Source: http://www.baileydaily.com/2010/02/
Timestamp: 2019-04-22 04:45:51+00:00

Document:
On February 23, 2010, the Ninth Circuit issued an opinion interpreting the scope of tip pooling restrictions imposed by 29 U.S.C. § 203(m) in Cumbie v. Woody Woo, 2010 U.S. App. LEXIS 3686 (9th Cir. 2010). The case was brought by a server at an Oregon restaurant who received an hourly wage at a rate exceeding the federal minimum wage, but was required by her employer to contribute her tips to a “tip pool” which were distributed primarily to kitchen staff. Plaintiff filed a FLSA collective action, alleging that the employer’s tip pool policy was “invalid” under 29 U.S.C. § 203(m) because it included employees who were not “customarily and regularly tipped employees.” The Ninth Circuit disagreed.
Cumbie argues that under section 203(m), an employee must be allowed to retain all of her tips--except in the case of a "valid" tip pool involving only customarily tipped employees--regardless of whether her employer claims a tip credit. Essentially, she argues that section 203(m) has overruled Williams, rendering tip-redistribution agreements presumptively invalid. However, we cannot reconcile this interpretation with the plain text of the third sentence, which imposes conditions on taking a tip credit and does not state freestanding requirements pertaining to all tipped employees. A statute that provides that a person must do X in order to achieve Y does not mandate that a person must do X, period.
If Congress wanted to articulate a general principle that tips are the property of the employee absent a "valid" tip pool, it could have done so without reference to the tip credit. "It is our duty to give effect, if possible, to every clause and word of a statute." United States v. Menasche, 348 U.S. 528, 538-39 (1955) (internal quotation marks omitted). Therefore, we decline to read the third sentence in such a way as to render its reference to the tip credit, as well as its conditional language and structure, superfluous.
Here, there is no question that Woo's tip pool included non-customarily tipped employees, and that Cumbie did not retain all of her tips because of her participation in the pool. Accordingly, Woo was not entitled to take a tip credit, nor did it. See Richard v. Marriott Corp., 549 F.2d 303, 305 (4th Cir. 1977) ("[I]f the employer does not follow the command of the statute, he gets no [tip] credit."). Since Woo did not take a tip credit, we perceive no basis for concluding that Woo's tippooling arrangement violated section 203(m).
Northern District Certifies Deceptive Promotion Class on Behalf of Superior/Lennox Brand Fireplace Owners in Keilholtz v. Lennox Hearth Prods.
On February 16, 2010, Northern District Judge Claudia Wilken certified a National and California class of approximately 556,639 owners of Superior or Lennox brand single-pane sealed glass front fireplaces in Keilholtz v. Lennox Hearth Prods., 2010 U.S. Dist. LEXIS 14553 (N.D. Cal. Feb. 16, 2010). The Court’s order certified claims brought under the UCL, CLRA and unjust enrichment based on defendants’ alleged concealment/failure to disclose “the fact that the fireplaces are dangerous and unsafe given that the unguarded single pane glass-sealed front may reach temperatures in excess of 475 degrees Fahrenheit, which may cause third degree burns to skin contacting the glass.” See Keilholtz, 2010 U.S. Dist. LEXIS 14553, at 1-3.
Defendants manufacture, assemble and package their fireplaces in Lynwood, California; Union City, Tennessee; Toronto, Canada; and Auburn, Washington. Dischner Decl. P 5. Since February 1, 2004, 117,016 fireplaces (twenty-one percent) were exclusively manufactured, assembled and packaged outside of California and 17,628 (three percent) were exclusively manufactured, assembled and packaged inside of California. The remaining 421,725 (seventy-six percent) were partly manufactured, assembled or packaged at plants in California and partly in at least one other state. Although many fireplaces were produced exclusively outside of California, the fact that seventy-six percent maintained a production connection to California weighs in favor of finding that applying California law to the class claims would not be arbitrary or unfair. Plaintiffs have shown that a significant portion of Defendants' alleged harmful conduct emanated from California. Overall, this class action involves a sufficient degree of contact between Defendants' alleged conduct, the claims asserted and California to satisfy due process concerns. See Parkinson v. Hyundai Motor America, 258 F.R.D. 580, 597-98 (C.D. Cal. 2008); Mazza v. American Honda Motor Co., 254 F.R.D. 610, 620-21 (C.D. Cal. 2008).
See Keilholtz, 2010 U.S. Dist. LEXIS 14553, 23-24.
