Fourth District Reverses Prior Meal/Rest Period Certification Opinion Based On Brinker, Orders “On-Duty” Break Theories To Be Certified On Behalf of Security Guard Class: Faulkinbury v. Boyd & Associates, Inc.

On May 10, 2013, the Fourth District Court of Appeal (Division Three) reversed its prior opinion in Faulkinbury v. Boyd & Associates, Inc., 185 Cal. App. 4th 1363 (2010), which had affirmed the trial court’s denial of certification of meal and rest break claims, premised largely on the employer’s use of on-duty meal agreements, on behalf of a proposed class of approximately 4000 security guards.  The opinion is the second among the bevy of “grant-and-hold” appellate decisions which the Fourth District has reversed based on the California Supreme Court decision in Brinker. [The first was Bradley v. Networkers Internat., LLC, 211 Cal.App.4th 1129 (2012), which is discussed here].

The Court’s subsequent Opinion – Faulkinbury v. Boyd & Associates, Inc, __ Cal.App.4th __ (2013) [2013 Cal. App. LEXIS 370] – reversed and remanded the trial court’s denial of certification, with directions to certify all of the theories of liability assert by the plaintiffs.  The Opinion contains significant analysis favorable to the plaintiff’s perspective on several issues, including the two issues discussed below.

First, the Court held that the trial court erred in denying certification of a meal break theory predicated upon the employer’s uniform use of a standardized “on-duty” meal agreement, reasoning that the employer’s “blanket use” of such an agreement was the very type of policy which Brinker deemed suitable for class-wide adjudication:

Liability turns on the issue whether Boyd's policy requiring all security guard employees to sign blanket waivers of off-duty meal breaks is lawful. That issue can be resolved on a classwide basis. "The theory of liability—that [the employer] has a uniform policy, and that that policy, measured against wage order requirements, allegedly violates the law—is by its nature a common question eminently suited for class treatment." (Brinker, supra, 53 Cal.4th at p. 1033.)

Indeed, by requiring blanket off-duty meal break waivers in advance from all security guard employees, regardless of the working conditions at a particular station, Boyd treated the off-duty meal break issue on a classwide basis.

 See Slip Opinion, at 14-15.

Material to this finding, the Court acknowledged that it had erred in its prior opinion by improperly conflating issues of individual class member “damages” with the overarching issue of whether the employer’s alleged unlawful policy gave rise to “liability.”  As the Court explained, Brinker mandates that determination of an employer's liability focus exclusively on whether the employer’s policy violates the wage and hour laws, whereas the issue of whether the employee was able to take a legally compliant break despite the employer’s policy goes to damages:

In Faulkinbury I, we concluded that even if Boyd's on-duty meal break policy was unlawful, Boyd would be liable only when it actually failed to provide a required off-duty meal break. Brinker leads us now to conclude Boyd would be liable upon a determination that Boyd's uniform on-duty meal break policy was unlawful. In Brinker, the Court of Appeal, in reversing class certification, had concluded that because rest breaks could be waived, any showing on a class basis that class members missed or took shortened rest breaks would not "'necessarily establish, without further individualized proof,'" that the employers had violated the Labor Code and the relevant IWC wage order. (Brinker, supra, 53 Cal.4th at p. 1033.) The Supreme Court stated that conclusion was error. An employer is required to permit and authorize the required rest breaks, and if it adopts a uniform policy that does not do so, then "it has violated the wage order and is liable." (Ibid.) In other words, the employer's liability arises by adopting a uniform policy that violates the wage and hour laws. Whether or not the employee was able to take the required break goes to damages, and "[t]he fact that individual [employees] may have different damages does not require denial of the class certification motion." (Jaimez, supra, 181 Cal.App.4th at p. 1301.)

 See Slip Opinion, at 15-16.

Second, the Court held that the trial court erred in denying certification of plaintiffs rest break theory, which, boiled to its essence, was based upon the employer’s lack of policy explaining how a rest break was to occur in the face of (1) “an express policy requiring all security guards to remain at their posts at all times” and (2) employee handbook policy “identifying ‘unacceptable behavior’ to include ‘[l]eaving work station without permission of supervisor or proper relief during absence.’”  See Slip Opinion, at 16-17.  As reasoned by the Court, because “[t]here does not appear to be an on-duty rest break exception as there is for meal breaks” and because “the rest period must be … duty-free’” [Slip Opinion, at 17-18], that “[m]easured against these legal standards, the lawfulness of Boyd's lack of rest break policy and requirement that all security guard employees remain at their posts can be determined on a classwide basis.” See Slip Opinion, at 18.

