Tuesday, October 22, 2013

A Third Court of Appeal Finds the “Death-By-Declarations” Strategy To Defending Wage And Hour Class Actions To Be Reversible Error: Benton v. Telecom Network Specialists

On October 16, 2013, the Second District (Division 7) reversed an order denying certification of meal period, rest period and overtime claims in Benton v. Telecom Network Specialists, __ Cal. App. 4th __ (2013), joining what now appears to be a chorus of post-Brinker appellate decisions rejecting the strategic use of employee declarations to defeat certification.

In this case, certification was sought on behalf of a proposed class comprised of cell-phone tower technicians, most of whom were hired and paid by staffing companies that contracted with the defendant, based on the defendant’s purported failure to adopt policies authorizing and permitting breaks, and paying overtime.  Certification was denied based on the trial court’s reliance on employee declarations submitted by the employer focusing on varying “working conditions”, as opposed the employer’s lack of a policy authorizing and permitting off-duty meal/rest breaks, which was the theory of liability put forward by the plaintiff:
The trial court concluded that class certification was improper because the parties' evidence showed that some technicians' working conditions permitted them to take meal and rest breaks, while others did not. More specifically, the court found that while TNS's declarations showed that some technicians worked “on their own and at complete liberty to take breaks as they pleased, with no time or management pressure,” plaintiffs' declarations showed that other technicians worked under severe time constraints that precluded them from taking “proper” meal and rest periods.  According to the court, as a result of these diverse “working conditions,” there was no “single way to determine whether TNS is liable to the class for failure to provide breaks.”
Slip Opinion, at 26.

Relying on the recent decisions in Bradley v. Networkers Internat., LLC, 211 Cal. App. 4th 1129 (2012) and Faulkinbury v. Boyd & Associates, Inc., 216 Cal. App. 4th 220 (2013), the Court held the trial court’s failure to evaluate the theory of liability put forward by the plaintiff was reversible error, stating that “the trial court employed improper criteria [when it] … improperly focused on whether individualized inquiry would be required to determine which technicians had missed their meal and rest periods”:
As in Bradley and Faulkinbury, the trial court employed improper criteria in assessing whether plaintiffs' meal and rest break claims were amenable to class treatment.  Rather than focusing on whether plaintiffs' theory of liability—that TNS violated wage and hour requirements by failing to adopt a meal and rest period policy — was susceptible to common proof, the court improperly focused on whether individualized inquiry would be required to determine which technicians had missed their meal and rest periods. The written order (as well as statements made at the motion hearing) make clear that the trial court did not believe TNS would be liable upon a determination that its lack of a meal and rest policy violated applicable wage and hour requirements; rather, it concluded that TNS would become liable only upon a showing that a technician had missed breaks as a result of TNS's policies.
Slip Opinion, at 26-27.

As explained by the Court, the issue of whether employees took breaks is not only a “damages” issue [Slip Opinion, at 27], “under Brinker, the fact that individual inquiry might be necessary to determine whether individual employees were able to take breaks despite the defendant's allegedly unlawful policy (or unlawful lack of a policy) is not a proper basis for denying certification”:
We agree with Bradley and Faulkinbury's conclusion that, under Brinker, the fact that individual inquiry might be necessary to determine whether individual employees were able to take breaks despite the defendant's allegedly unlawful policy (or unlawful lack of a policy) is not a proper basis for denying certification. Rather, for purposes of certification, the proper inquiry is “whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment.” (Ghazaryan, 169 Cal.App.4th at p. 1531.) In this case, the plaintiffs' theory of recovery is that TNS violated wage and hour requirements by failing to adopt a policy authorizing and permitting meal and rest breaks to its technicians.
Slip Opinion, at 27-28.

Although the Court stopped short of ordering certification (due to unresolved issues concerning the defendant’s status as a joint-employer), the opinion is nonetheless a positive sign that our courts of appeal are finally appreciating that permitting an employer to reap a potential windfall for its alleged unlawful policies simply because it can trot out a handful of employees claiming they were not impacted rests squarely upon fallacious logic.

Thursday, October 3, 2013

Ninth Circuit Finds On-Duty Meal Break Exemption Appropriate for Class Adjudication: Abdullah v. U.S. Security Associates, Inc.

On September 27, 2013, the Ninth Circuit issued an opinion in Abdullah v. U.S. Sec. Assocs., __ F.3d __ (2013) [2013 U.S. App. LEXIS 19793], which upheld a district court order certifying a meal period claim on behalf of a class of security guards employed at approximately 700 California locations, almost always as the sole guard on duty for a given shift.  At issue was the employer’s “on-duty” meal policy, which authorized only “on-duty” meal periods (under the exception enumerated under subpart 11 of the Wage Order) because the “nature of the work” purportedly precluded a release of duty when guards worked alone.  The district court certified the plaintiff’s theory of liability challenging the lawfulness of this policy, which the employer asserted was error, claiming that adjudication of the “nature of the work” element purportedly “requires ‘an individualized, fact-specific analysis’ of each employee's work history, including ‘a day-by-day examination of an employee's job duties.’”  See Slip Opinion, at 10.  The Ninth Circuit disagreed – engaging in perhaps the most comprehensive appellate examination of the on-duty meal exemption to date – concluding that the “nature of the work” issue was not only common in light of the employer’s single-employee staffing policies, but the predominate issue to be adjudicated as to the class as a whole.

