Monday, September 10, 2012

Wage-and-hour class actions: The sky is falling (or is it?) After Brinker and Duran, what lies ahead?

This article by Bryan Schwartz Law principal, Bryan Schwartz, is the cover feature in the current edition of Plaintiff Magazine.

Copyright © 2012 by the author.

SEPTEMBER 2012

BY BRYAN SCHWARTZ

In the dark days of 2011 – and as recently as six months ago – it seemed like all might be lost. The industry of wage and hour class litigation had exploded after workers and their lawyers caught wind of early-21st century cases like Bell v. Farmers Ins. Exchange (over $90 million for misclassified claims adjusters), Savaglio v. Wal-Mart ($172 million for missed meal breaks), and SavOn Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 333 (class action is favored mechanism for resolving wage disputes). Now, it seemed on the brink of collapse.

With the end of wage/hour class suits, many of us would need to diversify into other areas of litigation. I saw employment class-action litigators expand into consumer law, begin taking more individual workers’ cases, and try their hands practicing in bankruptcy.

Much worse, workers who count on us in the plaintiffs’ bar to vindicate their rights to fair and lawful wages would be out in the cold, because few of us can afford to offer contingency representation on wage cases worth a few hundred or few thousand dollars, with full fee-shifting on smaller cases uncertain after Chavez v. City of Los Angeles (2010) 47 Cal.4th 970; hourly workers cheated of their pay certainly cannot pay us for services out-of-pocket; and, as California officially recognized with the passage of the Private Attorney General Act of 2004 (PAGA), government agencies are too overburdened to enforce wage and hour laws comprehensively without our help.

During this bleak period, decisions in both the United States Supreme Court and in the California Courts of Appeal seemed to point to one conclusion: judges were getting tired of hearing wage/hour class actions (notwithstanding the extraordinary relief obtained for workers during the last decade of robust private enforcement of wage laws).

In the U.S. Supreme Court, the one-two punch of Stolt-Nielsen v. AnimalFeeds (2010) 130 S.Ct. 1758, and ATT Mobility v. Concepcion (2011) 131 S.Ct. 1740, seemingly reconstituted a 1925 statute, the Federal Arbitration Act (FAA), to empower corporations to sweep away concerted actions by workers asserting wage claims, simply by requiring employees (or applicants) to sign agreements to arbitrate, long before the signers know they will be deprived of lawful wages. Of course, Wal-Mart v. Dukes (2011) 131 S.Ct.2541, considering the merits of claims at the class certification stage and harping on managers’ discretion as anathema to class litigation, sent a chill down most of our spines.

As of early 2012, in the California Courts of Appeal, the eternally-pending review Brinker Restaurant Corp. v. Superior Court (2008) 80 Cal.Rptr.3d 781, created the possibility that meal and rest period claims would be, almost as a matter of law, inherently too individualized (turning on whether workers voluntarily forego breaks) to permit class-wide adjudication. And anyhow, according to Kirby v. Immoos Fire Protection Svcs (2010) 113 Cal.Rptr.3d 370, employers could recover their attorneys’ fees against our clients if we lost any meal/rest period claim – or even lost a class-certification motion on a meal/rest claim. No reasonable plaintiffs’ lawyer could advise a humble, low-wage client to take such a risk.

Then last winter, sounding what seemed to be the final death knell, the Court of Appeal in Duran v. US Bank (2012) 137 Cal.Rptr.3d 391, sought to eradicate virtually any form of class-wide proof in a wage/hour case, essentially stretching the holding of Wal-Mart v. Dukes to mean that relying on statistical or representative proof in a class action impermissibly denies employers of their due process right to defend each employee’s wage claims separately.

There’s always tomorrow

I remember well April 12, 2012, because it was the day the sun broke through again on wage/hour class litigation: The long-awaited day the California Supreme Court ruled in Brinker (2012) 53 Cal.4th at 1004. Sure, the Court did not hand us strict liability for premiums where workers work during meal or rest breaks. Ironically, the employer-side spin doctors used this one holding, that employers cannot be liable for premiums by simply failing to police workers to ensure every break is taken, to paint Brinker as a great victory for their team. But those of us in the trenches of wage/hour class litigation – on both sides – immediately knew differently: That the chief result of Brinker would be to again empower employee advocates in claims where employers, with policies and common practices, refuse to relinquish all control over meal and rest periods owed to workers.

