Source: http://cawageandhourlaw.blogspot.com/2011/04/
Timestamp: 2019-04-19 12:49:15+00:00

Document:
Plaintiff-Appellee Michael Marlo and Defendant-Appellant United Parcel Service, Inc. (UPS) appeal or cross-appeal from a jury verdict awarding Marlo unpaid overtime, meal, and rest-period wages. UPS classified Marlo as an executive and administrative employee under California’s Industrial Welfare Commission (IWC) Wage Order No. 9, Cal. Code Regs. tit8, § 11090 (2005), thereby purporting to exempt him from the California Labor Code’s overtime-pay requirements. See Cal. Lab. Code § 515(a). The district court initially certified a class comprised of full-time supervisors employed by UPS from 2000 to 2004, and appointed Marlo class representative. In 2008, however, the court decertified the class on the ground that Marlo had failed to establish that common issues of law or fact predominated over individual ones. See Fed. R. Civ. P. 23(b)(3).
We have jurisdiction under 28 U.S.C. § 1291. We hold that the district court did not abuse its discretion in decertifying the class. We address the remaining issues in a memorandum disposition filed contemporaneously with this opinion.
The district court’s order decertifying the class recognized that distinction. It evaluated whether “questions of law or fact common to class members predominate over any questions affecting only individual members, and [whether] a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The court concluded, “Because [Marlo] has brought a class action challenging UPS’s exemption of FTS as a policy of misclassification, [he] must be ‘able to demonstrate pursuant to either scenario that misclassification was the rule rather than the exception. . . .’ ” Marlo, 251 F.R.D. at 482 (citation omitted). The district court therefore properly placed the burden on Marlo to demonstrate that Rule 23’s class certification requirements had been met.
Slip op. at 7. The Court rejected Marlo's other contentions as well.
AT&T v. Concepcion: Supreme Court Holds that FAA Preempts California's "Discover Bank Rule"
AT&T Mobility LLC v. Concepcion, --- S.Ct. ----, 2011 WL 1561956 (4/27/11), concerns whether the Federal Arbitration Act (FAA) preempts California's Discover Bank unconscionability analysis of class action waivers in arbitration agreements. The Supreme Court today issued its opinion in Concepcion, and here is the syllabus. I will have more after I have a chance to digest the opinion.
The cellular telephone contract between respondents (Concepcions) and petitioner (AT & T) provided for arbitration of all disputes, but did not permit classwide arbitration. After the Concepcions were charged sales tax on the retail value of phones provided free under their service contract, they sued AT & T in a California Federal District Court. Their suit was consolidated with a class action alleging, inter alia, that AT & T had engaged in false advertising and fraud by charging sales tax on “free” phones. The District Court denied AT & T's motion to compel arbitration under the Concepcions' contract. Relying on the California Supreme Court's Discover Bank decision, it found the arbitration provision unconscionable because it disallowed classwide proceedings. The Ninth Circuit agreed that the provision was unconscionable under California law and held that the Federal Arbitration Act (FAA), which makes arbitration agreements “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,” 9 U.S.C. § 2, did not preempt its ruling.
Held: Because it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581, California's Discover Bank rule is pre-empted by the FAA. Pp. –––– – ––––.
(a) Section 2 reflects a “liberal federal policy favoring arbitration,” Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765, and the “fundamental principle that arbitration is a matter of contract,” Rent–A–Center, West, Inc. v. Jackson, 561 U.S. ––––, ––––, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). Thus, courts must place arbitration agreements on an equal footing with other contracts, Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038, and enforce them according to their terms, Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488. Section 2's saving clause permits agreements to be invalidated by “generally applicable contract defenses,” but not by defenses that apply only to arbitration or derive their meaning from the fact that an agreement to arbitrate is at issue. Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902. Pp. –––– – ––––.
(b) In Discover Bank, the California Supreme Court held that class waivers in consumer arbitration agreements are unconscionable if the agreement is in an adhesion contract, disputes between the parties are likely to involve small amounts of damages, and the party with inferior bargaining power alleges a deliberate scheme to defraud. Pp. –––– – ––––.
(c) The Concepcions claim that the Discover Bank rule is a ground that “exist[s] at law or in equity for the revocation of any contract” under FAA § 2. When state law prohibits outright the arbitration of a particular type of claim, the FAA displaces the conflicting rule. But the inquiry is more complex when a generally applicable doctrine is alleged to have been applied in a fashion that disfavors or interferes with arbitration. Although § 2's saving clause preserves generally applicable contract defenses, it does not suggest an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA's objectives. Cf. Geier v. American Honda Motor Co., 529 U.S. 861, 872, 120 S.Ct. 1913, 146 L.Ed.2d 914. The FAA's overarching purpose is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate informal, streamlined proceedings. Parties may agree to limit the issues subject to arbitration, Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444, to arbitrate according to specific rules, Volt, supra, at 479, 109 S.Ct. 1248, and to limit with whom they will arbitrate, Stolt–Nielsen, supra, at ––––. Pp. –––– – ––––.
(d) Class arbitration, to the extent it is manufactured by Discover Bank rather than consensual, interferes with fundamental attributes of arbitration. The switch from bilateral to class arbitration sacrifices arbitration's informality and makes the process slower, more costly, and more likely to generate procedural morass than final judgment. And class arbitration greatly increases risks to defendants. The absence of multilayered review makes it more likely that errors will go uncorrected. That risk of error may become unacceptable when damages allegedly owed to thousands of claimants are aggregated and decided at once. Arbitration is poorly suited to these higher stakes. In litigation, a defendant may appeal a certification decision and a final judgment, but 9 U.S.C. § 10 limits the grounds on which courts can vacate arbitral awards. Pp. –––– – ––––.
Justice Scalia wrote the opinion, joined by Roberts, Kennedy, Thomas, and Alito. Breyer dissented, joined by Ginsburg, Sotomayor, and Kagan. The opinion is available here.
The trial court did not use improper criteria in denying class certification based on its finding that the evidence presented “plainly and inescapably established” that Big Lots does not “operate its stores or supervise its managers in a uniform and standardized manner” Slip. op. at 8.
Plaintiffs' expert witness's declaration that a survey could be done to establish that class members were categorically misclassified as exempt employees "did nothing to refute the evidence presented by Big Lots that it did not operate its stores or supervise its managers in a uniform and standardized manner." Slip. op. at 8.
Substantial evidence supported the trial court's decision. The trial court did not err in discounting the class members' declarations, given "the lack of detail in the putative class members' declarations and the similarity in the wording of many declarations, as well as the discrepancies between the former managers' deposition testimony and their declarations." Slip op. at 9. It also did not err in considering the employer's observational study, conducted by Robert W. Crandall. Slip op. at 9-10.
The trial court did not commit prejudicial error in overruling the plaintiffs' objections to the declarations of Mr. Crandall and Lloyd Aubry, although Mr. Aubry "arguably exceeded the proper bounds of expert testimony when he opined the case is not amenable to class treatment..." Slip op. at 10-11. Nor did the court err in admitting defendant's "summary of evidence," a mix of evidence and argument that the plaintiffs apparently counteracted in the trial court. Slip op. at 11.
Although the trial court erred in sustaining objections to some of the plaintiffs' evidence, the errors did not prejudice the plaintiffs. Slip op. at 12.
From the questioning, it looks as though most of the justices are leaning to holding that out-of-state employees of a California-based company who come to California must be paid overtime under California law (e.g., daily overtime and California exemptions apply).
As always, the UCL Practitioner is the best resource around for all things UCL.

References: § 11090
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 § 1291
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