Source: http://cawageandhourlaw.blogspot.com/2012/09/
Timestamp: 2019-04-19 13:17:49+00:00

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On July 6, 2012, The Daily Journal ran a profile of me in its Verdicts and Settlements Section. You can read the profile here.
Thank you to those of you who were kind enough to speak with the Daily Journal reporter on my behalf, and thank you to all of you who have allowed me to be of service in mediation.
In Batarse v. Service Employees International Union Local 1000 (9/24/12) --- Cal.App.4th ---, the plaintiff, a former attorney who had resigned from the State Bar with charges pending, was employed by the SEIU as a union rep. After his termination, he filed suit for racial and gender discrimination, retaliation, negligent supervision and retention, and wrongful termination in violation of public policy. The trial court granted summary judgment on all counts, and the Court of Appeal affirmed.
First, the trial court was justified in declining to consider the plaintiff's opposition without a separate statement that conformed to the requirements of the Code. Slip op. at 7-14. This was not a single-issue case that could be determined without a separate statement, but a complex case involving shifting burdens of proof. Slip op. at 12. The plaintiff's separate statement was insufficient in that it "merely disputed a few of SEIU's facts without including additional facts attempting to affirmatively show pretext or otherwise overcome SEIU's asserted reason for termination. Plaintiff's separate statement did not dispute any of the facts showing SEIU had a legitimate reason for terminating his employment; that is, it did not dispute any of the facts regarding plaintiff being disciplined by the state bar or concealing or making misrepresentations about the reasons for his resignation [from the State Bar]." Slip op. at 13-14. The defects in the separate statement were not merely procedural. Plaintiff admitted that SEIU had legitimate business reasons for his termination (i.e., misrepresenting his reasons for resigning from the State Bar when he applied for his job) but failed to show that those reasons were untrue or pretextual. Ibid.
Second, even if the trial court erred in refusing to give the plaintiff additional time to correct his separate statement, the error was not prejudicial. Slip op. at 14-19. The facts that plaintiff stated in his points and authorities, even if properly stated in the separate statement, would not raise triable issues of fact. Ibid. The plaintiff could not "offer substantial evidence that the employer's stated nondiscriminatory reason for the adverse action was untrue or pretextual, or evidence the employer acted with a discriminatory animus, or a combination of the two, such that a reasonable trier of fact could conclude the employer engaged in intentional discrimination." Slip op. at 15.
As direct evidence of intentional discrimination, plaintiff cites the following three facts: (1) “Plaintiff has asserted that he was replaced by a Hispanic individual … no more qualified than Plaintiff for the position.” Plaintiff cites no evidence that his replacement was Hispanic or that the replacement was no more qualified than plaintiff. (2) Sanchez “has shown a refusal to try and get along with the representatives that were assigned to her DLC, who happen to be Caucasian males.” The declaration of Angela Moralez, cited in support, states that Sanchez “has simply refused to attempt to get along with” males she worked with; Moralez identified two Caucasian males, one who resigned two months into his employment and another Sanchez “failed to get along with.” Other unidentified males (of unidentified race and ethnicity) left within months of employment “because of their inability to get along with Ms. Sanchez and Ms. Sanchez's refusal to attempt to [get] along with any of them.” Moralez states her belief that Sanchez used her influence to have plaintiff terminated, but admits she “cannot say for certain that it was because of [plaintiff's] race, gender, or in retaliation for his conduct.” The declaration of Tim Chaney, also cited in support of this statement, admits he has not personally heard Sanchez make derogatory remarks about Caucasians, but opines that “she has shown an inability or refusal to get along with Caucasian males.” (3) Within the first couple of weeks of plaintiff's employment, plaintiff's supervisor received a phone call from a member saying the member looked plaintiff up on the state bar website and did not want him to represent the member.
Slip op. at 17. None of this constituted "direct evidence of discriminatory or retaliatory motive." Ibid.
In Bell v. H.F. Cox, Inc. (9/5/12) --- Cal.App.4th ---, truck drivers filed a class action against their employer, Cox, alleging wage and hour violations. The trial court summarily adjudicated three counts in favor of Cox, a jury found in favor of Cox on another count, and the trial court found that plaintiffs were exempt from federal overtime compensation requirements and awarded attorney fees to Cox. Plaintiffs appealed, and the Court of Appeal affirmed in part and reversed in part.