Moreover, like its meal break analysis above, the Court acknowledged that it had erred in its prior opinion by improperly conflating issues of individual class member “damages” with the overarching issue of whether the employer’s alleged unlawful policy gave rise to “liability”:

In opposition to the motion for class certification, Boyd submitted declarations from current employees. Some declarations stated the employee was relieved of duties in order to take off-duty rest breaks; other declarations stated breaks were taken during periods of inactivity; at least one declaration stated the employee determined, based on the circumstances, when to take a rest break; and another declaration stated the employee frequently took rest breaks at her post. While, in Faulkinbury I, we concluded this evidence established individual issues of liability, we are now convinced, in light of Brinker, this evidence at most establishes individual issues of damages, which would not preclude class certification. Boyd's liability, if any, would arise upon a finding that its uniform rest break policy, or lack of policy, was unlawful.

See Slip Opinion, at 18-19.

Northern District Certifies Unpaid Wage Claims on Behalf of Technicians Alleging Required Commute Time in Company-Issued Vehicles Was Not Compensated: Gonzales v. Simplexgrinnell LP

On February 12, 2013, Northern District Court Judge Richard Seeborg granted certification of unpaid wage claims in Gonzales v. Simplexgrinnell LP, 2013 U.S. Dist. LEXIS 31627 (N.D. Cal. Feb. 12, 2013) on behalf of a class comprised of “Field Technicians” which plaintiff alleged were not paid for commute time in company-issued vehicles. 

Specifically, plaintiff pursued certification on a “control-based” theory of liability, alleging that defendant maintained a standardized company policy “requiring its ‘Field Technicians’ to drive company-supplied vehicles to and from work, but then declining to compensate them for the time they spend driving those vehicles at the beginning and end of the work day.”  See id., at 1.  Defendant maintained that certification was improper under standards set forth in Dukes, claiming that “plaintiffs cannot show there is any uniform policy regarding travel time, and that therefore individual inquiries would be necessary to determine whether any class members might have viable claims for unpaid wages and overtime.”  See id., at 1-2.  The Court disagreed, concluding that plaintiff had framed a singular “rifle-shot” issue wherein Defendant’s liability would turn exclusively on proving or disproving the existence of the alleged policy:

Here, while SimplexGrinnell has pointed to substantial hurdles plaintiffs will face in showing there to be uniform policies and practices regarding FTs use of company cars and compensation for travel time, the issue is significantly different than that presented in Dukes. There are no questions here as to whether individual managers acted with improper motive, as intent is not an element of plaintiffs' claims. This is, at core, primarily a legal dispute as to whether California law requires compensation for travel time under these general facts.  If SimplexGrinnell is correct that plaintiffs will be unable to show the policies and practices they allege even exist, the claims will fail, on a class-wide basis.

Even if plaintiffs' characterization as to the uniformity of SimplexGrinnell's policies and practices is supported, the question will still remain as to whether California law requires compensation for travel time in such circumstances. In their briefing on this motion, the parties dispute whether Morillion v. Royal Packing Co., 22 Cal.4th 575, 94 Cal. Rptr. 2d 3, 995 P.2d 139 (2000) and Rutti v. LoJack Corp., Inc., 596 F.3d 1046 (9th Cir. 2010) on the one hand, or Overton v. Walt Disney Co., 136 Cal.App.4th 263, 38 Cal. Rptr. 3d 693 (2006) on the other hand, will govern the result on the merits of this case. In both Morillion and Rutti the facts were found to support a claim for travel time compensation; under the facts in Overton the employer was found not liable to pay such compensation. Overton and Rutti were both decided on summary judgment, Morillion on demurrer. None of the cases addressed class certification standards.[] The dispute as to whether the facts here are more like those in Morillion and Rutti, or more akin to the circumstances of Overton, is one that can be resolved on a class-basis.

See Gonzales, 2013 U.S. Dist. LEXIS 31627, at 7-8.

