Wage Law

Diverse Facts and Legal Arguments Concerning Equitable Defenses in UCL Claims Do Not Bar Class Certification

Unclean hands and other equitable defenses cannot be used to defeat class certification in an unfair competition lawsuit based upon violations of statute, even if the defenses might be taken into account when fashing a remedy, and even if they involve the determination of facts and legal issues that vary greatly among class members. Ticconi v. Blue Shield of California Life & Health (2007) __ Cal.App.4th __.

In Ticconi, the Court of Appeal began its analysis by noting that

Courts have long held that the equitable defense of unclean hands is not a defense to an unfair trade or business practices claim based on violation of a statute. To allow such a defense would be to judicially sanction the defendant for engaging in an act declared by statute to be void or against public policy. (Kofsky v. Smart & Final Iris Co. (1955) 131 Cal.App.2d 530, 532; Page v. Bakersfield Uniform Etc. Co. (1966) 239 Cal.App.2d 762, 770 [“The equitable doctrine of the refusal of aid to anyone with ‘unclean hands,’ does not, as such, apply to actions under [the unfair practices act].”)

At the trial court, Ticconi's class certification motion had been denied because the trial court found that "legal and factual issues concerning the defenses of fraud and unclean hands outweighed those related to liability rendering class treatment disadvantageous." However,

our Supreme Court explained that “equitable defenses may not be asserted to wholly defeat a UCL claim [under Bus. & Prof. Code, § 17200] since such claims arise out of unlawful conduct. . . .” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 179.) In Cortez, the plaintiff brought an action under the UCL seeking restitution of overtime wages withheld from her and other employees. The defendant argued that where the UCL sounded in equity, the trial court was obligated to consider equitable defenses. The Supreme Court held that the equities may be considered when the trial court exercises its discretion to fashion a remedy under Business and Professions Code section 17203. (Ibid.) But, equitable defenses may not be used to defeat the cause of action under the UCL. As more fully explained by Justice Werdegar in her concurrence in Cortez, “in general, as between a person who is enriched as the result of his or her violation of the law, and a person intended to be protected by the law who is harmed by its violation, for the violator to retain the benefit would be unjust.”

Therefore, the diverse facts making up Blue Shield Life’s fraud and unclean hands defenses could not be factored in when determining whether the community interest requirement for class certification had been met.

"Legal and factual issues that go to remedies simply cannot outweigh the common issues related to liability."

Because wage and hour cases are generally based upon statutory violations, and UCL claims are a part of any sound wage and hour class action complaint, Ticconi v. Blue Shield of California Life & Health should be required reading for every wage and hour class action attorney. You can read the full text here in pdf or word format.

DLSE Looking Again at Meal and Rest Period Regs

The Division of Labor Standards Enforcement (DLSE) will be holding a forum later this week in Sacramento and on a second date, to be determined, in Southern California, "to provide members of the public an opportunity to inform the newly appointed California State Labor Commissioner, Angela Bradstreet, of their concerns regarding how recent changes to the meal and rest period enforcement practices required by legislation and recent court decisions has impacted their daily work-lives."

The Sacramento hearings will be held on Thursday, August 2, 2007, from 9 a.m. to 2 p.m., at the Sacramento State Alumni Center, Capital Room, California State University, Sacramento, located at 6000 J. Street, Sacramento, California 95819.

All members of the public are invited to address the Labor Commissioner. Additionally, the Office of the Labor Commissioner will be accepting written comments received by the close of business on Friday, August 31, 2007. Written comments may be sent to:

Chief Counsel
Division of Labor Standards Enforcement
P.O. Box 420603
San Francisco, CA 94142

We suggest workers send written comments, pointing out that the Commissioner is unlikely to hear from real working class folks at a midweek, mid-workday hearing. If prior experience serves as a guide, there is a likelihood that the Chamber of Commerce and/or California Restaurant Association will be packing the room with workers paid or otherwise strongly encouraged to accompany them and testify against employee meal and rest periods.

