In a case of current events meets the UCL, Twitter held not liable for suspending user accounts in Murphy v. Twitter, Inc.

I though I would call this one out just because UCL cases don’t usually arrive so contemporaneously with current events. In Murphy v. Twitter, Inc. (Jan. 22, 2021), the Court of Appeal (First Appellate District, Division One) examined claims, including a UCL claim, that Twitter violated users’ rights by permanently suspending accounts.

Without getting deep into the discussion provided by the Court, it should not be surprising that the Court found that Section 230 of the Communications Decency Act of 1996 provided broad immunity for Twitter’s editorial functions. Of course, this just highlights the incongruity of how Section 230 works, since its passage was predicated on the promise by large tech companies that they would not behave like traditional publishers in exchange for the grant of immunity for what users post on their platforms. Right now, Twitter (and Facebook, and others) get immunity that other publishers do not AND they are restricting content on a viewpoint basis.

Interestingly, and with an astounding bit of hubris, Twitter argued that the Plaintiff’s claims violated the First Amendment. The Court declined to address the constitutional question when Section 230 was sufficient to resolve the case in the Court’s view. I just think that’s pretty ballsy of Twitter to throw the First Amendment argument out there when it denies that users have any such rights (and there is a good argument that it is wrong about that, now that it has decided to act as a partisan favoring one political party over another).

Collateral estoppel does not preclude a member of a decertified class from later seeking to certify an identical class

This is interesting. I draw your attention to Williams v. U.S. Bancorp Investments, Inc. (June 8, 2020), in which the Court of Appeal (First Appellate District, Division Four) concluded that collateral estoppel does not bar an absent member in a putative class that was initially certified, but later decertified, from subsequently pursuing an identical class action. The Court held that the reasoning of Smith v. Bayer Corp., 564 U.S. 299, 312–316 (2011) and Bridgeford v. Pacific Health Corp., 202 Cal. App. 4th 1034, 1041–1044 (2012) applied equally to this variation.

Betancourt v. OS Restaurant Services, LLC says you still cannot get fees in a wage and hour case seeking meal and rest break premiums

Kirby v. Immoos Fire Protection, Inc., 53 Cal. 4th 1244 (2012) said that actions for failure to provide meal periods and rest breaks are not actions for non-payment of wages under Labor Code § 218.5. In Betancourt v. OS Restaurant Services, LLC (May 21, 2020), the Court of Appeal (Second Appellate District, Division Eight) says the same thing. There is a bit of discussion about what “predicate” violation was alleged (the plaintiff arguing that it was faulty record-keeping), but the Court was not persuaded to deviate from a growing list of decisions considering how to treat premium pay “penalties” and derivative claims under sections 203 and 226.

A quick note on Gonzalez v. San Gabriel Transit, Inc.

In Gonzalez v. San Gabriel Transit, Inc. (October 10, 2019), the Court of Appeal (Second Appellate District, Division Four) reversed and remanded on an appeal from the denial of class certification. Most of the opinion is about the impact of Dynamex, which adopted the “ABC test” after the trial court denied certification. There is some important analysis about what claims are encompassed by the “ABC test,” and the retroactive application. But I’m posting now just to draw attention to a sliver of discussion at the end of the opinion regarding typicality:

Also, SGT maintains that Gonzales’ claims are atypical because, “unlike other class members, [he] never leased a taxi during the class period.” But the class allegations are not premised on having “leased” a vehicle. Rather, Gonzales seeks more generally to certify a class of plaintiffs who “were engaged by [SGT] to drive passengers for hire,” and who “drove” for SGT during the class period, i.e., all “drivers employed by, or formerly employed by [SGT] . . . [during the class period], who were or are classified as independent contractors.” The common allegations of harm suffered by Gonzales and other drivers is that all were misclassified as independent contractors. As such, they were required at their own expense to install equipment and provide tools to access SGT’s dispatch system, and to obtain insurance and perform maintenance, all expenses Gonzales contends should properly be borne by their employer and were denied the benefits of wage order protections.