The Court affirmed the trial court's grant of summary judgment on the count for failure to pay promised vacation benefits to current employees, but reversed on the count for failure to pay vacation benefits on termination of employment. Slip op. at 9-17. First, a triable issue of fact (whether the employer pays vacation benefits from its general funds or from a separately maintained account) precluded summary judgment on ERISA grounds. Slip op. at 10-13. Because this was the trial court's sole basis for summary judgment on the claim for payment of vacation funds on separation, the Court reversed as to this count. Ibid. Second, because Labor Code section 227.3 prohibits the forfeiture of vested vacation benefits upon the termination of employment, Cox's policy of paying its drivers $500 (and later $650) per week of unused vacation time did not violate section 227.3, as applied to current employees. Slip op. at 13-17.
The Court affirmed the trial court's order denying the plaintiffs' motion to exclude certain witnesses from trial. Slip op. at 17-18. In short, the plaintiffs had asked Cox to identify witnesses, and Cox had identified "the shippers," but the plaintiffs failed to dig further, and the court properly denied the plaintiffs' motion to exclude individual representatives of "the shippers" from testifying at trial. Ibid.
The Court held that the plaintiffs were exempt from the Fair Labor Standards Act (FLSA) overtime requirements because they fell within the motor carrier exemption as employees "with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49." 29 U.S.C. section 213(b)(1). Slip op. at 19-24. The Court held that substantial evidence supported the trial court's finding that the drivers "reasonably could be expected to be called on to drive an interstate route," and did not discuss the more interesting issue of whether the drivers' intrastate deliveries were "part of the continuous movement of goods in interstate commerce." Slip op. at 22.
The Court rejected the plaintiffs' argument that the trial court committed instructional error. Slip op. at 24-27. "Because plaintiffs have not shown that any particular proposed instruction was proper, we conclude that they have shown no error in the denial of any of their proposed instructions." Slip op. at 26.
Finally, the Court reversed the award of attorney fees to Cox because its reversal in part "compels the conclusion that there is no prevailing party at this time and therefore no basis for an attorney fee award under section 218.5." Slip op. at 28.
(1) Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S. Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights?
(2) Does the high court's decision permit arbitration agreements to override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, ? 2698 et seq.)?
(3) Did defendant waive its right to compel arbitration?
Iskanian is Case No. S204032. The Court's web page is here.
In Sheppard v. David Evans and Associates, ---F.3d --- (9/12/12), the plaintiff filed suit for violation of the Age Discrimination in Employment Act (ADEA) and wrongful termination in violation of Oregon law. The district court dismissed the action under FRCP 8(a)(2), finding that the plaintiff failed to plead her causes of action with sufficient factual detail to state a claim.
As to the ADEA claim, the Court held that the plaintiff alleged a plausible prima facie case of age discrimination by alleging that: (1) she was at least forty years old; (2) “her performance was satisfactory or better” and that “she received consistently good performance reviews”; (3) she was discharged; and (4) her five younger comparators kept their jobs. Slip op. at 11175. This was sufficient to give rise to an inference of age discrimination. Id. at 11175-11176.
First, an employer does not have to pay its employees “reporting time pay” for attending meetings at work when the meetings are scheduled, and the employees work at least half the scheduled time, even if the scheduled time is less than four hours.
Second, an employer does not owe its employees “split shift” compensation if, when they work split shifts, they earned more than the minimum wages required by the wage order.
Third, the employer could not recover its attorney fees because the claims arose under Labor Code section 1194, the one-way fee-shifting statute for minimum wage and overtime claims, rather than section 218.5, which allows either party to recover its fees when it succeeds in an action for the nonpayment of wages.
In March, 2012, the California Supreme Court granted review in Aleman pending its decision in Kirby v. Immoos Fire Protection, Inc. The Court issued its Kirby decision in April (discussed here) and transferred Aleman back to the Court of Appeal for reconsideration.
The Court of Appeal issued its new decision last week. Aleman v. AirTouch Cellular (9/20/12) --- Cal.App.4th ---. The Court again held that the plaintiffs could not recover reporting time pay (slip op. at 9-16) or split shift compensation (slip op. at 16-19).
The Court reversed its earlier decision on attorney fees in part. It began by reviewing Kirby, which held that Labor Code section 226.7 claims for missed meal and rest periods are not subject to Labor Code section 1194 because they are not minimum wage claim, nor are they subject to section 218.5 because they are claims for failure to provide meal and rest periods, not claims for nonpayment of wages.