California Supreme Court Concludes That UCL Is Governed by Common Law Accrual Rules, Including Doctrine Of “Continuous Accrual”: Aryeh v. Canon Business Solutions

On January 24, 2013, the California Supreme Court issued its opinion in Aryeh v. Canon Business Solutions, Inc., __ Cal. 4th __ (2013) [2013 Cal. LEXIS 480], which – as previously discussed here – addressed the Second District’s finding that (1) the continuing violations doctrine does not apply to claims brought under the UCL, and (2) this required a UCL claim predicated on reoccurring conduct that commenced more than four years prior to the date of filing to be barred in its entirety.  The Court held that this was error, finding that “(1) the text and legislative history of the UCL leave UCL claims as subject to the common law rules of accrual as any other cause of action, and (2) continuous accrual principles prevent Aryeh's complaint from being dismissed at the demurrer stage on statute of limitations grounds.” See Slip Opinion, at 1, 12, 20.

With regard to the “continuous accrual” doctrine, the Court held that each breach of a continuing or recurring obligation must be treated as an independent claim, and as such, only those breaches falling outside of the UCL’s four year statute can generally be excluded based on statute-of-limitations grounds:

Generally speaking, continuous accrual applies whenever there is a continuing or recurring obligation: "When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period." (Hogar Dulce Hogar v. Community Development Commission (2003) 110 Cal.App.4th 1288, 1295.) Because each new breach of such an obligation provides all the elements of a claim-wrongdoing, harm, and causation (Pooshs v. Philip Morris USA, Inc., supra, 51 Cal.4th at p. 797)-each may be treated as an independently actionable wrong with its own time limit for recovery.

However, unlike the continuing violation doctrine, which renders an entire course of conduct actionable, the theory of continuous accrual supports recovery only for damages arising from those breaches falling within the limitations period. In Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, for example, an employee sued for sex discrimination in her wages. The unlawful practice had gone on for six years. While the applicable two-year statute of limitations did not bar suit, because the obligation not to discriminate in setting  wages was an ongoing one, we concluded it limited the employee to recovery only of those lost wages owed during the preceding two years. (Id. at pp. 103-107; see also Green v. Obledo, supra, 29 Cal.3d at p. 141 [recovery limited to payments that accrued within the limitations period preceding suit]; Dryden v. Board of Pension Commrs., supra, 6 Cal.2d at p. 582 [same].) "[T]he continuing accrual rule effectively limits the amount of retroactive relief a plaintiff or petitioner can obtain to the benefits or obligations which came due within the limitations period." (Hogar Dulce Hogar v. Community Development Commission, supra, 110 Cal.App.4th at p. 1296.) n7 Consequently, if applicable here, the theory would permit Aryeh to sue, but only for those discrete acts occurring within the four years immediately preceding the filing of his suit.

See Slip Opinion, at 15-16.

Based on this construction, the Court concluded that the Second District erred in finding that the plaintiff’s UCL claim was barred in its entirety because the complaint had admitted that the reoccurring conduct commenced outside of the four year statutory period of the UCL:

To determine whether the continuous accrual doctrine applies here, we look not to the claim's label as a UCL claim but to the nature of the obligation allegedly breached. [] Canon billed Aryeh on a recurring monthly basis. Accepting the truth of the complaint's allegations solely for purposes of resolving Canon's limitations defense on demurrer, those bills periodically included test copy charges that were unfair or fraudulent. By its nature, the duty Canon owed-the duty not to impose unfair charges in monthly bills-was a continuing one, susceptible to recurring breaches. Accordingly, each alleged breach must be treated as triggering a new statute of limitations. (Hogar Dulce Hogar v. Community Development Commission, supra, 110 Cal.App.4th at p. 1295 ["When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period."]; see also Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1388-1391 [treating each disputed monthly bill as triggering a new statute of limitations]; Tsemetzin v. Coast Federal Savings & Loan Assn., supra, 57 Cal.App.4th at p. 1344 [same].) Aryeh cannot recover alleged excess charges preceding the four-year limitations period, but is not foreclosed from seeking recovery for charges to the extent they fall within that period.  Because the complaint alleges excess charges within the four years preceding suit, it is not completely barred by the statute of limitations.

See Slip Opinion, at 17-18.

