Wage Law

New Littler Report on Wage and Hour Compliance

Some of the best ideas for the plaintiff's bar have come from defense lawyers. The latest example: Littler Mendelson has published an interesting report entitled Total Wage and Hour Compliance: An Initiative to End the Wage and Hour Class Action War. You can download the report directly from the firm's website. It isn't just a learning tool for employers. It also provides considerable food for thought if you are represent employees, and that's all we'll say about it.

Restitution of Waiting Time Penalty Wages

Wage and hour lawyers are talking about a law and motion ruling made last week by Orange County Superior Court Judge David Velasquez, holding that waiting time penalties under Labor Code § 203 were recoverable as restitution under Business & Professions Code § 17203. In Ybarra v. Aramark Corp., No. 30-2008-00180008-CU-OE-CXC, the court treated section 203's "wages of the employee [that] shall continue as a penalty" as ordinary wages.

In similar fashion to the "additional hour of pay" [in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1108], the instant court observes that Labor Code § 203 does not provide that the employer is "subject to" the imposition of the waiting time penalty. Rather that section states "the wages of the employee shall continue" if the employer does not pay separation wages within 72 hours of the employee's termination. The employee is not required to do anything affirmative — "take action" — in order to be entitled to the continuing right to wages. The right to the waiting time penalty is self-executing, i.e., the employee's right to payment of the waiting time penalty arises immediately upon the satisfaction of the condition precedent, late payment of the last wages due to the employee at the time of termination from employment. In that respect, because the waiting time penalty becomes immediately due and payable to the employee, the right to receive the penalty becomes a vested property right of the employee and the proper subject of restitution. (Cf. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178 [wages which are due but unpaid are the proper subject of restitution].)

If this is appealed, it must proceed by writ petition, but the writ will be submitted to the same appellate division that gave us McCoy v. Superior Court (2007) 157 Cal.App.4th 225 (review denied) last year. In McCoy (which we previously discussed at a post found at this link), the court ruled that the statute of limitations was one year on causes of action seeking section 203 penalties that do not arise in conjunction with the claims for the underlying wages. The McCoy court noted that its holding meant that the court didn't need to address the plaintiffs claim that the statute was four years under the alternate theory of unfair competition, which was unfortunate, because the issue has arisen in quite a few very large cases.

[Hat tip: The UCL Practitioner, which has a link to the order]

New Oral Argument Set in Brinker

The second round of oral argument in Brinker Restaurant Corporation v. Hohnbaum is now set for May 13, 2008, before the Fourth District Court of Appeal, Division One, in San Diego. The latest developments:

Petitioner Brinker Restaurant corporation's request for leave to file a supplemental brief filed April 22, 2008, is GRANTED. The supplemental brief is deemed filed this date. Real parties in interest shall have seven days from the date of this order to file a supplemental reply brief addressing the issues raised in the supplemental brief. Real parties in interest Adam Hornbaum, Illya Haasf, Romeo Osorio, Amanda June Rader, and Santana Alvarado's motion and requests for judicial notice, filed on December 17, 2007 and April 22, 2008, are GRANTED in part and DENIED in part. Real parties in interest's motion requesting we take judicial notice of the depositions of plaintiffs' experts Jon A Krosnick and Harold S. Javitz is denied. Real parties in interest's request we take judicial notice of a February 16, 1999 Division of Labor Standards Enforcement (DLSE) Opinion Letter, a September 17, 2001 DLSE Opinion Letter, Industrial Welfare Commission Wage Order 5-76, a June 14, 2002 DLSE Opinion Letter and excerpts from the DLSE Enforcement Policies and Interpretations Manual is denied as unnecessary as these are items that we are entitled (but not required) to rely upon as authority, without having to formally take judicial notice. The denial as unnecessary of real parties in interest's request we take judicial notice of these items should not be construed as meaning this court will not consider them in ruling of the petition for writ of mandate in this matter. Real parties in interest's request we take judicial notice of the August 28, 2000 Senate Floor Bill Analysis and September 9, 2000 Assembly Floor Bill Analysis for Assembly Bill No. 2509 is granted.