And the sun grew brighter still. In rapid succession: Kirby was decided for employees – holding that employers cannot be entitled to fee-shifting merely based on workers’ unsuccessful litigation of meal/rest period claims; then, the California Supreme Court granted the workers’ petition for review in Duran. In the meantime, during this evolving springtime for wage/hour-class plaintiffs, we began to see that courts were allaying our worst fear – i.e., that Concepcion, Stolt-Nielsen, and Wal-Mart v. Dukes would successfully preclude class litigation of employees’ claims. By April 2012, both the U.S. and California Supreme Courts had denied review of Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, which held post-Concepcion that class waivers in arbitration agreements remain inapplicable to PAGA claims and which did not extend Concepcion to undermine Gentry v. Superior Court (2007) 42 Cal.4th 443 (arbitration class waivers unconscionable in employment context). The Court of Appeal’s April 2012 decision in Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, review denied (July 11, 2012), described a virtual laundry list of ways in which arbitration agreements might still be found unconscionable under California law, even after Concepcion, applying Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. Likewise, Federal Circuit and District Courts repeatedly upheld class certification or reversed certification denial orders, or denied motions to stay court actions and compel individual arbitration of claims, defeating companies’ hope that Concepcion, Stolt-Nielsen and/or Wal-Mart v. Dukes would doom employees’ concerted activity.

On top of these developments, the National Labor Relations Board’s (NLRB’s) progressive D.R. Horton, Inc., 357 N.L.R.B. No. 184 (2012 WL 36274), decision from January 2012 reinvigorates a couple other old statutes – the National Labor Relations Act (NLRA) of 1935, long ignored by all but the pure union lawyers, and the Norris-LaGuardia Act of 1932, 29 U.S.C. §§ 102, et seq., articulating a public policy to protect unorganized workers’ right of association. The NLRB reminded workers’ rights advocates that the protections for employees engaged in concerted activities under Section 7 of the NLRA and association covered by the Norris-LaGuardia Act are valuable outside the union context.

California’s Legislature also enacted new workers’ rights bills, with the “Wage Theft Prevention Act of 2011” (AB 469) (effective January 1, 2012), adding Labor Code section 2810.5, requiring that employers provide non-exempt workers with notice at the time of hire containing extensive information affecting their wages and working conditions, with a host of new civil and criminal penalties for wage violations or any failure to pay a Labor Commissioner judgment (Lab.Code, §§ 200.5, 1197.1, and 1197.2). Moreover, effective January 1, 2013, employees’ commission agreements must be transparent, written contracts.

Now, in the fall of 2012, the once-bleak outlook for wage/hour class-action litigators seems not only more hopeful, but presents a host of new opportunities for plaintiffs’ attorneys.

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With the remainder of this article, I will discuss in more detail five particularly hot battlegrounds in the refreshed struggle for workers’ wages: 1) arbitration class waiver issues post-Concepcion and Stolt-Nielsen; 2) how Wal-Mart v. Dukes is affecting class certification; 3) new challenges and opportunities in misclassification cases where employers claim administrative, professional, and outside sales exemptions; 4) what is the next likely “shoe to drop” from the U.S. Supreme Court’s march to stomp out wage/hour class litigation; and, 5) the implications of Brinker and our battle yet to be won in Duran, to continue allowing courts to be flexible in determining fair and efficient means to hear class-wide proof, through statistical and representative evidence, as has long been permitted under Sav-On.

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Arbitration class waiver issues post-Concepcion and Stolt-Nielsen

In Stolt-Nielsen, the Supreme Court held that employers could not be required to engage in class arbitration where the arbitration agreement was silent regarding whether such was permitted and where no evidence proved the parties’ intent to agree to class arbitration. Plaintiffs’ advocates feared the Court had created the default position that where an employer forgot to prohibit class prosecution of claims against it in its arbitration provision, the employer would remain immune to class suit or arbitration, since it had not overtly agreed to be subject to class claims. Then, the Court sought to finish the job in Concepcion, using the FAA to preempt California’s Discover Bank v. Superior Court (2005) 36 Cal.4th 148, with its presumption that a class waiver in an adhesion contract is unconscionable, as discriminatory against arbitration. In other words, we worried that companies after Concepcion and Stolt-Nielsen would feel free to prohibit wage/hour class litigation against themselves, explicitly, or by default.

