Source: http://www.baileydaily.com/2010/
Timestamp: 2019-04-22 04:16:11+00:00

Document:
On November 18, 2010, the California issued its opinion in Pineda v. Bank of Am., N.A., __ Cal. 4th __ (2010), on the issues of whether (1) a Labor Code 203 penalty action brought without alleging an underlying wage claim is governed by the one year statute of limitations of CCP 340(a), rather than the limitations period under Labor Code 203(b), which references “an action for the wages from which the penalties arise”, and (2) whether Section 203 penalties, which the statute itself identifies as a continuation of “wages”, may be recovered as restitution under the UCL. The Court resolved both issues in the negative.
With regard to the first issue, the Court reasoned that an interpretation of section 203(b) which would condition the application of the 3 year statute for wages on the concurrent filing of an underlying wage claim was not reasonable construction of the language of Section 203(b), and would “lead to unwieldy and inconsistent results”, inlcuding (1) rendering it impossible to know what statute of limitation governed at the time a Section 203 claim accrued, and (2) permiting the anomalous situation of an employer escaping Section 203 liability altogether by waiting a year to pay unpaid wages. Slip Opinion, at 5-10.
Finally, as we have acknowledged on multiple occasions, "[t]he public policy in favor of full and prompt payment of an employee's earned wages is fundamental and well established" and the failure to timely pay wages injures not only the employee, but the public at large as well. (Smith, supra, 39 Cal.4th at p. 82.) We have also recognized that sections 201, 202, and 203 play an important role in vindicating this public policy. (Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 360.) To that end, the Legislature adopted the penalty provision as a disincentive for employers to pay final wages late. (See BLS, 20th Biennial Rep.: 1921-1922, supra, p. 36.) It goes without saying that a longer statute of limitations for section 203 penalties provides additional incentive to encourage employers to pay final wages in a prompt manner, thus furthering the public policy.
Based on these considerations, the Court concluded “there is but one reasonable construction: section 203(b) contains a single, three-year limitations period governing all actions for section 203 penalties irrespective of whether an employee's claim for penalties is accompanied by a claim for unpaid final wages.” See id., at 10, 13.
[P]ermitting recovery of section 203 penalties via the UCL would not "restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest." (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149.) Section 203 is not designed to compensate employees for work performed. Instead, it is intended to encourage employers to pay final wages on time, and to punish employers who fail to do so. In other words, it is the employers' action (or inaction) that gives rise to section 203 penalties. The vested interest in unpaid wages, on the other hand, arises out of the employees' action, i.e., their labor. Until awarded by a relevant body, employees have no comparable vested interest in section 203 penalties. We thus hold section 203 penalties cannot be recovered as restitution under the UCL.
On November 17, 2010, the California Supreme Court granted review of the Third District’s decision in Kirby v. Immoos Fire Protection, 186 Cal. App. 4th 1361 (2010). The Kirby decision upheld a fee award in favor of an employer who successfully defended a rest period claim, concluding that meal and rest period claims were governed by Labor Code 218.5’s two-way fee shifting provisions, rather than the one way fee shifting of Section 1194. This holding poses a significant issue, as two way fee shifting would severely chill private enforcement of an employee's statutory right to recover meal and rest period premium wages.
The thrust of the argument in opposition is that Section 226.7 premium wages should be governed by Section 1194, not only because Section 226.7 proscribes a statutorily mandated wage, but also because the California Supreme Court concluded in Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094 (2007) that meal and rest break premium pay is itself a form of overtime compensation.
Does Labor Code section 218.5 govern attorney's fees awarded on a cause of action alleging violation of the statutorily mandated wage payment for missed meal and rest periods (Lab. Code, 226.7), or is an attorney's fee award governed by Labor Code section 1194?
The plaintiff’s Petition was supported numerous Amici, including one drafted by myself on behalf of the CAOC. Congratulations to everyone involved on a great effort securing review of such an important issue.
The trial court concluded that the plaintiff’s PAGA claim was non-viable, asserting that “suitable seating” was not required under the language of the Wage Order, and that PAGA penalties were not recoverable insofar as subpart 20 of the Wage Order provided penalties, which were restricted to instances where the employee was underpaid. Slip Opinion, at 4. The Court of Appeal reversed.
Second, the Court rejected the employer’s argument that the penalties provision of subpart 20 of the Wage Order governed. See id, at 8-10. The Court reasoned that subpart 20 – which was a generalized penalty provision – did not provide an “exclusive penalty” for violation of the suitable seating under subpart 14. Id., at 9-10. As a result, PAGA’s default penalty provision under Labor Code 2699(f) applied, permitting for the recovery of a penalty amount of $100 for initial violations, and subsequent penalties in the amount of $200 per pay period.