Since then, several letters were written to the court informing the panel about the depublication of Bell v. Superior Court (H.F. Cox, Inc.), and the petitioner has filed a supplemental brief concerning the Brown v. Federal Express Corp. case.

We've been following the case closely, and have discussed it in several prior posts, including here and here.

Paperboys Are Employees, not Contractors

The paperboy is an employee, not an independent contractor, according to an unpublished opinion issued in February that was ordered published last week by the Second District Court of Appeal. Antelope Valley Press v. Poizner (2008) __ Cal.App.4th __ poses the specific question whether, for purposes of worker’s compensation insurance, persons who make deliveries of newspapers for the Antelope Valley Press are independent contractors or employees. The issue arises not out of a claim for worker’s compensation benefits, but a dispute over insurance premiums. The court expressly noted that its ruling was limited to this context.

Our review of the facts of this case and relevant law convinces us that the trial court correctly ruled that the administrative record supports the conclusion that the carriers are employees for purposes of workers’ compensation law, not independent contractors. Therefore, we will affirm the trial court’s judgment.

As usual, the court addressed a laundry list of relevant factors that tilted toward employment:

• Home deliveries are made by the carriers, who are paid according to the number of copies of the Press they are given to deliver.
• the per copy rate paid to the carriers varies.
• There are written contracts
• they provide that papers must be delivered in a safe and dry condition.
• If a carrier chooses to wrap the Press in a plastic bag to keep it from getting wet or otherwise harmed, the bag must be yellow or white.
• The carriers also receive approximately 20 complementary copies of the Press each day.
• These free samples, called the “C’s,” are dropped off by the carriers at homes of nonsubscribers.
• The carriers are paid 3 cents for delivering each C. They are required to put the C’s in orange plastic bags, which are provided by AVP
• The routes are checked once a week.
• Carriers also deliver AVP’s magazine-type publication called “Lifestyles.”
• Carriers are required to put Lifestyles in the white plastic bags that AVP provides, and they receive 5 cents per copy they deliver.
• AVP also publishes a free “TMC” (total market coverage) advertisement paper which is called the A.V. As with the C’s, the carriers are required to place the A.V. Express in colored plastic bags (red) that are provided by AVP, and management checks the routes to verify that deliveries of the A.V. Express are made.
• The carriers receive 3 cents per copy of the A.V. Express they deliver, and are charged 23 cents for each copy they do not actually deliver.
• Deliveries by the carriers are made according to AVP’s time schedules.
• The carriers are expected to pick up their bundles of newspapers by a specific time from a specific location.
• If a carrier is late, he or she is charged $35 per hour ($0.58333 per minute) to cover AVP’s cost of having someone oversee the pick-up location until the carrier arrives.
• Additionally, personnel of AVP may begin folding and bagging the tardy carrier’s newspapers after the deadline for pickup so as to facilitate prompt delivery of papers to the customers, and the carrier is charged for the bags even though carriers are not required to put the Press in bags.
• For the pick up location that is not manned by AVP personnel, the carrier runs the risk that the newspapers will be stolen if the carrier is not on site when they are dropped off, and stolen papers are the financial responsibility of the carrier.
• On weekdays, carriers are required to finish their deliveries by 5:00 a.m. on in town routes and 6:00 a.m. on out-of-town routes. On weekends, the delivery deadlines are 6:00 a.m. and 7:00 a.m., respectively.
• The A.V. Express is to be delivered by noon on Saturday.
• Home delivery subscribers pay their subscription fees to AVP, not to the carriers.
• If a home delivery subscriber fails to pay his or her bill, the carrier is not docked unless and until a written stop delivery notice for that customer is given to the carrier.
• The carriers are charged a $2.50 complaint recording fee if a customer does not receive his or her copy of the Press, does not receive it in a timely manner, or it is damaged.
• If there are more than 2 complaints per one thousand paid deliveries and the carrier has elected to have AVP redeliver the Press, the carrier is also charged a $2.50 redelivery fee per complaint. If the carrier has elected to correct subscriber complaints by himself or herself but does not make the correction within one hour of being notified of the problem, or cannot be reached to receive such notification, then if AVP corrects the complaint the carrier is charged $35 per hour and $.31 per mile driven by an AVP employee to correct the problem.
• Invoices are issued to them every two weeks. The invoices list credits and charges.
• The only information the manager seeks from the prospective carrier is whether he or she has a California driver’s license, proof of vehicle insurance, and a social security number.
• The form contract is for a term of one year. Either party can terminate the contract without cause with 30 days written notice. Either party can terminate the contract, effective immediately with written notice, if the other party commits a material breach.
• there was an extreme disparity in bargaining position between the Carriers and AVP.
• "the Carriers wanted work, and they signed what they needed to in order to get it.”
• the lengthy, small print contract was “drafted by sophisticated lawyers and is in no sense the product of arm’s length negotiations, as might occur, for example, in hiring an independent contractor, specialized and sophisticated in the costs of his business, and able to garner trade from other actual and potential customers.”
• There was no evidence that any of AVP’s carriers hold themselves out as being an independent delivery service that happens to have AVP as one of its customers.
• Further, AVP does not cite evidence showing that the carriers have a substantial investment in their AVP delivery duties other than their time and the vehicles they use; and their vehicles are not shown to be other than the vehicles they use for their own personal activities.
• there was no evidence that any of the carriers have a delivery business through which they can distribute that risk and cost.
• Delivering papers requires no particular skill. A carrier’s remuneration is in very large part dependent on nonnegotiated financial terms in the contract rather than on the carrier’s initiative, judgment or managerial abilities.

