Wage Law

You Can't Compel Arbitration Without Alleging an Agreement to Arbitrate

Code of Civil Procedure § 1281.2 requires a party moving to compel arbitration to allege the existence of a written agreement to arbitrate. Must a trial court deny a petition to compel arbitration where the moving party fails to allege the existence of a written agreement containing an arbitration clause? Of course. Brodke v. Alphatec Spine, Inc. (2008) __ Cal.App.4th __.

The gist of the case: it's not enough to merely point out that the plaintiffs allege such an agreement exists.

the evidence offered by defendants to prove the existence of a written agreement to arbitrate consisted solely of counsel's declaration attaching a copy of plaintiffs' complaint, which in turn attached a copy of the Brodke agreement. In short, defendants did not allege, or attempt to prove, that defendants contended an agreement to arbitrate existed - only that plaintiffs alleged the existence of an agreement.

If you want to read the whole thing, you can get a pdf or word version of the opinion from the court's website.

Court Reverses Denial of Large Fee Award on $11,500 Verdict

As a general rule, under Code of Civil Procedure § 1033(a), the trial court has the discretion to deny attorney's fees as an element of costs of suit under Code of Civil Procedure § 1033.5(a)(10)(B) if the plaintiff recovers less than the minimum jurisdictional amount of the court. Thus, for example, if a plaintiff sues in unlimited civil court and recovers only $25,000, and not a penny more, the case could have been brought in the limited  civil division and therefore, some costs may be denied. In Chavez v. City of Los Angeles (2008) __ Cal.App.4th __,

a jury awarded appellant Robert Chavez $11,500 in a statutory retaliation action brought against his employer and a supervisor. Chavez then filed a motion seeking approximately $871,000 in attorney fees under the fee provisions of the Fair Employment and Housing Act (FEHA), Government Code section 12965, subdivision (b). Ignoring that statute, and instead exercising its discretion under Code of Civil Procedure section 1033, subdivision (a) to deny costs because Chavez’s recovery was below its jurisdictional minimum, the trial court denied the motion. Chavez appeals from the denial of the motion, contending the court applied the wrong statutory standard and abused its discretion by denying him fees. We agree and reverse the order.

The opinion contains a lengthy discussion regarding the court's proper exercise of discretion, the conflicting purposes of  Code of Civil Procedure § 1033(a) and Government Code § 12965, and the language in the latter which limits the exercise of discretion in a FEHA case. In certain important respects, the holding can be distinguished in a wage case, but significant elements of the opinion apply as clearly to a Labor Code case as to a FEHA case.

You can download Chavez v. City of Los Angeles here in pdf and word format.

The Thin Body of Law Regarding Class Action Objections

...became slightly less thin with the publication of Chavez v. Netflix, Inc. (2008) __ Cal.App.4th __.

Frank Chavez sued Netflix, Inc. (Netflix) over its practice of advertising that it would send customers " 'unlimited' " DVD rentals with "1 Day Delivery" for a flat monthly fee. Alleging that both selling points were false, Chavez sought injunctive relief and damages on behalf of himself and a class of current and former Netflix subscribers. Before the class was certified, Netflix agreed to settle the class action by providing one month of free DVD rental services or upgrades to class members who claimed the benefit. The trial court approved the settlement and awarded attorney fees of $2,040,000 to be paid by Netflix to class counsel. The appellants in these consolidated appeals objected to the class action settlement and fee award in the trial court. They contend that the trial court abused its discretion in approving the settlement, affording notice to class members, and determining the amount of fees. Finding no abuse of discretion, we affirm the orders in issue.

The case is full of interesting language supporting settling parties. A detailed analysis has been posted over at the UCL Practitioner. We're in trial, so we'll just point you in that direction. You can download the case here in pdf or word format.

Court Orders Production of Costco's Attorney-Client Communication in Overtime Class Action

In an unusual opinion, the Second District Court of Appeal ordered Costco Wholesale Corp. to turn over some of its attorney-client communications during discovery in a putative class action alleging misclassification of Costco managers. In Costco Wholesale Corp. v. Superior Court (2008) __ Cal.App.4th __, the Court of Appeal held that the trial court was correct to order Costco to produce portions of a pre-litigation attorney-client memo prepared for Costco by its outside counsel. The memo analyzed whether Costco's department managers qualified for exempt status. Counsel took interviews, reviewed job descriptions, and prepared a detailed and lengthy memo analyzing the status of the managers. The trial court ordered an in-camera review by a referee, who determined that portions of the memorandum regarding the managers’ job duties were not privileged and should be produced.

Costco petitioned for a writ of mandate. After some odd procedural quirks, the Court of Appeal denied the writ, holding that Costco had not shown "irreparable harm” because the portions to be produced came from job descriptions and interviews with two managers; it was “inconsequential; and it did not “infringe on the attorney-client relationship.” The Court found that these were not work product, and that disclosure would cause no harm because the information would be readily available from other sources.

You can download the full text of Costco Wholesale Corp. v. Superior Court here in pdf or word format. A modification order was issued yesterday, which did not change the judgment. We read the whole thing, twice, and we might be incorporating a request for in camera review of much more from the privilege logs than ever before.