On remand, SGT must show that the variations in class members’ factual situations are sufficiently wide to defeat class certification. For instance, regardless of a driver’s status as lessee or owner/operator, drivers were charged weekly “lease” fees to perform services under the SGT umbrella. If and to the extent it is important that a driver owned rather than leased a vehicle—which may cause a variation in weekly “lease” rates, insurance, equipment installation fees, or some other business expense—such a difference would likely be a function of the damages to which an individual driver was entitled. That a calculation of individual damages will, at some point, be required does not foreclose the possibility of taking common evidence on the issue of misclassification questions. (Collins v. Rocha (1972) 7 Cal.3d 232, 238.) The overarching inquiry is whether class members were misclassified during the class period. If so, as discussed in the overlapping analysis of commonality above, the class members are entitled to a determination as to whether SGT misclassified them as independent contractors. The fact that individual members of the class have different damages does not preclude class certification. (Sav–On, supra, 34 Cal.4th at pp. 329–330.)

The trial court also alluded to the fact that Gonzales could not demonstrate typicality for the entire class because he never drove LAX or school runs. However, as we have noted, typicality does not require that a class representative have suffered injuries identical to those of other class members. (Martinez v. Joe’s Crab Shack Holdings, supra, 231 Cal.App.4th at p. 375.) Accordingly, the trial court must reevaluate whether the requirements for typicality are satisfied, and whether, given time limitations, the complaint may be amended to add an additional representative plaintiff.

Slip op., at 37-38. This discussion pushes back against a common argument used to try and “thin” a class action down to a subset of the members alleged to be a part of the class. The argument is frequently along the lines of “the plaintiff didn’t work in all of the job positions,” or “the plaintiff didn’t work at all of the locations.” This discussion doesn’t entirely reject such arguments, but it certainly undermines them substantially with a fact pattern that is not particularly unique in wage and hour class actions.

Another Court of Appeal holds that PAGA claims cannot be split and sent partially to arbitration

Right now, Lawson v. ZB, N.A., review granted Mar. 21, 2018, S246711, is making its way through the California Supreme Court. The case asks whether a representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) (‘PAGA”) seeking recovery of individualized lost wages as civil penalties under Labor Code § 558 fall within the preemptive scope of the Federal Arbitration Act (9 U.S.C. § 1 et seq.). Lawson was argued on June 5, 2019. Supplemental briefing was requested and received, and the matter was deemed submitted on June 27, 2019. That means a decision is imminent.

Today, in Mejia v. Merchants Building Maintenance, LLC (August 13, 2019), the Court of Appeal (Fourth Appellate District, Division One) another Court of Appeal came down on the side of the Courts of Appeal that have concluded that PAGA claims cannot be split so as to direct a portion to arbitration:

We agree with the conclusion of the Lawson and Zakaryan courts on this question, and conclude that a single PAGA claim seeking to recover section 558 civil penalties may not be "split" between that portion of the claim seeking an "amount sufficient to recover underpaid wages" and that portion of the claim seeking the $50 or $100 per-violation, per-pay-period assessment imposed for each wage violation. The result is that an employee bringing a PAGA claim to recover the civil penalties identified in section 558 may not be compelled to arbitrate that portion of her PAGA claim that seeks an amount sufficient to recover underpaid wages pursuant to that statute, while the rest of the claim that seeks the $50 or $100 per-pay-period per violation portion of the penalty remains in a judicial forum. We therefore affirm the trial court's order denying the MDM defendants' motion to compel arbitration in this case

Slip op., at 6.

As for reading tea leaves, the Lawson matter (perhaps to be known as the ZB matter due to a change in the name of the case), as noted above, requested supplemental briefing on this question:

If this court concludes Labor Code section 558's "amount sufficient to recover underpaid wages" is not a "civil penalty" recoverable under the Private Attorneys General Act (Lab. Code, § 2698 et seq.), should the trial court be ordered to deny ZB's motion to compel arbitration?

Lawson docket. That question suggests that at least someone on the Supreme Court is thinking about whether an aggrieved employee can recover unpaid wages at all through Labor Code § 558. There’s a curve for you.

How long do "on-duty" meal periods have to be? 30 minutes.

