awarded under Labor Code section 218.5?
Is our analysis affected by whether the claims for meal and rest periods are brought alone or are accompanied by claims for minimum wage and overtime?

So Zelasko-Barrett becomes the second Kirby grant-and-hold. The other is In re. UPS Wage and Hour Cases (blogged here). I thought the Court might grant review in Plancich v. United Parcel Service, Inc. (8/11/11) 198 Cal.App.4th 308 (blogged here) in which the Court of Appeal held that while Labor Code section 1194 gives a prevailing employee the right to recover attorney's fees and costs, it "does not contain express language excluding prevailing employers from recovering their costs." Turns out I'm a lousy judge of grant-and-holds. Go figure.

The Supreme Court's Kirby page is here.

Raniere v. Citigroup: District Court Holds Collective Action Waiver Unenforceable as Preventing Employees From Vindicating Substantive Statutory Rights under the FLSA

2012-01-19T15:06:00.000-08:00

Thank you to Andrew Frisch for his Overtime Law Blog. Mr. Frisch does a truly excellent job of covering FLSA developments, and I recommend his blog highly. Mr. Frisch has written a detailed article on an interesting District Court case, Raniere v. Citigroup Inc. (S.D.N.Y. 11/22/11). I will not review the case in detail but will only note a few important points.

In Raniere, three individuals brought a putative nationwide FLSA collective action for unpaid overtime, alleging that the defendants classified its home mortgage consultants as exempt employees and failed to pay them overtime compensation. The defendant moved to compel individual arbitration, and the Court denied the motion. Slip op. at 2.

First, the Court based its ruling in the "federal substantive law of arbitrability," which "requires federal courts to declare otherwise operative arbitration clauses unenforceable when enforcement would prevent plaintiffs from vindicating their statutory rights." Slip op. at 30. The Court stated that AT&T Mobility v. Concepcion "in no way alters" this federal law of arbitrability. Slip op. at 32.

Second, the Court held that employees cannot waive their right to proceed collectively under the FLSA, and "a waiver of the right to proceed collectively under the FLSA is per se unenforceable." Slip op. at 36.

Third, because the agreement at issue included a "blow-up" provision -- a clause stating that if the collective action waiver is found unenforceable, then the action shall proceed in court, rather than in arbitration -- the Court declined to order class arbitration or to stay the court proceedings. Slip op. at 51.

The opinion is available here. Mr. Frisch's post on Raniere is here.

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC:

2012-01-18T14:46:00.000-08:00

I am mediating more cases that fall outside of the wage and hour realm, and wanted widen the blog's focus to include more traditional employment law.

In Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, --- S.Ct. ----, 2012 WL 75047 (1/11/12), the Supreme Court considered whether a minister may sue her church for wrongful termination based on acts of discrimination. In a unanimous opinion written by Chief Justice Roberts, the Court held that the Establishment and Free Exercise Clauses of the First Amendment bar such actions.

Cheryl Perich worked as a teacher for Hosanna-Tabor. She was considered "called," meaning that she was regarded as having been called to her vocation by God through a congregation. She taught academic and religious classes and led the students in prayer. Perich was diagnosed with narcolepsy and went on disability leave. When Perich advised the school that she was able to return to work, it told her that it had filled her position. After Perich showed up for work, Hosanna-Tabor terminated her.

Perich filed a charge with the Equal Employment Opportunity Commission (EEOC), alleging that Hosana-Tabor had terminated her employment in violation of the Americans with Disabilities Act (ADA). 42 U. S. C. §12101 et seq. The EEOC filed suit, alleging that Hosanna-Tabor had fired Perich in retaliation for threatening to file an ADA lawsuit. Hosanna-Tabor moved for summary judgment, arguing that Perich was a minister, and she had been fired for a religious reason - namely, that her threat to sue the Church violated the Synod’s belief that Christians should resolve their disputes internally. The District Court agreed that the suit was barred by the ministerial exception and granted summary judgment in Hosanna-Tabor’s favor. The Sixth Circuit Court of Appeals vacated the decision, but the Supreme Court granted certiorari and affirmed.

The Court began by tracing the history of the First Amendment Establishment and Free Exercise Clauses from the Magna Carta, through the reign or Henry VIII, to the founding of the colonies by the Puritans, and the early days of the United States. The principal lesson drawn from this history is that the government under the First Amendment has no role in telling a church whom to choose as its minister. In the words of then Secretary of State James Madison in 1806, the selection of church functionaries was an “entirely ecclesiastical” matter left to the Church’s own judgment. Slip op. at 9.

The Court then considered whether "this freedom of a religious organization to select its ministers is implicated by a suit alleging discrimination in employment." Slip op. at 13. The Court held that there is a “ministerial exception,” grounded in the First Amendment, that precludes application of anti-discrimination legislation to claims concerning the employment relationship between a religious institution and its ministers. Ibid.

The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions.

Slip op. at 13-14.

The Court then held that the ministerial exception applied to the facts of the present case. The Court declined to set a bright line rule on the limits of the ministerial exemption and instead looked to the particular facts of the case, including: Hosanna-Tabor held Perich out as a minister; her title as a minister "reflected a significant degree of religious training followed by a formal process of commissioning;" Perich held herself out as a minister of the Church by accepting the formal call to religious service; and her job duties reflected a role in conveying the Church’s message and carrying out its mission. Slip op. at 16-18. The Court concluded:

The interest of society in the enforcement of employment discrimination statutes is undoubtedly important. But so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith, and carry out their mission. When a minister who has been fired sues her church alleging that her termination was discriminatory, the First Amendment has struck the balance for us. The church must be free to choose those who will guide it on its way.

Slip op. at 21-22.

The opinion is available here.

CompuCredit Corp. v. Greenwood: New SCOTUS Arbitration Decision May Shed Light on Future of Employment Class Action Waivers

2012-01-18T12:41:00.000-08:00

In CompuCredit Corp. v. Greenwood, --- S.Ct. ----, 2012 WL 43514 (1/10/12) the Supreme Court of the United States (SCOTUS) considered whether the Credit Repair Organizations Act (CROA), 15 U.S.C. § 1679 et seq., precludes enforcement of an arbitration agreement in a lawsuit alleging violations of that Act. The plaintiffs filed a putative class action under the CROA, the defendant moved to compel arbitration, the trial court (N.D.Cal., Judge Claudia Wilken) denied the motion, and the Ninth Circuit affirmed.