First, the Court began by examining the DLSE’s construction and application of the “nature of the work” exception contained in various DLSE opinion letters [Slip Opinion, at 12-17], which the Court concluded “make clear that ‘the showing necessary to establish the 'nature of the work' exception is a high one.’”  See id. at 21.  As explained by the Court, the “[DLSE] starts with the premise that the general requirement for an off-duty meal period is remedial in nature, and any exception to that general requirement must be narrowly construed, so as to avoid frustrating the remedial purpose of the regulation.”  See id. at 13.  Moreover, the DLSE has determined that “[t]he employer has the burden to ‘establish[] the facts that would justify an on-duty meal period”, which places “the onus is on the employer to show that the work involved prevents the employee from being relieved of duty.’”  See id. (emphasis in original).  Furthermore, the DLSE’s application of the exemption has been very limited, as the Court “characterize[d] the instances in which [the] DLSE has found that the ‘nature of the work’ exception applies into two categories: (1) where the work has some particular, external force that requires the employee to be on duty at all times, and (2) where the employee is the sole employee of a particular employer.”  See id., at 14.

Second, applying the forgoing standards to the evidence underpinning the plaintiff’s theory of liability, the Court rejected the defendant’s assertion that varying duties from location to location undermined the trial court’s finding of commonality under Rule 23(a)(2). 

As explained by the Court, for defendant’s challenge on such grounds to be meaningful defendant “had to demonstrate not just that its employees' duties varied, but that they varied to an extent that some posts would qualify for the ‘nature of the work’ exception, while others would not.”  See id., at 21.  The Court concluded that the defendant could never make this showing, as “USSA's sole explanation for why it requires on-duty meal periods is that its guards are staffed at single-guard locations.”  See id.  Specifically, because the defendant “does not argue that any particular posts would qualify for the ‘nature of the work’ exception absent the single-guard staffing model” [See id., at 21], “the only reason any of [the required duties] ‘prevent’ the employee from taking a meal period is because USSA has chosen to adopt a single-guard staffing model.”  See id., at 22.  This rendered the defendant’s justification “distinct from, for example, a truck driver who is required by federal regulation to attend to his vehicle at all time [], or a worker whose job involves the ‘continuous operation of machinery requiring monitoring[.]’”  See id., at 22 fn. 17.

Based thereon, the Court held that the district court did not abuse its discretion in concluding that Rule 23(a)(2) commonality was satisfied, as “the merits inquiry will turn on whether USSA is [legally] permitted to adopt a single-guard staffing model that does not allow for off-duty meal periods—namely, whether it can invoke a ‘nature of the work’ defense on a class-wide basis, where the need for on-duty meal periods results from its own staffing decisions.”  See id., at 23.

Significantly, the Court further concluded that the same analysis established the element of predominance [id, at 24 (“our analysis of the ‘nature of the work’ exception, supra, drives our conclusion that Rule 23(b)(3) is satisfied here.”)], as the fact the defendant’s “nature of the work” justification necessarily rested on its practice of single-employee staffing rendered irrelevant any argument that individual inquiry into each employee/jobsite was required:
[W]here, as here, "there are no relevant distinctions between the worksites," we agree with the district court that "the 'nature of the work' inquiry would be a common one," focused on the legality of a single-guard staffing model, "rather than a site-by-site" inquiry. Viewing the meal break sub-class' claims in this manner undercuts USSA's primary argument that individual issues will predominate due to its need to present an individual "nature of the work" defense for each plaintiff and each worksite.
Slip Opinion, at 25.

Importantly, while the Court “concluded that the ‘nature of the work’ defense can, and will, be applied on a class-wide basis in this case” [id. at 24], the Court made very clear that it was “offer[ing] no opinion on whether USSA's ‘single-guard’ staffing model will qualify for the ‘nature of the work’ exception” [id.], specifically noting that even the DLSE’s analysis on this point was indefinite, presenting an open legal question:
[T]he DLSE opinion letters do not provide a definite metric for deciding in what circumstances a lone employee may be permitted to take an on-duty meal break—for example, it is not clear if an employee must be (1) the sole employee on duty at a particular time, (2) the sole employee staffed at a particular location, or (3) the sole employee working for the employer in order to qualify for the "nature of the work" exception. Cf. DLSE Opinion Letter 2003.11.03 (concluding that the "nature of the work" exception would apply to an "isolated" gas station with "a single employee," but not if "another employee [is] employed at the worksite"); DLSE Opinion Letter 1994.09.28 (explaining that the "nature of the work" exception might apply where "the employee is the only person employed in the establishment and closing the business would work an undue hardship on the employer").
Slip Opinion, at 24 n. 18.

[Even then, it bears noting that the DLSE’s interpretations are not controlling.  See Mendiola v. CPS Security Solutions, Inc., 217 Cal. App. 4th 851, 863 (2013) (“Although DLSE opinion letters are due ‘consideration and respect,’ it is ultimately the judiciary's role to construe the language [of the applicable wage order].’”); Lazarin v. Superior Court, 188 Cal. App. 4th 1560, 1569 (2010) (“the court does not defer to the agency's interpretation of the law under which the regulation issued, but rather exercises its own independent judgment.”).  Regardless, resolution of the legal merit of predicating an on-duty meal on an employer’s decision to schedule employees to work alone is reserved for another day.]