There Will Not Be a Prachasaisoradej II

The Supreme Court published a case last year regarding the interplay between company expenses and losses and the payment of profit-sharing bonuses to employees. Prachasaisoradej v. Ralphs Grocery Company, Inc. (2007) 42 Cal.4th 217. We previously discussed the case in a post found at this link. A few months later, the court entered an order awarding $275,000 in attorney's fees to Ralphs Grocery. Prachasaisoradej appealed. The Supreme Court denied review. End of story.

Pending Bills - SB 1539, Amended, Withdrawn from Committee

A bill seeking to make it more difficult for employees to get meal breaks, or to sue, individually or collectively, for meal break wages made it out of committee on April 9, but was substantially amended on April 15 and set for hearing today. However, that hearing has been withdrawn.

SB 1539 (Margett) initially sought to specify that "providing" an employee with a meal break meant "giving the employee an opportunity to take" a meal break.

This bill would revise the statutory requirements for the provision of meal periods to specify that the requirements apply only to employees subject to the meal period provisions of an order of the IWC. The statutory requirements for providing the meal periods would be revised to specify that a meal period based on working more than 5 hours in a workday is required to be provided before the employee completes 6 hours of work, unless the existing waiver provision is invoked. The waiver provision for the 2nd meal period would be changed to provide an exception for different provisions within IWC wage orders in effect as of January 1, 2008, and to permit the employer and employee to agree to waive either the first or the 2nd meal period if the employee otherwise is entitled to 2 meal periods. The bill also would specify conditions under which on-duty meal periods are permitted rather than meal periods in which the employee is relieved of all duty. The meal period provisions of a valid collective bargaining agreement would be required to be implemented for covered employees rather than the statutory requirements. The bill would require that orders of the IWC be interpreted in a manner consistent with this section, and would require the Department of Industrial Relations to amend and republish specified IWC wage orders to be consistent with the revised meal period requirements. The bill also would declare that all those provisions are declaratory and not amendatory of existing law.

With the latest amendment, the bill looks quite different:

An act to amend Section 512 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL'S DIGEST

SB 1539, as amended, Calderon. Meal periods.

Existing law requires an employer to provide an employee who works more than 5 hours in a workday with a meal period of not less than 30 minutes, unless the employee works no more than 6 hours in a workday and the meal period is waived by mutual consent. An employer also is required to provide an employee who works more than 10 hours in a workday with a second meal period of not less than 30 minutes, unless the employee works no more than 12 hours, the first meal period was not waived, and the second meal period is waived by mutual consent. The Industrial Welfare Commission (IWC) of the Department of Industrial Relations adopts and amends wage orders that, among other things, specify how meal periods are required to be provided to covered employees within various industries, including the procedures for providing employees with on-duty meal periods.

This bill would declare the intent of the Legislature to enact
legislation to address issues related to meal periods in employment.

Instead of a massive overhaul of Labor Code section 512, the text of the bill now just reads:

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.   It is the intent of the Legislature to enact legislation to address issues related to meal periods in employment.

That's it for now. Senator Margett's other meal period bill, SB 1192, was withdrawn on April 8. That bill would have reduced the statute of limitations on meal and rest period pay to one year, and would have allowed employers to force their employees to wait as long as six hours to take a meal break.

Supreme Court Depublishes Bell v Superior Court (HF Cox, Inc.)

The Supreme Court has denied a petition for review, but granted a request for depublication in Bell v. Superior Court (H.F. Cox, Inc.) (2007) 158 Cal.App.4th 147, a class certification opinion involving truck drivers with overtime, off-the-clock, meal/rest period and vacation pay claims.

The petition for review is denied. The requests for an order directing depublication of the opinion are granted. The Reporter of Decisions is directed not to publish in the Official Appellate Reports the opinion in the above-entitled appeal filed November 21, 2007, which appears at 158 Cal.App.4th 147. (Cal. Const., art. VI, section 14; rule 8.1125(c)(1), Cal. Rules of Court.) George, C.J., was absent and did not participate. Kennard J., is of the opinion the petition should be granted.

The Court of Appeal had affirmed in part and reversed in part a multiple-issue certification ruling by the Superior Court.

Four employees of a petroleum transportation company sought to bring a wage and hour class action against their employer, alleging: (1) the failure to pay overtime; (2) the requirement of off-the-clock work; (3) the failure to provide meal and rest breaks; (4) the incorrect calculation of vacation pay; and (5) the failure to pay pro rata vacation pay upon termination of employment. The plaintiffs filed a motion for class certification. The trial court granted the motion in part, certifying only a class with respect to the claim for failure to pay vacation pay upon termination of employment. In all other respects, the motion was denied. Plaintiffs sought review by means of a petition for writ of mandate. We issued an order to show cause why relief should not be granted and stayed further proceedings. We now conclude the trial court erred in failing to certify a class with respect to the overtime pay and vacation pay claims. We therefore grant the writ petition and direct the trial court to vacate its order, and enter a new and different order granting certification of a class with respect to those claims.