In an opinion written by Justice Scalia, the Supreme Court reversed. First, the CROA's provision requiring credit repair organizations to notify consumers of their right to sue ("You have a right to sue a credit repair organization that violates the Credit Repair Organization Act") is a notification provision, not a private right of action provision (which occurs elsewhere in the CROA) and "does not create a right to initial judicial enforcement." Slip op. at 4.

Second, the CROA's non-waiver language ("Any waiver by any consumer of any protection provided by or any right of the consumer under this subchapter—(1) shall be treated as void; and (2) may not be enforced by any Federal or State court or any other person") does not prohibit the waiver of one's right to proceed in court because, again, the CROA "does not create a right to initial judicial enforcement." Ibid.

Because the CROA "is silent on whether claims under the Act can proceed in an arbitrable forum, the FAA requires the arbitration agreement to be enforced according to its terms." Slip op. at 6.

This brings to my mind the somewhat related issue in the National Labor Relations Board's recent decision in D.R. Horton, Inc. (blogged here). In D.R. Horton, the Board held that an employer violates Section 8(a)(1) of the National Labor Relations Act (NLRA) when it requires employees covered by the Act, as a condition of employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, whether arbitral or judicial. The Board emphasized that its holding did not implicate the Federal Arbitration Act (FAA) because the policy at issue prohibited collective or class actions in any forum, not just in arbitration. However, even if the NLRA did conflict with the FAA, the FAA would have to yield:

[U]nder the Norris-LaGuardia Act, a private agreement that seeks to prohibit a “lawful means [of] aiding any person participating or interested in” a lawsuit arising out of a labor dispute (as broadly defined) is unenforceable, as contrary to the public policy protecting employees’ “concerted activities for . . . mutual aid or protection.” To the extent that the FAA requires giving effect to such an agreement, it would conflict with the Norris-LaGuardia Act. The Norris-LaGuardia Act, in turn—passed 7 years after the FAA,—repealed “[a]ll acts and parts of act in conflict” with the later statute (Section 15).

Would this reasoning hold in the Supreme Court? Addressing federal laws that prohibit arbitration, Justice Scalia in CompuCredit wrote:

When [Congress] has restricted the use of arbitration in other contexts, it has done so with a clarity that far exceeds the claimed indications in the CROA. See, e.g., 7 U.S.C. § 26(n)(2) (2006 ed., Supp. IV) (“No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section”); 15 U.S.C. § 1226(a)(2) (2006 ed.) (“Notwithstanding any other provision of law, whenever a motor vehicle franchise contract provides for the use of arbitration to resolve a controversy arising out of or relating to such contract, arbitration may be used to settle such controversy only if after such controversy arises all parties to such controversy consent in writing to use arbitration to settle such controversy”); cf. 12 U.S.C. § 5518(b) (2006 ed., Supp. IV) (granting authority to the newly created Consumer Financial Protection Bureau to regulate predispute arbitration agreements in contracts for consumer financial products or services).

Slip op. at 5. Justice Sotomayor, joined by Justice Kagan, joined in the result, but added this note:

The majority opinion contrasts the liability provision of the Act with other, more recently enacted statutes that expressly disallow arbitration. I do not understand the majority opinion to hold that Congress must speak so explicitly in order to convey its intent to preclude arbitration of statutory claims. We have never said as much, and on numerous occasions have held that proof of Congress' intent may also be discovered in the history or purpose of the statute in question. See ibid. (“If such an intention exists, it will be discoverable in the text of the [statute], its legislative history, or an ‘inherent conflict’ between arbitration and the [statute's] underlying purposes”); Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 227, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (“If Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent ‘will be deducible from [the statute's] text or legislative history,’ or from an inherent conflict between arbitration and the statute's underlying purposes” (quoting Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); citation omitted)).

Slip op. at 8.

If the Supreme Court does eventually take up the Board's decision in D.R. Horton, it is possible that the decision will turn on the question of whether Congress, in enacting the NLRA and the Norris-LaGuardia Act, intended the employee protections of those acts to trump the policies at work in the FAA.

Until then, the Court's opinion in CompuCredit is available here.

Wisdom v. AccentCare: Court Invalidates Unconscionable Arbitration Agreement

2012-01-18T10:31:00.000-08:00

In Wisdom v. AccentCare, Inc. (1/3/12) --- Cal. App. 4th ----, 2012 WL 8701, the defendant employed the plaintiffs as on-call staffing coordinators. The plaintiffs filed suit, alleging that they were not paid for off-the-clock work. They sought damages and injunctive and declaratory relief.

The employer moved to compel arbitration based on an acknowledgment form that some of the plaintiffs signed when they applied for employment. The form stated:

I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by AccentCare,that all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with AccentCare, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules then in effect of the American Arbitration Association.

Slip op. at 2. The trial court (Sacramento County Superior, Judge Steven H. Rodda) denied the motion, holding that the acknowledgment form was unconscionable. Ibid.

Relying on Armendariz v. Foundation Health Psychcare Services, Inc., (2000) 24 Cal.4th 83, the Court of Appeal affirmed, holding that the acknowledgment was procedurally and substantively unconscionable. On procedural unconscionability, the Court held:

The contract, being one of adhesion, was oppressive. It was given to plaintiffs upon their application for employment. This situation leads to inherent unconscionability because of the unequal bargaining power of the parties and the nature of the relationship. There was no evidence that the plaintiffs in this case were highly sought-after skilled employees who individually negotiated the details of their employment relationship with AccentCare.

Slip op. at 3. The Court noted that the arbitration was to be conducted under the American Arbitration Association rules, but the acknowledgment did not attach those rules. The Court also found that an element of surprise, as stated in the plaintiffs' declarations, in that the plaintiffs did not know what “binding arbitration” meant, no one explained it to them, and they did not know that they were giving up their right to trial. Ibid. Cf. Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1468-1469.

The Court also found the acknowledgment substantively unconscionable because it lacked mutuality, i.e., it required the plaintiffs to arbitrate their claims but did not require the defendant to do so. Slip op. at 6. The Court concluded:

The arbitration language in the acknowledgment signed by plaintiffs did not create mutual obligations. This, combined with the elements of procedural unconscionability present in the circumstances of the execution of the agreement compel the conclusion that the arbitration agreement was unenforceable.