Fourth District Concludes Brinker Compels Certification of Meal/Rest Break Claims Predicated Upon Employer’s Complete Lack of Break Policy: Bradley v. Networkers International, LLC

On December 12, 2012, the Fourth District (Division 1) reversed its prior unpublished opinion in Bradley v. Networkers International, LLC (2009 Cal. App. Unpub. LEXIS 963), which had affirmed the trial court’s denial of certification of overtime and meal/ rest break claims on behalf of a proposed class of telecommunications installers classified as independent contractors.  The case was among the bevy of “grant-and-hold” appellate decisions which review was granted by the California Supreme Court pending resolution of Brinker.  The Court’s subsequent Opinion – Bradley v. Networkers International, LLC, __ Cal.App.4th __ (2012) – contains significant analysis favorable to the plaintiff’s perspective on several issues, including the two issues discussed below.

First, the Court acknowledged that it had improperly incorporated issues pertaining to “whether” and “why” individual employees may have missed breaks (a purely damages question) into its predominance analysis, rather than focusing on whether the plaintiff’s theory of liability was amenable to common adjudication.  See Slip Opinion, at 18-19 (“In analyzing the rest break claims, the Brinker court also expressly rejected this court's reasoning that evidence showing some employees took rest breaks and other employees were offered rest breaks but declined to take them made class certification inappropriate.”).  As explained by the Court, “Brinker instructs that in ruling on the predominance issue in a certification motion, the court must focus on the plaintiff's theory of recovery and assess the nature of the legal and factual disputes likely to be presented and determine whether individual or common issues predominate.”  See Slip Opinion, at 30 (citing Brinker, 53 Cal.4th at p. 1025.).  Citing to the Second District’s analysis in Jaimez v. Daiohs USA, Inc., 181 Cal.App.4th 1286 (2010), the Court concluded that it was error to deny certification of a theory challenging a uniform company policy/practice based on employee declarations submitted by the employer attesting that breaks were received:

Reversing the trial court's order, the Jaimez court found the trial court "misapplied" the law regarding class certification by "focusing on the potential conflicting issues of fact or law on an individual basis, rather than evaluating 'whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment.' " (Jaimez, supra, 181 Cal.App.4th at p. 1299.) The court stated that "had the trial court focused on the correct criteria, it would have necessarily found the [defendant's] declarations, while identifying individual effects of policies and practices that may well call for individual damages determinations, nevertheless confirm the predominance of common legal and factual issues that make the case more amenable to class treatment." (Id. at p. 1300.) The court further held "[t]he fact that individual [workers] may have different damages does not require denial of the class certification motion." (Id. at p. 1301.)

As in Jaimez, there were common factual and legal issues in this case regarding whether the employees were permitted to take meal and rest breaks and whether they were compensated for missed meal and rest breaks. The evidence also showed that the nature of Networkers' scheduling and work requirements made it difficult for employees to take required rest and meal breaks.  Focusing on the employees' allegations that the employer's companywide employment practices violated state law, the Jaimez court found the fact that the evidence may disclose that not all employees missed a meal or rest break does not mean that individual issues would predominate on the liability issues. (Jaimez, supra, 181 Cal.App.4th at pp. 1300-1301.) Applying the principles set forth in Brinker, we reach the same conclusion in this case.

Slip Opinion, at 32-33.

Second, the Court also acknowledged error in finding that a theory alleging an employer failed to maintain any meal and/or rest break policy was uncertifiable due to individualized issues of waiver.  As explained by the Court, Brinker made clear that an employer is legally foreclosed from asserting the defense of waiver unless and until it establishes that it complied with its minimal obligation to communicate its authorization for breaks to employees.  See Slip Opinion, at 30.  Based thereon, a theory alleging that the employer failed to meet its threshold obligation in the first instance necessarily presented a uniform issue suitable for class treatment even if some employees claimed that they always received their breaks:

On plaintiffs' class certification motion, it was undisputed that: (1) Networkers did not have a policy permitting or authorizing meal or rest breaks for the proposed class members; (2) Networkers did not know whether these workers took the required breaks; and (3) Networkers did not maintain any records reflecting when (or if) the workers took meal or rest breaks. The evidence also showed that after Networkers formally converted these workers to "employee" status, it did not implement any rest or meal break policy, or give any notification to the workers about their entitlement to take meal or rest breaks.

