a California-centric collection of comments and resources about complex litigation and class action practice
Episode 18 is here, discussing how Epic (and its utter termination with extreme prejudice of the NLRA theory that class waivers impair concerted employee activity) will drive PAGA litigation. And then we turn to Huff, which makes that prospect of more PAGA litigation significantly more daunting for employers.
Maybe this podcast thing will catch on one day...
American Pipe, we had some good time. Sniff. But now you're dead to me. Pack your stuff and get out. The Unites States Supreme Court, in China Agritech, Inc. v. Resh, et al. (June 11, 2018), answered a question that, as far as I have observed, wasn't being asked with any stridency for years. That question was whether American Pipe equitable tolling applied to a subsequent class action (as opposed to individual action) when the plaintiff bringing the second action (a putative class member from the first) would have a time-barred claim absent the equitable tolling.
Top-filers, start your engines!
Our Class Re-Action podcast crossed the 5,000 unique downloads mark earlier this month! Sure, it's an arbitrary number. I could get worked up about 4,500 or 5,123, but 5,000 is nice, big round number. It's actually pretty awesome, since I had no idea when I decided to try something whether anyone would listen. All I wanted to do was present information in a different way than the wave of blogging that surged for a while back when this blog started. I was concerned that the signal to noise ratio would become an issue if everyone had a blog.
This is my roundabout way of saying thank you for listening. Oh, and our next show is scheduled to record on June 10, 2018. There should be plenty to talk about, so stay tuned...
See what I did there? Shine. Spotlight. Nevermind. Today's wage and hour class action opinion comes to us courtesy of Shine v. Williams-Sonoma, Inc. (May 29, 2018). In Shine, the Court of Appeal (Second Appellate District, Division Four) reviewed de novo whether a demurrer to a reporting time pay complaint was properly sustained on res judicata grounds. Multiple bases were argued in support of the Trial Court's Order, but the Court found that the res judicata basis was sufficient alone, and did not require analysis of the other arguments. As to res judicata, the Court said:
The Morales complaint sought recovery of unpaid wages on behalf of class members employed by Williams-Sonoma since June 24, 2009. The allegations in that case included the claims of failure to provide meal and rest periods, overtime and minimum wages, timely wages, and final paychecks to the Morales class plaintiffs.
In the present action, Mr. Shine seeks reporting-time pay for on-call shifts that were canceled in early 2013, within the period covered by the Morales settlement agreement. Because reporting-time pay is a form of wages, a claim for reporting-time pay could have been raised in the Morales action. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1111–1112 [reporting-time pay, like split-shift and overtime pay, is a form of wages even though it serves a dual purpose of shaping employer behavior].) The fact that no claim for reporting-time pay was alleged in Morales does not alter our determination that the same primary right, to seek payment of wages due, was involved in both Morales and this case. (See Boeken v. Phillip Morris USA, Inc. (2010) 48 Cal.4th 788, 798–799.)
Slip op., at 7. The Court also discussed Villacres, but, compared to Villacres, the outcome seems more obvious here when the language of the prior release is considered:
Like the Augustus release, the Bonilla settlement agreement released “all claims, demands, rights, liabilities and causes of action that were or could have been asserted (whether in tort, contract or otherwise) for violation of the Fair Labor Standards Act, the California Labor Code, the California Business and Professions Code, the Private Attorneys General Act (‘PAGA’), the applicable Industrial Welfare Commission Orders or any similar state or federal law, whether for economic damages, non-economic damages, liquidated damages, punitive damages, restitution, penalties, other monies, or other relief based on any facts, transactions, events, policies, occurrences, acts, disclosures, statements, omissions or failures to act pled in the Complaint, which are or could be the basis of claims that Defendant failed to pay wages or overtime, failed to provide meal or rest breaks or compensation in lieu thereof, failed to provide timely wages and final paychecks, committed record-keeping violations, provided noncompliant wage statements, failed to reimburse for business expenses, or engaged in unfair business practices at any time on or before the date of Preliminary Approval.” (Italics added.)
Slip op., at 12 (boldface emphasis added).
Separate from all of this, I have a concern about the Villacres holding that allows any enumerated list of released items to be treated as a "general release." This seems to muddy the waters as to what constitutes a general release and what constitutes a specific release. As it stands, this seems to re-define "specific release" to mean a release with an expressly enumerated scope and a "general release" to mean any release with coverage broader than what is expressly enumerated, particularly where identified by the phrase "all claims." So you can have a "general" release of "all" wage payment claims. Perhaps we should call "general" releases "total coverage" releases and all other releases "specific" or "itemized" coverage releases.