The court was not concerned about the parties' written arrangements characterizing the relationship as one involving contractors.

The Borello and JKH Enterprises courts also determined that the workers in those cases were employees despite their having signed agreements (migrant farm workers in Borello) or other writings (delivery service drivers in JKH Enterprises) that stated they are independent contractors.

Even though the case arose out of an insurance premium dispute, because the contractor/employee issue arises frequently with wage and hour implications, the opinion is a worthwhile read. You can download the full text of Antelope Valley Press v. Poizner here in pdf or word format.

Alan II Not Published

In Alan v. American Honda Motor Co. Inc. (2006) 131 Cal.App.4th 886, the Supreme Court reviewed the dismissal of an appeal and considered a discreet issue: Did the Statement of Decision and Minute Order dated January 2, 2003, trigger the 60-day period within which to notice an appeal under California Rules of Court, rule 8.104. They concluded that it did not, and so the case was remanded to the Court of Appeal for a review on the merits. On remand, in an unpublished opinion, they still ruled against the plaintiffs. Alan v. American Honda Motor Co. Inc. (2008 Cal. App. Unpub. LEXIS 829).

As explained in Massachusetts Mutual, we will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used; or (2) erroneous legal assumptions were made. (Massachusetts Mutual, supra, 97 Cal.App.4th at p. 1287.)

In this case, we conclude that the trial court finding that Alan did not make a sufficient showing of class-wide damages is supported by substantial evidence and that the trial court did not use improper criteria or make erroneous legal assumptions. As noted by the trial court, Alan's exhibits failed to show commonality as to damages. Alan failed to present sufficient evidence that purported class members knew of the alleged service concealment or relied upon it and then suffered damages as a result of the reliance. Without awareness of the alleged concealment and a detrimental change of position because of the alleged concealment, there can be no injury. Thus, there are no facts showing a common injury. In conclusion, the trial court finding that commonality does not exist with respect to damages is supported by substantial evidence.