This really feels like the setup for a bad joke that only employment lawyers in California would get. Question: How long does an “on-duty” meal period have to be? Answer: 30 minutes. Follow-up: But….it’s “on-duty.” Put your hand down. I’m not calling on you. In L’Chaim House, Inc. v. Division of Labor Standards Enforcement (July 31, 2019), the Court of Appeal (First Appellate District, Division One), the Court was called upon to review a wage and hour citation by the DLSE. The Court summarized, “On appeal, L’Chaim claims that under the applicable Industrial Welfare Commission (IWC) wage order, it may require its employees to work “on-duty” meal periods that, unlike periods when employees are ‘relieved of all duty,’ do not need to be at least 30 minutes long.” (Slip op., at 1.)

The Court’s discussion was more interesting than you might think, since the Court necessarily had to explain the difference between on-duty and off-duty meal periods, and what events can transform one into the other. This led to the Court’s rejection of the appellant’s position:

What L’Chaim misunderstands is that an on-duty meal period is not the functional equivalent of no meal period at all. On-duty meal periods are an intermediate category requiring more of employees than off-duty meal periods but less of employees than their normal work. Recognizing this, the trial court stated that even if L’Chaim’s employees were not entitled to “an uninterrupted meal period,” they “may at least be afforded 30[] minutes of limited duty enabling them to eat their meal in relative peace.” L’Chaim attacks the notion that its “employees may be given ‘limited duty’ while on a meal break” as creating “several absurd consequences.” According to L’Chaim, because employees do not clock out for on-duty meal periods, there is no way to track the length of those periods. In addition, “the creation of a new ‘limited duty’ requirement to [Wage Order No. 5, subdivision 11(E)] would force employers to delineate which tasks an employee is expected to perform during his or her on-duty meal period,” which L’Chaim claims “would be difficult and even potentially dangerous for the residents.”

But any such practical challenges are inherent in providing “on-duty meal periods” at all, not just periods of a particular length. Moreover, the question presented here is whether an on-duty meal period must be at least 30 minutes long, not how courts might evaluate the adequacy of the period under different factual scenarios. Thus, while we do not address what constitutes an acceptable on-duty meal period in the context of this case, what we can say is that employees of 24-hour residential care facilities for seniors are unambiguously entitled to “on-duty meal periods” under subdivision 11(E). L’Chaim’s interpretation would effectively read that requirement out of Wage Order No. 5.

Slip op., at 5. If this still doesn’t convince you, the Court made one final observation that seems pretty solid:

Finally, even if any doubt remained, we agree with the DLSE that section 512 compels the same conclusion. Under that statute, which L’Chaim does not address in its briefing, an employer is prohibited from “employ[ing] an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes,” unless the employee works no more than six hours in a day and agrees to waive the meal period. (§ 512, subd. (a).) Although section 512 contains exceptions for workers in several industries, none of them apply here. And although the IWC has broad authority to “adopt or amend working condition orders with respect to . . . meal periods . . . for any workers in California consistent with the health and welfare of those workers,” at all relevant times—including when subdivision 11(E) was added to Wage Order No. 5—that authority has been specifically limited “as provided in Section 512.”

Slip op., at 7. The Wage Orders cannot negate Labor Code provisions. The balance of the decision is worth a quick read if you practice in this area.

The tort of "Trespass to Chattel," by itself, does not support a UCL violation

I just wanted to write “trespass to chattel,” so this case gets a post just for that. In Pneuma International, Inc. v. Cho (June 24, 2019), the Court of Appeal (First Appellate District, Division One) was asked to review an assortment of complaints about the outcome of a trial. One issue was whether the failure to transfer ownership of a domain, the “trespass to chattel” that was at issue, constituted a fraudulent or unfair practice under the UCL. While Pneuma argued that the UCL’s “unlawful” prong is construed broadly, so there should be no resistance to borrowing the tort to serve as the predicate violation, the Court was not persuaded. After noting the dearth of authority on that particular tort, the Court said:

Although not directly relevant to whether Pneuma may “borrow” a tort as a basis for a UCL cause of action, respondents correctly observe that Pneuma may not recover damages under a UCL cause of action because remedies under the act are purely equitable in nature. (E.g., Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150-1151 [remedies provided under UCL “are limited” and “it is well established that individuals may not recover damages”].) Pneuma does not identify what additional relief it would be entitled to if it prevailed on its UCL cause of action. The trial court already ordered the equitable relief of transferring the egpak.com website to Pneuma after it prevailed on a cause of action for trespass to chattel.

