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.
In what might be a significant decision, Noel v. Thrifty Payless, Inc. was argued to the California Supreme Court on May 8, 2019. The issue presented for review is as follows: “Must a plaintiff seeking class certification under Code of Civil Procedure section 382 or the Consumer Legal Remedies Act demonstrate that records exist permitting the identification of class members?” While California appeared to have settled this question decisively many decades ago, the question arose when the First Appellate District (Division Four) opined that such identification was required. A decision may issue any time in the next couple of weeks. This is not likely to be an issue for wage and hour cases — where employer records are basically always available as a source of identification information — but is may be an issue in consumer class actions, where specific class members identification may not be possible.
I know. I know. There is no such thing as a “good” review of LMRA preemption. Or any form of preemption come to think of it. You’re right. Don’t read this case. But if you MUST read a case about LMRA preemption, or want a solid backgrounder on it, you could do worse than Melendez v. S.F. Baseball Associates LLC (April 25, 2019), in which the California Supreme Court clearly discusses the two-stage test for determining whether LMRA preemption under Section 301 applies:
Does the claim arise solely from independent state law, or is it based on the collective bargaining agreement (CBA)?
To resolve the merits of the claim, is it necessary to “interpret” a CBA’s terms, or merely “reference” a CBA?
This really is a straightforward discussion of the issue. If you are dealing with this issue for the first time, it is a good place to start.
The prevailing plaintiffs were represented by Dennis F. Moss, of Moss Bollinger (Dennis F. Moss arguing) and Sahag Majarian II.
I previously mentioned the surprising appellate court opinion in Huff v. Securitas Security Services USA (May 23, 2018). When it was issued, I was certain that review would be requested, and I would not have been surprised if review had been granted. However, I missed the fairly quick denial of review and depublication. That denial issued on August 8, 2018. Sorry I missed that; this is a noteworthy opinion.
The California Supreme Court denied the Petition for Rehearing in Troester v. Starbucks, making a tiny change to the Opinion. Here is the change, which was made to the last paragraph:
We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable here. The relevant statutes and wage order do not allow employers **834 to require employees to routinely work for minutes off-the-clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.
We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable to the regularly reoccurring activities that are principally at issue here. The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off the clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them.
So that makes this Opinion final final. Can't wait until its final final final. Or even final final final final.
Join us on Episode 19 for a lively discussion of potential implications from the recent Troester v. Starbucks decision from the California Supreme Court. Listen as I attempt to control the crowd cheering for me.