Friday, January 20, 2012

First District Dismisses Appeal Challenging Trial Court’s Refusal to Compel Arbitration of “Individual” PAGA Claims: Reyes v. Macy’s, Inc.

On January 19, 2012, the First District (Division 3) published its opinion in Reyes v. Macy’s, Inc., __ Cal.App.4th __ (2012), which dismissed Macy’s appeal “from an order granting Macy’s motion to compel arbitration of plaintiff’s individual claims but denying the request to dismiss class allegations and plaintiff’s claim under the Labor Code Private Attorneys General Act of 2004 (PAGA)….” See Slip Opinion, at 1. As reasoned by the Court, the trial court's ruling on Macy's motion to dismiss the class allegations and the PAGA claim was a non-appealable interlocutory order, and could not be construed as a denial of the motion to compel arbitration insofar as Macy’s did not seek to compel arbitration of the class allegations and the PAGA claim. See Slip Opinion, at 2-3.

In reaching its holding, the Court expressly rejected Macy’s argument that the trial court’s failure to order arbitration of plaintiff’s individual PAGA claim affected a denial, in part, of the motion to compel arbitration. Relying on the analysis of Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011) – previously discussed here and here – and Arias v. Superior Court, 46 Cal.4th 969 (2009), the Court reasoned that a “plaintiff may not and does not bring the PAGA claim as an individual claim, but ‘as the proxy or agent of the state’s labor law enforcement agencies.” See Slip Opinion, at 3. As further explained by the Court, a PAGA action can only be pursued as a representative claim. See id., at 4 (“The PAGA statute does not enable a single aggrieved employee to litigate his or her claims, but requires an aggrieved employee ‘on behalf of herself or himself and other current or former employees to enforce violations of the Labor Code by their employers.’”) (emphasis in original). Based thereon, the Court expressly rejected the conclusions of three Federal District Court opinions finding that PAGA claims were “personal” claims which an individual employee could agree were arbitrable in the first instance:
Macy’s argues that Machado was incorrectly decided, relying on three district court cases for the proposition that PAGA permits plaintiffs to maintain individual claims. (See Grabowski v. Robinson (S.D.Cal. Sept. 19, 2011, No. 10cv1658-WQH-MDD) 2011 U.S.Dist. Lexis 105680; Valle v. Lowe’s HIW, Inc. (N.D.Cal. Aug. 22, 2011[]) 2011 U.S.Dist. Lexis 93639; Quevedo v. Macy’s, Inc. (C.D.Cal., June 16, 2011[]) 2011 U.S.Dist. Lexis 83046.) None of these cases, however, addresses PAGA’s statutory language and purpose. They rely on AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [179 L.Ed.2d 742, 131 S.Ct. 1740], which does not address the question of whether a PAGA claim may be asserted individually. The court in Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th 489 pointed out that Quevedo v. Macy’s, Inc. failed to mention Machado, although Machado explicitly concluded that a PAGA claim cannot be brought on an individual basis. (197 Cal.App.4th at p. 503, fn. 8.)
See Slip Opinion, at 4 n. 3

Wednesday, January 18, 2012

Second District Creates Division in Authority on Whether Denial of Certification May Have Collateral Estoppel Effect: Bridgeford v. Pacific Health Corp.

On January 18, 2012, the Second District (Division Three) issued an opinion “holding that the unnamed putative members of a class that was never certified cannot be bound by collateral estoppel.” See Bridgeford v. Pacific Health Corp., __ Cal.App.4th __ (2012).  The Court’s opinion adopts the U.S. Supreme Court’s analysis in Smith v. Bayer Corporation, 131 S.Ct. 2368 (2011), which I discussed previously in a post found here.  As the Bridgeford Court’s opinion acknowledges, the decision creates a split among various Courts of Appeal on this issue (including within the Second District itself):
California courts have held or suggested that the denial of class certification can establish collateral estoppel against absent putative class members on issues that were actually decided in connection with the denial. (Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1236; Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1202-1203 (Bufil); see also Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1510-1513 & fn. 8 (Johnson) [assuming the point while expressing reservations].) Alvarez stated that the principles of collateral estoppel ensure that the absent putative class members‟ interests were adequately represented in the prior proceeding. (Alvarez, supra, at p. 1236.) We conclude to the contrary that if no class was certified by the court in the prior proceeding, the interests of absent putative class members were not represented in the prior proceeding and the requirements for collateral estoppel cannot be established….
See Slip Opinion, at 11.

Monday, January 2, 2012

California Supreme Court Rejects Finding That Insurance Claims Adjusters Are Non-Exempt As Matter of Law: Harris v. Superior Court

On December 29, 2011, the California Supreme Court overturned a court of appeal opinion finding that insurance claims adjusters are categorically “non-exempt” employees in Harris v. Superior Court, __ Cal.4th __ (2011).  The Supreme Court found that the court of appeal’s conclusion that work “not carried on at the level of policy or general operations” is not administrative, thereby falling outside of Wage Order 4’s administrative exemption as a matter of law, failed to consider the facts under all relevant components of FLSA regulations incorporated by reference in 8 CCR 11040(2)(a)(f).  As explained by the Court “[t]he essence of our holding is that, in resolving whether work qualifies as administrative, courts must consider the particular facts before them and apply the language of the statutes and wage orders at issue.”  Slip Opinion, at 22.  The judgment of the court of appeal – which had reversed the trial court’s denial of a plaintiff-filed MSJ – was reversed with instructions to apply the correct legal standard.  The Court expressed no opinions on the propriety of certification, declining the defendant’s request to decertify the class.  Id., at fn. 9.