Slip op. at 7. The opinion is available here.

Sky Sports v. Superior Court: Court of Appeal Finds No Waiver of Right to Arbitrate

2012-01-09T17:47:00.000-08:00

Sky Sports, Inc. v. Superior Court (Hogan) (12/15/11) 2011 WL 6225228, brings an interesting twist to the question of whether a party waives its right to demand arbitration by taking part in litigation.

The plaintiff filed a putative class action against his former employer for meal and rest period violations. In opposition to the plaintiff's motion for class certification, the defendant argued that he was not typical of the class because, unlike the majority of his co-workers, he had not signed an arbitration agreement. The trial court (Los Angeles Superior, Judge Ernest M. Hiroshige) granted certification and held that the defendant had waived its right to compel arbitration. Slip op. at 2.

The Court of Appeal reversed. The Court held that the defendant could not have compelled the plaintiff to arbitrate because he had not signed an agreement to arbitrate. Slip op. at 3. The defendant's delay in bringing the motion to compel arbitration until certification of a class that included people who had signed an arbitration agreement could not constitute a waiver of the defendant's right to move compel arbitration. Slip op. at 4.

The opinion is available here.

D.R. Horton: National Labor Relations Board Holds that Class Action Waivers Violate National Labor Relations Act

2012-01-06T17:49:00.000-08:00

The National Labor Relations Board has announced its decision in the case of D.R. Horton, Inc. Case No. 12-CA-25764. Many of us have been watching this case closely since the SCOTUS decision in AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), which held that the Federal Arbitration Act (FAA) preempts the California Supreme Court's decision in Discover Bank v. Superior Court (2005) 36 Cal.4th 148 regarding unconscionability analysis of class action waivers in arbitration agreements. My posts on Concepcion are here and here.

In D.R. Horton, the NLRB considered whether an employer violates Section 8(a)(1) of the National Labor Relations Act when it requires employees covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, whether arbitral or judicial. The Board found that such an agreement violates section 7 of the Act, which gives employees the right to engage in concerted activities for mutual aid or protection, notwithstanding the FAA, which generally makes employment-related arbitration agreements judicially enforceable. The Board found that under the circumstances presented, there was no conflict between Federal labor law and policy, on the one hand, and the FAA and its policies, on the other. Slip op. at 1.

The Board began by discussing section 7 of the Act, which preserves the right of employees to engage in concerted activity for their mutual benefit. Slip op. at 2. The Board and the courts have long held that section 7 protects the right of employees to bring legal action addressing their wages, hours, and working conditions. Ibid. This includes the right to bring "employment-related claims on a classwide or collective basis in court or before an arbitrator." Slip. op at 3.

The employer's Mutual Arbitration Agreement (MAA) violates section 7 because it requires employees, as a condition of their employment, to refrain from bringing collective or class claims in any forum at all. They cannot proceed in court, because the MAA waives their right to a judicial forum; and they cannot proceed in arbitration, because the MAA prohibits the arbitrator from consolidating claims or awarding collective relief. "The MAA thus clearly and expressly bars employees from exercising substantive rights that have long been held protected by Section 7 of the NLRA." Slip op at 4.

Because the MAA "expressly restricts protected activity," the employer violated section 8(a)(1) of the Act by imposing it on employees as a condition of employment. Slip op. at 4. Further, even if "entered into without coercion," any agreement that obligates an employee to bargain individually constitutes a restraint upon collective action. Slip op. at 5. The prohibition on such agreements "lies at the core of the prohibitions contained in Section 8" and implicates Federal labor policy that predates the Act. Slip op. at 5-6.

The Board next rejected the defendant's argument that finding a violation of the Act would conflict with the FAA. Slip op. at 7.

Enacted in 1925, the FAA sought to “reverse the longstanding judicial hostility to arbitration agreements” and to place private arbitration agreements “upon the same footing as other contracts.” Slip op. at 8, citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). Agreements to arbitrate remain subject to the same defenses against enforcement to which other contracts are subject. Slip op. at 8.

The Board's finding that the MAA violates the NLRA does not conflict with the FAA for several reasons. First:

To find that an arbitration agreement must yield to the NLRA is to treat it no worse than any other private contract that conflicts with Federal labor law. The MAA would equally violate the NLRA if it said nothing about arbitration, but merely required employees, as a condition of employment, to agree to pursue any claims in court against [their employer] solely on an individual basis.

Slip op. at 9.

Second, an agreement to arbitrate statutory claims may not require a party to forego its substantive statutory rights. Ibid. The MAA's "categorical prohibition" of joint, class, or collective claims in any forum - either judicial or arbitral - violates section 7's right to engage in concerted activity. Ibid. That right is substantive, not merely procedural. It is "the core substantive right protected by the NLRA and is the foundation on which the Act and Federal labor policy rest." Slip op. at 10.

Third, "nothing in the text of the FAA suggests that an arbitration agreement that is inconsistent with the NLRA is nevertheless enforceable." Slip op. at 11. To the contrary, the FAA provides that arbitration agreements may be invalidated in whole or in part upon any “grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. section 2. The generally applicable defense here is that the MAA violates the NLRA. Ibid.

The Board then discussed Concepcion and the concern expressed by the Supreme Court that the “switch from bilateral to class arbitration sacrifices the principal advantage of arbitration—its informality.” Concepcion, 131 S.Ct. at 1750. The Board reasoned that "the weight of this countervailing consideration was considerably greater in the context of AT&T Mobility than it is here" because the employment agreement at issue here differs substantially from the consumer contract at issue in Concepcion. Slip op. at 11. Employment class actions represent only a subset of all class actions and tend to be more limited than consumer class actions, so any intrusion on the policies underlying the FAA is similarly limited. Slip op. at 11-12.

The Board thus held that its holding accommodates "to the greatest extent possible" the policies underlying both the NRLA and the FAA. Slip op. at 12.

The Board then reasoned that, even if there were a direct conflict between the NLRA and the FAA, it is the FAA that must yield:

As explained above, under the Norris-LaGuardia Act, a private agreement that seeks to prohibit a “lawful means [of] aiding any person participating or interested in” a lawsuit arising out of a labor dispute (as broadly defined) is unenforceable, as contrary to the public policy protecting employees’ “concerted activities for . . . mutual aid or protection.” To the extent that the FAA requires giving effect to such an agreement, it would conflict with the Norris-LaGuardia Act. The Norris-LaGuardia Act, in turn—passed 7 years after the FAA,—repealed “[a]ll acts and parts of act in conflict” with the later statute (Section 15).

