Thursday, December 23, 2010

Second District Again Holds That Wage Order 7's “Suitable Seating” Provision is a Mandatory Labor Requirement Subjecting Employers to PAGA Penalties: Home Depot U.S.A., Inc. v. Superior Court

On December 22, 2010, the Second District, Division 4, joined its sister division’s conclusion in Bright v. 99¢ Only Stores, 189 Cal. App. 4th 1472 (2010) that Wage Order 7’s "suitable seating" requirement (8 CCR 11070(14)) imposes a mandatory labor requirement that is governed by the enhanced PAGA penalty ascribed by Labor Code section 2699(f). See Home Depot U.S.A., Inc. v. Superior Court, __ Cal. App. 4th __ (2010).

Relying largely on the analysis in Bright (discussed in a previous post contained here), the Court denied Home Depot’s petition for writ relief from the trial court’s order overruling demurrer to plaintiff’s PAGA claim (predicated on Home Depot’s alleged failure to provide seating to employees at cashier and counter areas):
On November 12, 2010, while Home Depot’s petition was pending before us, Division Five of this district held that the default remedy stated in section 2699, subdivision (f), encompasses violations of section 1198 based on the seating requirement in Wage Order 7-2001. (Bright v. 99¢ Only Stores (2010) 189 Cal.App.4th 1472 (Bright).) We agree with this conclusion. Subdivision (f) of section 2699 establishes civil penalties for violations of “all provisions of [the Labor Code] except those for which a civil penalty is specifically provided.” As we elaborate below, section 1198 meets this description: an employer’s failure to provide seating under Wage Order 7-2001 is unlawful under section 1198, but no civil penalty for such conduct is “specifically provided” in section 1198 or elsewhere. Accordingly, violations of this type are subject to the default remedy stated in section 2699, subdivision (f).
See Slip Opinion, at 7-18.

Wednesday, December 15, 2010

Northern District Holds CAFA Not Implicated in PAGA Representative Action: Sample v. Big Lots Stores, Inc.

On November 29, 2010, Northern District Court judge, Saundra Brown Armstrong, granted plaintiff’s motion to remand a PAGA action (predicated on alleged overtime, meal and rest period violations) on the grounds that a PAGA representative action does not trigger CAFA jurisdiction as a matter of law. See Sample v. Big Lots Stores, Inc., 2010 U.S. Dist. LEXIS 131130 (N.D. Cal. Nov. 29, 2010).

In evaluating the defendant’s removal under CAFA, the Court explained that “[t]he salient issue presented is whether a representative enforcement action under PAGA is a ‘class action’ subject to removal under CAFA.” See id., at 6. Relying largely on the California Supreme Court's decision in Arias v. Super. Ct., 46 Cal.4th 969 (2009) – which concluded that a PAGA action is distinct from a class action, and therefore, not subject to the requirements necessary maintain a class action – the Court held that it was not. See id., at 6-8. As reasoned by the Court, Arias’ explanation of PAGA as fundamentally a law enforcement action to recover penalties on behalf of the State removes PAGA claims from the reach of CAFA:
While it is true that Arias did not address CAFA per se, the California Supreme Court's decision nonetheless informs the Court's analysis in this case. C.f., Murtishaw v. Woodford, 255 F.3d 926, 964 (9th Cir. 2001) (noting that the California Supreme Court's interpretations of California law are binding on federal courts). On its face, CAFA applies only to state statutes or procedural rules that are "similar" to a federal class action brought under Rule 23. While Arias may not have directly involved CAFA, it clarifies that a PAGA claim is fundamentally distinct in both purpose and effect from a class action. Arias, 46 Cal.4th at 986. "Unlike a class action seeking damages or injunctive relief for injured employees, the purpose of PAGA is to incentivize private parties to recover civil penalties for the government that otherwise may not have been assessed and collected by overburdened state enforcement agencies." Ochoa-Hernandez v. Cjaders Foods, Inc., No. C 08-2073 MHP, 2010 U.S. Dist. LEXIS 32774, 2010 WL 1340777, at *4 (N.D. Cal. April 2, 2010) (citing Arias, 46 Cal.4th at 986) (Patel, J.). As such, Arias instructs that "PAGA claims are law enforcement actions, not class actions." Mendez v. Tween Brands, Inc., No. 2:10-CV-00072-MCE-DAD, 2010 U.S. Dist. LEXIS 66454, 2010 WL 2650571, 4 (E.D. Cal., July 1, 2010) (emphasis added).
See id., at 8-9.

Tuesday, December 7, 2010

8th Circuit’s Disapproval of Tobacco II Deemed “Unpersuasive” by Northern District Court: Greenwood v. Compucredit Corp.

On November 19, 2010, Northern District Judge Claudia Wilken declined to follow the 8th Circuit’s recent decision in Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023 (8th Cir. 2010) as a basis for decertification of a UCL deceptive advertising class.  See Greenwood v. Compucredit Corp., 2010 U.S. Dist. LEXIS 127719 (N.D. Cal. Nov. 19, 2010).  As explained by the Court, Avrit “disapproved of Tobacco II’s holding that absent class members were excused from establishing individual reliance on misrepresentations alleged in UCL claims.”  See id., at 7.  In no uncertain terms, the Court concluded that “[t]he decision in Avritt does not bind this Court, and it is unpersuasive.”  See id. As reasoned by the Court, Arvitt’s conclusion regarding absent class member standing was contrary to Ninth Circuit authority [see id.], and ultimately, the issue of absent class member reliance “is a question of the meaning of a California state law, on which the California Supreme Court's decision in Tobacco II is determinative.”  See id., at 15.

Discussion of the Court's certification order in Greenwood is contained in a previous post contained here.

Monday, December 6, 2010

U.S. Supreme Court To Review Propriety of Rule 23(b)(2) Certification of Claims Involving Monetary Relief in Dukes. v. Wal-Mart

On December 6, 2010, the U.S. Supreme Court granted Wal-Mart’s petition for a writ of certiorari in Dukes. v. Wal-Mart.   The petition challenges the Ninth Circuit's ruling earlier this year upholding grant of certification of the largest gender discrimination class action in U.S. history. As stated on the Supreme Court's website (here), the issue presented is limited to the following:
Petition GRANTED limited to Question I presented by the petition. In addition to Question I, the parties are directed to brief and argue the following question: "Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a)."
Question I, as stated in the Petition (here), is as follows:
I. Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.
A detailed discussion of the Ninth's Circuit's class certification analysis was dicussed previously here (Rule 23(a) analysis), and here (Rule 23 (b)(2)).