Oral argument scheduled in Sullivan et al. v. Oracle Corporation et al.

On Wednesday, April 6, 2011, the California Supreme Court will hear argument in the matter of Sullivan, et al. v. Oracle Corporation, et al.  On February 17, 2009, the matter was certfied to the California Supreme Court by the Ninth Circuit.  Justice Roger Boren, from the Second Appellate District, Division Two, was assigne as justice pro tempore.  The questions certified to the California Supreme Court are:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

As a side note, the argument calendar also shows that Brinker is not on the April agenda.  Do I hear May anyone?  And by "May," you all know I mean May 2012, right?

Seymore v. Metson Marine, Inc. offers guidance on 7th day overtime, on call work

Plaintiffs worked consecutive 14-day “hitches” on Metson's ships, providing emergency clean up of oil spills and other hazardous chemical spills off the California coast.  This arrangement gave rise to questions about how Metson calculated pay for the seventh consecutive workday in a week and compensation for employees when on call.  In Seymore v. Metson Marine, Inc. (February 28, 2011), the Court of Appeal (First Appellate District, Division Three) reversed an order granting summary judgment in favor of Metson.

On the seventh day of overtime issue, Metson set the start time of the workweek so that employees only worked one "workweek" of seven consecutive days in the 14-day hitch.  On an issue of first impression, the Court rejected that manipulation:

Metson's attempt to evade the requirements of sections 500 and 510 is no different from the method struck down in the Wal-Mart case. Under the plain language of section 510, plaintiffs are entitled to premium pay “on the seventh day of work in any one workweek” and according to section 500, a workweek is defined to mean “any seven consecutive days, starting with the same calendar day each week.” The clear intent of this statute is to provide premium pay for employees who are required to work a seventh consecutive day in a “fixed and regularly” occurring workweek. Metson's attempt to circumvent this requirement cannot be condoned. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 910 [“The bottom line is this: An employer may not engage in a subterfuge or artifice designed to evade the overtime laws”].)

Slip op., at 5.  The Court found a DLSE memorandum on the issue to be in potential conflict with the statutory language and disregarded it.

Turning to whether Metson's control was sufficient to establish an obligation to pay for on-call time, the Court reviewed the evidence de novo, finding one fact in particular to be the key determinant, the obligation to sleep on Metson's premises:

Metson cites a number of cases in which courts have concluded that on-call employees able to engage in such personal activities and subject to even shorter response time requirements were not entitled to compensation. (See Gomez, supra, 173 Cal.App.4th 508 [30-minute telephone response time]; Dinges v. Sacred Heart St. Mary’s Hosps. (7th Cir. 1999) 164 F.3d 1056 [7-minute response time]; Bright v. Houston Northwest Medical Center Survivor, Inc. (5th Cir. 1991) 934 F.2d 671 [20-minute response time].) However, there is one critical difference between each of those cases and the present situation —in none of those cases was the employee required to sleep at the employer's premises. In Bright, the court observed that the situation there was “wholly different” from cases in which employees were required to serve their on-call time at the employer's premises because “Bright did not have to remain on or about his employer's place of business, or some location designated by his employer, but was free to be at his home or at any place or places he chose, without advising his employer, subject only to the restrictions that he be reachable by beeper, not be intoxicated, and be able to arrive at the hospital in 'approximately' twenty minutes.” (934 F.2d at p. 676.)

Slip op., at 10.  (As an aside, I find it amusing that two cases I handled, one on the prevailing side and one on the losing side, factored into the Court's discussion of this on-call issue.  Glad I didn't completely screw it up for the plaintiffs here.)  In any event, after an extended discussion of how California parallels but does not exactly follow FLSA precedent surrounding this issue, the Court then spent a moment discussing the fact that, in California, an employer may agree with an employee to designate eight sleeping hours as uncompensated time when an employee works a 24-hour shift.  The Court concluded by suggesting that Metson's arguments about the need for revised exceptions to current wage orders (or a new wage order) were worthy of consideration but did not provide a basis for the Court to disregard existing law.

California courts website is changing to a new web address, with a new appearance, in April

California's statewide court information website is currently located at www.courtinfo.ca.gov.  On April 2, 2011 the site will change over to www.courts.ca.gov.  The new site is evidently live now, but I am guessing that curiosity is impacting the new site's performance.  It is loading for me, but at a painfully slow rate (as in minutes, not seconds).  From what little I can see, it looks nice.