Applying this logic, the Aleman Court held: (1) a split shift claim is a claim for minimum wages and is subject to section 1194 (slip op. at 25-26); but (2) a reporting time pay claim is not a minimum wage claim, and is subject to section 218.5, rather than section 1194 (slip op. at 26-27). The Court remanded to the trial court to award the defendant only such fees as were attributable to the reporting time claims.
In Kilgore v. KeyBank, N.A., 673 F.3d 947 (3/7/12) (discussed here), a three-judge panel of the Ninth Circuit Court of Appeals held that the Federal Arbitration Act ("FAA") preempts California's Broughton-Cruz rule, which prohibits the arbitration of claims for broad, public injunctive relief. See Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066 (prohibition on compelling arbitration in public injunctive relief cases under the Consumer Legal Remedies Act); Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 (prohibition on compelling arbitration in public injunctive relief cases under the Unfair Competition Law). The plaintiffs in Kilgore are student loan borrowers who filed a putative class action against lenders seeking to enjoin them from collecting loans or reporting loan balances to credit reporting agencies.
On Friday, the Ninth Circuit granted the plaintiffs' petition for en banc review of the decision. The Court's order is available here. The docket is available through the PACER system here. Kilgore is Case No. 09-16703.
I have added Kilgore to our Watch List of important pending cases.
Caron v. Mercedes-Benz Financial Services USA LLC (7/30/12) --- Cal.App.4th --- (discussed here) (finding that FAA preempts CLRA's prohibition on class action waivers and reversing trial court order denying motion to compel arbitration, but remanding for determination of unconscionability).
As in Sanchez v. Valencia Holding Co., the Court of Appeal in Goodridge v. KDF Automotive Group, Inc. (8/24/12) --- Cal.App.4th ---, held that such an agreement is unconscionable and unenforceable without regard to any class action waiver provision.
The plaintiff filed a putative class action against a car dealer, alleging, inter alia, violations of the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), the Automobile Sales Finance Act (Civ. Code, § 2981 et seq.), and the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.). After several months of litigation, the defendant moved to compel arbitration. The trial court denied the motion, and the Court of Appeal affirmed.
First, the Court held that the arbitration agreement was procedurally unconscionable. Slip op. at 15-19. The Court found both oppression, "i.e., an inequality of bargaining power that resulted in no real negotiation and an absence of meaningful choice for Goodridge regarding the arbitration clause" and surprise, in that the "arbitration clause was hidden within the lengthy prolix of the printed form presented by KDF to Goodridge."
1. The provision allowing either party to appeal a decision against it in excess of $100,000, which would benefit only KDF. Slip op. at 19-21.
2. The provision allowing either party to appeal a decision for injunctive relief against it, which, again, would benefit only KDF. Slip op. at 21-22.
3. The provision requiring an appealing party to pay the full cost of the appeal in advance, because an individual plaintiff would find such costs unduly burdensome. Slip op. at 22-23.
4. Finally, the provision excluding self-help remedies -- including repossession --from arbitration, which would benefit only KDF, as only KDF would seek such remedies. Slip op. at 23-24.
The Court thus found the arbitration agreement "unconscionable under California's doctrine of unconscionability that generally applies to all contracts." Slip op. at 24, citing Armendariz. The Court also affirmed the trial court's decision not to sever the multiple unconscionable provisions from the agreement. Slip op. at 24-26.
I assume that the contract included a class action waiver, and it is interesting that the Court did not rely on any such clause in finding the agreement unenforceable. I assume that the California Supreme Court grants review and holds pending its decision in Sanchez v. Valencia Holding Co.
In Bates v. Mortgage Electronic Registration System, Inc., --- F.3d --- (9th Cir. 9/17/12), the plaintiff filed suit under the California False Claims Act (“CFCA”), Cal. Gov’t Code §§ 12650-12655, against a number of defendants, alleging that they made false representations in recorded mortgage documents in order to avoid paying recording fees. The district court granted the defendants' motion to dismiss, and the Ninth Circuit affirmed.
First, the Court held that the district court did not err in denying plaintiff's motion to remand, which he based on the argument that the State of California was a party to the action, thus defeating diversity jurisdiction. The Court held that the State was a nominal party only, that plaintiff failed to point to any allegation in the complaint showing that he was suing on behalf of the State, and the State would recover nothing if he prevailed. Slip. op. at 11329.
Second, the Court held that the CFCA's public disclosure provision barred the action. Slip. op. at 11329-11331. The public disclosure provision “erects a jurisdictional bar to qui tam actions that do not assist the government in ferreting out fraud because the fraudulent allegations or transactions are already in the public domain.” The provision applies when the prior public disclosures are “sufficient to place the government on notice of the alleged fraud [or] practice prior to the filing of the qui tam action.” The complaint showed that the information supporting the fraud allegations were in the public domain prior to plaintiff's alleged discovery of them, and plaintiff could not be the "original source" of the information.
