For what it's worth, in a recent survey of more than 2,000 legal, ethics, and HR professionals, "60 percent of respondents reported that either their employees were not accurately reporting all hours worked, or they didn't know if they were. Additionally, more than 40 percent of respondents were not confident that their employees even knew how to file a wage and hour complaint . . . ." (August 5, 2008 Press Release.) The catch to this study is that it was conducted by ELT, a company that provides online wage & hour/employment law compliance training. But while there is at least a bias on the part of ELT, given its line of work, its conclusion is anecdotally supported by the comparatively high percentage of wage & hour class action filings (as against all other types).
These days, it seems as if the Ninth Circuit and its District Courts aren't operating from the same play book. As has been discussed repeatedly in connection with Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008), District Courts have repeatedly made news with their decisions undermining wage & hour class actions. In Brown v. Federal Express Corp., (C.D.Cal. 2008) ___ F.R.D. ___ [2008 WL 906517], a district court concluded that a claim of meal period violations was not amenable to class treatment because the court would be "mired in over 5000 mini-trials" to determine if such breaks were provided. Another District Court opinion (White v. Starbucks Corp., 497 F.Supp.2d 1080 (N.D. Cal. 2007)) refused to hold that employers must ensure that their employees take meal breaks. The White v. Starbucks Corp. court guessed that the California Supreme Court, if deciding the issue, would require only that an employer offer meal breaks, without forcing workers to take those breaks.
Instead of joining with the district court, the Ninth Circuit has pushed in the opposite direction. For example, in an unpublished opinion, the Ninth Circuit reversed a substantial portion of a District Court order denying class certification in a wage and hour class action entitled Sepulveda v. Wal-Mart Stores, Inc.Recently, the Ninth Circuit went a step further. In Parra v. Bashas', Inc. (9th Cir. July 29, 2008) ___ F.3d ___, the Ninth Circuit made history (in the Circuit), when it reversed a denial of class certification in a wage & hour class action where the denial of certification was predicated on lack of commonality:
“Although this circuit has, up to now, never reversed a district court finding that commonality was lacking in an employment suit, other circuits have. See, e.g., Forbush v. J.C. Penny Co., 994 F.2d 1101, 1106 (5th Cir. 1993); Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1557 (11th Cir. 1986); Paxton v. Union Nat’l Bank, 688 F.2d 552, 561 (8th Cir. 1982).
(Slip op., at p. 9641.) It's only a matter of time before all of this wage & hour employment law matter and anti-matter collide and destroy the planet.
UPDATE: The problem with the title of this post has been corrected.
UPDATE 2: An astute reader points out that I was a bit sloppy with my labels in this post. The case involves employment law claims (discrimination issues), which do not fall into the subset of employment law claims referred to as "wage & hour" cases. As a very general proposition, many of the policies that govern "wage & hour" cases govern all employement law cases. However, there are special policy considerations that govern matters like discrimination cases such that the distinction between "employment law" and "wage & hour" is not necessarily irrelevant. I actually appreciate the correction because I strive for accuracy.
On July 30, 2008, this blog reported that the DLSE had already updated its enforcement materials in response to Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008). The information now coming to light is significantly more troubling than a simple revision of DLSE enforcement materials. In a July 25, 2008 Memorandum entitled Binding Court Ruling on Meal and Rest Period Requirements, Angela Bradstreet, the Labor Commissioner, described Brinker as a “binding court ruling,” without noting that Brinker is one of two decisions that interpret regulations governing meal breaks (the other being Cicairos v Summit Logistics, Inc. (2005) 133 Cal App.4th 949, which still stands as valid authority).
The California Labor Federation was none too pleased with the July 25, 2008 Memorandum. In strongly-worded correspondence of July 30, 2008, the California Labor Federation took Ms. Bradstreet to task for what it persuasively described as a biased, pro-employer approach from the very regulatory body charged with enforcing employee-protective laws and regulations. And by fortunate happenstance, I've stumbled across a copy of that correspondence (with attachments):
The correspondence can also be downloaded in pdf format here. The letter is definitely worth reading.
Because of the significance of this issue, I intend to set this post so that, for at least the next week, it appears as the first post on The Complex Litigator (assuming nothing else demands top billing in that time). So be sure to check below to see new posts.