Slip op., at 15. So, does this mean that, where the UCL could supply some additional relief, a common law tort could serve as a predicate violation of the UCL? More realistically, can you even concoct a scenario where it would make sense to say that a common law tort constituted the predicate violation?

It's still possible to waive enforcement of arbitration agreements according to Nunez v. Nevell Group, Inc.

Other than the minor surprise I now experience when any motion to compel arbitration is denied, such agreements having achieved a status as super-contracts with super powers, the decision in Nunez v. Nevell Group, Inc. (pub. ord. May 28, 2019) isn’t too surprising. In Nunez, the Court of Appeal (Fourth Appellate District, Division Three) affirmed the trial court’s denial of a motion to compel arbitration on the basis of waiver, delay, and prejudice.

The Court covers two topics in its discussion of waiver that might be of use to others. First, the Court examines the idea of waiver generally. Second, the Court examines the “clear and unmistakable” standard that asks whether a CBA clearly and unmistakably waives the right to a judicial forum for the particular type of claim in question. Keep in mind that, as the Court here observed, federal and California state courts may reach slightly different conclusions regarding application of the “clear and unmistakable” waiver standard, since California Courts are not bound by federal court decisions on the subject.

FAA section 1 held to exempt some California truck drivers from FAA coverage in Nieto v. Fresno Beverage Co.

The arbitration battle lines have somewhat diminished in their spectacular scope, but that doesn’t mean the war is entirely over. Case in point: in Nieto v. Fresno Beverage Co. (certified for publication March 22, 2019), the Court of Appeal (Fifth Appellate District) affirmed a trial court ruling that found beverage company deliver drivers to be exempt from Federal Arbitration Act (9 U.S.C. §1 et seq., the “FAA”) by operation of the exemption in Section 1 for what the Supreme Court has denominated “transportation workers.”

The case is not too long of a read, but it nevertheless does a thorough job of reviewing decisions addressing the Section 1 exemption (see pages 6-13 for the state of affairs).

There is also a quick reminder in the discussion about waiver of arguments not raised in the Opening Brief.

Kenneth H. Yoon, Stephanie E. Yasuda, and Brian G. Lee of Yoon Law and Douglas Han, Shunt Tatavos-Gharajeh, and Daniel J. Par of Justice Law Corporation represented the prevailing plaintiff on appeal.

Perfunctory certification order reversed and sent back to the trial court in Myers v. Raley's

The standard of review governing certification orders is effectively unique to class actions. As the Supreme Court explained in Ayala v. Antelope Valley Newspapers, Inc. 59 Cal.4th 522 (2014): “We review the trial court’s actual reasons for granting or denying certification; if they are erroneous, we must reverse, whether or not other reasons not relied upon might have supported the ruling.” Id., at 530. In other words, only the stated reasons are reviewed under the abuse of discretion standard. And if a stated reason includes a legally erroneous provision, that, by definition, constitutes and abuse of discretion. The record is not searched for an alternative basis to affirm.

In Myers v. Rayey’s (March 12, 2019), the Court of appeal (Third Appellate District) [Yolo!] concluded that one paragraph of substance was insufficient to permit review, since, without a statement of reasoning and analysis, there is no way to meaningfully review what is simply an ultimate conclusion:

To turn to the record to concoct some basis for the trial court’s denial of certification is to abolish the relevant standard of review, ignore the trial court’s reasoning, and apply ordinary appellate review contrary to the legion of cases that prohibit appellate revisionism. This we cannot do.

Slip op., at 15. As part of its discussion of the insufficiency of a “perfunctory” order, the Court explicitly disagreed with Dailey v. Sears, Roebuck & Co., 214 Cal. App. 4th 974 (2013), which had affirmed an exceedingly terse certification denial order.

This hits close to home, as I was unsuccessful on an appeal of a certification order with about as much (or little) in the way of analysis. If I had been in front of this panel…. And if it weren’t for those meddling kids!

I also get the feeling when reading the statement of facts that the Court had a strong opinion about how things should turn out after round two but couldn’t actually say how things should turn out.