Not so fast, said a host of federal and state courts and administrative agencies. Because Concepcion did not go so far as to eliminate the unconscionability defense (just California’s presumption of unconscionability for class waivers), courts are still finding arbitration agreements unconscionable, applying Armendariz. In Trompeter v. Ally Financial, Inc., 2012 WL 1980894 (N.D. Cal. June 01, 2012), Judge Claudia Wilken found an arbitration agreement procedurally and substantively unconscionable under California law, applying Armendariz, and found the unconscionable provisions not severable, rejecting the defendant’s Concepcion argument in support of a motion to compel arbitration and motion to stay.

In Samaniego, a wage/hour class action, the Court of Appeal affirmed the trial court, finding a host of flaws in the arbitration agreement, applying Armendariz and ultimately rejecting the agreement entirely. No-no’s included: that the take-it-or-leave-it arbitration agreement was only in English, a language the worker could not read; that the agreement was part of a lengthy, single-spaced document in small-font print, “riddled with complex legal terminology,” and with the arbitration provision buried in the 36th of 37 sections; a shortened statute of limitations for claims; unilateral fee-shifting against workers; and the invocation of the American Arbitration Association (AAA) commercial rules, without attaching the rules or providing them otherwise.

In another wage/hour class action, Laughlin v. VMWare, Inc., 2012 WL 298230 (N.D. Cal. Feb. 1, 2012) (Davila, J.), the District Court likewise addressed a Concepcion motion to compel arbitration, applied Armendariz, rejecting several unconscionable provisions (including one that would have made the employee split arbitration fees), but found the unconscionable provisions severable, and referred the entire matter to arbitration. Most notably, the Laughlin court held that it was for the arbitrator to decide the permissibility of class arbitration. (Id. at *8.) On August 27, 2012, the American Arbitration Association issued a Partial Final Award on Clause Construction in the Laughlin matter, finding that the parties' arbitration agreement permits class arbitration.

The latter confronts employers with a “be careful what you wish for” scenario. Wage/hour class arbitration – with costs to be borne by employers – is awfully expensive, i.e., profitable for arbitrators. Indeed, since Concepcion, numerous arbitrators from JAMS, AAA, and other major arbitration services have – like in Laughlin – construed arbitration clauses/agreements to permit class-wide arbitration. Courts are mostly saying that arbitrators have this prerogative. (See, e.g., Sutter v. Oxford Health Plans LLC (3rd Cir. 2012) 675 F.3d 215 (upholding arbitrator decision to construe arbitration agreement to authorize class arbitration); Jock v. Sterling Jewelers Inc. (2nd Cir. 2011) 646 F.3d 113 (same); Fantastic Sam’s Franchise Corp. v. FSRO Ass’n Ltd. (1st Cir. 2012) 683 F.3d 18, 26 (arbitrator decides permissibility of class arbitration). But, see Reed v. Florida Metropolitan University, Inc. (5th Cir. 2012) 681 F.3d 630.)

Also this year, the NLRB decided D.R. Horton, holding that – though the FAA prohibits discrimination against arbitration agreements, preempting state law, the NLRA prohibits barriers to employees (union or non-) engaging in concerted activities for their mutual aid and protection, and the Norris-LaGuardia Act restricts the power of federal courts to issue injunctions to prohibit certain associational activities. These are not preempted by the FAA. Thus, federal law under D.R. Horton prohibits class-action waivers, according to the NLRB, and Concepcion has nothing to say about it. Courts have divided on how, if at all, D.R. Horton must guide their decision-making. Compare Herrington v. Waterstone Mort. Corp., 2012 WL 1242318 (W.D. Wisc. Mar. 16, 2012) (D.R. Horton guides District Court) and Owen v. Bristol Care, Inc., 2012 WL 1192005 (W.D. Mo. Feb. 28, 2012) (same), with Morvant v. P.F. Chang’s China Bistro, Inc., 2012 WL 1604851 (N.D.Cal. May 7, 2012) (Gonzalez Rogers, J.) (Concepcion trumps D.R. Horton and requires compelling arbitration with class waiver) and Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115 (declining to follow D.R. Horton).

