Posts belonging to Category Caselaw Developments

Last month, yet another case was granted review pending the California Supreme Court’s decision in Iskanian v. CLS Transport: Reyes v. Liberman Broadcasting, Inc., 146 Cal. Rptr. 3d 616 (Cal. Ct. App. 2012). In Reyes, the plaintiff worked as a security officer for the defendant. After the plaintiff’s employment ended, he filed both a class action and PAGA representative action alleging wage and hour violations. The trial court denied the defendant’s attempt to compel arbitration, ruling that it had waived any entitlement to arbitration by delaying before bringing a petition to compel arbitration. The California Court of Appeal reversed, however, holding that the defendant had not in fact waived its right to compel arbitration.

Iskanian is shaping up to be a lynchpin post-Concepcion decision on the issue of waiver. In addition to the grant and hold issued in Reyes, the Ninth Circuit is also hearing an appeal in Kilgore v. KeyBank, with the en banc panel contemplating issuing a stay of Kilgore pending a result in Iskanian. The California Supreme Court has the opportunity to use its decision in Iskanian to define the extent to which class actions remain available to enforce wage and hour violations.

In Reyes, the plaintiff contended that the defendant had waived any right to arbitrate through delay, as the defendant did not file its motion to compel arbitration until over a year after the original complaint was filed. Reyes at 620. The defendant, and subsequently the Court of Appeal, embraced a “futility” theory, arguing that prior to the U.S. Supreme Court’s ruling in AT&T Mobility v. Concepcion, the defendant perceived moving to compel arbitration to be futile. “LBI reasonably perceived that it likely would have been futile to seek to compel arbitration in light of Gentry . . . and California authority applying Gentry to invalidate class arbitration waivers.” Reyes at 629. The theory of futility as an excuse for delay is also an issue in Iskanian, and so will likely be addressed by the California Supreme Court.

The California Supreme Court has granted a request to depublish Tien v. Healthcare Corp., 209 Cal. App. 4th 1077 (2012), in which California’s intermediate appellate court had affirmed a trial court’s denial of certification of meal break claims. Tien’s depublication follows the Supreme Court’s recent issuance of orders to depublish two other meal break cases: Lamps Plus Overtime Cases, 146 Cal. Rptr. 3d 691 (2012), and Hernandez v. Chipotle Mexican Grill, Inc., 146 Cal. Rptr. 3d 424 (2012).

The common thread in all three depublished cases is their interpretation of Brinker v. Superior Court, 53 Cal. 4th 1004 (2012), all three having read Brinker to require employers simply to “make available” or “offer” meal periods. When Brinker was issued, public consensus was that neither the plaintiffs’ bar nor employers had clearly prevailed. The Court devised a standard that fell between employers’ proposal that they be required only to offer meal breaks, and plaintiffs’ argument that employers be required to ensure that meal breaks are taken. While Brinker engendered disappointment among workers’ advocates at the time it came down, the Supreme Court’s recent disagreement with cases holding that meal breaks must merely be offered could indicate a doctrinal shift towards a policy of meal break enforcement rather than availability.

In urging depublication of Tien, prominent class action specialist Kimberly Kralowec argued that Tien constitutes a “misreading” of Brinker, explaining that “[t]he Tien opinion wholly fails to acknowledge this Court’s explicit holding in Brinker that ‘[t]he wage orders and governing statute do not countenance an employer’s exerting coercion against the taking of, creating incentives to forego, or otherwise encouraging the skipping of legally protected breaks.’” Depublication Request at 4 (quoting Brinker at 1040).

Kralowec’s depublication request also assailed Tien for misreading Brinker with respect to California’s rest break law, and for adopting the reasoning of two federal cases frequently cited by employer defendants, Brown v. FedEx, 249 F.R.D. 580 (C.D. Cal. 2008), and Kenny v. Supercuts, 252 F.R.D. 641 (N.D. Cal. 2008). The employer defendant in Brinker had urged the Supreme Court to adopt the reasoning of Brown and Kenny, but the court “conspicuously declined to do so,” Kralowec’s letter notes.

The full text of Kraweloc’s letter is available here.

