a California-centric collection of comments and resources about complex litigation and class action practice
Episode 31 of the Class Re-Action Podcast is now out. We discuss Donohue v. AMN Services, LLC (February 25, 2021). And Killer Robot Dogs. And my eventual Evil Mastermind lair in a secret glacier base.
As opinions go these days, the California Supreme Court’s opinion in Vasquez v. Jan-Pro Franchising International, Inc. (Jan. 14, 2021) is a short one, at about 16 pages of actual text. It is also a unanimous opinion. The Ninth Circuit asked the Supreme Court to answer whether the Court’s decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) applies retroactively. The California Supreme Court concluded that it was retroactive in application:
In concluding that the standard set forth in Dynamex applies retroactively — that is, to all cases not yet final as of the date our decision in Dynamex became final — we rely primarily on the fact that Dynamex addressed an issue of first impression. It did not change a settled rule on which the parties below had relied. No decision of this court prior to Dynamex had determined how the “suffer or permit to work” definition in California’s wage orders should be applied in distinguishing employees from independent contractors. Particularly because we had not previously issued a definitive ruling on the issue addressed in Dynamex, we see no reason to depart from the general rule that judicial decisions are given retroactive effect.
Slip op., at 2. Read the decision if you want to know all about the general rule of retroactive effect and issues of first impression.
So, it turns out that the answer to my question is GOAT, not goat (he says with tongue planted firmly in cheek). ZB, N.A., et al. v. Superior Court (Lawson) (September 12, 2019) was issued this morning, and, unsurprisingly I think, the Supreme Court dropped an off speed pitch over the plate and froze everybody. You could see the windup with the italics added by the Court to this passage:
Before the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for “a civil penalty as follows: [¶] (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. [¶] (2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.” (Id., subd. (a), italics added.)
Slip op, at 1-2. See that? It’s the tell for what’s coming:
What we conclude is that the civil penalties a plaintiff may seek under section 558 through the PAGA do not include the “amount sufficient to recover underpaid wages.” Although section 558 authorizes the Labor Commissioner to recover such an amount, this amount –– understood in context –– is not a civil penalty that a private citizen has authority to collect through the PAGA. ZB’s motion concerned solely that impermissible request for relief. Because the amount for unpaid wages is not recoverable under the PAGA, and section 558 does not otherwise permit a private right of action, the trial court should have denied the motion. We affirm the Court of Appeal’s decision on that ground. On remand, the trial court may consider striking the unpaid wages allegations from Lawson’s complaint, permitting her to amend the complaint, and other measures.
Slip op., at 2-3. So that’s it then.
There is, of course, a bit more, given that the Opinion is 30 pages long, but after the procedural history, the balance of the discussion is a detailed example of statutory construction. For instance, the Court finds that the wages referred to in Section 558 must be treated as a compensatory wage, else the provision would be internally inconsistent with Section 1197.1. Read it, if for no other reason than to see the thoroughness with which a sentence can be parsed, and persuasively I might add.
The Court was unanimous in its decision.
It isn’t entirely clear who you would call the “winner” here, given the disconnect between affirming the Court of Appeal and the practical result, but James L. Morris, Brian C. Sinclair and Gerard M. Mooney, of Rutan & Tucker, represented the Petitioners, who no longer have to deal with the potential for an award of unpaid wages as part of Section 558 penalties under PAGA.
Another question that had divided courts will be decided tomorrow, when the California Supreme Court releases ZB, N.A., et al. v. Superior Court (Lawson). The question under review is whether a representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) seeking recovery of individualized lost wages as civil penalties under Labor Code section 558 falls within the preemptive scope of the Federal Arbitration Act. That’s the stated issue. After the supplemental issue briefing, however, I’m putting my chips on the long-shot square and betting that everyone has been wrong. My Karnak the Magnificent prediction is that the Court will say that the “wages” mentioned in Section 558 cannot be recovered under PAGA because PAGA authorizes the recovery of “penalties” where a penalty amount is stated (or a catch-all penalty where no amount is specified) but not every type of relief otherwise available to the Labor Commissioner. Remember that Section 558 also includes true penalties of $50/$100 for initial and subsequent violations. There’s my guess. GOAT or goat, we’ll see tomorrow.
This is almost looking like a trend. We are back with Episode 22 of the Class Re-Action Podcast. We discuss Voris v. Lampert (August 15, 2019), but I don’t know if we will convert anyone with our analysis. Ahhhh?!?!
NOTE: Correcting a comment I made on the podcast about Lawson, somehow I got it stuck in my head that opinions are due 60 days after submission. It’s 90 days, and I’m either becoming senile or too much junk is taking up valuable storage space in my head.
Back so soon?!?! Yes we are, with Episode 21 of the Class Re-Action podcast. We discuss Noel v. Thrifty Payless (July 29, 2019), an objective show topic that is easy to ascertain. See what I did there?