Yesterday, the California Supreme Court denied review in Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193. Other commentators noted this denial as significant because Bufil contains language that appears to conflict with Brinker Restaurant Corp., et al. v. Hohnbaum, et al. (2008) ___ Cal.App.4th ___. (See, e.g., Wage Law.) While I find the Brinker connection of great interest, I find this denial most significant because it let stand a rather significant reduction in the impact of Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223. My initial post on Bufil discusses the Alvarez connection in painful detail.
One measure of a decision's significance is the amount of commentary it generates. By that standard,Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008) is moving rapidly towards the rarefied air set aside for events like the passage of Proposition 64. The Complex Litigator has already run several posts on this decision, noting its issuance and summarizing coverage here and here. To help readers stay on top of the coverage and the dialog, I'm adding to the coverage collection:
In the last roundup, I noted that Class Action Defense Blog prepared a detailed synopsis of the decision, but I missed its coverage of the Governor's statement about Brinker.
Not to be outdone by Retail Law Observer, Restaurant and Food Service Blog, in a post of uncanny similarity to that by Retail Law Observer, also dicusses the shockwave created by Brinker.
Sheppard Mullin, suggesting that the Court of Appeal has "clarified" meal and rest break obligations, weighs in on the pro-employer Brinker decision here.
Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008) keeps on making news. Yesterday, I attempted to collect as much coverage as I could in one post. However, Brinker isn't remotely done making news. In today's edition of the Daily Journal (July 25, 2008), D. Gregory Valenza asks, "Meal and Break Class Actions: On the 'Brink' of Extinction?" (Subscription required.) Mr. Valenza's article follows closely on the heels of a July 23, 2008 article by Daily Journal Staff Writer Pat Broderick, which briefly summarized the core of the Brinker decision.
Mr. Valenza's analysis is substantially more thorough than the July 23, 2008 article, but it is, essentially, a further summary of the Court's primary holdings. While the article discusses several sources of law at issue in the Brinker decision, Mr. Valenza doesn't delve into the competing policies that are suggested but left unresolved by that opinion. In fact, no commentator has yet addressed the full set of economic incentives at play within and without the Brinker world view of wage & hour class actions. The Brinker opinion opens the door to this analysis but fails to step through. Instead, the Court picks one of many economic incentives at work to justify its conclusion: "It would also create perverse incentives, encouraging employees to violate company meal break policy in order to receive extra compensation under California wage and hour laws." (Slip op., at p. 44, quoting Brown v. Federal Express Corp. (C.D.Cal. 2008) ___ F.R.D. ___ [2008 WL 906517 at *6].) In selectively discussing such incentives, the Court overlooks employer economic incentives to cheat the system and employee economic incentives to adhere to a meal break policy where job loss is the consequence for failure to do so. These incentives are likely far stronger, due to the amounts at issue, than one employee's desire to obtain an extra hour of pay.
If policy considerations are going to drive the judicial determination of the meal and rest break obligations, the Brinker decision must be viewed with some measure of skepticism until the full picture of incentives is faily presented and fully analyzed.
Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008) dropped a bit of a bombshell in the busy field of wage & hour class actions, at least judging by the early and numerous reactions. The Complex Litigator noted the issuance of the opinion shortly after it was posted to the California Courts website. Other blogs and media outlets followed with commentary and analysis, some of it extensive. Defense-oriented firms proclaimed it a much-needed victory, while plaintiff-side commentators lamented the irrationality of the decision and the need for speedy review by the California Supreme Court. To keep up with the dialog, a round-up of coverage, in no particular order, is in order:
Wage Law has two posts on the decision. The first post hits the highlights of the decision. The second post comments on the Governor's statement in support of the decision, noting that the fact of the Governor's comment, in and of itself, demonstrates that Supreme Court review is needed to "settle an important question of law."
California Workforce Resource Blog also has two posts on the Brinker. The first post is an extensive discussion of the decision, offered from the vantage point of a firm that represents employers. The second post provides a collection of comments about the decision.
What's New In Employment Law offers a decidedly partisan cheer for the Brinker decision, but notes that it is premature to celebrate.
The UCL Practitioner, one of the many counsel in Brinker, judiciously limits her comments to a refutation of quotes attributed to her about the decision in the Recorder. Importantly, Ms. Kralowec takes exception with the attributed statement that the decision "creates an appellate split that likely will ensure Supreme Court review." Ms. Kralowec notes that she would never be so presumptuous as to declare what the Supreme Court will, in the exercise of its discretion, decide to do about Brinker.