Despite the significant good news for plaintiffs’ advocates in the aftermath of Concepcion and Stolt-Nielsen, the vote is still out on how, ultimately, the cases will impact wage/hour class litigation in California. In Iskanian v. CLS Transportation Los Angeles, LLC (2012) 206 Cal.App.4th 949, the Court of Appeal compelled arbitration with a class waiver, and in so doing, rejected Brown v. Ralphs (carving out PAGA and leaving untouched Gentry’s holding that arbitration class waivers are unconscionable in the employment context), holding that Concepcion effectively overruled Gentry. Iskanian petitioned for review of the Court of Appeal’s decision, and as of the time of this writing, the Supreme Court has not yet decided on the petition. If the Supreme Court takes up Iskanian, it may be the defining case about the effect of Concepcion and Stolt-Nielsen on California laws protecting workers. If the Supreme Court does not grant review, then we will be left scratching our heads about the state of California law on class-action waivers in arbitration agreements, with Court of Appeal authority heading in every direction.

How Wal-Mart v. Dukes is affecting class certification

The intensive merits analysis in Wal-Mart v. Dukes at the certification stage worried many plaintiffs’ advocates that the first law of class certification – that Rule 23 and California Code of Civil Procedure section 382 elements are decided, but merits are not – had lost currency. But the California Supreme Court and numerous federal courts have largely restored order in this regard. The Brinker court, acknowledging that some “peek” at the merits would be necessary at certification to ensure the predominance of common questions, reinforced that – even post-Wal-Mart v. Dukes – such merits-based inquiries are “closely circumscribed” and “limited to those aspects of the merits that affect the decisions essential to class certification.” (Brinker, 53 Cal.4th at 1024 (citations omitted).) In rejecting the Brinker Court of Appeal’s notion that courts must first decide upon the applicable law and resolve legal issues surrounding each element of a proposed class claim before deciding on certification, the Supreme Court expressly condemned a “free-floating merits inquiry” and eschewed resolution of most factual and legal issues at the certification stage. (Id. at 1025.)

Post-Wal-Mart v. Dukes, Federal courts have likewise held that, as the Seventh Circuit put it, “the court should not turn the class certification proceedings into a dress rehearsal for the trial on the merits.” (Messner v. Northshore University Health System (7th Cir. 2012) 669 F.3d 802, 811. See also Sullivan v. DB Investments, Inc (3rd Cir. 2011) 667 F.3d 273, 305-306 (en banc) (merits inquiries very limited); In re Whirlpool Corp. Front Loading Washer Products Liability Litig. (6th Cir. 2012) 678 F.3d 409, 417 (underlying merits no impact on propriety of class action).

Likewise, federal courts have continued to uphold class certification or reverse certification denial under Rule 23. In McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (7th Cir. 2012) 672 F.3d 482, the noted conservative Judge Posner reversed a class certification denial in a disparate impact discrimination case, explaining that the exercise of subjectivity by managers with respect to company policies did not defeat certification, but resulted in a disparate impact. (See also Sullivan, 667 F.3d at 338 (common factual issues predominated among 184 million purchasers, despite variation between state laws at issue); In re Whirlpool, 678 F.3d at 420 (finding predominance and superiority where there were common alleged design flaws, and where small individual recovery would discourage vindication on individual basis); Chen-Oster v. Goldman, Sachs & Co., 2012 WL 2912741 (S.D.N.Y. July 17, 2012) (alleged “common mode of exercising discretion” warranted denial of motion to strike class allegations, distinguishing Wal-Mart v. Dukes).) Meanwhile, in Sanchez v. Sephora USA, Inc., 2012 WL 2945753(N.D. Cal. July 18, 2012) (Armstrong, J.), the Northern District of California held that Wal-Mart v. Dukes reasoning is inapplicable to Fair Labor Standards Act (FLSA) collective action certification under 29 U.S.C. sec. 216(b).1

Misclassification of exempt workers

Class wage claims based upon misapplication of exemption defenses to discrete groups of employees are surviving, but the universe of employees who might assert such misclassification claims is narrower after several recent decisions. For example, the professional exemption became more robust after the Ninth Circuit’s decision in Campbell v. PriceWaterhouseCoopers, LLP (9th Cir. 2011) 642 F.3d 820 and the parallel state decision in Zelasko-Barrett v. Brayton-Purcell, LLP (2011) 198 Cal.App.4th 582, which held that non-licensed individuals practicing in the Wage Order’s recognized professions (e.g., law clerks and junior non-licensed accounting employees) could still be exempt from overtime.