Respondents and Defendants were successfully represented by Melanie L. Bostwick, Randall C. Smith, Jessica R. Perry, and Allison Riechert Giese of Orrick, Herrington & Sutcliffe
I haven't posted anything yet about Epiq Systems Corp. v. Lewis (what's there to say that hasn't been kicking around for years in various ways), but certainly that decision motivates a renewed focus on PAGA claims in California. And would you look at that?! Here's a new decision about PAGA. In Huff v. Securitas Security Services USA, Inc., the Court of Appeal (Sixth Appellate District) examined the following question:
This case presents the question of whether a plaintiff who brings a representative action under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698, et seq.) may seek penalties not only for the Labor Code violation that affected him or her, but also for different violations that affected other employees.
Slip op., at 1. So at this point, I must admit that my assumption for about 5 seconds was that the answer would be a big "No, they may not." To my surprise, the Court held to the contrary:
As we will explain, we conclude that PAGA allows an “aggrieved employee” –– a person affected by at least one Labor Code violation committed by an employer –– to pursue penalties for all the Labor Code violations committed by that employer.
Slip op., at 1. That was unexpected.
The Court's primary analysis is well summarized by this passage:
When we interpret a statute our primary task is to ascertain the Legislature’s intent and effectuate the purpose of the law. We look first to the words of the statute itself as the most direct indicator of what the Legislature intended. (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.) PAGA provides in section 2699, subdivision (a) that “any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.” The statute then specifically defines “aggrieved employee” in section 2699, subdivision (c): “ ‘aggrieved employee’ means any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.”
As the trial court did, we interpret those provisions to mean that any Labor Code penalties recoverable by state authorities may be recovered in a PAGA action by a person who was employed by the alleged violator and affected by at least one of the violations alleged in the complaint. Indeed, we cannot readily derive any meaning other than that from the plain statutory language, and Securitas does not offer a reasonable alternative for what those provisions mean when read together.
Slip op., at 5-6. After this, the Court spent a lot of time rejecting arguments that it should look to the legislative history (the Court held that when a statute is clear, it is not to consider legislative history) and other arguments about absurd results. It rejected all of those arguments.
Of course, in good Apple presentation fashion, this case has a couple of items that qualify as a "one more thing" moment. One of those moments included the following:
Section 2699, subdivision (f) creates a civil penalty for any Labor Code violation for which a penalty is not provided elsewhere in the law. The penalties under section 2699, subdivision (f) are “one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.” Securitas posits that using the definition of aggrieved employees in section 2699, subdivision (c) to calculate those penalties would allow over-counting in some cases to include weeks worked by employees affected by just one of the Labor Code violations alleged in the complaint, even if it is not the one giving rise to the penalties imposed by section 2699, subdivision (f). To the contrary, it is entirely possible to harmonize the two provisions. The method of calculation under section 2699, subdivision (f) imposes penalties based on the total number of employees that have been affected by an employer’s Labor Code violations. Though Securitas calls that “over-counting,” it is not impermissible for the Legislature to impose penalties measured in that way. Even if the method of calculation provided for by section 2699, subdivision (f) is something of a blunt instrument, it is not our role to rewrite the statute. (People v. Garcia (1999) 21 Cal.4th 1, 14.) Separation of powers principles require us to interpret the law as written, “and leave for the People and the Legislature the task of revising it as they deem wise.” (Id. at p. 15.) We also note that PAGA gives a court broad discretion to “award a lesser amount than the maximum civil penalty amount … if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” (§ 2699, subd. (e)(2).) So the statute incorporates a remedy if the penalty calculation is unfair or arbitrary as applied to a particular employer.
Slip op., at 12-13. Let that sink in for a moment. If I am not imaging things, I believe that this means that for subdivision (f) penalties, the Court held that the correct method of counting up the penalties would be to count the total number of employees that qualify as "aggrieved" by any violation an multiply that number by the $100 or $200 penalty. Oh my. So, if this stands the test of time, more employers will avoid class actions with class waivers in their arbitration agreements, but if there are violations of any of the sections included in PAGA, the penalty calculation for that one year will be absolutely brutal. Big winner? The LWDA. For California employers in the long run it will likely be a slight loss. While Epiq will cut into class actions, that will be countered with larger penalty recoveries. And since the statutory period is just one year, an employer that doesn't fully correct issues will see plaintiffs returning to that well with regularity.