On Tuesday, November 9, 2010, the U.S. Supreme Court heard oral argument AT&T Mobility LLC v. Concepcion, which considers whether the invalidation of class action waivers on state-law unconscionability grounds (i.e. the Discover Bank rule) is preempted under the Federal Arbitration Act. The case involves the 9th Circuit’s decision in Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. Cal. 2009), which upheld an order denying a motion to compel “individual” arbitration based on the Discover Bank rule. This one is potentialy a game-changer. A transcript of the oral argument may be obtained on the official Supreme Court website here. Although one would think that the present composition of the Court would tend to favor AT&T, I have read through it, and admittedly, the Court seems to be leaning against preemption.
Ninth Circuit Reverses Order Denying FACTA Class Certification Grounded on Concerns Penalty Liability Was Too Large: Bateman v. American Cinema, Inc.
The district court refused to certify the class because it concluded that the proposed class failed to meet Rule 23(b)(3)’s superiority requirement. See Bateman, 252 F.R.D. at 650-51. At the heart of its ruling, the district court determined that class treatment would render the magnitude of the defendant’s potential liability “enormous and completely out of proportion to any harm suffered by Plaintiff.” Id. at 651. In its first order denying class certification without prejudice, the court also considered significant AMC’s good faith efforts to bring its machines into compliance with FACTA shortly after the lawsuit was filed. We conclude that none of these three grounds —the disproportionality between the potential liability and the actual harm suffered, the enormity of the potential damages, or AMC’s good faith—justified the denial of class certification and hold that the district court abused its discretion in relying on them.
As reasoned by the Court, Rule 23(b)(3) does not permit consideration of a comparison of actual harm relative to the aggregate amount of statutory liability when deciding whether to certify FACTA class case. Slip Opinion, at 16366-81.
The Court further reasoned that while a court’s decision to certify a class may put pressure on a defendant to settle “even unmerited claims”, this fact standing alone cannot provide a basis to deny certification. See id., at 16382-83 (“If the size of a defendant’s potential liability alone was a sufficient reason to deny class certification, however, the very purpose of Rule 23(b)(3) – 'to allow integration of numerous small individual claims into a single powerful unit' – would be substantially undermined.”). The issue of “whether the potential for enormous liability can justify a denial of class certification depends on congressional intent” [See id., at 16383], which in light of the record surrounding enactment of FACTA’s statutory penalty provisions, did not support denial of certification. See id., at 16383-84 (“To limit class availability merely on the basis of ‘enormous’ potential liability that Congress explicitly provided for would subvert congressional intent.”).
Finally, the Court reasoned that the district court’s consideration of the defendant’s post-complaint good faith compliance was inconsistent with congressional intent in enacting FACTA, as “Congress did not include any safe harbor or otherwise limit damages for good faith compliance with the statute after an alleged violation.” See id., at 16385. Rather, certification was required to further the purpose of deterrence underpinning FACTA’s statutory penalty scheme. See id.
On September 21, 2010, magistrate judges in two separate actions issued rulings concluding that the “opt-out” notice procedure approved in Pioneer Electronics, Inc. v. Superior Court, 40 Cal. 4th 360 (2007) was unnecessary for wage and hour class actions brought in Federal court. Both orders collectively provide a solid basis for dispensing with an employer’s resistance to producing the contact information of the putative class, precertification.
Moreover, the Court is not persuaded that an opt-out system is necessary, both for pragmatic and legal reasons. As to the first, such a procedure would be extremely time-consuming, given the short pre-certification discovery period. Further, in Pioneer Electronics, supra, the California Supreme Court supported the proposition that an opt-in style of notice would not be required, but did not impose an opt-out style of notice. See also Tierno v. Rite Aid Corp., 2008 U.S. Dist. LEXIS 58748, 2008 WL 3287035 (N.D. Cal. 2008). Although Plaintiffs initially offered, as a compromise, to utilize a third party and an opt-out system, that is no longer feasible, given the looming deadline for the class certification motion.
See Alvarez, 2010 U.S. Dist. LEXIS 99281, at 5-6.