Likewise, the outside sales exemption has become more powerful after Christopher v. SmithKline Beecham Corp. (2012) 132 S.Ct. 2156 (pharmaceutical sales representatives subject to outside sales exemption) and the Ninth Circuit’s In re Wells Fargo Home Mortg. Overtime Pay Litig. (2009) 571 F.3d 953 (outside sales calculus in loan officer case too individualized to permit class action) decision from several years ago.

On the other hand, the administrative exemption has remained a fruitful battleground for wage/hour class-action plaintiffs’ counsel both in California and federal courts. One should still consider arguing the “administrative/production dichotomy” (first embraced in Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805 (often called “Bell II”)) – i.e., whether the group of employees are primarily administering policies directly related to and of substantial importance to the management or operations of the overall business (exempt) or whether they are principally engaged in helping generate the businesses’ end product (non-exempt). (See Harris v. Superior Court (Liberty Mutual Insurance) (2011) 53 Cal.4th 170, 181.) In Harris, the Supreme Court did not toss out the Bell II framework, but held that the administrative/production worker dichotomy was not a dispositive test as it had been applied in that case, requiring the Court of Appeal on remand to undergo a qualitative and quantitative review under the current Wage Order. (Id. at 190.) However, on remand, re-granting summary adjudication on the administrative exemption defense and rejecting a decertification motion, the Harris Court of Appeal reiterated that the class members (claims adjusters) were not “primarily engaged in work that is directly related to management policies or general business operations” and as such, were not administrative employees under the Wage Order’s exemption. (Harris v. Superior Court (2012) 207 Cal.App.4th 1225. See also adopting the administrative/production dichotomy federally, Davis v. J.P. Morgan Chase & Co., 587 F.3d 529 (2nd Cir. 2009) (mortgage loan underwriters were production employees).)

Anticipating the Supreme Court’s next blow

On June 25, 2012, the U.S. Supreme Court granted certiorari in Symczyk v. Genesis HealthCare Corp. (3rd Cir. 2011) 656 F.3d 189, which stands for the fairly obvious premise that an employer cannot moot an FLSA collective action simply by making an offer of full relief under Fed.R.Civ.P. 68 to the lone named plaintiff. Citing the Supreme Court’s seminal FLSA decision in Hoffmann-La Roche, Inc. v. Sperling (1989) 493 U.S. 165, 170-171, the Third Circuit held:

When a defendant’s Rule 68 offer arrives before the court has had an opportunity to determine whether a named plaintiff has satisfied his burden at this threshold stage [of first-tier FLSA conditional certification], and the court has therefore refrained from overseeing the provision of notice to potential party plaintiffs, it is not surprising to find the offer has also preceded the arrival of any consent forms from prospective opt-ins. If our mootness inquiry in the §216(b) context were predicated inflexibly on whether any employee has opted in to an action at the moment a named plaintiff receives a Rule 68 offer, employers would have little difficulty preventing FLSA plaintiffs from attaining the “representative” status necessary to render an action justiciable notwithstanding the mooting of their individual claims. (Symczyk, 656 F.3d at 198-199.)

Unfortunately, the Supreme Court’s grant of cert. does not bode well for the future of FLSA actions, except in cases where plaintiffs and their counsel are fortunate enough to have a group of plaintiffs and opt-ins willing to step forward from the outset. Clearly, assuming the Supreme Court decides to undermine its prior Hoffman-LaRoche precedent (why else would it have granted cert.?), savvy employers will offer several thousand dollars as soon as a suit is filed to knock off any solo named plaintiff with an offer of full, individual relief, and avoid notice to a class of those similarly-situated.

Brinker, Duran and the future

Last but not least, we return to Brinker and Duran. In Brinker, the Supreme Court reversed and remanded in large part the Court of Appeal, in a unanimous opinion by Justice Werdegar holding that employers must comply with stringent obligations to provide both meal and rest periods to employees or face paying premiums under California Labor Code section 226.7.