Slip op. at 12.

Finally, the Board held that its decision does not implicate the Supreme Court's restriction on compelling class arbitration, as expressed in Concepcion and Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758, 1775–1776 (2010). Slip op. at 12. Neither Concepcion nor Stolt-Nielsen involved the waiver of rights protected by the NLRA. Further, Concepcion involved a conflict between the FAA and state law, which implicated the Constitution's Supremacy Clause, while this case arguably involves a conflict between two federal statutes. Finally, the Board's decision does not require any employer to submit any employment dispute to class arbitration:

We need not and do not mandate class arbitration in order to protect employees’ rights under the NLRA. Rather, we hold only that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, arbitral and judicial. So long as the employer leaves open a judicial forum for class and collective claims, employees’ NLRA rights are preserved without requiring the availability of classwide arbitration. Employers remain free to insist that arbitral proceedings be conducted on an individual basis.

Slip op. at 12.

The Board's opinion is available here.

Harris v. Superior Court (Liberty Mutual Insurance): Cal. Supreme Court Reverses Insurance Adjuster Exemption Case

2012-01-05T09:14:00.000-08:00

Plaintiffs worked as claims adjusters for defendants. They alleged that defendants erroneously classified them as exempt “administrative” employees and sought unpaid overtime. Plaintiffs moved for class certification, and the trial court certified a class of “all non-management California employees classified as exempt by [defendants] who were employed as claims handlers and/or performed claims-handling activities.”

Plaintiffs moved for summary adjudication of defendants’ affirmative defense that plaintiffs were exempt from the overtime compensation requirements under Industrial Welfare Commission (IWC) Wage Order No. 4. Cal. Code Regs., tit. 8, § 11040. Defendants opposed the motion and moved to decertify the class.

The trial court decertified the class in part, depending on then the plaintiffs’ claims arose. For claims arising before October 1, 2000, the trial court granted the motion for summary adjudication on grounds that the Bell v. Farmers Insurance line of cases – Bell v. Farmers Ins. Exchange (2001) 87 Cal. App. 4th 805 (“Bell II”) and Bell v. Farmers Ins. Exchange (2004) 115 Cal. App. 4th 715 (“Bell III”) – compelled a ruling that the claims adjusters were nonexempt “production workers.” The court decertified the class as to all claims arising after October 1, 2000, the effective date of a new Wage Order 4.

Both parties appealed. A divided court of appeal ruled for plaintiffs, concluding that they could not be considered exempt employees under either version of the Wage Order. The court of appeal directed the trial court to vacate its prior order and enter an order granting plaintiffs’ motion for summary adjudication and denying defendants’ motion to decertify.

The California Supreme Court granted defendants’ petition for review. In a unanimous but relatively narrow decision, the Court reversed and remanded to the court of appeal for reconsideration, holding that the “administrative/production worker dichotomy” is not dispositive.

In 1998, the IWC issued a new series of wage orders, abolishing overtime compensation for work over eight hours in a day. In response, the Legislature passed the AB 60, “Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999.” The Act amended Labor Code section 510 to provide overtime compensation for work over eight hours in a day. It also added section 515, which permits the IWC to exempt from overtime compensation executive, administrative, and professional employees, provided that they are primarily engaged in duties that meet the test of the exemption, that they regularly exercise discretion and independent judgment in performing those duties, and that they earn a monthly salary no less than two times the state minimum wage for full-time employees, currently $640 per workweek.

Following passage of AB 60, the IWC issued new wage orders, including Wage Order 4-2001. Whereas Wage Order 4-1998 did not “articulate the precise scope” of the administrative exemption, Wage Order 4-2001 contains “a much more specific and detailed description of work that is properly described as administrative.” Harris, slip op. at 4, 7. The Order provides a multi-pronged test of the exemption. Harris focuses on the first and last factors: that an administrative employee is one whose duties and responsibilities involve “the performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his/her employer’s customers” and who is primarily engaged in duties that meet the test of the exemption.

The Wage Order provides that the activities constituting exempt and non-exempt work “shall be construed in the same manner” as in certain regulations under the federal Fair Labor Standards Act in effect as of the date of the order. The relevant regulation provides that work is “directly related to management policies or general business operations” only if it satisfies two components. Fed. Regs. § 541.205(a) (2000). First, it must be qualitatively administrative. Second, quantitatively, it must be of substantial importance to the management or operations of the business. Both components must be satisfied before work can be deemed exempt in nature. Harris, slip op. at 10.

In their motion for summary adjudication, plaintiffs argued that defendants could not show that their work was qualitatively administrative in nature. They argued that they fell on the production side of the administrative/production worker dichotomy, as explained in the Bell cases. The administrative/production worker dichotomy distinguishes between administrative employees who are primarily engaged in “administering the business affairs of the enterprise” and production-level employees whose “primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.” (Bell II, 87 Cal. App. 4th at p. 821.)

Like Harris, Bell asked whether a class of insurance adjusters could be deemed administrative exempt employees. Examining the role of the plaintiffs in the defendant’s business, the Bell court held that the defendant’s business was to handle claims, the adjusters fell squarely on the production side of the administrative/production dichotomy, and they could not be deemed administrative employees. Bell II, 87 Cal. App. 4th at 826.

The Supreme Court distinguished Bell on two grounds. First, the Bell courts were careful to limit their holdings to the facts before them, including the defendants’ stipulation that the plaintiffs’ work was “routine and unimportant.” Bell II, 87 Cal. App. 4th at 826. “Second, because Wage Order 4-1998 did not provide sufficient guidance, the Bell II court looked beyond the language of the wage order and employed the administrative/production worker dichotomy as an analytical tool.” Harris, slip op. at 17. In contrast, Wage Order 4-2001 provides “detailed guidance” on the issue. Ibid.

Having thus distinguished Bell, the Supreme Court held that the court of appeal erred in placing too much reliance upon it.

First, the court of appeal both failed to consider all of the relevant aspects of the federal regulations incorporated into Wage Order 4-2001 and it “reached out for support” to other regulations not incorporated into the Wage Order. Harris, slip op. at 18.

