in brief: Johnson v. Arvin-Edison Water Storage Dist. holds that governmental entities are exempt from wage & hour laws absent express statutory language to contrary

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In Johnson v. Arvin-Edison Water Storage Dist. (June 3, 2009) the Court of Appeal (Fifth Appellate District) held that governmental entities are not subject to a wide array of wage & hour laws absent express legislation to the contrary.  The water district defendant was determined to be a municipal entity, thus entitled to that broad grant of immunity.

Petition for Review denied in Cristler v. Express Messenger Systems, Inc.

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The California Supreme Court has denied the Petition for Review in Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal. App. 4th 72.  My prior post on the case can be found here.  The denial is unfortunate, as the case is likely to be misconstrued as a decision about the independent contractor/employee distinction, rather than the jury instruction and standard of review opinion that it is.

In D'Este v. Bayer Corporation, Ninth Circuit certifies interesting issue to California Supreme Court

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The Ninth Circuit has been certifying questions to various state Supreme Courts with increasing frequency.  After giving this observed increase some thought, I theorize that at least one reason for this increase is the shift of some class actions to federal court as a result of CAFA.  For example, in a post on this blog, I noted a recent question certified to the California Supreme Court about e-mail spam.  Other issues certified to state supreme courts are simply questions of first impression, at least as the caselaw is viewed by the Ninth Circuit.  One example of such an issue involves a question about statutes of limitation in California, noted in this post on Products Liability Prof Blog.  The most famous recent example involves the certification of questions in Sullivan v. Oracle Corp., covered on The UCL Practitioner.

On May 5, 2009, in D'Este v. Bayer Corporation (link now corrected) the Ninth Circuit certified a challenging question that actually a colleague of mine fits in a class action we both worked on several years ago.  Here is the key question certified to the California Supreme Court:

“The Industrial Welfare Commission’s Wage Orders 1-2001 and 4-2001 define “outside salesperson” to mean “any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” 8 Cal. Code Regs., tit. 8, §§ 11010, subd. 2(J); 11040, subd. 2(M). Does a pharmaceutical sales representative (PSR) qualify as an “outside salesperson” under this definition, if the PSR spends more than half the working time away from the employer’s place of business and personally interacts with doctors and hospitals on behalf of drug companies for the purpose of increasing individual doctors’ prescriptions of specific drugs?

(Order, at p. 5193.)  But the question doesn't really capture the issue.  The underlying issue, developed in the factual description, turns on the fundamental nature of sales for purposes of the "outside salesperson" overtime exemption.  The pharmaceutical representatives in question promote Bayer products to doctors and hospitals, but they don't actually enter into bindings sales agreements.  Instead, they attempt to influence the prescription decisions of doctors and hospitals.  Are they "selling" when they engage in this promotion that does not end in a commercial transaction?  The Ninth Circuit thinks that the wage order can be interpreted in either manner.  Without CAFA, this issue would certainly have made its way to a California Court of Appeal.  Instead, it has moved outside the state court system, up to the Ninth Circuit, and may end up at the California Supreme Court through this inefficient route.

Answer on the merits filed in Brinker Restaurant v. Superior Court (Hohnbaum)

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When the Supreme Court granted the Petition for Review in Brinker Restaurant v. Superior Court (Hohnbaum), the news opportunities in the case diminshed substantially.  For those in need of a Brinker news fix, its worth a mention that on April 28, 2009, Brinker Restaurant submitted its Answer on the merits, along with an application for permission to file an overlong Answer Brief.  Since the Real Party in Interest received approval from the Court to file an overlong Opening Brief, it's safe to assume that the Answer will be approved as well.

The docket also shows that the Amicus filings are already underway.  If Branick is instructive, expect the Amicus briefing period to continue until well into the Fall.

California Supreme Court grants review in Lu v. Hawaiian Gardens Casino, Inc.

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Greatsealcal100The Supreme Court has granted review in Lu v. Hawaiian Gardens Casino, Inc.  The docket indicates that review has been granted on the limited issue of whether a private right of action exists under Labor Code section 351.  In Lu, the Court of Appeal was called upon to determine whether plaintiffs challenging a tip-pooling arrangment could bring a private right of action under Labor Code section 351.  The Court of Appeal concluded that Labor Code section 351 did not create a private right of action. The Court of Appeal then noted that such Labor Code sections could nevertheless serve as predicates for the “unlawful” conduct prong under the UCL:

“Nevertheless, Lu alleged a cause of action under the UCL for violation of Labor Code sections 351 and 450. “ ‘Virtually any law -- federal, state or local -- can serve as a predicate for an action under Business and Professions Code section 17200.’ [Citation.]” (Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 539; cf. Louis v. McCormick & Schmick Restaurant Corp. (C.D.Cal. 2006) 460 F.Supp.2d 1153, 1156, fn. 5; Matoff v. Brinker Restaurant Corp., supra, 439 F.Supp.2d at pp. 1037-1038.) The UCL is a proper avenue for Lu to challenge violations of these Labor Code provisions. Therefore, we turn to the substantive question of whether the tip pool procedure here violates the Labor Code sections enumerated in the complaint such as would support UCL causes of action.