Under Brinker, plaintiffs' legal challenge to these uniform practices involve common factual and legal issues that are amenable to class treatment. "An employer is required to authorize and permit the amount of [rest and meal] break time[s] called for under the wage order for its industry. If it does not . . . it has violated the wage order and is liable." (Brinker, supra, 53 Cal.4th at p. 1033.) Claims alleging a "uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment." (Ibid.)

*****

Networkers argues, and we agreed in our initial opinion, that the issue of which employees had missed breaks and how many breaks were missed and whether those missed breaks were the result of Networkers' lack of a break policy was highly dependent on the testimony of each plaintiff, essentially requiring a mini-trial on each class member's case to determine the eligibility for recovery and the amount of damages to which each plaintiff would be entitled.

However, this argument conflicts with Brinker's clear holdings that for meal breaks, an employer has an obligation to relieve its employee of all duty, permit the employee to take an uninterrupted 30-minute break, and to not impede or discourage the employee from doing so. (Brinker, supra, 53 Cal.4th at p. 1040.) Similarly, an employer has an obligation to provide a rest break, and if the employer fails to do so, the employer cannot claim the employee waived the break. (Id. at p. 1033.) Under the logic of these holdings, when an employer has not authorized and not provided legally-required meal and/or rest breaks, the employer has violated the law and the fact that an employee may have actually taken a break or was able to eat food during the work day does not show that individual issues will predominate in the litigation.

Slip Opinion, at 28 and 30-31.

Second District Concludes Gentry Test Survives Concepcion ; Finds Class Action Waivers Unenforceable In Meal/Rest Period Actions: Franco v. Arakelian Enterprises

On November 26, 2012, the Second District (Division 1) issued an opinion in Franco v. Arakelian Enters., __ Cal.App.4th (20120) [2012 Cal. App. LEXIS 1207], revisiting its prior “class action waiver” opinion in Franco v. Athens Disposal Co., Inc., 171 Cal.App.4th 1277 (2009).  In Franco I, the Court held that the four-part test set forth in Gentry v. Superior Court, 42 Cal.4th 443 (2007) required invalidation of a class action waiver in the context of a rest and meal period action due to the exculpatory effect such application would have on unwaivable, low value statutory rights.  In this second installment, the Court considered whether Gentry (like Discover Bank) was overruled by the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011).  After engaging in a very thorough examination of U.S. Supreme Court precedent on the subject, the Court held that it was not.

Boiled to its essence, the Court held that “Gentry remains good law because, as required by Concepcion, it does not establish a categorical rule against class action waivers but, instead, sets forth several factors to be applied on a case-by-case basis to determine whether a class action waiver precludes employees from vindicating their statutory rights.”  Slip Opinion, at 3, 61.  Specifically, the Court explained that the Gentry test was rested upon the prohibition on of exculpatory agreements – a generally applicable contract defense to all contracts under CCP § 1668 (which is required to avoid FAA preemption under Concepcion) – which a court determines by applying the following test:

“[W]hen it is alleged that an employer has systematically denied proper overtime pay to a class of employees and a class action is requested notwithstanding an arbitration agreement that contains a class arbitration waiver, the trial court must consider … [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.  If it concludes, based on these factors, that a class . . . is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws for the employees alleged to be affected by the employer’s violations, it must invalidate the class arbitration waiver to ensure that these employees can vindicate [their] unwaivable rights . . . .’”

Slip Opinion, at 40-41 (quoting Gentry, 42 Cal.4th at 463).

Applying this test to the meal and rest period claims at issue, the Court’s analysis turned heavily on the fact that, subsequent to Franco I, the California Supreme Court held that attorney’s fees were not recoverable as a matter of statutory right in Kirby v. Immoos Fire Protection, Inc., 53 Cal.4th 1244 (2012).  Slip Opinion, at 41-42.  As explained by the Court, this fact rendered such claims distinct from the analysis set forth in Concepcion, as it created a “means” based barrier to litigating the claim (i.e. a barrier rooted in a lack of choice), as opposed to an “incentive” based barrier (i.e. a barrier rooted in choice).  Slip Opinion, at 58-59 (“preemption under Concepcion occurs if the arbitration process would make a prevailing claimant whole, but the amount in dispute is so small that a claimant does not think it worth the effort to pursue relief; preemption does not occur under Concepcion if a claimant lacks the means to pursue a claim in arbitration because the cost of pursuing relief on an individual basis — whether in arbitration or court — exceeds the potential recovery.”).  Based thereon, the Court held that such unwaivable claims were dependent the class action mechanism, and that a class action waiver would have an impermissible exculpatory effect:

We conclude that, as established by the attorney declarations, Franco cannot pursue relief for violations of his unwaivable statutory rights to rest and meal periods unless his case can be brought as a class action. This is the type of case where the plaintiff lacks the means to vindicate his unwaivable statutory rights absent a class action. (See Coneff v. AT&T Corp., supra, 673 F.3d at p. 1159 [applying Concepcion and distinguishing between plaintiffs who lack incentive to pursue claim and those who lack means to pursue claim].) "In contrast to the facts in Concepcion, [Franco] has demonstrated that [he] would not be able to obtain representation or vindicate [his] rights on an individual basis." (Sutherland v. Ernst & Young, LLP, supra, 847 F.Supp.2d at p. 536.) "Without the possibility of recovering costs and attorney's fees, an individual plaintiff would undoubtedly have an impossible time securing legal representation . . . given the minor amount an individual plaintiff would likely recover relative to the cost of prosecution." (Kristian v. Comcast Corp., supra, 446 F.3d at p. 52.) Where, as here, an arbitration agreement operates "as a prospective waiver of a party's right to pursue statutory remedies," it will be "condemn[ed] . . . as against public policy." (Mitsubishi Motors, supra, 473 U.S. at p. 637, fn. 19.) If a "prospective litigant [cannot] effectively . . . vindicate [his or her] statutory cause of action in the arbitral forum, the [FAA] will [not] serve . . . its remedial and deterrent function." (Id. at p. 637.)

Slip Opinion, at 60.

Second District Reverses Denial of Certification of “Independent Contractor” Issue On Behalf of Newspaper Carrier Class: Ayala v. Antelope Valley Newspapers

On October 17, 2012, the Second District (Division 4) published its class certification opinion in Ayala v. Antelope Valley Newspapers, __ Cal.App.4th __(2012) [2012 Cal. App. LEXIS 1083], which overturned  an order denying class certification of “a class of newspaper home delivery carriers … alleging that AVP improperly classified the carriers as independent contractors rather than employees....”  Slip Opinion, at 2.  The trial court denied certification based on its conclusion that “there were numerous variations in how the carriers performed their jobs, and therefore common issues did not predominate.”  See id.  The Court of Appeal disagreed with this assessment, and reversed.

As explained by the Court, the trial court erred in its finding because resolution of the overarching issue of “control” was governed by a standardized “form” agreement which set forth the general duties performed by all carriers that comprised the class:

We conclude, however, that those variations do not present individual issues that preclude class certification. Instead, because all of the carriers perform the same job under virtually identical contracts, those variations simply constitute common evidence that tends to show AVP's lack of control over certain aspects of the carriers' work. Similarly, the so-called “secondary factors” that must be considered when determining the primary issue in this case—whether AVP improperly classified the carriers as independent contractors rather than employees—also may be established for the most part through common proof, since almost all of those factors relate to the type of work involved, which is common to the class. Therefore, we hold the trial court erred in finding that the independent contractor-employee issue is not amenable to class treatment.

Slip Opinion, at 2.

Significantly, the Court further reasoned that the finding of individualized inquiry was improperly predicated upon evidence denying the existence of the policies underpinning the plaintiff’s theory of liability, which the Court concluded actually served to underscore the uniformity of the question of “control” as to the class as a whole:

In denying class certification, the trial court agreed with AVP that no commonality exists regarding AVP's right to control because individualized questions predominate as to who performs the services, when and where they perform the services, and how they perform the services. Many of the court's observations (and AVP's arguments), however, actually point to conflicts in the evidence regarding AVP's right to control rather than individualized questions. For example, the court noted that AVP's home delivery manager declared that AVP does not have a policy or practice to instruct or direct carriers on how to fold and deliver their papers, and some carriers testified that they were never so instructed, but two of the plaintiffs testified that AVP had rules on folding the papers and how to deliver them. Similarly, the court noted that the home delivery manager and some carriers testified that AVP does not require carriers to bag or rubber band the newspapers, but one of the plaintiffs testified that carriers were required to bag them.