Respondent and Plaintiff was successfully represented by Michael Millen.
UPDATE: In response to a question about my post, I want to clarify something that is potentially unclear. When I wrote, “…if there are violations of any of the sections included in PAGA, the penalty calculation for that one year will be absolutely brutal,” I was referring to the penalty look-back period of one year prior to filing. In other words, I was not saying that a specific one year period was implicated by this decision. I was only observing that the penalties for a one-year statute of limitation could be high, compared to a four-year statute in a wage and hour class action (plus whatever time passes while a case is pending).
On May 9, 2018, a panel of the Ninth Circuit certified questions to the California Supreme Court in two different cases involving airlines. In Ward v. United Airlines, Inc., the Court asked for review of the following two questions:
(1) Wage Order 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement (CBA) in accordance with the Railway Labor Act (RLA). See 8 C.C.R. § 11090(1)(E). Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code § 226 by an employee who is covered by a CBA?
(2) Does California Labor Code § 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?
Order, at 2-3.
In Oman v. Delta Air Lines, Inc., the Court asked for review of the following three questions:
(1) Do California Labor Code §§ 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?
(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? See Cal. Labor Code §§ 1182.12, 1194; 8 C.C.R. § 11090(4).
(3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? See Gonzalez v. Downtown LA Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct. App. 2013); Armenta v. Osmose, Inc., 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005)?
Order, at 2.
Of the two sets of questions, Delta certainly presents questions that are likely of broader applicability.
The Class Re-Action Podcast is about to cross over the 5,000 listens milestone. Oh...my...gosh...we all need a life. But seriously, thanks for listening. As a reminder, you can now find the podcast through more services, including the original iTunes, iHeartRadio, Google Play, and Spotify.
Hey, Linh, thanks for all the hard work you've contributed to line up absolutely spectacular guests for each show!
Thanks again for listening.
It's easy to say that California courts look to Rule 23 decisions for guidance when there is a gap in California's jurisprudence on class-related issues. But how that works out in practice is a different matter. In Fierro v. Landry's Restaurant Inc. (May 14, 2018), the Court of Appeal (Fourth Appellate District, Division One) waded into uncharted procedural terrain when they sorted out how American Pipe tolling interacts with California's different procedural approach to certification as a "death knell" versus interlocutory issue. The core of the American Pipe application issue is captured by the Court's discussion of how federal and state procedure differ:
In the federal system, because there can be no appellate review of an order denying class certification until after entry of a final judgment in the class action, there can be years of delay—including potentially a trial on the merits of the individual claims—before the parties have the benefit of appellate review of the denial of class certification. Under such a procedure, the policy of protecting the efficiency and economy of litigation is not furthered by the continuation of tolling—first, pending resolution of the remaining claims in the trial court and, then, pending review and disposition in the appellate court.
In contrast, in our state system, the death knell doctrine allows the parties the benefit of immediate appellate review of an order denying class certification. This procedure advances the efficiency and economy of class action litigation. Stated differently, neither efficiency nor economy will result if, upon the denial of class certification, an unnamed class member is required either to seek intervention in the individual action that remains in the trial court or to file a new action while an immediate appeal of the order denying class certification is pending. Thus, in both the state and federal systems, once the trial court denies certification, the putative class member is on notice that he or she must take action to protect his or her rights; however, in the state system, there is a right to immediate review of that decision, and to deny American Pipe tolling under such circumstances is to encourage a multiplicity of actions—i.e., to encourage inefficiency and expense—before the order denying class certification is final
Slip op., at 20. The Court's effort to get under the hood and examine how policy interacts with procedural differences is commendable.
Separately, this case presents an unusual procedural history in its own right, as the Court had to engage in some very proactive digging to try to get as complete a record as it could and still fell short of getting all of what it wanted.
Appellants were successfully represented by Matthew Righetti and John J. Glugoski of Righetti Glugoski.
As 2018 heats up with big decisions, Episode 17 is here just in time. Dynamex and Serrano v. Aerotek are discussed. More importantly, I decide to rename the ABC test.
For Class Re-Action podcast listeners looking for more options, you can now find this podcast on Spotify, iHeartRadio, and in the Google Play store, in addition to the iTunes location where we started.