I recall that in the early 2000’s it was common to see a conversion claim for relief included in a wage & hour complaint, on the theory that the wages owed and unpaid were property of the employee. When this was challenged by demurrer, I observed that the demurrer was successful well over half the time, but there wasn’t a definitive appellate ruling on point. The demurrers that worked would usually focus on the argument that a conversion tort for money had to specifically identify the precise amount in question (essentially, identify the specific cash in question).
Today, in Boris v. Lampert (August 15, 2019) the California Supreme Court answers a question I long ago quit wondering about: whether a conversion claim is cognizable for unpaid wages. In a split 5-2 decision, the Supreme Court said it was not.
The conversion of specific sums of money guided the majority’s analysis:
The employee’s claim is not that the employer has wrongfully exercised dominion over a specifically identifiable pot of money that already belongs to the employee—in other words, the sort of wrong that conversion is designed to remedy. Rather, the employee’s claim is that the employer failed to reach into its own funds to satisfy its debt. Indeed, in some cases of wage nonpayment, the monies out of which employees would be paid may never have existed in the first place. Take, for example,a failed start-up that generates no income and thus finds itself unable to pay its employees. Because the business accounts are empty, there would not be any identifiable monies for the employer to convert. No one would dispute that the start-up is indebted to its employees. But only in the realm of fiction could a court conclude that the business, by failing to earn the money needed to pay wages, has somehow converted that nonexistent money to its own use.
Slip op., at 15. The majority expressed some concern about the consequences of layering tort liability over what has traditionally been a species of contract recovery:
But a conversion claim is an awfully blunt tool for deterring intentional misconduct of this variety.As noted,conversion is a strict liability tort. It does not require bad faith, knowledge, or even negligence; it requires only that the defendant have intentionally done the act depriving the plaintiff of his or her rightful possession. (Moore, supra, 51 Cal.3d at p. 144, fn. 38; Poggi, supra, 167 Cal. at p.375.) For that reason, conversion liability for unpaid wages would not only reach those who act in bad faith, but also those who make good-faith mistakes—for example, an employer who fails to pay the correct amount in wages because of a glitch in the payroll system or a clerical error. We see no sufficient justification for layering tort liability on top of the extensive existing remedies demanding that this sort of error promptly be fixed.
Slip op., at 25.
I won’t go into great detail on the dissent, but it is pointed, and is well-encapsulated by this passage, which rejects the notion that wage payment recovery is best handled under contract theories:
In California, unpaid wages are not merely contractual obligations to pay a sum. This is because, as we long ago observed, “wages are not ordinary debts.” (In re Trombley (1948) 31 Cal.2d 801, 809, italics added.)
Slip op., Dissent of Cuellar, at 3. This comment is also interesting: “For some time, plaintiffs in wage cases have routinely included a claim for conversion.” Slip op., Dissent of Cuellar, at 7. It is a somewhat feisty dissent. I like it for the conviction. In closing, the dissent observes that it seems illusory to treat theft of stocks as a conversion but deny similar treatment to wages owed.
I’m not 100% settled on where I come down on these competing arguments, but, for purposes of California law, the majority defines where things stand.
This is interesting. On August 1, 2019, the Ninth Circuit certified a pair of questions to the California Supreme Court in Cole v. CRST Van Expedited, Inc. (No. 17-55606) (9th Cir. Aug. 1, 2019). Before we get ahead of ourselves, the California Supreme Court still needs to agree to take up the certified questions. They do so at an exceedingly high rate, but it isn’t a done deal…yet. So, what about those questions? The questions posed are as follows:
1.Does the absence of a formal policy regarding meal and rest breaks violate California law?
2.Does an employer’s failure to keep records for meal and rest breaks taken by its employees create a rebuttable presumption that the meal and rest breaks were not provided?
Slip op., at 4. The case arises in the context of the operation of truck drivers working for a shipping company. The discussion of the reason for the certification clarifies where the Ninth Circuit seeks guidance:
The California Supreme Court did not directly address in Brinker whether the absence of a policy providing for meal and rest breaks constitutes a violation of California labor law. However, in Duran v. U.S. Bank Nat’l Ass’n, 325 P.3d 916,933 n.28 (Cal. 2014), the California Supreme Court observed that “[i]n regard to other wage and hour claims, some courts have held that the absence of a uniform policy supports [class] certification if such a policy is required by law. We express no opinion on this question.” (emphasis in the original).
Slip op., at 11. After noting Benton and Bradley, the Court also observed the concurring comment in Brinker:
In Brinker, Justice Werdegar noted that “[i]f an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” 273 P.3d at 545 (Werdegar, J., concurring).
Slip op. at 12.
If the California Supreme Court takes up the questions, I will be happy to handle action on the outcome for a 5% vig. Kidding. 10%. Still kidding.
I’m testing out opening sentences. The first candidate is: “The objective import of Noel v. Thrifty Payless, Inc. (July 29, 2019) is easy to ascertain.” You can see how that’s an option. It includes “objective,” as in the class definition must state the class with objective characteristics. And it drops in “ascertain,” as in this is a decision about the ascertainability requisite for certification. I like it. No second option for you.