Regulation Expanding Truckers' Working Hours Is Stricken

On Tuesday, the U.S. Court of Appeals for the D.C. Circuit invalidated a Bush administration regulation that relaxed limitations on the working hours of truck drivers, holding that the regulatory changes lacked adequate justification. Owner-Operatore Independent Drivers Assocation, Inc. v. Federal Motor Carrier Safety Administration (DC Cir. 2007) __ F3d. __. In 2005, the Federal Motor Carrier Safety Administration increased the maximum driving hours of truck drivers from 60 to 77 over 7 consecutive days, and from 70 to 88 hours over any 8 day period. The change had been made in response to a similar appellate ruling issued in 2004.

[Hat tip: Public Citizen]

Review Denied In Belaire-West Landscaping

Yesterday, the Supreme Court denied review of Belaire-West Landscaping, Inc. v. Superior Court (2007) 149 Cal.App.4th 554, which held that the precertification discovery, notice and disclosure opt-out standards expressed in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 also apply to wage and hour cases. We previously discussed Belaire-West Landscaping, Inc. v. Superior Court in a post that can be found at this link.

Class Actions: Required for UCL Claims, Not Required for PAGA

The Third District Court of Appeal has ruled that, under the Proposition 64 revisions to the Unfair Competition Law [UCL] (Business & Professions Code § 17203), a representative claim must be brought as a class action because the UCL now requires compliance with the class action provisions of Code of Civil Procedure § 382; however, the Private Attorneys General Act [PAGA] expressly allows a person to prosecute a representative claim without requiring that it be brought as a class action. In Arias v. The Superior Court of San Joaquin County (Angelo Dairy) (2007) __ Cal.App.4th __, plaintiff brought an action for overtime wages, and meal and rest period claims on behalf of a group of dairy workers. He did not style the complaint as a class action, but alleged claims under the UCLA and PAGA.

As to the UCL claim, Arias argued that the plain language of Proposition 64 is clear and unambiguous, and that it contains no requirement that a representative suit be brought as a class action. The court disagreed, holding that

although Proposition 64 does not on its face require a representative claim to be pled as a class action, it requires that the claim comply with section 382, which is commonly understood to authorize class actions. The requirement that a representative claim comply with section 382 makes plain that a representative UCL claim must be pursued as a class action. To the extent that Proposition 64 presents any ambiguity, we resolve it by the indicia of the voters’ intent. That intent, as set forth in the official ballot pamphlet, was that representative claims under the UCL be brought as class actions.

Thus, the court upheld the trial court's order granting a motion to strike the UCL claims. However, with respect to the PAGA claim, Arias's writ petition was granted. The court held that, unlike the UCL,

the Labor Code statute authorizing a private enforcement action is an exception to the class action requirement.

So, one must allege class allegations to bring a representative claim under the UCL, but need not do so under the PAGA. Both issues are of potential interest to the Supreme Court, so we'll be watching to see if this one gets review, and if so, as to what issues. The full text of Arias can be found at the court's opinion pages, in pdf or word format.

Federal Minimum Wage Increase Takes Effect Today

The Fair Minimum Wage Act of 2007 amended the FLSA to increase the federal minimum wage in three steps. The first step raise to $5.85 per hour is effective today, July 24, 2007. The second raise, to $6.55 per hour, goes into effect July 24, 2008; and the third, to $7.25 per hour, is effective July 24, 2009. Here is a list of the various states' minimum wages:

State	Minimum hourly wage
Alabama	No minimum wage law
Alaska	$7.15
Arizona	$6.75
Arkansas	$6.25
California	$7.501
Colorado	$6.85
Connecticut	$7.65
Delaware	$6.652
District of Columbia	$7.00
Florida	$6.67
Georgia	$5.15
Hawaii	$7.25
Idaho	$5.15
Illinois	$7.503
Indiana	$5.15
Iowa	$6.20
Kansas	$2.65
Kentucky	$5.15
Louisiana	No minimum wage law
Maine	$6.754
Maryland	$6.15
Massachusetts	$7.50
Michigan	$7.155
Minnesota	$6.156
Mississippi	No minimum wage law
Missouri	$6.50
Montana	$6.15
Nebraska	$5.15
Nevada	$6.15
New Hampshire	$5.15
New Jersey	$7.15
New Mexico	$5.15
New York	$7.15
North Carolina	$6.15
North Dakota	$5.15
Ohio	$6.85
Oklahoma	$5.15
Oregon	$7.80
Pennsylvania	$6.25
Rhode Island	$7.40
South Carolina	No minimum wage law
South Dakota	$5.15
Tennessee	No minimum wage law
Texas	$5.15
Utah	$5.15
Vermont	$7.53
Virginia	$5.15
Washington	$7.93
West Virginia	$6.557
Wisconsin	$6.50
Wyoming	$5.15
1= $8 as of Jan. 1, 2008; 2= $7.15 as of Jan. 1, 2008; 3= $7.75 as of July 1, 2008, $8 as of July 1, 2009, $8.25 as of July 1, 2010; 4= $7 as of Oct. 1; 5= $7.40 as of July 1, 2008; 6= $5.25 for small employer; 7= $7.25 as of July 1, 2008 Source: Department of Labor

Sony Computer Entertainment Settles $8.5M Class Action

Sony Computer Entertainment America will pay up to $8.5 million to settle a wage and hour class action lawsuit brought on behalf of current and former employees who worked as artists and modelers known as "Image Production Employees." The suit, filed in 2005, and settlement will cover employees who worked at Sony February 2001 and September 2007. Under the terms of the settlement, Sony will also reclassify class members with a job title of Associate Artist and Artist 1 as nonexempt employees. As usual, the employer denies any liability or wrongdoing. The settlement is subject to court approval at a hearing set in September.

Interim Fees on Arbitration Motions and Petitions

A very interesting opinion was recently published by the Second District Court of Appeal in Acosta v. Kerrigan, affirming an order awarding interim attorney fees in connection with his successful petition to compel arbitration of a dispute between the parties arising under a lease agreement and denying a petition to compel arbitration of the actual request for those same attorney fees. Acosta and Kerrigan had a lease agreement that including an arbitration clause and the following fee-shifting provision regarding petitions to compel arbitration:

Should any party to this Agreement hereafter institute any legal action or administrative proceeding against the other by any method other than arbitration, the responding party shall be entitled to recover from the initiating party all damages, costs, expenses and attorneys' fees incurred as a result of such action.

We've been seeing more and more of these. For now, at least, they are enforceable. In all likelihood, under Civil Code section 1717, a losing petitioner would also be on the hook for fees if the trial court found the arbitration agreement to be unenforceable, but that is another case for another day. We recently filed an opposition to an arbitration agreement in which our opposition prayed for interim fees under an identical fee-shifting provision, and the petitioner took the petition off calendar.

You can download the full text of Acosta v. Kerrigan here in pdf or word format.

RIP John C. McCarthy

One of the pioneers of California employment litigation, Mr. John C. McCarthy, passed away earlier this month after a battle with cancer and a life of great accomplishment. He was a founding member of the California Employment Lawyers Association. He was a graduation of USC and the UCLA law school, where he was a member of its first graduating class. He tried the first case in the nation to a jury verdict for wrongful termination in violation of public policy on the heels of the the California Supreme Court's landmark decision in Tameny v. ARCO, allowing such claims. In 1988, he won a $38 million verdict against the Las Vegas Hilton on behalf of 37 blackjack dealers. It was the largest civil verdict by a California lawyer that year. He was a tireless advocate and inspiration for all attorneys who stand up for the rights of employees.

A memorial service for John will be held on Saturday July 21, at 2:00 p.m., at Our Lady of the Assumption Catholic Church, 435 Berkeley Avenue, Claremont. To get there, take I-10 to Indian Hill Boulevard in Claremont. Exit and go north one mile, to Bonita Avenue. Turn left and continue to the first stop sign. The church is on the corner. Turn right on Berkeley and turn left into the parking lot.

San Francisco Settles Overtime Pay Dispute With Employees For $625,000

Approximately 75 employees of the City and County of San Francisco will share $625,000 to settle an FLSA claim filed in April 2005. The case Alba, et al. v. City and County of San Francisco (ND Cal., case number 3:05-CV-01667-TEH) is not a class action and need not be approved by the court. It is, however, still subject to approval by the Board of Supervisors.