In addition to wage and hour cases and cases involving discrimination, harassment, and retaliation, I also mediate cases involving allegations of misappropriation of trade secrets. So, in the midst of all of the class action waiver cases, here's one involving recovery of attorney fees in a trade secret action.
In SASCO v. Rosendin Electric, Inc. (7/11/12) --- Cal.App.4th ---, SASCO filed suit against Rosendin and three former employees who left SASCO to work for Rosendin. SASCO alleged misappropriation of trade secrets and related causes of action. After more than a year of litigation, with defense motions for summary judgment pending, SASCO dismissed the action. The trial court granted the defendant's motion for attorney fees, finding that SASCO prosecuted the action with no evidence of trade secret misappropriation. SASCO appealed, and the Court of Appeal affirmed.
First, the Court reviewed the basics: If a trade secret claim is made in bad faith, the prevailing party can recover its reasonable attorney fees and costs. The Uniform Trade Secrets Act (UTSA) does not define "bad faith" but courts have held that it includes both "objective speciousness of the plaintiff's claim . . . and  subjective bad faith in bringing or maintaining the claim." Slip op. at 8.
"Objective speciousness exists where the action superficially appears to have merit but there is a complete lack of evidence to support the claim." Slip op. at 9. The trial court correctly relied on this standard in awarding fees, even though the plaintiff dismissed the case prior to the completion of discovery. Ibid. Code of Civil Procedure section 128.7 does not set the standard for frivolousness in a trade secret case. Slip op. at 10-11.
Bad faith may exist, and attorney fees may be recovered, even if "objectively speaking, it appeared at the time of the filing of the action some evidence would be obtained in discovery that would support a misappropriation claim." Slip op. at 12 (emphasis in original).
When an employee entrusted with trade secrets departs to work for a competitor, a reasonable observer might consider it likely that discovery will unearth at least some evidentiary support (if not a winning case) for allegations of trade secret misappropriation. This objective assessment of a difficult predictive problem has nothing to do with the good faith or bad faith of the plaintiff, which is, after all, what the statute instructs courts to examine.
Second, the Court held that the trial court did not abuse its discretion in finding that SASCO's claims were made in bad faith. SASCO pointed to no evidence in the record to show misappropriation.
It was perfectly legitimate for Rosendin to hire the individual defendants and for the individual defendants to leave the employ of SASCO in favor of a competitor, Rosendin. Speculation that the individual employees must have taken trade secrets from SASCO based on their decision to change employers does not constitute evidence of misappropriation.
In Sparks v. Vista Del Mar Child and Family Services (7/30/12) --- Cal.App.4th, the trial court denied a petition to compel arbitration of an individual wrongful termination action, and the Court of Appeal affirmed.
was included within a lengthy employee handbook; the arbitration clause was not called to the attention of plaintiff, and he did not specifically acknowledge or agree to arbitration; the handbook stated that it was not intended to create a contract; the handbook provided that it could be amended unilaterally by defendant and thus rendered any agreement illusory; the specific rules referred to in the arbitration clause were not provided to plaintiff; and the arbitration clause is unconscionable.
The language in the Handbook here, like the language at issue in [Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164], suggests that the Handbook, which was "distributed" to all employees, was informational rather than contractual. Thus, because defendant failed to point out or call attention to the arbitration requirement in the Acknowledgment, plaintiff should not be bound to arbitrate.
The "Acknowledgment of Receipt" that the plaintiff signed also did not bind him to arbitrate. "At best, it expressed the employee's understanding that he must comply with personnel policies and obligations, rather than an agreement to arbitrate."
The arbitration clause is also substantively unconscionable in that it requires the employee to relinquish his or her administrative and judicial rights under federal and state statutes (cf. Ajamian v. CantorCO2e, supra, 203 Cal.App.4th at pp. 798-799) and it makes no express provision for discovery rights (Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at p. 104). As the American Arbitration Association rules specified by the clause were not provided to plaintiff, and according to defendant those rules gave the arbitrator the discretion to deny any discovery, the provision for discovery is insufficient. Accordingly, the clause is unenforceable as unconscionable.
The opinion is available here with a slight modification on 8/20/12 here.