Specifically, the court of appeal focused on former part 541.205(a), concluding that only work performed at the level of policy or general operations can qualify as “directly related to management policies or general business operations” and that work that merely carries out the particular day-to-day operations of the business is production, not administrative, work. Harris, slip op. at 19. The court failed to take into account former part 541.205(b), which provides that “administrative operations of the business” includes work performed by “white-collar employees engaged in ‘servicing’ a business as, for example, advising the management, planning, negotiating, [and] representing the company.” Ibid. The court thus read the phrase “directly related to management policies or general business operations” in too narrow a fashion. Ibid.

Second, the court of appeal erred in relying on Bratt v. County of Los Angeles (9th Cir. 1990) 912 F.2d 1066 to support its conclusion that “although advising management about the formulation of policy is exempt administrative work, advising management about the settlement of an individual claim is not.” Harris, slip op. at 19-20. The Supreme Court distinguished Bratt because the Ninth Circuit more recently held that claims adjusters may be exempt from the Fair Labor Standards Act’s overtime requirements and because Bratt involved probation officers, not claims adjusters. Harris, slip op. at 20. The court of appeal’s reliance on Bratt “highlights the difficulty in relying on the particular role of employees in one enterprise to deduce a rule applicable to another kind of business” and “reveals the limitations of the administrative/production worker dichotomy itself as an analytical tool.” Harris, slip op. at 20-21. The Court held that modern-day, post-industrial, service-oriented businesses may not follow the administrative/production worker dichotomy, and that courts should not strain to apply the dichotomy where it does not fit. Harris, slip op. at 21.

The court of appeal did not err in considering two opinion letters issued by the Division of Labor Standards Enforcement (DLSE): a 1998 letter applying the administrative/production worker dichotomy to find that certain claims adjusters were not exempt; and a 2003 letter stating that the dichotomy is still viable after adoption of Wage Order 4-2001. Harris, slip op. at 21. The Supreme Court stated that its opinion was not inconsistent with the opinion letters.

We do not hold that the administrative/production worker dichotomy was misapplied to the Bell II plaintiffs, based on the record in that case, or that the dichotomy can never be used as an analytical tool. We merely hold that the Court of Appeal improperly applied the administrative/production worker dichotomy as a dispositive test.

Harris, slip op. at 22.

The Supreme Court thus reversed and remanded with instructions that the court of appeal review the trial court’s denial of the summary adjudication motion, applying the legal standards set forth in the opinion. The Court did not take immediate action in either of the two companion cases, Pellegrino v. Robert Half International, Inc., Case No. S180849 (blogged here) and Hodge v. AON Insurance Services, Case No. S191415 (blogged here).

The opinion is available here.

Harris v. Superior Court: Supreme Court Says Court of Appeal Erred in Finding Insurance Adjustors Not Exempt

2011-12-29T11:34:00.000-08:00

The California Supreme Court has issued its decision in Harris v. Superior Court (Liberty Mutual Insurance). I will post more later, but for the time being, here's the headline:

This litigation tests whether certain insurance company claims adjusters are exempt employees, not entitled to overtime compensation under the Labor Code and regulations of the California Industrial Welfare Commission (IWC or Commission). Reviewing the trial court’s denial of a summary adjudication motion, the Court of Appeal held the adjusters are not exempt employees as a matter of law. In doing so, the Court of Appeal misapplied the substantive law. We reverse.

The opinion is available on the Supreme Court's web site.

Aleman v. AirTouch Cellular: Court Issues Decision on Reporting Time, Split Shifts

2011-12-22T09:55:00.001-08:00

In Aleman v. AirTouch Cellular (12/21/11) --- Cal.App.4th ----, the Court of Appeal affirmed an order granting summary judgment (Los Angeles Superior Court, Judge William Highberger) to an employer in a putative class action.

The plaintiffs alleged that the defendant violated two separate provisions of Industrial Welfare Commission (IWC) Wage Order No. 4-2001. They alleged that defendant: (1) failed to pay reporting time pay for days when they were required to report to work just to attend work-related meetings; and (2) failed to pay split shift compensation for days on which they attended a meeting in the morning and worked another shift later the same day.

The trial court granted motions for summary judgment against two of the named plaintiffs. The Court of Appeal affirmed, issuing three holdings of note.

First, the defendant did not have to pay the plaintiffs “reporting time pay” for attending meetings at work, because all the meetings were scheduled, and the plaintiff worked at least half the scheduled time, even if the scheduled time was less than four hours. In other words, if an employee's only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, the employer is not required required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages because the employee was furnished work for more than half the scheduled time. Slip op. at 10.

Second, the defendant did not owe the plaintiffs additional compensation for working “split shifts” because on each occasion he worked a split shift he earned more than the minimum amount required by the wage order. Slip op. at 17. In other words, the plaintiff would be entitled to split shift pay only if his total earnings for the day were less than the number of hours worked, plus the split shift premium of one hour's pay, at the minimum wage rate. Ibid.

Third, the defendant could not recover its attorney fees from the plaintiffs because the claims arose under Labor Code section 1194, the one-way fee-shifting statute, rather than section 218.5, which allows either successful party to recover its fees. Slip op. at 22. "Ultimately, reporting time and split shift pay requirements serve the same general purpose as Labor Code section 1194." Slip op. at 25.

The opinion is available here.

Brinker-Watch 2012

2011-12-15T12:29:00.000-08:00

The California Supreme Court held oral argument in Brinker on November 8, 2011. (You can view the oral argument on youtube.) The Court deemed the matter submitted as of that date, meaning that it would issue its opinion no later than 90 days later, or February 6, 2012.

On December 2, the Court granted permission to the California Employment Law Council to file an amicus brief regarding the retroactive application of the Court's opinion. Yesterday, the Court vacated its prior order deeming the case submitted and held that it will be deemed "resubmitted" on January 13, 2012:

Pursuant to California Rules of Court, rule 8.520(f)(7) and this court's December 2, 2011, order, the parties' answers to the amicus curiae brief of the California Employment Law Council, addressing the grounds for prospectively applying portions of this court's eventual decision on the merits, are due Tuesday, January 3, 2012. Each party may file a simultaneous reply to the other party's answer within 10 days thereafter. Submission of the cause is vacated. (See Cal. Rules of Court, rule 8.524(h)(1) [submission runs from expiration of the time in which to file briefs, including supplemental briefs].) The cause will be resubmitted on January 13, 2012.