Further, under Federal Rule of Civil Procedure 26(a)(1)(A) "[a] party must, without awaiting a discovery request, provide to the other parties... [t]he name and, if known, the address and telephone number of each individual likely to have discoverable in the information...." Moreover, subsection (b) of that Rule states a party "may obtain discovery regarding any non-privileged matter that is relevant to any parties claim or defense-including... The identity and location of persons who know any discoverable matter." Under the Federal Rules, the information plaintiff seeks is clearly discoverable. Moreover, there is no requirement for any notice provision that would limit this very basic discovery to which plaintiff is clearly entitled under our rules.
See Stone, 2010 U.S. Dist. LEXIS 99754, at 6-7.
On September 17, 2010, the First District (Division Four) changed the status of its opinion in California Correctional Peace Officers’ Association v. State of California from unpublished to published. The opinion affirmed the trial court’s determination that Labor Code Sections 226.7 and 512 relating to meal and rest periods do not apply to public employees. As reasoned by the Court, “[a] traditional rule of statutory construction is that, absent express words to the contrary, governmental agencies are not included within the general words of a statute.” See Slip Opinion, at 5. From this starting point, the Court rejected arguments that the Legislature’s failure to expressly exclude public entities in Section 226.7 and 512, while expressly excluding public entities in other Labor Code provisions was a sufficient basis to conclude that the Legislature intended such provisions to extend to public employees. See id., at 5-6.
On August 31, 2010, Eastern District Court Judge, Lawrence K. Karlton, certified off-the-clock and meal period claims of enrollment counselors in Adoma v. Univ. of Phoenix, 2010 U.S. Dist. LEXIS 96388 (E.D. Cal. Aug. 31, 2010). Plaintiffs’ off-the-clock and meal period claims derived from an alleged requirement that enrollment counselors be available at any time to take calls forwarded by defendant’s nationwide automated call-routing system, which plaintiffs claimed resulted in employees not being paid for time spent working through meal periods. The Court’s analysis in certifying such claims is noteworthy for the use of statistical sampling to overcome issues with predominance.
Plaintiffs argue that rather than relying on login/logout times, they can look at records of calls made in combination with the aux codes to determine what work an employee was actually doing and when.  Defendants respond that the aux codes are also unreliable. Some evidence, including depositions of the named plaintiffs, indicates that employees often fail to enter the appropriate aux code or change in aux code when the employee leaves for or returns from lunch, especially when the employee is in a meeting or engaged in another "aux" activity immediately prior to or after lunch. Although defendants further argue that employees inappropriately fail to distinguish between other aux codes, the "meal break" code is the only potentially non-compensable code, so ambiguity among the others is not relevant to the reconstruction of hours worked. Plaintiffs acknowledge that employees sometimes improperly record meal periods. Plaintiffs nonetheless argue that the question is whether an employee, or employees generally, "regularly forgot to log out for lunch." The court cannot agree. Plaintiffs' claim is for failure to pay for hours actually worked, and this is a fact specific inquiry. This is not to say that individual issues predominate: trends may establish, by a preponderance of evidence, that most days in which meal periods were not recorded, the employee in fact took no meal period. The issue, however, is whether the trend is evidence of individual days, not vice versa.
See Adoma, 2010 U.S. Dist. LEXIS 96388, at 15-16.
All potential class members used both the Avaya and MyHR systems. While defendants argue that the Avaya system provides an inadequate indicator of the number of hours employees actually worked, the types of arguments are common to all class members. Hilao appears to permit a representative inquiry to determine the magnitude of these effects, and at this stage, the court cannot distinguish Hilao. The remaining questions are also common. Notably, the question of whether the Avaya system gave defendants at least constructive knowledge of the employee overtime is a common question. Thus, it appears that common questions predominate. Although defendants argue that the named plaintiffs are not typical, the asserted atypicalities pertain to facts irrelevant to the above theories of liability and proof. Accordingly, plaintiffs have shown commonality, typicality, and predominance of common issues as to their state law off-the-clock claim.
See Adoma, 2010 U.S. Dist. LEXIS 96388, at 22-23.
Of course, the legal question regarding the scope of the employer's obligation is itself a common question of law. As to common questions of fact, plaintiffs contend that they will use the Avaya phone records system to demonstrate how often employees skipped meal periods. For the reasons stated above it appears that this predicate factual question is susceptible to common proof. Accordingly, common issues predominate.
See Adoma, 2010 U.S. Dist. LEXIS 96388, at 26-27.