(Slip op., at p. 11.)  My original post on Lu is here.  Lu was the first in a group of tip-pooling decisions that were all decided in the last few months.  See a recap here.

in brief: Gomez v. Lincare, Inc. provides a satisfying "I told you so"

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Greatsealcal100In Gomez v. Lincare (April 28, 2009), the Court of Appeal (Fourth Appellate District, Division Three) reversed portions of various Trial Court Orders that caused the dismissal of a putative class action by employees that provided respiratory services and medical equipment setup to patients in their homes. The opinion, from the habitually conservative Fourth Appellate District, was originally unpublished. I find the decision particularly satisfying because I worked on that case for several years while employed by Plaintiffs' counsel. I may post more on this decision later.

in brief: another employment class arbitration waiver is rejected as unconscionable in Olvera v. El Pollo Loco, Inc.

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Greatsealcal100Once again, an employer tried to avoid the potential for class-wide liability to employees by creating an arbitration agreement that included a class action waiver provision. Once again, that effort met with failure. In Olvera v. El Pollo Loco, Inc. (April 27, 2009), the Court of Appeal (Second Appellate District, Division Three) affirmed the Trial Court (Judge Peter Lichtman) Order denying a motion to compel arbitration.

California Supreme Court grants review in Pineda v. Bank of America, N.A., which construed Labor Code section 203

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In Pineda v. Bank of America, N.A., plaintiff Pineda advanced the theory that restitution of "penalties" recoverable under Labor Code section 203 (waiting time penalties) was available under the UCL because the penalty was a vested property interest due upon failure to timely pay wages.  The Court of Appeal rejected that theory and held that restitutionary recovery of waiting time penalties was not available to Pineda.  Today, the Supreme Court granted review.  Pineda is no longer citable.  My earlier post about Pineda is here.  The UCL Practitioner also has a comment about Pineda.

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Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.) strictly limits instances where class actions can be decided on the pleadings

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Greatsealcal100On April 13, 2009, the Court of Appeal (Second Appellate District, Division One) ordered the publication of its March 12, 2009 opinion in Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.). The appeal followed a somewhat complex effort to obtain unemployment insurance benefits by locked-out employees of Albertsons, Inc. If you are curious about such things as writ petitions following adverse administrative ruling and the disdainful lack of honor by defendants that demand procedural compliance only to throw that compliance in the plaintiffs’ face when they satisfy those demands, then I urge you to read the opinion since I won’t be discussing those niceties here.

The very basic procedural summary of the case is as follows:

“ This is an appeal from the denial of a writ petition, styled as a class action, filed by employees of Albertson’s Inc. (Albertson’s) seeking to reverse an administrative decision denying them unemployment insurance benefits during an 18-week lockout by Albertson’s. On demurrer, the trial court ruled that the employees failed to allege sufficient facts supporting equitable tolling. The trial court also struck the class allegations as overly broad. The employees elected not to amend their petition in order to pursue the present appeal. We reverse and remand for further proceedings.

(Slip op., at p. 2.) The aspect of the opinion of interest in the context of class action litigation is the near-adamant holding that class actions should be decided at the pleading stage only in mass tort and similar actions not well-suited to class treatment. That section is quoted here in full:

““California’s judicial policy [is to allow] potential class action plaintiffs to have their action measured on its merits to determine whether trying their suits as a class action would bestow the requisite benefits upon the litigants and the judicial process to justify class action litigation.” (Beckstead v. Superior Court (1971) 21 Cal.App.3d 780, 783.) “In order to effect this judicial policy, the California Supreme Court has mandated that a candidate complaint for class action consideration, if at all possible, be allowed to survive the pleading stages of litigation.” (Id. citing La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 868-869 [reversing trial court’s sustaining of demurrer against class action suit]; Vasquez v. Superior Court (1971) 4 Cal.3d 800, 816 [same]; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 716-717 [same]; Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 121 [affirming trial court’s overruling of demurrer attacking class allegations].)