In Caron v. Mercedes-Benz Financial Services USA LLC (7/30/12) --- Cal.App.4th ---, the Court of Appeal has held that the Federal Arbitration Act (FAA) preempts the Consumer Legal Remedies Act (CLRA) prohibition on class action waivers.
Plaintiff sued defendants, alleging various class and individual claims, including claims under the CLRA. Defendants petitioned to compel individual arbitration and to stay the class proceedings.
Relying on Fisher v. DCH Temecula Imports LLC (2010) 187 Cal.App.4th 601 (discussed here), the trial court held that (1) the arbitration provision was unenforceable because it waived the plaintiff's right to bring a class action under the CLRA; and (2) the FAA did not preempt the CLRA's prohibition against class action waivers.
1. The trial court did not err in implicitly overruling plaintiff's objection to introduction of the arbitration agreement because, among other things, plaintiff attached the same document to her complaint and alleged that it was a true and correct copy of the parties' agreement. Slip op. at 6-8.
2. The FAA preempts the CLRA's prohibition of class action waivers because the antiwaiver rule "stands as an obstacle" to the FAA's purpose of enforcing arbitration agreements according to their terms. Slip op. at 14-19.
Slip op. at 15. The Court distinguished Fisher on grounds that it was decided before Concepcion and improperly found that the CLRA's antiwaiver provision was a "generally available contract defense" that was subject to the FAA's "savings clause." 9 U.S.C. section 2. Slip op. at 16-17.
3. The Court remanded to the trial court to decide (1) whether the arbitration agreement is unconscionable and (2) whether to sever any unconscionable provisions. Slip op. at 19-22. The trial court did not rule on this issue, instead finding the CLRA's antiwaiver provision to be dispositive.
The NLRB incorrectly decided D.R. Horton (discussed here), and nothing in the NLRA or the Norris-La Guardia Act evidences an intent to override the FAA's policies in favor of construing arbitration agreements according to their terms.
Contrary to the holding in Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489 (discussed here), Concepcion applies to a plaintiff's representative claims under the Labor Code Private Attorneys General Act (PAGA).
Contrary to the holding in Reyes v. Macy’s Inc. (2011) 202 Cal.App.4th 1119, (discussed here), the plaintiff could pursue individual PAGA claims in arbitration.
The California Supreme Court today voted unanimously to grant the plaintiff's petition for review in Iskanian. The Court's docket page is here.
In Lamps Plus Overtime Cases (2011) 195 Cal.App.4th 389 (discussed here), the Court of Appeal held that the trial court did not abuse its discretion in denying class certification of a wage and hour action alleging, among other causes of action, violation of California's meal and rest period requirements. The California Supreme Court granted review and held pending its decision in Brinker v. Superior Court (4/12/12) 53 Cal.4th 1004 (discussed here).
On remand, the Court of Appeal has found that its earlier decision was consistent with Brinker and again affirmed the trial court's order. Lamps Plus Overtime Cases (8/20/12) --- Cal.App.4th ---, Slip op. at 2. The decision comes from the same panel (Second District, Division Eight, Justices Bigelow, Flier, and Grimes) that issued Hernandez v. Chipotle Mexican Grill, Inc. (8/21/12) --- Cal.App.4th --- (discussed here), and the two decisions parallel each other.
First, the Court held that the trial court correctly concluded that employers must "provide employees with meal and rest breaks, not to ensure the breaks are taken." Slip op. at 10-14. The Court distinguished Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, on grounds that: "Unlike the employer in Cicairos, in this case, there is overwhelming evidence that Lamps Plus's policies allowed and encouraged meal periods." Slip op. at 14-15. The Court also found that requiring employers to ensure that meal periods are taken would be "utterly impractical." Slip op. at 15-16.
Second, the Court found that the trial court did not improperly reach the merits of the plaintiffs' meal and rest period claims. "No case prevents a court from examining a legal issue when ruling on a certification motion." Slip op. at 16. The Court distinguished Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, on grounds that the employer's practices there -- giving the employees more work than they could do if they took meal periods, auto-deducting 30 minutes per day whether employees took meal periods or not, and requiring employees to acknowledge that they received their meal periods in order to be paid their wages -- "presented the predominant common factual issues on the meal and rest break claims." Slip op. at 17.
Third, the Court held that substantial evidence supported the trial court's ruling on the meal and rest period claims. "Lamps Plus did not have a universal practice of denying employees their breaks." Slip op. at 17. Its meal and rest period policies conformed to the law, and it disciplined employees for violating those policies. Slip op. at 18. The evidence of violations was "widely variable." Ibid. The Court rejected the plaintiffs' theory that chronic understaffing led to classwide violations. Slip op. at 19. The trier of fact would have to determine whether people actually missed breaks or just failed to record them. Slip op. at 19-20.