What this means is that all links to the old site location may (will) break, including this blog's links to opinions and other resources.  Assuming the new site starts responding correctly, I will begin linking to the new location immediately.

Perhaps this means that we are getting closer to the statewide court management system that caused such intense discussion in the last couple of years.  I saw a demonstration of the system last year.  If it works as advertised, it should prove to be a very useful resource.  Imagine being able to log onto one system and see all of your upcoming appearances in any court in California.  One can hope.

Update on 2011-03-01 02:09 by The Complex Litigator

Just brilliant.  The new opinions page displays slip opinions as some sort of inline frame with no direct link available.  If you open the opinion in a separate tab (on tabbed browsers), it links to the old website address.  Hopefully this issue gets corrected by April 2, 2011.  I guess this means that I will be linking to the old website address until they do something about the location for new slip opinions.

Two California Supreme Court cases relevant to this blog will be online shortly

Later this morning the California Supreme Court will post opinions in Bruns (Dana) v. E-Commerce Exchange, Inc., et al. and In re Baycol Cases I and II. Bruns raises the following issues: Does a stay of discovery constitute a stay of the action within the meaning of Code of Civil Procedure section 583.340, subdivision (c), such that the period during which discovery was stayed should be excluded in determining the time within which the action had to be brought to trial? Baycol raises the following issue: Did the “death knell doctrine” require plaintiff to immediately appeal the sustaining of a demurer as to class claims when the ruling resolved both individual and class claims, or did the one final judgment rule apply and require a single appeal from the subsequent entry of final judgment on all claims?

The links above should work shortly after 10:00 a.m. today.Save & Close

Update on 2011-02-28 18:05 by The Complex Litigator

The opinions are now available at the links above.

United Parcel Service Wage And Hour Cases holds that a defendant cannot recover fees after prevailing on Labor Code section 226.7 claims

In Kirby v. Immoos Fire Protection, Inc. (July 27, 2010), the Court of Appeal (Third Appellate District) held that a prevailing defendant could recover fees when it prevailed against a plaintiff asserting claims arising under Labor Code section 226.7 (meal and rest periods).  The Supreme Court then granted review.  The answering brief is currently due in that matter on March 21, 2011.   Today, the inscrutable Second Appellate District (Division Eight) held, in United Parcel Service Wage And Hour Cases (February 24, 2011), that fees were not available to a prevailing defendant in such actions.  In its analysis, the Court said:

Nothing in the legislative history suggests the Legislature meant the reciprocal fee recovery provisions of Labor Code section 218.5 to apply in an action for violation of the section 226.7 mandate that employers provide meal and rest breaks for certain nonexempt employees. The statutory remedy of section 226.7, providing compensation for missed breaks, was first enacted in 2000 in response to poor employer compliance with the meal and rest break requirements. (Murphy, supra, 40 Cal.4th at pp. 1105-1106; Stats. 2000, ch. 876, § 7, p. 6509.) Before 2000, the only remedy available to an aggrieved employee was injunctive relief to prevent future abuse. (Murphy, at p. 1105.)

The 2000 amendment providing a pay remedy bears sufficient hallmarks of a penalty designed to shape employer behavior, and is sufficiently distinct from the customary types of bargained-for wages recognized under the law, that we cannot conclude the Legislature intended a claim under Labor Code section 226.7 to be interpreted as a claim for “nonpayment of wages” within the meaning of section 218.5. The section 226.7 pay remedy for missed meal and rest breaks was enacted 14 years after the Legislature enacted the reciprocal fee recovery provisions of section 218.5. It is therefore not reasonable to assume that when the Legislature enacted section 218.5 in 1986 to provide for recovery of prevailing party fees in claims for nonpayment of wages and benefits, it intended that provision to permit a prevailing employer-defendant to recover fees from an employee raising a claim for denial of breaks -- a claim which at that time only supported injunctive relief.

Construing the entire statutory scheme with a view toward protecting employees, as we must, we find that a claim for remedial compensation under Labor Code section 226.7 does not trigger the reciprocal fee recovery provisions of section 218.5. Since none of the claims on which UPS prevailed permit the recovery of attorney fees, the award of statutory fees to UPS was in error.

Slip op., at 14.

Considering the current state of Kirby, it seems like this decision will be citable law for about 90 days, give or take a week here or there.  If a Petition for Review wasn't granted, we'd certainly have a good idea about how a part of Kirby will be decided.

