a California-centric collection of comments and resources about complex litigation and class action practice
Following the Epic decision by the Supreme Court, today the Ninth Circuit formally vacated Morris v. Ernst & Young, LLP in a per curiam Opinion. And I bet you were wondering if they would Resist! They did not.
Set aside, for a brief moment, the legal arguments about rounding in the context of California law (I know...it's a legal blog, but I can digress because I say so). Here's what I don't get in the class context: how does it pass the smell test to say to some employees, who lost some wages from rounding, that it's cool because their money basically went to some other employees. Using the rationale of rounding jurisprudence, I think I could make wage system that randomly takes money from half a workforce and gives it to the other half. It's neutral as applied by definition. It's random so it's "fair" on its face. What's wrong with that? And if it's not okay, why is rounding okay.
Anyhow, in AHMC Healthcare, Inc. v. Superior Court (June 25, 2018), the Court of Appeal (Second Appellate District, Division Four) held that rounding was proper in a system the Court characterized as "neutral on its face and as applied." Slip op., at 2. On undisputed facts, it was shown that slightly more employees lost time than gained time, but the gainers did slightly better in aggregate. Slip op., at 4-5.
After discussing federal decisions that approved of rounding in the aggregate, the Court said this:
Because California’s wage laws are patterned on federal statutes, in determining employee wage claims, California courts may look to federal authorities for guidance in interpreting state labor provisions.
Slip op. at 11. I don't think that's right, at least not as stated. California extensively diverges from federal wage and hour law in many areas. The California Supreme Court has issued a number of decisions rejecting application of federal law in a variety of contexts, noting in several cases that Wage Orders must basically state express incorporation of a federal standard before it will be read into a Wage Order. Notably, and I think relevant to rounding, California's definition of what constitutes compensable time differs from the federal standard. What no Court has yet attempted to explain is why rounding is not analyzed in the way other wage and hour obligations are analyzed when comparing California law to federal law. Given the undeniably employee-centric nature of California wage and hour law, I find this at least peculiar.
This issue will receive more attention before it is settled I predict.
Jeffrey P. Fuchsman and Zareh A. Jaltorossian of Ballard Rosenberg Golper & Savitt represented the successful petitioner.
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!
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
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 Class Re-Action podcast is back in business with new Episode 16, how available anywhere digital technology is! We discuss Alvarado v. Dart Container with attorneys who argued the case before the California Supreme Court. Listen loud! Listen often!
I won't diminish the expectant quality of your Friday by providing a blow-by-blow of the decision, but Lambert v. Nutraceutical Corp. (9th Cir. Sept. 15, 2017) takes a thorough look at the timing requirements of Fed. R. Civ. P. 23(f) petitions, concluding that the 14-day filing deadline of Rule 23(f) is not jurisdictional and can be extended or tolled for a variety of reasons. The opinion also reversed the District Court's decertification order in the consumer class action, concluding that it erred in its treatment of the plaintiff's damage model.
Appellant was successfully represented by Gregory Weston (argued) and David Elliott, The Weston Firm, San Diego, California; and, Ronald A. Marron, The Law Offices of Ronald A. Marron APLC, San Diego, California.
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.