The result is that we will have the opinion no later than April 12, 2012. Stay tuned.

As a reminder, the Court's docket is here.

Christopher v. SmithKline Beecham: SCOTUS Grants Review in Pharmaceutical Sales Rep Action

2011-12-15T11:40:00.000-08:00

On November 28, 2011, the Supreme Court of the United States granted certiorari in Christopher v. SmithKline Beecham Corp. (blogged here). The Ninth Circuit in Christopher upheld a district court's finding that pharmaceutical sales representatives (PSRs) are exempt employees under the Fair Labor Standards Act (FLSA).

Here are the questions presented:

The outside sales exemption of the Fair Labor Standards Act exempts from the overtime requirements of the Act "any employee employed ... in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary ...)." 29 U.S.C. § 213(a)(1). The Secretary of Labor has implemented various regulations that "define and delimit" the outside sales exemption and, filing as amici in this and other related matters, has interpreted these regulations to find the exemption inapplicable to pharmaceutical sales representatives. A split exists between the Second and Ninth Circuits concerning whether this interpretation is owed deference and whether the outside sales exemption of the Fair Labor Standards Act applies to pharmaceutical sales representatives.

The questions presented are:

(1) Whether deference is owed to the Secretary's interpretation of the Fair Labor Standards Act's outside sales exemption and related regulations; and

(2) Whether the Fair Labor Standards Act's outside sales exemption applies to pharmaceutical sales representatives.

The case number is 11-204, and the docket is here.

Haligowski v. Superior Court: Like FEHA, California Law Prohibiting Discrimination Against Members of Armed Services Does Not Permit Action Against Individual Supervisor

2011-12-14T19:24:00.000-08:00

In Haligowski v. Superior Court (Pantuso) (11/10/11), 200 Cal.App.4th 983, the Court of Appeal reversed a trial court order (Los Angeles Superior Court, Judges Susan Bryant–Deason and Coleman A. Swart) overruling a demurrer, holding:

Like the California Fair Employment and Housing Act (FEHA), which contains similar language and embodies similar goals, Military and Veterans Code section 394, which prohibits employers from discriminating against members of the armed forces,allows servicemen and servicewomen plaintiffs to hold their employers, but not individual employees, liable for discrimination; and
The Uniformed Services Employment and Reemployment Rights Act (USERRA) (38 U.S.C. 4301 et seq.) does not supersede the California anti-discrimination statute.

The opinion is available here.

Nachshin v. AOL: Ninth Circuit Reverses Cy Pres Award

2011-12-14T19:18:00.000-08:00

In Nachshin v. AOL, LLC (11/21/11) --- F.3d ----, 2011 WL 5839610, plaintiffs brought a class action against AOL on behalf of a putative class of more than 66 million paid AOL subscribers, alleging that AOL wrongfully inserted footers containing promotional messages into e-mails sent by AOL subscribers.

At mediation, the parties agreed that the maximum recovery at trial would have been the unjust enrichment AOL received as a result of its footer advertisement sales, or about $2 million. Divided among the more than 66 million AOL subscribers, each member of the class would receive only about 3 cents. The cost to distribute these payments would far exceed the maximum potential recovery.

In lieu of a cost-prohibitive distribution to the plaintiff class, the parties agreed that AOL would provide certain notices to its subscribers and make a series of donations to Los Angeles area charities.

The district court (C.D.Cal., Judge Christina A. Snyder) granted preliminary and final approval, and an objector appealed. The Ninth Circuit affirmed in part and reversed in part. Noting that "The cy pres doctrine takes its name from the Norman French expression, cy pres comme possible, which means as near as possible," the Court held that the charitable donations here failed to meet the test for cy pres distributions. Six (6) Mexican Workers v. Arizona Citrus Growers (9th Cir. 1990) 904 F.2d 1301. Two thirds of the donations would be made to Los Angeles-area charities. The proposed donation to the Federal Judicial Center Foundation would benefit a national organization, but this organization has no apparent relation to the objectives of the underlying statutes, and it is not clear how this organization would benefit the class. The Court thus concluded that the district court applied the incorrect legal standard and abused its discretion in approving the proposed cy pres distribution. Slip op. at 6. The Court even suggested that the parties find a beneficiary that "works to protect internet users from fraud, predation, and other forms of online malfeasance." Ibid.

The Court rejected the contention that Judge Snyder should have recused herself because her husband sat on the board of one of the proposed cy pres beneficiaries, the Legal Aid Foundation of Los Angeles. Id. at 6-7.

The opinion is available here.

Pirjada v. Superior Court: Court Denies Leave to Find New Class Rep.

2011-12-14T18:43:00.000-08:00

Can a defendant in a putative class action defeat or moot the action by settling with the putative class representative -- or merely by offering to settle?

In Pitts v. Terrible Herbst, Inc., --- F.3d ----, 2011 WL 3449473 (9th Cir. 8/9/11) (blogged here) the Ninth Circuit held that a full value offer to a putative class representative in an action under the Fair Labor Standards Act (FLSA) and Nevada state law does not moot the action. In Damasco v. Clearwire Corp., --- F.3d --- (7th Cir. 11/18/11), the Seventh Circuit held that such a full-value offer, if made before a class certification motion is filed, renders the putative collective action moot.

A different issue arises when the putative class representative actually accepts the defendant's offer. See Cameron-Grant v. Maxim Healthcare Serv., Inc., 347 F.3d 1240, 1248-49 (11th Cir. 2003) (accepted offer to class representatives moots FLSA collective action).

In California class actions, this situation typically is addressed by allowing putative class counsel to conduct discovery to find a new class representative. Best Buy Stores, L.P. v. Superior Court (2006) 137 Cal.App.4th 772.

In Pirjada v. Superior Court (Pacific National Security, Inc.) (12/12/11), the Second District Court of Appeal held that the trial court (L.A. Superior Court, Judge Michael M. Johnson) did not abuse its discretion in denying as moot counsel's motion to compel defendant to identify the putative class members in response to pre-settlement discovery requests:

[T]he decision to deny the motion to compel was also within the broad discretion of the court: By the time the motion was filed, the court had already chosen other means to protect the absent class members—it gave [counsel] leave to amend the complaint after using informal means to identify potential replacement class representatives and deferred any determination whether the entire case should be dismissed and, if so, how to comply with the notice requirements of Rule 3.770(c), to a later date. Although the court's decision to deny [counsel's] motion for notice to the class was based largely on a distinction between consumer and employee class actions, a distinction we implicitly rejected in Belaire–West Landscape, Inc. v. Superior Court, supra, 149 Cal.App.4th 554, the propriety of that ruling is not before us. [Counsel] did not seek writ review of the court's May 26, 2011 order. Instead, it elected to proceed by way of a motion to compel. The court's subsequent decision to deny that motion, finding the outstanding discovery requests propounded by Pirjada moot in light of his individual settlement, was in no way arbitrary or capricious or otherwise in excess of the bounds of reason.