In Safaie v. Jacuzzi Whirlpool Bath, Inc., Court holds that decertification order, affirmed on appeal, bars subsequent motion to certify

Stephen v. Enterprise Rent-a-Car, 235 Cal. App. 3d 806 (1991) held that a party has no right to bring a second motion to certify a class after the court has denied the first motion and the time for appeal has passed.  Stephen arose when a plaintiff failed to timely appeal an order denying certification.  But Stephen did not consider all of the unusual permutations that could occur.  In Safaie v. Jacuzzi Whirlpool Bath, Inc. (February 22, 2011), the Court of Appeal (Fourth Appellate District, Division One) examined whether, after an unsuccessful appeal of an order decertifying a class, the plaintiff could move for recertification on the basis of new law (Tobacco II).  The Court concluded that, because the plaintiff did not petition for review while Tobacco II was pending, the order affirming decertication was final and no further attempts at certification were permissible absent equitable considerations necessary to prevent unfairness.

The Court offered interesting comments about the course that it expects class actions to follow:

We agree with Stephen's holding and find its rationale persuasive. To ensure fairness to the class action plaintiff, trial courts are required to liberally grant continuances and ensure a plaintiff has the opportunity to make a complete record before the court rules on class certification. (See Stephen, supra, 235 Cal.App.3d at pp. 814- 815.) Once the record is complete, if the trial court issues a final order denying a class certification motion in its entirety, the plaintiff has the right to seek immediate appellate review and to obtain a written ruling from a Court of Appeal on the disputed issues, and then, if dissatisfied, to petition for review in the California Supreme Court. Thus, unlike the situation with most interlocutory orders, the plaintiff is provided the right to an immediate appeal even though the case is still pending. However, this special status has a necessary ramification: once the appellate period has passed or once the appellate court has affirmed the order and a remittitur has issued, the order is final and plaintiff is bound by the final decertification decision.

Slip op., at 12.  The Court later discussed the possibility of equitable exceptions to the rule in Stephen:

In reaching this conclusion, we recognize trial courts have broad discretion to determine the propriety of class actions, including to be procedurally innovative in certifying an appropriate class and in formulating procedures to ensure fairness and avoid manifest injustice in class action litigation. (See Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 339.) Moreover, a court has the discretion to move sua sponte to certify a class. (See City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 453-454.) However, to the extent there may be equitable exceptions to the rule precluding successive class certification motions after a final order denying certification, the circumstances here do not come within this exception.

Slip op., at 17.

From all of this I take away two possible lessons.  First, you must file a petition for review with the California Supreme Court if there is any chance that a change in law could help your certification arguments.  Second, the farther away you get from the wellspring of all consumer and employee protection, the more likely it is that your class action will receive the firing squad, not a certification order.  This theory would explain why Los Angeles is dicey, Orange County is perilous, and San Diego is the kiss of death.  But it's just a theory.

California Supreme Court activity for the week of February 14, 2011

The California Supreme Court held its (usually) weekly conference on February 16, 2011.  Notable results include:

• Petition for Review denied in Villacres v. ABM Industries, 189 Cal. App. 4th 562 (2010) [PAGA claims precluded when underlying claims released in prior settlement];
• Petition for Review denied in Bright v. 99¢ Only Stores, 189 Cal. App. 4th 1472 (2010) [PAGA penalties available for violation of wage order suitable seating requirement], discussed on this blog here.

I am slightly surprised by the decision not to review Villacres, considering only the strength of the dissent in that decision.

UPS v. Superior Court holds that Labor Code section 226.7 allows for 2 premium payments per workday

Today the Second Appellate District, Division Eight, giveth and taketh away.  In the first of two opinions issued by that Court today, the Court considered, in UPS v. Superior Court (February 16, 2011), whether Labor Code section 226.7 "authorizes one premium payment per work day regardless of the number or type of break periods that were not provided, or two premium payments per work day – one for failure to provide a meal period and another for failure to provide a rest period."  Slip op., at 2.  The Court concluded that section 226.7 allows up to two premium payments per work day.  In reaching that holding, the Court discussed with approval the statutory analysis and review of legislative history undertaken by the one federal court to exmaine the issue.  See, Marlo v. United Parcel Service, Inc. (C.D. Cal. May 5, 2009, CV 03-04336 DDP).

I must apologize for the reduced post frequency to start out this year.  Between a long overdue vacation, a bit of a lull in appellate decisions of note, and an impending move, I've been a bit short on blogging time.  My life is currently compressing into stacks of moving boxes and won't rehydrate until late March.  Thank you for your patience and for reading.