The Court of Appeal in Brinker had held that because an employer’s duty was merely to provide” meal periods to employees, employers could avoid class liability with a compliant published policy. The Court of Appeal wrote, in language that would have been devastating to wage and hour class actions had it been upheld by the Supreme Court: “The evidence in this case indicated that some employees took meal breaks and others did not. For those who did not, the reasons they declined to take a meal period require individualized adjudication. Further, plaintiffs’ statistical and survey evidence does not render the meal break claims one in which common issues predominate. While time cards might show when meal breaks were taken and when there were not, they cannot show why.” (80 Cal.Rptr.3d at 810.) The Court of Appeal had engaged in similar reasoning to reject rest break claims.

If that reasoning had prevailed, plaintiffs would seldom, if ever, have been able to show that personal motivations for missing meal and rest periods were sufficiently common to justify class certification. The Court remanded on meal periods. Its holding that the “employer need not ensure that no work is done” during meal periods is really an employee victory, because of the reasoning behind it: “[T]he obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break: to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.” (Brinker, 53 Cal.4th at 1038-1039.)

In other words, Brinker reasoned that employers cannot police employees to make sure that no work is performed because employers may exercise no control over employees during their meal periods. If an employer has a policy restricting employees’ activities during meal periods, that may now clearly be the basis for a meal period class action.

On rest periods, the Supreme Court outright reversed the Fourth District Court of Appeal, explaining: “An employer is required to authorize and permit the amount of rest break time called for under the wage order for its industry. If it does not – if, for example, it adopts a uniform policy authorizing and permitting only one rest break for employees working a seven-hour shift when two are required – it has violated the wage order and is liable.” (Id. at 1033.)

As to the latter, rest break claims can no longer be considered throwaway claims after Brinker – and the proof is in the pudding. In July 2012, Los Angeles County Superior Court Judge John Shepherd Wiley awarded $90 million to security guards for ABM in connection with rest breaks during which they were required to remain on-call. Brinker Restaurant Corporation’s own rest break liability will likely reach the eight-figure range.

The Supreme Court leaned heavily on Sav-On, and cited other key employee-friendly decisions: Dilts v Penske Logistics, LLC, 267 F.R.D. 625 (S.D. Cal. 2010); Bono Enterprises, Inc. v Bradshaw (1995) 32 Cal.App.4th 968; Ghazaryan v Diva Limousine, Ltd., (2008) 169 Cal.App.4th 1524; Bufil v Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193; and Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286. These decisions now provide a roadmap to certification of meal/rest class actions, post-Brinker. Moreover, over the next year or two, the eight decisions granted review and held pending Brinker,2 which have all now been remanded to Courts of Appeal, will be decided, fleshing out the meal and rest period standards in the post-Brinker era.

Perhaps most significantly going forward, the Brinker court held: “Claims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment.” (53 Cal.4th at 1033.) Where there is a policy at issue, wage/hour class actions are still available.

The Brinker concurrence, authored also by Justice Werdegar, rejects the Fourth District’s notion that “the question why a meal period was missed renders meal period claims categorically uncertifiable” (Id. at 1052), and goes on to cite Sav-On and Bell, 115 Cal.App.4th 715 (“Bell III”) and embrace “a variety of methods” of proof of class certification, liability, and damages, including “[r]epresentative testimony, surveys, and statistical analysis….” (Id. at 1054.)

Duran’s thrust was the opposite: “that when liability for unpaid overtime depends on an employee’s individual circumstances, employer defendants retain the right to assert the exemption defense as to every potential class member,” precluding the use of such methods of class-wide proof as were embraced in Sav-On, Bell III, and the Brinker concurrence. (Duran, 137 Cal.Rptr.3d at 426.)

In Duran, the trial court allowed selection of 20 representative class members (out of 260) to provide trial testimony and determined class-wide liability on the basis of such. (137 Cal.Rptr.3d at 428.) Whether or not this particular trial plan was optimal, it remains to be seen to what degree if any Duran’s sweeping rejection of sampling and representative testimony will prevail on review. Certainly, the Brinker concurrence gives reason for optimism in the plaintiffs’ Bar. (See also Romero v. Florida Power & Light Co., 2012 WL 1970125 (M.D. Fla., June 1, 2012) (affirming use of representative testimony).)

In sum, paraphrasing Mark Twain, reports of the death of wage/hour class litigation were greatly exaggerated. The wage and hour class-action war wages on.