Slip op. at 8. The Court also rejected counsel's argument that the trial court's refusal to require the defendant to identify the class members would interfere with notice to the class prior to dismissal of the action. The court noted that the trial court had not yet dismissed the action and held, in essence, that the trial court should cross that bridge when it comes to it. At that point, counsel "will have an opportunity to demonstrate to the court that some form of notice is required to avoid prejudice to absent class members." Slip op. at 9.

The opinion is available here.

Sullivan v. Oracle Corp. Returns to Ninth Circuit

2011-12-14T17:24:00.000-08:00

In 2009, the Ninth Circuit asked the California Supreme Court to rule on certain issues regarding work performed inside and outside of California by non-California residents.

In Sullivan v. Oracle Corp. (2011) 541 Cal.4th 1191 (blogged here) the California Supreme Court held: (1) California's overtime requirements apply to work performed in California for a California employer by non-residents; and (2) Business and Professions Code section 17200, known as the Unfair Competition Law or "UCL" applies to such overtime work; but (3) the UCL does not apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs.

In an opinion yesterday, the Ninth Circuit addressed two remaining issues, holding that application of the California Labor Code to non-residents working in California does not violate violates Due Process Clause of the Fourteenth Amendment or the Dormant Commerce Clause of the United States Constitution. Sullivan v. Oracle Corp., --- F.3d ----, 2011 WL 6156942 (9th Cir. 12/13/11).

The opinion is available here.

Sonic-Calabasas A, Inc. v. Moreno: SCOTUS Vacates and Remands to California Supreme Court

2011-11-09T17:35:00.000-08:00

On October 31, the Supreme Court of the United States granted certiorari and vacated the California Supreme Court's decision in Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, which held: (1) an employee's "statutory right to seek a Berman hearing [a wage hearing before the DLSE or Labor Commissioner], with all the possible protections that follow from it, is itself an unwaivable right that an employee cannot be compelled to relinquish as a condition of employment;" (2) waiver of an employee's right to seek a Berman hearing is a substantively unconscionable contract term; and (3) the Federal Arbitration Act does not preempt the Court's holdings on points one and two.

SCOTUS remanded the case to the California Supreme Court for further consideration in light of AT&T Mobility LLC v Concepcion.

Kairy v. SuperShuttle: Ninth Circuit Holds that District Court Has Jurisdiction to Determine Whether Drivers Are Employees or Independent Contractors

2011-11-07T11:27:00.001-08:00

In Kairy v. SuperShuttle International, 660 F.3d 1146 (9th Cir. 11/3/11), the Ninth Circuit Court of Appeals considered whether the district court lacks subject matter jurisdiction to determine whether certain drivers are employees or independent contractors under California law. Specifically, the Court considered whether such a decision by the district court would hinder, frustrate, interfere with, or obstruct the regulatory authority exercised by the California Public Utilities Commission (“PUC”) over passenger stage corporations (“PSCs”), as prohibited by California Public Utilities Code section 1759(a).

On review of a district court (N.D.Cal., Judge Jeffrey S. White) order granting the defendants' motion to dismiss, the Court examined the relationship of section 1759 and section 2106, which allows a private right of action against any public utility that violates the law. Applying a three-part test adopted by the California Supreme Court, the Court found:

The Public Utilities Commission has the authority to regulate the relationship between PSCs and their drivers. 660 F.3d at 1151.
The PUC may have exercised its authority to regulate that relationship. 660 F.3d at 1153.
Judicial action in this case would not hinder or interfere with the PUC's exercise, if any, of regulatory authority over the PSC-driver relationship. 660 F.3d at 1154.

Because this third factor is not present, Public Utilities Code section 1759 is not implicated, and the district court retains subject matter jurisdiction over the case. 660 F.3d at 1155. On remand, the Court directed the district court to determine whether the drivers at issue were employees or independent contractors under California law.

The opinion is available here.

California Supreme Court Schedules Oral Argument in Brinker

2011-10-04T17:57:00.000-07:00

The California Supreme Court just announced that it will hear oral argument in Brinker v. Superior Court (Hohnbaum) on Tuesday, November 8, 2011 at 9:00 a.m. in San Francisco. So we will have a decision by Valentine's Day. That's about 3 1/2 years after the petition for review was filed. Still well short of the 5 years that they spent on Martinez v. Combs.

Wang v. Chinese Daily News: SCOTUS Vacates Judgment, Remands for Reconsideration in Light of Dukes

2011-10-04T08:00:00.000-07:00

The Supreme Court of the United States yesterday vacated the judgment in Wang v. Chinese Daily News, the long-running Fair Labor Standards Act (FLSA) class action by employees of the Chinese language newspaper. The Court granted certiorari, vacated the judgment, and remanded to the Ninth Circuit for further consideration in light of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011).

The Ninth Circuit's opinion (blogged here) had addressed a number of important issues, including exempt status of reporters, class certification, invalidation of coerced opt outs, trial issues, preemption of claims under California's Unfair Competition Law (UCL), and attorney fees.

Ellis v. Costco: On Remand Following Dukes, Ninth Circuit Vacates Order Granting Certification in Discrimination Action

2011-09-18T12:34:00.000-07:00

The theory of liability in Dukes v. Wal-Mart (discussed here) is that a company's policy of allowing local decision-makers to make hiring and promotion decisions can have a disparate impact on women and violate Title VII. Brad Seligman, lead counsel for the plaintiffs in Dukes, has said that this is a very narrow and rarely used theory. Regardless, the same theory is at issue in another of Seligman's cases, Ellis v. Costco Wholesale Corporation, 657 F.3d 970 (9th Cir. 9/16/11).