Wage & hour class actions have, for many years, been presented for certification in an entirely predictable manner. Since well before Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, wage & hour class actions habitually involved a war of employee declarations. The defendant typically submitted a taller stack of current employee declarations, while the plaintiff struggled to collect a smaller group of declarations provided mostly by former employees. This competing stack of declarations was then tossed up in the air for the Court to sort out. In Sav-on, it so happened that the trial court sided with the plaintiff's stack of declaration. But along the way, the dynamic has evolved.
The first major shift hit when the Supreme Court decided Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, reminding litigants that plaintiffs can discovery class member information before certification. Pioneer was then extended into the wage & hour realm with Belaire-West Landscaping, Inc. v. Superior Court (2007) 149 Cal.App.4th 554. The upshot was that plaintiffs had nearly as much access to the putative class as did defendants. However, this change, alone, did not necessarily do anything to deter the war of declarations. Instead, it armed both sides with the ability to assemble similar volumes of putative class member declarations.
This approach has not been without its critics. One Judge in the complex litigation panel in Los Angeles remarked during a hearing that there had to be a better way to evaluate wage & hour class actions for certification purposes. An example of possible alternative is provided by a recent certification Order from the United States District Court for the Northern District of California. In Otsuka, et al. v. Polo Ralph Lauren Corporation, et al. (C 07-02780 SI), Judge Susan Illston granted certification in spite of the typical declaration set offered by defendants. The Court's statement of facts suggests what information was held significant by the Court:
“Plaintiffs contend that defendants use a single employee handbook for all California stores, and that defendants’ policies and practices are standardized throughout California in both retail and outlet stores. See, e.g., TAC at ¶ 45.
(Opinion, at p. 2.) In contrast, defendants may have protested too much:
“Defendants vigorously object to class certification, arguing that plaintiffs fail to meet almost every requirement of Rule 23 for the main class and the two subclasses. As discussed below, however, defendants’ arguments primarily dispute the merits of plaintiffs’ claims and raise questions of fact that will not be resolved at this juncture, and the Court finds that class certification is appropriate because plaintiffs have satisfied the requirements of Rule 23(a) and Rule 23(b)(3).
(Opinion, at p. 5.) Plaintiffs persuasively cast the action as one of common procedures and common legal inquiries:
“Plaintiffs persuasively argue that many questions of law and fact are common to the class, such as whether: (1) defendants’ policy of not compensating employees for time spent waiting for loss-prevention inspections violates California law or constitutes an unfair business practice; (2) time spent waiting for these inspections was “postliminary” or de minimis, and whether these federal standards would even apply to plaintiffs’ California law claims; (3) defendants breached their contracts with class members by failing to compensate them for time spent awaiting loss prevention inspections; (4) defendants had a policy of not providing or discouraging rest breaks; (5) defendants violated California law by failing to pay employees one hour’s wage when rest breaks were not provided; (6) defendants failed to maintain accurate pay records as a result of these alleged labor code violations; and (6) whether defendants’ failure to maintain accurate records was knowing and intentional. As these questions suggest, plaintiffs have sufficiently demonstrated that the commonality requirement of Rule 23(a) has been met with respect to the main class.
(Opinion, at p. 6.)
This approach, the focus on class-wide policies, has seen some increased use, with Court's accepting a theory of class liability that focuses almost exclusively on whether policies of the employer resulted in wage & hour violations, such as off-the-clock work or missed breaks.
As with a chess match, the adaptations and legal developments that have helped plaintiffs respond to the declaration onslaught will undoubtedly be countered with a new approaches from defendants. It will be interesting to see how those new approaches fare in practice.
The Otsuka Opinion can be downloaded here, or, you can view the embedded opinion in the acrobat.com flash viewer below:
I clearly recall reading a Daily Journal news article about Judge Sundvold's decision to "strike" class allegations on the defendant's motion, before plaintiffs in the case had filed their motion for class certification. In fact, in preparing this post, I found a copy of that March 12, 2007 article in a clippings file. (Don J. DeBenedictis, Precertification, Stores' Lawyers Crush Class, Daily Journal (March 12, 2007).) The article mentioned that the defendant had been contacting its store managers and obtained "several hundred" declarations from them. However, the article noted that the plaintiffs were not permitted by the court to contact those managers. I found the reported discussion very peculiar; it seemed that something had to be missing. I found it implausible that the Court would "not allow plaintiff to contact those current and former store employees or to see more than 5 percent of the declarations. . . ." It turns out that the reports were fairly accurate.