“The wisdom of allowing survival is elementary. Class action litigation is proper whenever it may be determined that it is more beneficial to the litigants and to the judicial process to try a suit in one action rather than in several actions . . . . It is clear that the more intimate the judge becomes with the character of the action, the more intelligently he may make the determination. If the judicial machinery encourages the decision to be made at the pleading stages and the judge decides against class litigation, he divests the court of the power to later alter that decision . . . Therefore, because the sustaining of demurrers without leave to amend represents the earliest possible determination of the propriety of class action litigation, it should be looked upon with disfavor.” (Beckstead, supra, 21 Cal.App.3d at p. 783.) Despite the policy disfavoring the determination of class suitability issues at the pleading stage, several cases, including those cited by Albertson’s, have done exactly that. (See, e.g, Silva v. Block (1996) 49 Cal.App.4th 345, 348 [trial court properly determined class issues on demurrer, since it was apparent from the face of the pleading that issues requiring separate adjudication—both of liability and damages—predominated over common questions]; Clausing v. San Francisco Unified School Dist. (1990) 221 Cal.App.3d 1224, 1234 [in this mass-tort action, “it would be a waste of time and judicial resources to require a full evidentiary hearing [on class suitability] when the matter can properly be disposed of by demurrer”; Brown v. Regents of University of California (1984) 151 Cal.App.3d 982, 990-991 [determination of class status by demurrer proper in mass-tort action].)

In Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, after an exhaustive review of the relevant case law, this division determined that the apparent conflict was in fact not a conflict at all: “[I]t is only in mass tort actions (or other actions equally unsuited to class action treatment) that class suitability can and should be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, class suitability should not be determined by demurrer.” (Id. at p. 1325.) We reasoned that in mass tort actions individual questions of liability and damages frequently predominate over common questions and resolving class suitability at the pleading stage is therefore proper. (Id. at pp. 1327-1328.) In contrast, we explained, “wage and hour disputes (and others in the same class) routinely proceed as class actions” because they usually involve “’a single set of facts applicable to all members’,” and “’one question of law common to all class members.’” (Ibid.) As long as a plaintiff “alleges institutional practices . . . that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis,” we held that “no more is required” at the pleading stage. (Id. at p. 1329.)

In our view, the petition in this case is more like a wage and hour case than a mass-tort action. It involves a single set of facts (i.e., those allegations pertaining to Albertson’s selective lockout and illegal hiring of locked out employees), one question of law common to all class members (i.e., whether employees who could not work because of Albertson’s lockout fall under the ambit of section 1262), and one institutional practice (i.e., the denial of benefits to locked out employees by the EDD and CUIAB Board). While there may be individual questions of the amount of benefits, if any, to which each claimant is entitled, we do not see these questions as predominant over the common factual allegations and legal questions cited above. (Accord Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809 [“the fact that each member of the class must prove his separate claim to a portion of any recovery by the class is only one factor to be considered in determining whether a class action is proper”]; Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1272, 1279 [rejecting county’s argument that denial of governmental benefits was not suitable for class treatment because “each recipient’s right to recover depends on the facts peculiar to his/her case” and noting that “it is especially appropriate to proceed with a class action to provide effective relief when, as here, a large number of [class members] have been allegedly, improperly denied governmental benefits on the basis of an invalid administrative practice”].)

In line with our decision in Prince, we conclude that it was premature for the trial court to make determinations pertaining to class suitability on demurrer. We reverse the court’s order granting Albertson’s motion to strike and the court’s accompanying legal ruling that the class definition was “too broad.” The putative class definition alleged in the petition, which we cite here, is sufficient to move forward past the pleading stage:

“Petitioners . . . bring this petition for writ of administrative mandamus on behalf of the entire class of individuals who were employed by Albertson’s at any time during the period October 11, 2003 through February 26, 2004, and who filed timely claims with the EDD for unemployment insurance benefits for all or some of this period, and were denied such benefits on the basis of the trade dispute exception, California Unemployment Insurance Code § 1262 . . . .”

(Slip op., at pp. 17-20.) This holding is likely to see immediate use in every class action challenged by way of demurrer or motion to strike, and it may deter these procedural wastes of time.  At least I hope so.  Nothing ruins a perfectly good day like receiving the obligatory demurrer to class allegations.

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California Supreme Court denies Petitions for Review in Ghazaryan and Marin

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In its April 1, 2009 Conference Report, the California Supreme Court noted that Petitions for Review were denied in Ghazaryan v. Diva Limousine, LTD. (2009) 169 Cal.App.4th 1524 and Marin v. Costco Wholesale Corporation (2008) 169 Cal.App. 4th 804 (among other denials).  You can read about Ghazaryan on this blog here, and Marin here.

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