On remand following the SCOTUS decision in Wal-Mart, the Ninth Circuit vacated the district court's order granting class certification under Federal Rules 23(b)(2) and 23(b)(3). The Court held as follows:

Because at least one named plaintiff (Sasaki) alleged a concrete injury that is both directly traceable to Costco's allegedly discriminatory practices and is redressable by both injunctive relief and monetary damages, the Court affirmed the district court's holding that she had standing to pursue the action.
The Court vacated and remanded the district court's ruling as to commonality under Rule 23(a) because the district court failed to conduct the required “rigorous analysis” to determine whether there were common questions of law or fact among the class members' claims and instead relied on the admissibility of the plaintiffs' evidence to reach its conclusion on commonality.
The Court vacated the district court's ruling as to typicality under Rule 23(a) because the district court failed to consider the effect that defenses unique to the named Plaintiffs' claims have on that question.
The Court affirmed the district court's ruling that Sasaki, a current employee who continues to be denied promotion, has incentive to vigorously pursue injunctive relief as well as monetary damages on behalf of all the class members and is an adequate class representative under Rule 23(a). However, the Court vacated the district court's finding that the other named plaintiffs, as former employees with "no incentive" to pursue injunctive relief, could adequately represent the class.
In light of Wal-Mart's rejection of the predominance test under Rule 23(b)(2), the Court vacated the district court's certification of the class under that Rule and remanded for the district court to consider whether the claims for various forms of monetary relief will require individual determinations and are therefore only appropriate for a Rule 23(b)(3) class.

The opinion is available here.

Supreme Court Schedules Oral Argument in Exemption Case

2011-09-07T19:27:00.000-07:00

The California Supreme Court will hear oral argument in Harris v. Superior Court (Liberty Mutual Insurance) on Monday, October 3, 2011, at 9:00 a.m., in San Francisco. Harris raises the following issue:

Do claims adjusters employed by insurance companies fall within the administrative exemption (Cal. Code Regs, tit. 8, section 11040) to the requirement that employees are entitled to overtime compensation?

For more information on this case, go here.

Goodwin Liu and Julie Su Confirmed

2011-09-03T10:28:00.000-07:00

Governor Brown on Thursday swore in Goodwin Liu as the California Supreme Court's newest justice. Brown nominated Liu to the Supreme Court in July, after Liu withdrew his name from consideration for the Ninth Circuit Court of Appeals. Republicans had blocked Liu's nomination by President Obama, complaining that he was too liberal for the Ninth Circuit. Liu replaces Justice Carlos Moreno, the author of a number of important employment and class action decisions, who retired in February. Recent articles re. Liu: Sacramento Bee; Los Angeles Times.

On Tuesday, Julie Su was confirmed as California's Labor Commissioner. Su will lead the Division of Labor Standards Enforcement, or DLSE.

Congratulations to Justice Liu and Commissioner Su.

Supreme Court grants review in People ex rel. Harris v. Pac Anchor Transportation, Inc.

2011-09-01T08:37:00.000-07:00

On August 10, 2011, the California Supreme Court granted review in People ex rel. Harris v. Pac Anchor Transportation, Inc. This is the issue on review:

Is an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that is based on a trucking company's alleged violation of state labor and insurance laws "related to the price, route, or service" of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501)?

The Court of Appeal held that the federal statute, popularly known around my office as the FAAAA, did not preempt such an action. Blogged here.

The Supreme Court's web page on the case is here. It is Case No. S194388. Go here to sign up for automatic email notifications about developments in the case.

The California Wage and Hour Law Blog

﻿Bridgeford v. Pacific Health: Class Cert Denial Does Not Establish Collateral Estoppel Against Absent Class Members

Zelasko-Barrett v. Brayton-Purcell: Supreme Court Grants Review and Holds Pending Kirby v. Immoos

Raniere v. Citigroup: ﻿District Court Holds Collective Action Waiver Unenforceable as Preventing Employees From Vindicating Substantive Statutory Rights under the FLSA

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC:

CompuCredit Corp. v. Greenwood: New SCOTUS Arbitration Decision May Shed Light on Future of Employment Class Action Waivers

Wisdom v. AccentCare: Court Invalidates Unconscionable Arbitration Agreement

Sky Sports v. Superior Court: Court of Appeal Finds No Waiver of Right to Arbitrate

D.R. Horton: National Labor Relations Board Holds that Class Action Waivers Violate National Labor Relations Act

Harris v. Superior Court (Liberty Mutual Insurance): Cal. Supreme Court Reverses Insurance Adjuster Exemption Case

Harris v. Superior Court: Supreme Court Says Court of Appeal Erred in Finding Insurance Adjustors Not Exempt

Aleman v. AirTouch Cellular: Court Issues Decision on Reporting Time, Split Shifts

Brinker-Watch 2012

Christopher v. SmithKline Beecham: SCOTUS Grants Review in Pharmaceutical Sales Rep Action

Haligowski v. Superior Court: ﻿Like FEHA, California Law Prohibiting Discrimination Against Members of Armed Services Does Not Permit Action Against Individual Supervisor

Nachshin v. AOL: Ninth Circuit Reverses Cy Pres Award

Pirjada v. Superior Court: Court Denies Leave to Find New Class Rep.

Sullivan v. Oracle Corp. Returns to Ninth Circuit

Sonic-Calabasas A, Inc. v. Moreno: SCOTUS Vacates and Remands to California Supreme Court

Kairy v. SuperShuttle: Ninth Circuit Holds that District Court Has Jurisdiction to Determine Whether Drivers Are Employees or Independent Contractors

California Supreme Court Schedules Oral Argument in Brinker

Wang v. Chinese Daily News: SCOTUS Vacates Judgment, Remands for Reconsideration in Light of Dukes

Ellis v. Costco: On Remand Following Dukes, Ninth Circuit Vacates Order Granting Certification in Discrimination Action

Supreme Court Schedules Oral Argument in Exemption Case

Goodwin Liu and Julie Su Confirmed

Supreme Court grants review in People ex rel. Harris v. Pac Anchor Transportation, Inc.

Bridgeford v. Pacific Health: Class Cert Denial Does Not Establish Collateral Estoppel Against Absent Class Members

Raniere v. Citigroup: District Court Holds Collective Action Waiver Unenforceable as Preventing Employees From Vindicating Substantive Statutory Rights under the FLSA

Haligowski v. Superior Court: Like FEHA, California Law Prohibiting Discrimination Against Members of Armed Services Does Not Permit Action Against Individual Supervisor