In re BCBG OVERTIME CASES (June 13, 2008) ___ Cal.Rptr.3d ___ is the published opinion of the Court of Appeal (Fourth Appellate District, Division Three) that followed from the Judge Sundvold's Order finding that the matter was unsuitable for class treatment. The Court of Appeal affirmed the Trial Court's decision.
First, some nomenclature in the underlying case was discussed by the Court of Appeal. In the Trial Court, the defendant apparently referred to its motion as a "Motion to Strike Class Allegations." The Court of Appeal discussed the misleading nature of this document title:
“BCBG’s “motion to strike” was not a motion to strike as used during the pleading stage of a lawsuit in both California and federal procedure. (Code Civ. Proc., § 435; Federal Rules Civ. Proc., rule 12(f).) It was a motion seeking to have the class allegations stricken from the complaint by asking the trial court to hold an
evidentiary hearing and determine whether Plaintiffs’ proposed class should be certified. “A motion to strike class allegations is governed by Rule 23, not Rule 12(f). Rule 23 requires that the Court decide the certification issue at the earliest time possible.” (Bennett v. Nucor Corp. (E.D. Ark., July 6, 2005, No. 3:04CV002915WW) [2005 WL 1773948] slip opn., p. 2, fn. 1.)
(Slip op., at p. 6.)
Next, the Court of Appeal examined the procedure utilized by the defendant. Although defense-initiated motions to deny certification are uncommon, the Court of Appeal concluded that they are permitted:
“Under both California and federal law, either party may initiate the class
certification process. In Carabini v. Superior Court (1994) 26 Cal.App.4th 239, a state
appellate panel explained the California class certification process: “‘As soon as
practical after commencement of a lawsuit that purports to be a class action, a hearing
must be held on whether it will be allowed to proceed as such. The hearing may be held
either on the motion of the representative to certify the case as a class action; or, on
motion by the party opposing the class to dismiss the class action allegations; or, by the
court on its own motion . . . .’ [Citations.]” (Carabini v. Superior Court, supra, 26
Cal.App.4th at p. 242.)
(Slip op., at p. 6.) In upholding the procedure permitted by the Trial Court, the Court of Appeal also cited California Rules of Court, rule 3.767 (formerly Rule 1857, before the excellent idea of rules with decimal points).
In reading the opinion, the Court of Appeal suggests, but does not say, that the plaintiffs may have made a tactical error in the issues raised on appeal. In particular, the plaintiffs did not appeal the trial court's rulings that prohibited the plaintiffs from discovering the contact information of store managers. In the text of the opinion, the Court said:
“BCBG’s motion to strike the class allegations was not made before the
Plaintiffs had a chance to conduct discovery on class certification issues. Such discovery
had been going on for some time, although some of the plaintiffs’ efforts had apparently
been thwarted by adverse rulings from the court. The propriety of these rulings is not
before us.
(Slip op., at p. 9.) Then, in a footnote immediately following the text, the Court said:
“We do not know why Plaintiffs have been unable to obtain the contact information for BCBG’s former and current managers. “Contact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case. (E.g., Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 820-821, 836, Budget Finance Plan v. Superior Court (1973) 34 Cal.App.3d 794, 799-800; see Code Civ. Proc., § 2017.010.)” (Pioneer Electronics (USA) Inc. v. Superior Court (2007) 40 Cal.4th 360, 373.) BCBG’s opposition to the request for a precertification notice seems to be based on its assertion that there is nothing improper about its precertification contact with the putative class members.
(Slip op., at p. 9, fn. 4.) Reading these passages, it sounds very much like the Court of Appeal would have welcomed the opportunity to reverse for further discovery that would include depositions of any declarant offered by defendant. Looking at the Court of Appeal docket, it doesn't appear that any attempt was made to address the Pioneer decision during the appeal, although, given that discovery rulings were apparently not raised in the appeal as discretionarily included issues, any attempt to do so may have been rejected.
While the procedure used here is uncommon, it isn't novel. The real lesson from this case is to be sure you make your record in the trial court in the unfortunate event that you have to appeal a trial court order - and then be sure you raise the issues on appeal. I'm not sure that the Court of Appeal would, in good conscience, tolerate a trial court ruling that allowed a defendant to put forth declarations of its own managers to defeat certification while refusing to submit those declarants to cross-examination at deposition.
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.
These days, it seems as if the Ninth Circuit and its District Courts aren't operating from the same play book. As has been discussed repeatedly in connection with 
Multiple sources are now reporting that the DLSE has already updated its materials to require hearing officers to follow 
