Monday, February 28, 2011

Second District Narrows Applicability of Labor Code Section 218.5 Fee Shifting Provision: United Parcel Service Wage and Hour Cases

On February 24, 2011, the Second District (Division 8) concluded that the bi-lateral fee shifting provision of Section 218.5 did not apply to various wage related causes of action, including meal and rest period claims. See United Parcel Service Wage and Hour Cases, __ Cal.App.4th __ (2011).

With regard to meal and rest periods, the Court rejected the employer’s argument that the California Supreme Court’s analysis in Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094 (2007) establishes that an action for recovery of the statutory remedies for missed meal and rest breaks is a claim for “nonpayment of wages” within the meaning of Labor Code section 218.5. As reasoned by the Court, “nothing in the Murphy opinion suggests the court intended its decision to permit a prevailing employer-defendant in a section 226.7 action to recover attorney fees from the unsuccessful employee” and that “[t]o so find would undermine the Supreme Court's heavy reliance in its analysis on the principle that statutes governing working conditions must be liberally construed in favor of employees.” Slip Opinion, at 12. Rather, citing to the analysis in Earley v. Superior Court, 79 Cal. App. 4th 1420 (2000), the Court concluded that Section 226.7 was properly covered by the unilateral fee shifting provisions of Section 1194 because, like overtime compensation, the obligation to pay the Section 226.7 premium wage derives from statute. See id., at 12-13. Significantly, such reasoning is a complete refutation of the court's analysis in Kirby v. Immoos Fire Protection, 186 Cal. App. 4th 1361 (2010), which as previously discussed here, is pending review before the California Supreme Court.

In addition to the foregoing, the UPS Court also deemed Section 218.5 inapplicable to (1) wage statement claims, due to the fact Labor Code Section 226(e) itself contains a unilateral fee shifting provision, (2) conversion, based on the finding that Section 218.5 does not apply to common law torts, and (3) the UCL, based on existing authority concluding that the UCL does not incorporate fee provisions of the underlying predicate statute.  See id., at 10-11.

Thursday, February 24, 2011

California Supreme Court Concludes an Employee’s Statutory Right to a Berman Hearing Is Unwaivable: Sonic-Calabasas A, Inc. v. Moreno

On February 24, 2011, the California Supreme Court issued its opinion in Sonic-Calabasas A, Inc. v. Moreno, __ Cal.4th __ (2011), concluding that an employee’s statutory right to a Berman Hearing before the Labor Comissioner may not be waived by an arbitration agreement, and that this rule is not preempted by the FAA.

Fourth District Holds That Affirmance of Order Denying Certification on Appeal Bars Subsequent Efforts to Certify Class: Safaie v. Jacuzzi Whirlpool Bath, Inc.

On February 22, 2011, the Fourth District (Division One) published its opinion in Safaie v. Jacuzzi Whirlpool Bath, Inc., __ Cal. App. 4th __(2011), holding that a trial court’s order denying certification, once affirmed on appeal, bars subsequent efforts by the plaintiff to certify a class. Importantly, the Court’s decision makes clear that once remittituer is issued the trial court no longer has any discretion to revisit the issue, even if there is a subsequent change in the law or discovery of new facts. Slip Opinion, at 11-13; 15-17.

In making this ruling, the Court highlighted two distinctions that are important to note.

First, the bar can only operate if the trial court denies certification of all claims alleged by plaintiff. Slip Opinion, at 14. Citing the procedural posture of Tobacco II as an example, the Court reasoned that “[b]ecause the first order denying class certification [in that case] pertained to only one of the claims alleged in the complaint, it did not dispose of all claims between the parties, and thus was not a final, binding appealable order.” See id. “Thus, the plaintiff was free to seek certification on other causes of action alleged in the newly amended complaint.” See id. This distinction sanctions successive certification motions, so long as they are made on a claim by claim basis. Moreover, insofar as a "death knell" order cannot result under this procedural scenario, a plaintiff presumably would not be precluded from seeking reconsideration of the prior denial itself if armed with new facts or new law.  Simply put, as the Court's analysis on this point affords plaintiff counsel a degree of control over when the trial court would be permitted to make a "death knell" certification ruling, plaintiff counsel desiring flexibility to seek reconsideration of a certification ruling (and avoid the Court's ultimate holding) may consider following the procedural path described by the Court when moving for certification. 

Second, the Court concluded that this rule did not preclude successive motions challenging an order certifying a class, in large part, because “when a court certifies a class, the order is not final and cannot be appealed because the action continues between the parties.” See id., at 13. Based on this fact, “‘the rule against successive motions does not … apply to [class action] defendants, who may make any number of motions to decertify” based on new facts elicited during discovery.’” See id., at 14. Of course, as previously discussed in a post located here, any subsequent decertification motion must actually put forward new facts or new law, as a trial court abuses its discretion by decertifying a class absent a material change in the law or the evidence. See Weinstat v. Dentsply International, Inc., 180 Cal. App. 4th 1213, 1226 (2010).