Fourth, the court did not err in declining to stay the case pending Brinker. Slip op. at 19.
With regard to the off-the-clock claims, the fact that approximately half of respondents to a survey said they worked off the clock did not "lead to an inference there was a companywide policy requiring such work." Slip op. at 21. Nor did the plaintiffs show that Lamps Plus knew or should have known of such off-the-clock work. Ibid.
With regard to the claim for waiting time penalties, the Court began by finding that Lamps Plus had a policy to pay wages upon termination. Slip op. at 22. The Court then held that "California employers are not obligated to keep a record of the date of final pay for each employee, or of the date on which each employee gave notice of termination." Ibid. Because the evidence that the plaintiffs submitted "varied widely," the trial court did not err in finding that individual issues predominated. Slip op. at 22-23.
The Court held that the trial court also was correct in denying certification of the claim for wage statement violations because class members would have to show "actual injury from the noncomplying pay stubs." Slip op. at 23. Also, the pay stub claims was derivative of the plaintiffs' other claims, which were not suitable for class treatment. Ibid.
The Court held that the plaintiffs' claims for violation of the Unfair Competition Law ("UCL"), Cal. Lab. & Prof. section 17200 et seq., also were derivative of their other claims and also were not suitable for class treatment. Slip op. at 24.
Having found that common questions did not predominate, the Court went on to discuss adequacy and typicality. Slip op. at 24-26. The Court found that one class representative was not adequate because he lied in deposition about his criminal records. Slip op. at 25. Another was not adequate because the Court found that his memory and "sincerity in trying to honestly answer questions under oath" was "unreliable." Ibid. The third was not adequate because "by his own testimony, Lamps Plus provided all the rights to which he was entitled by law." Ibid.
The Court also found that the plaintiffs had not established that class treatment was superior to litigation of individual claims because "there could be thousands of mini-trials to address the factual issues" identified by the Court in its ruling. Slip op. at 26.
In Hernandez v. Chipotle Mexican Grill, Inc. (2010) 189 Cal.App.4th 751 (discussed here) the Court of Appeal affirmed a trial court order denying certification of a meal and rest period action. The Supreme Court granted review and held pending its decision in Brinker v. Superior Court (4/12/12) 53 Cal.4th 1004 (discussed here).
On remand, the Court of Appeal again affirmed the trial court's order. Hernandez v. Chipotle Mexican Grill, Inc. (8/21/12) --- Cal.App.4th ---. The decision comes from the same panel (Second District, Division Eight, Justices Bigelow, Flier, and Grimes) that issued Lamps Plus Overtime Cases (8/20/12) --- Cal.App.4th --- (discussed here), and the two decisions parallel each other.
First, the Court held that the trial court properly analyzed an employer's obligation to provide meal periods and to authorize and permit rest periods. Slip op. at 9-12. The Court again distinguished Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, on grounds that the employer in Cicairos "effectively deprived drivers of an opportunity to take breaks" and that the DLSE opinion letter upon which Cicairos relied has been withdrawn. Slip op. at 12-13. And in any case, Brinker held that employers must relieve their employees of duty during their meal periods, but need not ensure that they do no work. Slip op. at 13.
Second, the Court held that the law did not foreclose the trial court from considering meal and rest period standards on certification. Slip op. at 14. The Court again distinguished Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, on grounds that the employer's practices there -- giving the employees more work than they could do if they took meal periods, auto-deducting 30 minutes per day whether employees took meal periods or not, and requiring employees to acknowledge that they received their meal periods in order to be paid their wages -- "presented the predominant common factual issues on the meal and rest break claims." Slip op. at 14-15.
Third, the Court held that substantial evidence supported the trial court's order. The evidence showed no "universal practice with regard to breaks" and Hernandez would have to do a restaurant-by-restaurant or manager-by-manager analysis. Slip op. at 16. Chipotle's time records would be of little help because Chipotle paid its employees for their breaks, and the trier of fact would have to determine whether people actually missed breaks or just failed to record them. Slip op. at 17. Introduction of sampled evidence would not be manageable, and Hernandez's expert did not show how sampling evidence would simplify the trial. Slip op. at 18-19. Finally, substantial evidence supported the determination that some putative class members had also worked as supervisors, and "some putative class members may accuse other putative class members of violating their meal and rest period rights," raising a conflict of interest. Slip op. at 19-20.