DISPOSITION The order is affirmed. Defendant Honda is awarded costs on appeal.

You can download the full text of the two earlier opinions in Alan v. American Honda Motor Co. Inc. here: the 2005 opinion and the Supreme Court opinion are still posted. Last week, the Supreme Court denied a request to publish. We last talked about it in January, 2007.

Ninth Circuit Reverses Denial Of Class Cert. in Wal-Mart Assistant Manager Case

In a short, unpublished opinion, the Ninth Circuit has reversed a significant portion of District Court order denying class certification in a wage and hour class action against Wal-Mart. In Sepulveda v. Wal-Mart Stores, Inc., a group of assistant managers asserting various wage and hour claims (overtime and meal and rest period pay) brought a putative class action against against the retailer. The District Court denied the plaintiffs' motion for class certification in Sepulveda v. Wal-Mart Stores, Inc. (C.D.Cal. 2006) 237 F.R.D. 229, because the claims for monetary relief in the class action complaint were not incidental (failing the requirements for certification under Rule 23(b)(2)) and the duties of assistant managers were not susceptible to collective proof (failing the requirements for certification under Rule 23(b)(3)). On appeal, the Ninth Circuit held:

Plaintiffs, current and former Assistant Managers of Defendant, Wal-Mart Stores, Inc., appeal the district court’s order denying their motion for class certification. We have jurisdiction under 28 U.S.C. § 1292(e) and Federal Rule of Civil Procedure 23(f).

The district court misapplied Ninth Circuit precedent when, relying on its conclusion that Plaintiffs’ claims for monetary relief were non-incidental, it denied class certification under Federal Rule of Civil Procedure 23(b)(2). See Molski v. Gleich, 318 F.3d 937, 949–50 (9th Cir. 2003) (refusing to adopt the incidental damages approach set forth by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998)). The district court must focus on the intent of the Plaintiffs in bringing suit. Id. at 950. We therefore hold that the district court abused its discretion in denying class certification. See Sw. Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003) (en banc) (per curiam). On remand the district court shall reconsider class certification under Federal Rule of Civil Procedure 23(b)(2), and, in the alternative, also reconsider using Rule 23(c)(4) to certify specific issues under the Rule 23(b)(2) standard. See Society for Individual Rights, Inc. v. Hampton, 528 F.2d 905, 906 (9th Cir. 1975). In reconsidering these issues, the district court may find the California Supreme Court’s decision in Gentry v. Superior Court, 42 Cal. 4th 443, 457–59, 462, 464–65 (2007), instructive.

The district court did not abuse its discretion in denying class certification under Federal Rule of Civil Procedure 23(b)(3), and we therefore affirm that portion of its order. Each party shall bear its own costs on appeal.

We previously discussed the case in a January 2007 post that can be found at this link, where we observed:

The appeal is noteworthy because, unlike several other pending appeals in similar cases, this is a discretionary, interlocutory appeal, rather than a standard, post-judgment appeal. The standard for allowing such an appeal is extremely high, and the fact that the Ninth Circuit allowed the appeal suggests that the District Court’s decision to deny certification will be reversed.

The result was very close to what we expected.

District Courts Cannot Enjoin Other Actions, Even With Certified Class Action Pending

Last week's decision in Negrete v. Allianz Life Insurance Co. (9th Cir. 2008) __ F.3d __ is not a wage and hour case, but its holding concerning class action procedure could affect every wage and hour class action filed in the State of California. Essentially, the case holds that the mere risk that someone will file on top of an existing class action, even one which has been certified, and will then attempt to undermine the class by pursuing a so-called "reverse auction" settlement does not empower the court to issue orders which amount to an injunction against other courts and other proceedings which have overlapping parties, claims or issues.