The Court rejected defendants’ argument that individualized “inquiry into the specific warnings each putative class member received” would be required under the UCL, as “[r]elief under the UCL is available without individualized proof of deception, reliance and injury." See id., at 31-32 (citing In re Tobacco II Cases, 46 Cal. 4th 298, 320 (2009)). With regard to plaintiffs’ CLRA claim, the Court similarly concluded that common issues would predominate notwithstanding the fact the CLRA, unlike the UCL, imposes a causation component. As reasoned by the Court, a common inference of class member reliance was permitted in light of the materiality of defendants’ uniform “alleged failure adequately to disclose to consumers that Defendants' fireplaces could reach temperatures of 475 degrees and cause third-degree burns on contact.” See id., at 34-35 (citing Mass. Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 1294 (2002). However, the Court acknowledged that this issue could be revisited in the event it is subsequently determined that “a single determination of materiality is not possible.” See id.
On February 18, 2010, the California Supreme Court concluded in McCarther v. Pacific Telesis Group, __ Cal. 4th __ (2010), that Labor Code section 233 does not apply to paid sick leave policies that provide for an uncapped number of compensated days off.
Any employer who provides sick leave for employees shall permit an employee to use in any calendar year the employee's accrued and available sick leave entitlement, in an amount not less than the sick leave that would be accrued during six months at the employee's then current rate of entitlement, to attend to an illness of a child, parent, spouse, or domestic partner of the employee.
See Cal. Lab. Code § 233.
Our conclusion that the Legislature did not intend section 233 to apply to a sickness absence policy like defendants’ is supported by the Legislature’s addition to the Labor Code of section 234, which prohibits employers from using an absence control policy to “count sick leave taken pursuant to Section 233 as an absence that may lead to or result in discipline, discharge, demotion, or suspension … .” As noted above, the only limitation on the amount of compensated time off an ill employee may claim under defendants’ sickness absence policy is defendants’ attendance management policy, which provides a schedule of progressive discipline if an employee is absent eight days or more in a year. Without this limitation, an ill employee could claim an unlimited number of compensated sick days, provided the employee returned to work for at least part of a day every week.
If section 233 required defendants to permit an employee to use a portion of this compensated time for kin care, section 234, by its terms, would prohibit defendants from using its attendance management policy to limit the amount of kin care that an employee could claim. Thus, rather than being entitled to use for kin care half of the amount of compensated time the employee could use as sick time, sections 233 and 234 together would permit an employee to claim as kin care far more compensated time off than the employee would be entitled to claim if personally ill. Such a result would be contrary to the plain intent of section 233, which requires only those employers who provide sick leave in accrued increments to permit employees to use half of that annually accrued amount for kin care.
See Slip Opinion, at 9-10.
Northern District Denies Motion to Decertify in Otsuka v. Polo Ralph Lauren Corp.
On January 25, 2010, Northern District Judge Susan Illston denied a motion to decertify waiting time claims of approximately 6000 former California employees of Polo brand stores in Otsuka v. Polo Ralph Lauren Corp., 2010 U.S. Dist. LEXIS 12867 (N.D. Cal. Jan. 25, 2010). The certified claim arose from Polo’s policy requiring cashiers and sales employees undergo an on-camera bag inspection after clocking out at the end of their shift. Defendant Polo sought decertification on two grounds – both unsuccessful.
In the Court's view, neither of these facts justifies decertification of the waiting time class. The Court has already rejected Polo's contention that variations in the specific amounts of class members' wait times defeats commonality. The Court observed that, regardless of differences in amounts of time, "the most significant questions [are] . . . whether plaintiffs were made to wait for inspections without compensation and whether this off-the-clock time is compensable, questions that are common to all class members." July 8, 2008 Order at *11. Moreover, as the Court has likewise already observed, to the extent that "application of the de minimis rule might require inquiries into the individual experiences of class members, these individual questions will arise only after significant common questions of law and fact have been answered, and may not arise at all in the liability context." Id.
The Court also rejects Polo's contention that variations among Polo stores warrant decertification of the waiting time claims. Polo does not dispute that it maintains a uniform policy requiring employees to submit to bag searches, or that it does not compensate employees for time spent waiting for these searches. Differences in the size and layout of each store, or the timing of class members' shifts, will only affect damages, rather than Polo's liability. Accordingly, the Court DENIES Polo's motion to decertify the waiting time claims on the basis of new facts.