Truly Nolen of America v. Superior Court (Miranda) (8/9/12) --- Cal.App.4th --- is one of the more interesting post-Concepcion arbitration decisions.
Plaintiffs filed a class action complaint against defendant alleging California wage and hour violations. Defendant petitioned to compel individual arbitration, based on agreements that did not contain a specific provision pertaining to the availability or unavailability of classwide arbitration. The trial court ordered that the matter proceed in arbitration as a class action. The Court of Appeal granted defendant's petition for writ of mandate and reversed.
The Court began by stating that it was undisputed that the arbitration agreements at issue were governed by the Federal Arbitration Act ("FAA"). Slip op. at 9-10. The Court then reviewed California arbitration law: Keating v. Superior Court (1982) 31 Cal.3d 584; Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83; Discover Bank v. Superior Court (2005) 36 Cal.4th 148; and Gentry v. Superior Court (2007) 42 Cal.4th 443. Slip op. at 10-16. The Court then discussed the Supreme Court's decisions in Stolt-Nielsen v. AnimalFeeds Internat. Corp. (2010) 559 U.S. __, 130 S.Ct. 1758 (discussed here) and AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __, 131 S.Ct. 1740 (discussed here) and the reaction of California appellate courts to those decisions. Slip op. at 17-20.
The Court then held that Concepcion "implicitly disapproved the reasoning of the Gentry," but held that it should continue to adhere to Gentry until the California Supreme Court rules on the issue. Slip op. at 21-24.
The Court next held that even if Gentry is still good law, the plaintiffs failed to establish the four factors needed to preclude enforcement of the arbitration agreement: (1) "the modest size of the potential individual recovery;" (2) "the potential for retaliation against members of the class;" (3) "the fact that absent members of the class may be ill informed about their rights;" and (4) "other real world obstacles to the vindication of class members' rights to overtime pay through individual arbitration." Slip op. at 24-31. The plaintiffs had relied on declarations of their attorneys, but had not introduced specific facts "pertinent to their claims in this case, or the relevant employment conditions." Slip op. at 25-28.
The Court then ruled a number of non-Gentry arguments made by the plaintiffs. First, the Court held that parties can have an implied agreement to class arbitration and remanded to the trial court to determine whether that was the case here. Slip op. at 32-35. The Court distinguished Stolt-Nielsen, in which the parties had stipulated that their agreement did not include an express or implied agreement to class arbitration. Ibid.
Second, the Court declined to follow D.R. Horton. Slip op. at 35-36, citing CompuCredit Corp. v. Greenwood (2012) 565 U.S. __, __, 132 S.Ct. 665, 668-669] (discussed here).
Third, the Court held that the plaintiffs had waived their argument that the arbitrator, rather than the trial court, should determine whether the matter could proceed as a class arbitration. Slip op. at 36-37.
In Rodriguez v. West Publishing Corporation, 563 F.3d 948 (9th Cir. 2009) (discussed here) the Ninth Circuit examined "incentive agreements" between class representatives and class counsel, in which counsel agreed that the higher any settlement of the action, the higher an incentive award class counsel would request from the trial court. The case settled for $49 million, and class counsel sought a total of $325,000 in incentive awards. The trial court approved the settlement over several objections.
The Ninth Circuit held that the incentive agreements created an unacceptable conflict of interest between the class representatives and class counsel who signed them, on the one hand, and the members of the class, on the other. Nevertheless, because there were other class representatives who had no incentive agreements and whose separate counsel were not conflicted, the Court affirmed the district court order approving the settlement, but remanded for reconsideration of the order awarding $7 million in fees to the conflicted attorneys and awarding zero to the objectors.
In Rodriguez v. Disner, ---F.3d --- (9th Cir. 8/10/12) the Ninth Circuit revisits this same case, considering whether the trial erred in reducing class counsel's fee award to $500,000 or in denying fees to the objectors who had appealed.
The Court held that the district court had "broad discretion" to deny fees to an attorney who has committed an ethical violation, particularly in a common fund case such as this. Slip op. at 9079-9084. The Court then held that class counsel had committed an ethical violation in representing parties with conflicting interests. Slip op. at 9084-9086. As a result, the district court did not err in reducing counsel fee to $500,000. Slip op. at 9086-9088.