Vida F. Negrete filed this class action lawsuit against Allianz Life Insurance Company of North America. Allianz appeals a district court order that effectively prevents it from proceeding with any settlement negotiations on similar class action claims raised in any federal or state court without first obtaining permission from Negrete’s Co-Lead Counsel, and from finalizing a settlement in any other court “that resolves, in whole or in part, the claims brought in [the Negrete] action,” without first obtaining the district court’s approval. We reverse.

It is important to note that there were "no facts before the district court that supported the notion that some kind of collusion was afoot."

Negrete Counsel floated out the specter of a reverse auction, but brought forth no facts to give that eidolon more substance. A reverse auction is said to occur when “the defendant in a series of class actions picks the most ineffectual class lawyers to negotiate a settlement with in the hope that the district court will approve a weak settlement that will preclude other claims against the defendant.” Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 282 (7th Cir. 2002). It has an odor of mendacity about it. Even supposing that would be enough to justify an injunction of one district court by another one, there is no evidence of underhanded activity in this case. That being so, if Negrete’s argument were accepted, the “reverse auction argument would lead to the conclusion that no settlement could ever occur in the circumstances of parallel or multiple class actions — none of the competing cases could settle without being accused by another of participating in a collusive reverse auction.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1189 (10th Cir. 2002) (internal quotation marks omitted). In short, the district court’s order must be set aside. There simply was no proper support for the district court’s enjoining of proceedings in other courts.

The court wouldn't necessarily have endorsed the idea of an injunctive even if there were some reverse acution shenanigans going on, adding that they "need not decide whether reverse auction evidence would justify an injunction of state court proceedings, as opposed to leaving correction up to the usual appellate processes." Parsons Steel, Inc. v. First Ala. Bank, 474 U.S. 518, 525, 106 S. Ct. 768, 772-73, 88 L. Ed. 2d 877 (1986); Atl. Coast Line, 398 U.S. at 287, 90 S. Ct. at 1743.

The district court was troubled by the fact that settlements in other courts might draw the fangs from at least a portion of the class action case that it was then considering. Perhaps they will. But in this instance it was improper for the district court to react by issuing an injunction against other federal and state court proceedings. Rather, the district court must live with the vicissitudes and consequences of our elegantly messy federal system. The restrictions inherent in the All Writs Act and explicit in the Anti-Injunction Act have helped to concinnate the elements of our national polity; this is not the time to disrupt the harmony.

You can download the full opinion at this link.

Know Of Any Other Good Blogs?

We've removed a few links from the side column. If you had a blog we listed, but haven't posted to it since 2007, or posted fewer than five times in the last twelve months, you got removed. As always, we're interested in posting links to other good legal blogs, and particularly employment-related blogs. This week we added four legal blogs, none of which are employment blogs per se.

• The California Blog of Appeal
• ClassActionBlawg.com
• Overlawyered
• Class Action Defense Blog

If you know of any we should include, especially if it is yours, leave a comment or drop us an email.

Happy May Day

While here in California, May 1 (which was also Law Day) was the day for friends of labor to abandon work and school to march in the streets, in many places, they do all that on another May Day, which falls today, May 5. We will instead celebrate Mexico's 1862 victory over the French (which at the time, was thought impressive) by tossing back margaritas at our local Mexican eatery.

Feeling Lucky?

Happy Cinco de Mayo. We might celebrate with a happy hour margarita at one of many restaurant chains where we represented classes or other large groups of employees in wage and hour claims. But that's not the only thing making us happy today. Today's a lucky day of sorts for us.

Google digs blogs. Go to Google and do a search for wage law, and click the "I'm feeling lucky" button.

We'll see you back here in a moment.

For the first time, we've skipped ahead of the U.S. Department of Labor on the Google result page for this and a few other wage & hour related searches. We're still third fourth for searches on "wage and hour law" however. We now have a real B.L.O.G. (best listing on Google). Soon, we will have the domain name www.CaliforniaWageLaw.com publishing this blog, too, and we'll be even easier to find.