See Otsuka, 2010 U.S. Dist. LEXIS 12867, at 15-17.
Under federal law, "employees cannot recover for otherwise compensable time if it is de minimis." Lindow v. United States, 738 F.2d 1057, 1062 (9th Cir. 1984). According to Polo, the most recent case dealing with the de minimis exception, Rutti v. Lojack Corp., 578 F.3d 1084 (9th Cir. 2009), establishes that, in general, periods of ten minutes or less are de minimis and therefore cannot give rise to recovery. Polo asserts that because many of the class members surveyed reported waiting times of ten minutes or less, the Court should decertify the claim. Once again, however, Polo has failed to persuasively rebut the conclusions reached in the Court's certification order. As the Court noted in that order, even if defendants are correct that federal de minimis standards apply to plaintiffs' California claims, application of those standards will still require resolution of a number of significant common legal questions, including "(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work." Lindow, 738 F.2d at 1063. Therefore, Rutti does not justify decertification of the waiting time claims.
Otsuka, 2010 U.S. Dist. LEXIS 12867, at 17-18.
On January 26, 2010, I reported on a district court opinion in Jaegel v. County of Alameda, 2010 U.S. Dist. LEXIS 5125 (N.D. Cal. Jan. 22, 2010), wherein the plaintiffs sought certification of claims arising out of a strip search policy maintained as part of booking procedures at the Alameda County Jail (prior post located here). In that case, the district court certified plaintiff’s Section 1983 claim, but declined to certify statutory claims predicated upon California Penal Code § 4030. On February 9, 2010, the Ninth Circuit considered the merits of a similar class-wide challenge to San Francisco County's strip search policy in Bull v. City & County of San Francisco, 2010 U.S. App. LEXIS 2684, 47-48 (9th Cir. Cal. Feb. 9, 2010). In that case, the Ninth Circuit reversed the district court’s summary judgment ruling which found the policy unconstitutional.
We agree with the reasoning of the Eleventh Circuit that the rights of arrestees placed in custodial housing with the general jail population "are not violated by a policy or practice of strip searching each one of them as part of the booking process, provided that the searches are no more intrusive on privacy interests than those upheld in the Bell case," and the searches are "not conducted in an abusive manner." Powell, 541 F.3d at 1314; cf. Archuleta v. Wagner, 523 F.3d 1278, 1284 (10th Cir. 2008) (upholding searches of arrestees intermingled with general population of a corrections facility, but not those awaiting bail, and stating that when an arrestee is kept in a holding cell the "obvious security concerns inherent in a situation where the detainee will be placed in the general prison population are simply not apparent"). We therefore overrule our own panel opinions in Thompson and Giles.
Bull, 2010 U.S. App. LEXIS 2684, at 47-48.
In light of governing Supreme Court precedent, and given the circumstances presented here, we conclude that San Francisco's policy requiring strip searches of all arrestees classified for custodial housing in the general population was facially reasonable under the Fourth Amendment, notwithstanding the lack of individualized reasonable suspicion as to the individuals searched. Because the policy did not violate plaintiffs' Fourth Amendment rights, we reverse the district court's denial of Sheriff Hennessey's motion for summary judgment based on qualified immunity, and in doing so necessarily reverse the district court's grant of plaintiffs' motion for partial summary judgment as to Fourth Amendment liability.
Bull, 2010 U.S. App. LEXIS 2684, at 52-53.
Second District Grants Requests for Publication in Jaimez v. DAIOHS USA, Inc.
On February 8, 2010, the Second District (Division One) granted numerous requests (including one filed by yours truly) to publish its decision in Jaimez v. DAIOHS USA, Inc., __ Cal.App.4th __ (2010). Jaimez is now citeable authority. Some general discussion of Jaimez may be found at my previous post contained here. I will likely provide some further discussion of the Court’s opinion later.
We agree that Tobacco II did not dispense with the commonality requirement for class certification. But to the extent the appellate court’s opinion might be understood to hold that plaintiffs must show class members’ reliance on the alleged misrepresentations under the UCL, we disagree. As Tobacco II made clear, Proposition 64 did not change the substantive law governing UCL claims, other than the standing requirements for the named plaintiffs, and “before Proposition 64, ‘California courts have repeatedly held that relief under the UCL is available without individualized proof of deception, reliance and injury.’ [Citation.]” (Tobacco II, supra, 46 Cal.4th at p. 326.).
Ninth Circuit Finds Dell Class Action Waiver Unconscionable in Omstead v. Dell, Inc.