Bryan Schwartz has an Oakland-based firm representing workers in class, collective, and individual actions in wage/hour, discrimination, whistleblower, and unique federal and public employee claims – visit www.BryanSchwartzLaw.com. He practices in state and federal trial and appeals courts, in arbitration, and before a variety of administrative agencies. Schwartz is a member of the State Bar of California’s Labor & Employment Law Section Executive Committee, and recently chaired the Bar’s Second Annual Advanced Wage & Hour Seminar. He is a leader and amicus writer in the California Employment Lawyers Association (CELA), and authored CELA’s amicus briefs in Brinker and Kirby. He can be contacted at Bryan@BryanSchwartzLaw.com.

Endnotes

1 This year also saw the final demise of the defense argument circulating for several years asserting that FLSA and state wage law class claims are “inherently incompatible” in the same action because of the different procedural mechanisms (opt-in FLSA collective actions and opt-out class actions) – an argument that had been roundly rejected by all but a few District Courts (the latter mostly within the Third Circuit). Now, the Third Circuit itself finally rejected “inherent incompatibility.” (See Knepper v. Rite Aid Corp. (3rd Cir. 2012) 675 F.3d 249, 262 (“We join the Second, Seventh, Ninth, and D.C. Circuits in ruling that this purported ‘inherent incompatibility’ does not defeat otherwise available federal jurisdiction.”).)

2 Brinkley v. Public Storage (Supreme Court Case No. S168806); Bradley v. Networkers International LLC (S171257); Faulkinbury v. Boyd & Associates (S184995); Brookler v. Radioshack Corporation (S186357); Tien v. Tenet Healthcare (S191756). Shortly before this edition went to press, Hernandez v. Chipotle Mexican Grill (S188755), Lamps Plus Overtime Cases (S194064), and Muldrow v. Surrex (S200557), on remand, were all decided against the employees by California Courts of Appeal. Each can be distinguished on its facts, if you have a case involving a policy or practice restricting meal and rest period usage. See Lamps Plus, 2012 WL 3587610, at **8, 11 (Cal.App. 2 Dist. August 20, 2012) (citing “overwhelming evidence that Lamps Plus’s policies allowed and encouraged meal periods,” “that Lamps Plus had a meal and rest period policy conforming to the applicable laws and wage orders, and that Lamps Plus disciplined its employees for failing to comply with the policy”); Hernandez, 2012 WL 3579567 (Cal.App. 2 Dist. Aug. 21, 2012) (“The only evidence of a company-wide policy and practice was Chipotle’s evidence that it provided employees with meal and rest breaks as required by law.” (emph. in orig.)). In Muldrow, 2012 WL 3711553, *11 n.17 (Cal.App. 4 Dist. Aug. 29, 2012), the employees conceded that the Brinker court “answered [their claim on appeal] in the negative,” so that case is readily distinguishable, too, where you will not so concede.

Copyright © 2012 by the author.

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4 comments:

  1. Note the September 19th posting: Iskanian was granted review!

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  2. Another grant-and-hold case yielded a similarly unhelpful result. In an unpublished case, Brinkley v. Public Storage, Inc., 2012 WL 3126606 (August 2, 2012), the Second District Court of Appeal upheld summary adjudication as to the employees' meal and rest period claims. Fortunately, the case is not citable. However, the Court found that the storage facility managers scheduled breaks at their discretion, and thus could not assert that - notwithstanding compliant published policies - rest and meal breaks were not made available/provided. Significantly as to meal periods, the Court noted that the plaintiffs previously failed to assert the argument that the meal periods were "on duty" because they could not leave the storage facility premises, and thus waived the argument. It seems the latter - that their meal periods were on duty/not free from the employer's control - would have been the workers' best argument post-Brinker.

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  3. Note the December 19th posting: Bradley v. Networkers International on remand yielded a strong result for workers, granting class cert. in a meal/rest period case involving misclassified independent contractors where there was no policy to provide meal/rest periods:

    http://bryanschwartzlaw.blogspot.com/2012/12/normal-0-false-false-false-en-us-x-none.html

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  4. Great news: on December 12, 2012, the Supreme Court depublished the Lamps Plus and Hernandez v. Chipotle cases. This is, I hope, a very significant indication of how the Court is viewing meal/rest class actions and the developing jurisprudence in this area and - optimistically - foreshadows good things in the important Duran v. USBank case.

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