On September 13, 2010, Southern District Judge Irma E. Gonzalez, issued an order granting (in part) plaintiffs’ motion for certification of multiple wage claims in Lopez v. G.A.T. Airline Ground Support, 2010 U.S. Dist. LEXIS 95636, 22-23 (S.D. Cal. Sept. 13, 2010). As discussed previously in a post here, the Court granted a plaintiff-side summary judgment as to two of the claims at issue (i.e. the vacation claim and the wage statement clam).
Defendants argue that Plaintiffs' proposed "Vacation/Uniform/Paycheck/Wages/Breach of Contract" Class requires individual inquiries of fact and the application of five different areas of law, such that the proposed class fails the predominance inquiry under Rule 23(b)(3). As explained below, however, each of the claims asserted by this proposed class are based upon company policies which were consistently applied to all of GAT's employees at the four designated airports. Although individual inquiries would be necessary to determine whether the class members were damaged by the policies, the Court believes most of these individual inquiries are manageable in light of the size of the class.
See Lopez v. G.A.T. Airline Ground Support, 2010 U.S. Dist. LEXIS 95636, at 22-23.
Vacation Pay Claim: “Plaintiffs challenge GAT's policy of denying accrued and vested vacation benefits to those employees who leave the company before their one year anniversary. The Court has already found that the policy required employees to forfeit vested vacation pay in violation of Labor Code § 227.3. … Where, as here, the claim asserted by a proposed class is based upon a consistent employer practice, class certification is usually appropriate.” See id., at 24.
Uniforms Claim: “Although Plaintiffs' uniform deposit/refund claim presents more questions of individual fact than their unpaid vacation benefits claim, it also stems from a consistently applied company-wide policy.” See id., at 23-24.
Paycheck Claim: “Plaintiffs' paycheck claim also stems from a consistently applied company-wide policy of issuing payroll checks to California employees from an out-of-state bank, without indicating on the face of the check where it could be cashed on demand and without discount. The Court has already determined this practice violated Labor Code § 212, regardless of whether any individual plaintiff suffered actual injury. If a putative class member incurred a fee or delay in cashing the check, that plaintiff may be entitled to damages. However, those individual issues do not predominate over the common issue of law regarding whether GAT's consistently applied policy was unlawful.” See id., at 24-25.
Section 203/Late Wage Claim: “Plaintiffs' claim that GAT failed to pay its employees all wages due within the required time upon separation of employment arises out of the same nucleus of facts as its Vacation claim and Uniform claim. Plaintiffs allege GAT's practice of not paying vested vacation time to those employees who separated from employment before their one-year anniversary, and GAT's practice of mailing deposit checks to separated employees, both result in wages not being paid when due. Both of these claims are predicated on common legal issues.” See id., at 25.
Unpaid Compelled “Shuttle” Time: “As to each of the three airports subject to this claim, Plaintiffs allege GAT has designated employee parking lots far from the work area and requires employees to park in those lots and take a shuttle bus to the site.… Based upon GAT's alleged policy of requiring employees to use these shuttles, there is a common question of law as to whether GAT is required to compensate its employees for that travel time. Although Defendants argue there are individual inquiries regarding whether employees could have utilized other methods of transportation or were required to park in the employee lots and travel to the site on the employee shuttle, these inquiries go directly to the common legal question of whether GAT should have compensated employees for their travel time.” See id., at 26-27.
Section 184.02 states in pertinent part: "Service Charges shall not be retained by the Hotel Employer but shall be paid in the entirety by the Hotel Employer to the Hotel Worker(s) performing services for the customers from whom the Service Charges are collected." (LAMC, § 184.02, subd. (A).) Service charges may not be paid to "supervisory or managerial employees," and must be paid to "Hotel Worker(s) equitably and according to the services that are or appear to be related to the description of the amounts given by the hotel to the customers." n6 (LAMC, § 184.02, subd. (A).) Service charges collected for banquets or catered meetings "shall be paid equally to the Hotel Workers who actually work the banquet or catered meeting"; service charges collected for room service "shall be paid to the Hotel Workers who actually deliver the food and beverage associated with the charge"; and service charges collected for porterage services "shall be paid to the Hotel Workers who actually carry the baggage associated with the charge." (LAMC, § 184.02, subd. (A)(1)-(3).) Gratuities and tips left by customers for a hotel worker are excluded.
In concluding that the Ordinance was not preempted, the Court reasoned that “a service charge by definition is not a gratuity” under Labor Code Section 350, and rejected outright the hotel employer’s counter argument that this finding would vest them with a property right to such funds under Section 351. See id., at 10-11 (“We do not read section 351 or any other provision in the Labor Code governing gratuities to address employers' property rights.”).

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