Update on 2011-06-02 22:57 by The Complex Litigator

The same result was reached after rehearing, in an opinion published on June 2, 2011.

Wait for Brinker continues

The California Supreme Court released its oral argument calendar for March 8th and 9th.  Still no sign of Brinker.  But it was a great excuse to use the Brinker 2009/2010/2011 news alert icon.

Arechiga v. Dolores Press, Inc. provides controversial construction of Labor Code section 515

Labor Code section 515, subdivision (d) provides: "For the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the employee's regular hourly rate shall be 1/40th of the employee's weekly salary."  In Arechiga v. Dolores Press, Inc. (February 7, 2011), the Court of Appeal (Second Appellate District, Division Eight) considered whether section 515(d) effectively eliminated "explicit mutual wage agreements" for non-exempt employees.  The Court concluded that section 515(d) did not void such agreements, rejected the DLSE's conclusion on that issue, and affirmed a questionable interpretation of section 515 that will allow employers to circumvent California overtime laws and use a system more like that available under federal law.

Plaintiff and employer entered into a written agreement that plaintiff would receive a salary of $880.00 a week as a janitor.  Plaintiff worked 66 hours per week (11 hours per day, six days per week).  Upon termination, plaintiff sought unpaid overtime.  The trial court found that plaintiff's regular hourly wage was $11.14 and his overtime wage was $16.71.  The trial court credited some testimony that this hourly wage was communicated to plaintiff and found that plaintiff was adequately paid.  The trial court also found that all elements of an explicit mutual wage agreement were satisfied.  Note: acording to authority from before the enactment of section 515, an explicit mutual wage agreement “requires an agreement which specifies the basic hourly rate of compensation upon which the guaranteed salary is based before the work is performed, and the employee must be paid at least one and one-half times the agreedupon rate for hours in excess of forty.”  Ghory v. Al-Lahham, 209 Cal. App. 3d 1487, 1491 (1989).

The Court of Appeal agreed with the trial court's application of the explicit mutual wage agreement doctrine, saying "Arechiga cites no case law supporting his assertion that Labor Code section 515, subdivision (d) abolished explicit mutual wage agreements."  Slip op., at 7.  Immediately thereafter, in a footnote, the Court said, "Appellant's reliance on the Enforcement Policies and Interpretations Manual of the Division of Labor Standards Enforcement is unavailing because regulators did not properly adopt it, making it non-binding on courts."  Slip op., at 7, n. 5.  The Manual states:

In the past, California law has been construed to allow the employer and the employee to enter into an explicit mutual wage agreement which, if it met certain conditions, would permit an employer to pay a salary to a non-exempt employee that provided compensation for hours in excess of 40 in a workweek. (See, Ghory v. Al-Lahham[, supra,] 209 Cal.App.3d 1487[]). Such an agreement (backing in the regular rate) is no longer allowed as a result of the specific language adopted by the Legislature at Labor Code § 515(d). To determine the regular hour rate of pay for a non-exempt salaried employee, one must divide the weekly salary paid by no more than forty hours.

Slip op., at 7, n. 5, quoting Manual.  The Court relied, instead, on jury instruction citing to a pre-section 515 opinion and federal court opinions about California law (which, incidentally, are entitled to as little deference as the DLSE, and probably less, given that the DLSE's expertise in the area is entitled to some consideration).  In other words, the Court criticized plaintiff's lack of "authority" to support the proposition that explicit mutual wage agreements for non-exempt employees are now invalid, but the Court identified no controllling authority to controvert the plain language of section 515(d).

Most of the remainder of the opinion deals with various evidentiary rulings at trial.  Those don't concern me for purposes of this post.  What does trouble me is the potential for decisions like this to offer judicial roadmaps for how to "back in a regular rate" and avoid what, in my view, is a clear and unambiguous statutory provision.  Under this construction, employers could, after the fact, claim that an employee was "shown" a basic hourly wage.  So long as that alleged hourly wage was above the minimum wage, the employer could justfy, ex post facto, any salary that equaled the reverse engineered wage and overtime calculation.  Section 515 is inconsistent with cases decided prior to its enactment.

Courts shouldn't be legislating, whether they agree with the policy goals of the legislation or not.  It's not like the Court was asked to consider a constitutional challenge to a law or something.  All it had to do was decide whether a trial court correctly applied a simple statute to some facts.  The Court blew it.