Noel is a putative class action brought on behalf of retail purchasers of an inflatable outdoor pool sold in packaging that was allegedly misleading about the pool’s characteristics. The trial court denied the representative plaintiff’s motion for class certification on the basis that the plaintiff did not supply evidence showing how class members might be individually identified when the time came to do so. The Court of Appeal upheld the trial court, reasoning that such evidence was necessary to ensure that proper notice would be given to the class. The Supreme Court said, “Nah, brah.”
The Supreme Court reviewed the history of the “ascertainability” requisite. The first view of the requisite focuses on the nature of the definition of the class:
One view of ascertainability concentrates on the proposed class definition itself. This viewwas applied in Bartold v. Glendale Federal Bank (2000) 81Cal.App.4th 816 (Bartold), superseded by statute on another point as stated in Markowitz v. Fidelity Nat. Title Co. (2006) 142Cal.App.4th 508, 524. The Bartold court explained that “[a] class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description.” (81 Cal.App.4th at p.828.) This basic view of ascertainability has been reiterated by numerous other Courts of Appeal, including the courts in Estrada, supra, 154 Cal.App.4th at page 14 and Aguirre, supra, 234 Cal.App.4th at pages 1299 to 1300. (See also Aguirre, at p. 1300 [listing cases].) A similar formulation regards a class as ascertainable when it is defined “in terms of objective characteristics and common transactional facts” that make “the ultimate identification of class members possible when that identification becomes necessary.” (Hicks, supra, 89Cal.App.4that p.915.)
Slip op., at 21. The second formulation of the requisite was summarized as follows:
The second basic view of ascertainability entails a more exacting inquiry. One such articulationregards the ascertainabilityrequirementas calling for an examination into“(1) the class definition, (2) the size of the class and (3) the means of identifying class members.” (Miller v. Woods (1983) 148 Cal.App.3d 862, 873 (Miller); see also Noel, supra, 17 Cal.App.5th at p. 1324, Sotelo, supra, 207 Cal.App.4th at p. 648; Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1274.) Consistent with this view, it has been said that “[c]lass members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932 (Rose).) On its face, the quoted language from Rose could be understood as specifying a sufficient, as opposed to a necessary, basis for finding an ascertainable class within the Miller framework. But some courts, drawing from Rose’s focus on the mechanics of identifying class members, have gone further and required a class plaintiff to make a specific factual or evidentiary showing in order to show an ascertainable class.
Slip op., at 21-22. The Court then looked at the similar divide in the federal system, focusing extensively on the Seventh Circuit’s analysis of the requisite in Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015). After that extensive review of competing approaches, the Supreme Court concluded that the process protection provided by an objective and clear class definition was more significant to the ascertainability requirement than the goal of notice to each class member. From that conclusion a clear rule followed:
As a rule, a representative plaintiff in a class action need not introduce evidence establishing how notice of the action will be communicated to individual class members in order to show an ascertainable class.
Slip op., at 38. The Court expressly disapproved of strict reliance upon Rose as stating the requirement for an ascertainability showing. Slip op., at 41, n. 15.
The Court observed that a trial court could consider how notice will be provided to a class as a separate inquiry into, e.g., manageability. Slip op., at 42. It emphasized, however, that notice was not an aspect of the ascertainability showing. The decision of the Court was unanimous.
Christopher Wimmer and Peter Roldan of Emergent Legal and Leslie Brueckner and Karla Gilbride of Public Justice represented the successful Plaintiff and Appellant.
Some wage and hour decisions have broad implications. Others, no so much. Here, in Stoetzl v. Department of Human Resources (July 1, 2019), the California Supreme Court issued a decision that falls decidedly into the later category. Stoetzl concerns a trial on the issue of unpaid wages for what the Court calls “entry-exit walk time” and “duty-integrated walk time.” Sounds like we are about to get a decision about a California equivalent to preliminary and post-liminary time, right? Not so much. Stoetzl is really about whether the relevant Wage Order (Wage Order 4) or the California Pay Scale Manual issued by CalHR (read about CalHR here) controls pay obligations for “entry-exit walk time” and “duty-integrated walk time” for represented and unrepresented state employees working in prisons.
Don’t get the wrong idea. Stoetzl might impact lots of employees; California has a metric <BLEEP> ton of employees. But that’s really the only group impacted by this decision, since the tension arises as a result of the conflict between the Pay Scale Manual’s express adoption of FLSA provisions and the Wage Order’s use of California’s differing and more protective standards. On top of all that, the represented state employees are bound by a collective bargaining agreement that controls certain pay obligations.
If you want to find something of broader note in Stoetzl, it again demonstrates that less protective FLSA provisions do no displace more protective California laws and regulations unless there is an express statement of an intent to do so. Here, in this 5-2 decision, a majority of the Court concluded that the Legislature properly empowered CalHR to define state employee pay provisions, and CalHR chose to expressly adopt FLSA rules that governed such things as walk time.
The minority opinion, written by Justice Liu, with Justice Cuellar concurring, found particular fault with the majority’s discussion of the minimum wage pay issue for the unrepresented class of employees.
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.