The term "joint employer" is used to identify the wide variety of situations where one worker is controlled in frequently different ways by two employers. Staffing agency relationships with client companies are a commonly cited example. In Castillo v. Glenair, Inc., the Court of Appeal (Second Appellate District, Division Two), tackled a novel question:
In a joint employer arrangement, can a class of workers bring a lawsuit against a staffing company, settle that lawsuit, and then bring identical claims against the company where they had been placed to work.
Slip op, at 2. The Court's answer was succinct: "We answer no." (Slip op., at 2.)
Before you get the wrong idea, this is not the situation you might have first imagined. One firm did not sue a staffing agency, settle, and then bring the identical set of claims against the client company of the staffing agency. Rather, the staffing company class action was running in parallel before another trial court and made it to the settlement finish line first. (Slip op., at 2.) There are many procedural niceties to this that don't matter. What matters is that the first suit (known as the "Gomez" action), settled on a classwide basis, with a broad release of claims against the staffing company and its agents. The Court in this matter concluded that Glenair was an agent of CGA with respect to CGA's payment of wages to its employees who performed work at Glenair.
While the reasoning of the Court is guided, in part, by a number of factual stipulations of the parties regarding the relationship between Glenair and the staffing company GCA, the core issue for purposes of res judicata application of the Gomez settlement hinged on whether Glenair was either a party in the Gomez settlement or in privity with a party. The Court found that Glenair was both in privity with CGA as to the Gomez settlement and a released party in the Gomez settlement.
After reviewing developments in the law of privity, the Court said:
With this in mind, it is clear Glenair and GCA are in privity for present purposes. The subject matter of this litigation is the same as the subject matter of the Gomez litigation—namely, both cases involve the same wage and hour causes of action arising from the same work performed by the same GCA employees (the Castillos) at GCA’s client company Glenair. Based on the undisputed facts, it is apparent Glenair and GCA share the same relationship to the Castillos’ claims here. Both Glenair and GCA were involved in and responsible for payment of the Castillos’ wages. Glenair was authorized by GCA and responsible for recording, reviewing and transmitting the Castillos’ time records to GCA. GCA paid the Castillos based on those time records. And, by virtue of the Gomez settlement, the Castillos were compensated for any errors made in the payment of their wages. Thus, with respect to the Castillos’ wage and hour causes of action, the interests of Glenair and GCA are so intertwined as to put Glenair and GCA in the same relationship to the litigation here. Accordingly, we conclude they are in privity for purposes of the instant litigation.
(Slip op., at 23.) The Court emphasized that this should not be construed as a finding that Glenair and GCA are in privity for all purposes (e.g., a tort claim for an on-premises injury). The Court also found that Glenair was an agent of CGA based on facts that could not be reasonably construed any other way:
Glenair was an agent of GCA for the purpose of collecting, reviewing, and providing GCA’s employee time records to GCA so that GCA could properly pay its employees. The evidence is undisputed that GCA authorized Glenair to collect, review, and transmit GCA employee time records to GCA. Thus, Glenair was authorized to represent, and did represent, GCA in its dealings with third parties, specifically GCA’s payment of wages to its employees placed at Glenair. (Civ. Code, § 2295; Borders Online, supra, at p. 1189; see also Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 788 [in concluding the plaintiff employee’s claims must be arbitrated, court considered “alleged joint employers” staffing company and its client company “agents of each other in their dealings with” the plaintiff].)
(Slip op., at 26.) The Court rebuffed the plaintiffs' argument that there was no evidence of the requisite control necessary to support the agency conclusion:
Here, GCA authorized Glenair to perform certain timekeeping-related tasks on behalf of GCA and the only reasonable inference is that GCA required Glenair to perform those tasks. Had Glenair failed to perform those timekeeping tasks, GCA would not have been able to pay its employees.
(Slip op., at 27.) This raises a question in my mind. Many large staffing companies install their own timekeeping systems in the workplaces of large clients. If the staffing company collects its own time records, or its employees report time themselves, does this vitiate the agency analysis in this decision?
The decision also includes an extended discussion of procedural rules governing summary judgment, if that floats your boat.
Respondent was successfully represented by Jesse A. Cripps, Sarah Zenewicz and Elizabeth A. Dooley of Gibson, Dunn & Crutcher,
The Complex Litigator reports on developments in related areas of class action and complex litigation. It is a resource for legal professionals to use as a tool for examining different viewpoints related to changing legal precedent. H. Scott Leviant is the editor-in-chief and primary author of The Complex Litigator.