Simply put, much of AVP's evidence, upon which the trial court relied, merely contradicts plaintiffs' allegations that AVP had policies or requirements about how carriers must do their jobs. The parties do not argue that some carriers operating under the form agreements are employees while others are not. Both sides argue that AVP has policies that apply to all carriers. The difference between the parties is the content of those policies. Plaintiffs argue that the policies are ones that control the way in which the carriers accomplish their work; AVP argues the policies impose certain requirements about the result of the work but allow the carriers to determine manner and means used to accomplish that result. While there may be conflicts in the evidence regarding whether the policies plaintiffs assert exist, the issue itself is common to the class. Similarly, whether the policies that exist are ones that merely control the result, rather than control the manner and means used to accomplish that result, is an issue that is common to the class.

Slip Opinion, at 17-18.

Thus, the Court’s opinion provides additional authority for the proposition that certification cannot be avoided by an employer submitting “merits-based” evidence seeking to attack its own standardized written policies that form the basis of a plaintiff’s theory of liability.

Second District Finds Additional Exception to Death Knell Doctrine, Inches California Law Closer to Federal Rule Permitting Successive Certification Motions: Aleman v. Airtouch Cellular

On September 20, 2012, the Second District Court of Appeal (Division 2) dismissed an appeal of a trial court order denying class certification in Aleman v. Airtouch Cellular, __ Cal.App.4th __;  2012 Cal. App. LEXIS 993 (2012), concluding that appeal was premature because the order made clear that the denial was “without prejudice”, entitling plaintiffs to bring a second motion for certification:

All named plaintiffs collectively moved for class certification. They now argue that the order denying their motion constituted a death knell. We disagree. The death knell has not yet sounded. The remaining plaintiffs' ability to pursue class certification has not been terminated. Because the denial order was without prejudice, the remaining plaintiffs are free to move for class certification again. (See Chambreau v. Coughlan (1968) 263 Cal.App.2d 712, 718 [] [“The term ‘without prejudice,’ in its general adaptation, means that there is no decision of the controversy on its merits, and leaves the whole subject in litigation as much open to another application as if no suit had ever been brought.”].) The advisability of following such a course of action is left for plaintiffs and their lawyers to decide. 

Slip Opinion, at 29-31 (2012 Cal. App. LEXIS 993, 53-55).

The Court’s holding not only provides an additional exception to the “death knell” doctrine, previously discussed here and here, it also seemingly provides an exception to the “rule against successive certification motions”,  enunciated over 20 years ago in Stephen v. Enterprise Rent-A-Car, 235 Cal. App. 3d 806 (1991).  As explained in Stephen, California procedural law – unlike the Federal Rules – required an immediate appeal upon denial of certification specifically because successive motions are not permitted:

It is only in the absence of relevant state precedent that courts turn to federal law and rule 23 for guidance. []  State and federal courts parted company on the appealability issue 24 years ago in Daar v. Yellow Cab Co., supra, 67 Cal.2d 695. It follows from that split and the cases discussed above that state and federal law diverge on allowing successive motions to certify. CA(5)(5)  Like federal policy, state policy favors prompt and early class determinations. ( Massey v. Bank of America (1976) 56 Cal. App. 3d 29, 32 [] [dismissal after a nearly five-year delay].) However, to follow federal policy on renewed motions after a death-knell denial is impractical, and state policy can be administered with enough flexibility to avoid inequity. Plaintiffs lacking adequate evidence on class issues may reasonably defer moving to certify or seek a continuance to gather evidence, and trial courts should avoid ruling on the merits until satisfied that a plaintiff has had a fair opportunity to present the case for certification. Also, the right of appeal and consequent limitation on bringing renewal motions applies only to death-knell rulings, where a plaintiff has a right to immediate appellate review to correct error. Appellate courts will be sensitive to claimed abuses of discretion when reviewing such orders. 

See Stephen, 235 Cal. App. 3d at 814.

Although the Aleman Court did not discuss the rule annunciated in Stephen in its opinion, Aleman’s analysis does not necessarily conflict with Stephen’s analysis.  However, due to Stephen’s sweeping discussion of the policy underpinning the basis for the rule, I likely would err on the side of caution by filing an immediate appeal if there were any doubt as to whether the trial court actually intended to entertain a second certification motion.