With regard to the objectors, the Court recognized that objectors may be entitled to recover attorney fees if their work increases the benefits to the class. Slip op. at 9088-9089. The majority of the objectors produced no benefit to the class, and the court did not err in denying them attorney fees. Slip op. at 9089-9090. However, the objectors who brought the incentive agreements to the court's attention and who briefed the conflict of interest issue in the district court and in the Court of Appeal did create a benefit for the class, and the court erred in denying them fees. Slip op. at 9090-9092.
Hoover v. American Income Life Insurance Company (6/13/12) --- Cal.App.4th --- is yet another battle in the Arbitration Wars.
If Hoover was an employee with viable statutory labor claims, her claims are not subject to arbitration. If Hoover was an independent contractor she cannot assert statutory labor claims as an employee and therefore the question of arbitration seems irrelevant. In either instance, the trial court correctly denied AIL's petition to compel arbitration. Additionally, AIL's 15-month delay in petitioning for arbitration constituted a waiver of the right to compel arbitration.
First, it found substantial evidence to support the trial court's decision that AIL waived its right to compel arbitration by litigating the case for over a year, removing it to federal court twice, and conducting discovery in court. Slip op. at 10-15.
As a general rule, state statutory wage and hour claims are not subject to arbitration, whether the arbitration clause is contained in the CBA or an individual agreement.... An individual arbitration agreement also does not apply to an action to enforce statutes governing collection of unpaid wages, which "may be maintained without regard to the existence of any private agreement to arbitrate...." An exception to the general rule occurs when there is federal preemption by [the Federal Arbitration Act or] FAA, as applied to contracts evidencing interstate commerce.
Slip op. at 15-17, citing Labor Code section 229 and Perry v. Thomas (1987) 482 U.S. 483, 490. Because AIL failed to show that the contract at issue involved interstate commerce, the FAA did not apply, 229 was not preempted, and AIL could not compel arbitration. Slip op. at 17-18. Further, the arbitration agreement did not mention the arbitration of statutory wage claims or identify any statutes. Slip op. at 19. Finally, AIL could not compel arbitration of the UCL injunctive relief claim. Ibid., citing Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316; Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 500-501.
Thank you to Michael Singer for pointing out that the California Supreme Court denied petitions for review and depublication on September 12, 2012.
In Tucker v. Pacific Bell Mobile Services (8/7/12) --- Cal.App.4th ---, the plaintiffs alleged that the defendants misrepresented the number of usable minutes in their cellular phone plans. The trial court sustained defendants' demurrer to the class allegations without leave to amend, holding that there was "no reasonable possibility that Plaintiffs can establish a community of interest among the potential class members and that individual issues predominate over common questions of law and fact." Slip op. at 3.
The Court of Appeal reversed as to the plaintiffs' claims under the Unfair Competition Law and otherwise affirmed.
First, the Court reviewed the cases on demurrers to class allegations and held that a trial court may sustain such a demurrer where there is no "reasonable possibility the plaintiffs can plead a prima facie community of interest among class members." Slip op. at 4-10.
Next, the Court took note of an almost identical action, filed in a different county by the same attorneys representing the plaintiffs in this action. The trial court in the prior action had denied certification, finding that common issues did not predominate. The Court of Appeal had affirmed because the defendants made the alleged misrepresentations in a variety of ways, and the putative class members "stand in a myriad of different positions [sic] insofar as the essential allegation in the complaint [the alleged misrepresentations] is concerned." Slip op. at 12-14.
The Court then turned to whether the plaintiffs had a "reasonable possibility" of showing commonality in this case. The Court held that the plaintiffs could not proceed with their common law fraud and Consumer Legal Remedies Act claims because they would have to show actual reliance to sustain an award of damages. Slip op. at 18-22.
The Court then held that the plaintiffs could proceed with their UCL claims, at least to the extent that they sought injunctive relief. Distinguishing In re Tobacco II Cases (2009) 46 Cal.4th 298, the Court held that the record did not support a common inference of reliance. Slip op. at 23-26. Further, the Court held that the plaintiffs could not seek class-wide restitution. Slip op. at 26-27. However, the Court held that they plaintiffs could seek other equitable relief, including an injunction against further alleged misrepresentations. Slip op. at 28-29.
Whether, after Smith v. Bayer [564 U.S. ---, 131 S.Ct. 2368 (2011), discussed here] when a named plaintiff attempts to defeat a defendant’s right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a “stipulation” that attempts to limit the damages he “seeks” for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the “stipulation,” exceeds $5 million, the “stipulation” is binding on absent class members so as to destroy federal jurisdiction.
The Supreme Court's web site for Standard Fire is here. I have added it to our Watch List.

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