Thursday, February 17, 2011

Second District (Division 8) Issues Two New Opinions Involving Meal and Rest Periods: UPS v. Super. Ct. & Tien v. Tenet Healthcare

On February 16, 2011, the Second District Court of Appeal, Division 8, issued two new opinions involving meal and rest period claims. The first, UPS v. Super. Ct., __ Cal. App. 4th __ (2011), considered whether Labor Code Section 226.7 “authorizes one premium payment per work day regardless of the number or type of break periods that were not provided, or two premium payments per work day – one for failure to provide a meal period and another for failure to provide a rest period.” Slip Opinion, at 1. According to the Court, Section 226.7 permits employees to recover the latter:
In short, we conclude, based upon the wording of section 226.7, subdivision (b), the legislative and administrative history of the statute and IWC wage orders, the public policy behind the statute and wage orders, and also the principle that we are to construe section 266.7 broadly in favor of protecting employees, that the employees in this case may recover up to two additional hours of pay on a single work day for meal period and rest period violations – one for failure to provide a meal period and another for failure to provide a rest period.
Slip Opinion, at 12.

The second opinion, Tien v. Tenet Healthcare, __ Cal. App. 4th (2011), upheld a trial court’s order denying certification of the plaintiff’s meal and rest period claims. The Court opinion essentially tracks the same analysis of its previous opinion in Hernandez v. Chipotle Mexican Grill, Inc., 189 Cal.App.4th 751 (2010), which was recently depublished by the California Supreme Court’s January 26, 2011 grant-and-hold order pending its decision in Brinker.

The Tien opinion does include a somewhat unique wrinkle – it affirmatively concludes that “an employer who frustrates its employees’ exercising of their right to meal periods violates the employer’s obligation to ‘provide’ meal periods” in the first instance:
“The California Supreme Court has described the interest protected by meal break provisions [to mean] that ‘[a]n employee forced to forgo his or her meal period . . . has been deprived of the right to be free of the employer’s control during the meal period.’ ” (Brown v. Federal Express Corp. (C.D.Cal. 2008) 249 F.R.D. 580, 585 (Brown), quoting Murphy v. Kenneth Cole Prods., Inc. (2007) 40 Cal.4th 1094, 1104.) Consistent with the purpose of requiring employers to provide employees with meal breaks, the Labor Code uses mandatory language (e.g., Lab. Code, § 226.7, subd. (a) [“No employer shall require any employee to work during any meal or rest period . . . .”]) precluding employers from pressuring employees to skip breaks, declining to schedule breaks, or establishing a work environment that discourages employees from taking their breaks. A corollary to an employer’s obligation to ensure that its employees are free from its control for 30 minutes is the employer must not compel the employees to do any particular thing during that time – including, if employees so choose, not taking their meals. (Brown, supra, at p. 585.)
Slip Opinion, at 13.

While there are numerous cases which have made this distinction, the highlighted language perhaps goes the furthest of any opinion which I am aware in defining what I will refer to as the "barrier theory" (which, as the Tien Court explains, is distinct from the issue before the California Supreme Court in Brinker). At any rate, as the Court's analysis upholding the denial of certification largely mirrors Brinker, Brinkley and Chipotle, it is likely that this Opinion's shelf-life will be a short one.

Thursday, February 10, 2011

California Supreme Court Holds that Requesting and Recording Consumer Zip Code During Credit Card Transactions Violates Song-Beverly Credit Card Act: Pineda v. Williams-Sonoma Stores, Inc.

On February 10, 2011, the California Supreme Court issued its opinion in Pineda v. Williams-Sonoma Stores, Inc., __ Cal.4th__ (2011), holding that a retailer’s practice of requesting and recording a consumer’s zip code during a credit card transaction violates Cal. Civ. Code, § 1747.08(a)(2). That provision states in relevant part that “no person … that accepts credit cards for the transaction of business shall …[r]equest, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the person … accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.” Pursuant to Section 1747.08, subpart (e), an action may be brought “by the person paying with a credit card” to recover civil penalties “not to exceed two hundred fifty dollars ($250) for the first violation and one thousand dollars ($1,000) for each subsequent violation….”

As held by the Court, “requesting and recording a cardholder’s ZIP code, without more, violates the Credit Card Act.” Slip Opinion, at 2. The Court rejected the argument that such an interpretation rendered the statute “unconstitutionally oppressive because it would result in penalties ‘approach[ing] confiscation of [defendant’s] entire business . . . .’” See id., at 14. As the Court reasoned, the penalty provisions of Section 1747.08 (e) were not “fixed” amounts, but rather, maximum amounts which could be imposed at the trial court’s discretion. See id.

This opinion will likely have a significant impact, as the collection of zip code information when paying by credit card is a fairly widespread practice throughout California.