The National Labor Relations Board (NLRB) has issued a potentially influential ruling that extends its earlier interpretation of AT&T Wireless v. Concepcion in D.R. Horton. That decision struck an arbitration clause that included a class action waiver as a condition of employment. See D.R. Horton, 357 NLRB No. 184 (Jan. 3, 2012). Now the NLRB has held that making a class action waiver a condition of employment is an unfair labor practice, even where the waiver is not part of an arbitration clause. See Convergys Corp., 2012 NLRB LEXIS 742 (Oct. 25, 2012).

Convergys, which provides customer service support, had required all job applicants to sign a form stating that the applicants “will not lead, join, or serve as a member of a class or group of persons bringing such a claim or lawsuit.” Convergys at 2. Regardless, Convergys employee Hope Grant filed an FLSA collective action alleging that Convergys failed to pay her and similarly situated workers for essential tasks undertaken before and after their core customer service duties. Id. Convergys moved to strike any class and collective allegations pursuant to the waiver form all employees had signed as part of applying for their jobs at Convergys. Id.

In holding that the class action waiver violates the National Labor Relations Act, the NLRB identified D.R. Horton as the controlling authority, finding that “despite the fact that the D.R. Horton decision concerned a mandatory arbitration agreement, rather than a lawsuit which waived the employees’ rights to maintain a class or collective action, it is clearly dispositive of this case.” Convergys at 3. The NLRB rejected Convergys’ attempts to distinguish D.R. Horton. The fact that Grant was a job applicant rather than an employee was found to be of no consequence, both because the NLRA covers job applicants and because Grant was an employee when she filed the class action. See id.

D.R. Horton is the subject of a pending appeal in the Fifth Circuit, which rendered it “procedurally infirm,” according to Convergys, another argument that was rejected by the NRLB. See Convergys at 3, n.2. Accordingly, in addition to making clear that D.R. Horton prohibits both mandatory arbitration clauses and class action waivers as conditions of employment, Convergys underscores that D.R. Horton remains good law while the appeal works its way through the Fifth Circuit.

In addressing California’s so-called “day of rest” statutes (Cal. Lab. Code §§ 551 and 552), District Court Judge Cormac Carney has ruled that employees may waive their entitlement to a day off after six days of work, in a decision so broad as to perhaps render the purported right to a day of rest illusory. See Mendoza v. Nordstrom, No. 10-0109 (C.D. Cal. Sept. 21, 2012) (Memorandum of Decision). While Judge Carney ruled that Nordstrom could not manipulate the statutes’ plain meaning — “to prohibit employers from causing employees to work seven consecutive days” — the decision turned on an exceptionally literal understanding of what it is for an employer to “cause” an employee to work seven consecutive days. Memorandum at 8.

There was no dispute that the plaintiffs had in fact worked seven or more consecutive days, seemingly in violation of the labor code. And while the plaintiffs conceded that they had ostensibly chosen to exceed the six-day limit, they argued that this was in response to informal pressures. Plaintiff Christopher Mendoza claimed that “Nordstrom caused him to work for more than six consecutive days by exploiting his desire to earn a decent living, by making promotion within Nordstrom contingent upon additional work, and by giving him positive feedback on his performance evaluations after working beyond his scheduled hours.” Id. at 14. Mr. Mendoza noted that his willingness to forego days off was reflected in his performance reviews, earning praise. See id. at 16-17.

However, Judge Carney found the plaintiffs’ motivation to have been entirely self-directed. As to plaintiff Christopher Mendoza, the ruling concluded that he “was not forced or coerced into accepting additional shifts; he reasonably sought additional work to earn more money and maintain his benefits.” Id. at 18. Similarly, as to plaintiff Megan Gordon, who alleged that she covered for an absent employee because she believed that doing so was a tacit requirement, Judge Carney fully credited Nordstrom’s evidence that the store had no formal policy “requiring employees to cover ‘no show’ shifts.” Id. at 19.

Carney also noted that no evidence was presented that demonstrated overt coercion by Nordstrom. Of course, if employees believe that foregoing their statutorily mandated days off is a de facto rule for remaining in the good graces of their employer and advancing within the company, there will rarely be a need for coercive actions on the employer’s part.