On February 5, 2010, the Ninth Circuit issued an opinion disapproving of the use of class action waivers in Omstead v. Dell, Inc. – a proposed class case alleging that Dell designed, manufactured, and sold defective notebook computers. The Court’s opinion comes on the heels of a similar opinion in Laster v. AT&T Mobility LLC, discussed here, concluding a class action waiver used by AT&T in connection with a “free phone” sales promotion was unconscionable under California law.
On January 28, 2010, the Fourth District issued an opinion in Pellegrino V. Robert Half International, Inc., __ Cal.App. 4th __ (2010), upholding a trial court order granting summary judgment in favor of plaintiffs on the administrative exemption. The Court’s opinion contains two noteworthy components.
First, the court held that the trial court did not abuse its discretion in finding that a “limitation on claims” provision contained in plaintiffs’ employment agreements – which shortened the statute of limitations for employment claims to six months – was unenforceable under California law. As reasoned by the Court, “the trial court did not err because plaintiffs’ claims were based on unwaivable and fundamental statutory rights, and the provision drastically shortening to six months the time in which an employee might vindicate such rights violates [Labor Code] section 219 and public policy, and is thus unenforceable.” See Slip Opinion, at 11-27. Such non-waivable rights, in the view of the Court, included the right to overtime compensation [id., at 13-15], Meal and Rest periods [id., at 15-16], itemized wage statements [id., at 16-18], and the right to be paid commissions as wages. Id., at 18-19.
Here, substantial evidence showed plaintiffs' duties as account executives for RHI were not directly related to management policies because they instead constituted sales work. The evidence presented at trial included the following: (1) at RHI, a direct sale occurred when a candidate was placed with a client; (2) account executives were trained in sales and evaluated on how well they met or exceeded minimum sales production numbers; (3) account executives were primarily responsible for selling the services of RHI's temporary employees to clients; (4) when the account executives were not either soliciting potential clients for sales or placing orders for clients, they were recruiting more candidates for RHI's “inventory,” an activity which consumed about 30 percent of their time; (5) account executives had no role in supervising the temporary employees after they were placed and no responsibility for the administrative support staff in the account executives' offices; (6) account executives did not form policy but followed the “recipe,” including the three-week rotation system in performing their duties as required by headquarters; and (7) corporate headquarters included a human resources department, marketing department, and legal department designed to support the account executives' function—to focus on making sales.
On February 3, 2010, the California Supreme Court denied plaintiffs’ petition for review in Princess Cruise Lines, Ltd. v. Superior Court, 179 Cal. App. 4th 36 (2d Dist., 2009). Princess was one of the first CAP opinions to address Prop 64 standing, and specifically the element of named plaintiff reliance, subsequent to Tobacco II, 46 Cal. 4th 298 (2009).
Princess turned on Tobacco II’s findings that (1) “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material” [See id., at 327], and (2) that the named plaintiff “is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where … those misrepresentations and false statements were part of an extensive and long-term advertising campaign.” See id., at 327-28. The Princess Court found Tobacco II distinguishable, reasoning that the named plaintiffs could not claim that misrepresentations relating to a sur-charge imposed on certain travel were “material” when they admitted at deposition that they would have booked the subject travel “whatever it cost.” See Princess, 179 Cal. App. 4th at 43-44. Moreover, the CAP concluded that plaintiffs were foreclosed from claiming to have been subject to an “extensive and long-term advertising campaign” by Princess when they admitted at deposition that they had no contact of any kind with Princess prior to embarking on the cruise, and that all representations in question were made, not by Princess, but the travel agent through which they booked the travel. See id., at 44.
On February 2, 2010, the California Commission on Judicial Performance issued a decision imposing censure on Judge Brett C. Klein, retired, arising out of Judge Klein’s sua sponte modification of a proposed final order to provide for the payment of $125,000 in attorney's fees in $10 gift cards, and by his action in transmitting the order to the press. A copy of the Commission’s Order is posted here. The Order imposes the strictest of penalties – barring Judge Klein from holding judicial office in the state of California and from receiving an assignment, appointment, or reference of work from any California state court.
This month’s edition of Advocate dedicates its entire edition to the subject of class actions and mass torts. There are numerous great articles, including one authored by myself entitled In re Tobacco II Cases almost one year later: A boon for California consumers, or a bust? An electronic edition is available online at the CAALA website here. My article is contained on pages 52-59.

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