While on its face, the opinion had seemed to favor the plaintiff (who was the petitioner seeking Supreme Court review) the Court of Appeal's endorsement of the denial of certification in the off-the-clock and meal period causes of action had been embraced by the employers' bar, who will lament the depublication of the case.

We previously discussed the publication of and holding in Bell in a post here.

Tax Credits Do Not Trigger Prevailing Wage on Low Income Housing Construction Projects

Employers engaged on public works projects must pay prevailing wages to their workers if the project is “paid for in whole or in part out of public funds.” Until now, it was unclear whether tax credits provided by the state to facilitate construction of low-income housing comes within this definition. In State Bldg. & Const. Trades Council v. Duncan (2008) __ Cal.App.4th __, the trial court determined that it does. The Court of Appeal reversed.

we conclude otherwise—that however worthy the policy goals of encouraging the construction of low-cost housing and ensuring compliance with the prevailing wage requirements, the statutory language in its present form cannot be construed to command that result. Tax credits are, at best, intangible inducements offered from government, but they are not actual or de facto expenditures by government. As such, they do not qualify as either the “payment of . . . the equivalent of money by the state” (subd. (b)(1), or as a “transfer by the state . . . of an asset for less than fair market price” (subd. (b)(3)), the portions of the definition of “paid for in whole or in part out of public funds” considered here. We thus reverse.

You can download the full text here in pdf or word format.

Filibuster Defeats Ledbetter Equal Pay Bill

On Wednesday, a Senate filibuster blocked legislation to overturn the Supreme Court holding in Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. __. Hillary Rodham Clinton and Barack Obama each took time away from the campaign trail to speak in favor of the bill, but John McCain stayed away, expressing satisfaction over the bill's failure.

"I am all in favor of pay equity for women, but this kind of legislation, as is typical of what's being proposed by my friends on the other side of the aisle, opens us up to lawsuits for all kinds of problems. This is government playing a much, much greater role in the business of a private enterprise system."

In other words, he likes the equal pay laws, as long as few people actually get relief from the courts if the law is disregarded. Only six Republican senators supported the bill, which would have passed by a majority vote of 56-42, but could not be put to a vote without the 60 votes needed to end the filibuster. Had the filibuster failed, the White House vowed to veto the bill.

Working On-Duty Meal Period Is Not a Waiver

An on-duty meal period is not a "waived" meal period; consequently, an employee may take two on-duty meal periods in one shift, as long as the requirements for an on-duty meal period are satisfied, according to an unpublished U.S. District Court opinion rendered last month in McFarland v. Guardsmark, LLC (N.D. Cal. 2008) 2008 U.S. Dist. LEXIS 20296 (granting summary judgment for the employer in a wage & hour class action).

In deciding dueling summary judgment motions, the question for the court was whether, when an employee agrees to "on-duty meal periods," that employee is waiving his or her right to a meal period, or is simply agreeing to a particular type of meal period. Labor Code § 512 generally requires that employees working shifts of more than five hours be provided with a meal period, and that employees working shifts of more than ten hours be provided with a second meal period. In addition, section 512 states that an employee can "waive" his right to a meal period, subject to certain limitations - an employee can waive his first meal period if his work day does not exceed six hours, and can waive his second meal period if his work day does not exceed twelve hours and the first meal period was not waived:

An employer may not employ 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, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.

The applicable IWC Wage Orders provide generally that employees must be provided meal periods if they work in excess of five hours, but that they can waive meal periods so long as they do not work more than six hours. In addition, the regulations provide that the employer can satisfy its obligation to provide meal periods by providing "on duty" meal periods, if those "on duty" meal periods are consistent with the nature of the work, if the meal periods are compensated, and if the employee expressly consents to the "on duty" meal period. In this instance, Paragraph 11 of Wage Order 4 provided, in part, that

(A) No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee. Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an "on duty" meal period and count as time worked. An "on duty" meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement between the parties shall state that the employee may, in writing, revoke the agreement at any time. (B) If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee's regular rate of compensation for each workday that the meal period is not provided.

Relying on the wage order, Labor Code § 512 and Labor Code § 219, Plaintiff argued that California law implicitly precludes second "on duty" meal periods, and that the second "on duty" meal periods he was provided (and was paid for) were legally insufficient under the statute; an "on duty" meal period is not a meal period at all. Guardsmark asserted that the underlined language in Wage Order 4 confirms that an "on duty" meal period is in fact a specific type of meal period; a "waived" meal period is one that has been abandoned or renounced, while a security guard who agrees to take an "on duty" meal period has simply agreed that he will be paid for the time he is allowed to eat, but will also be on duty to respond to any emergencies that might arise. Such an employee has not, according to Guardsmark, abandoned or renounced his right to a meal period.

The court held that Guardsmark's position was the correct one.

There is no support in § 512 for plaintiff's interpretation of "waiver" as applying solely to "on duty" meal periods, rather than to meal periods, generally. Section 512 plainly states that a second "meal period" may be waived only if the first "meal period" has not been waived. But where the employee agrees to take an "on duty" meal period, and gets paid for working during the time he is eating, there is no "waiver" of the meal period. The court reads "waiver of the meal period" to mean that the employee gives up his right to eat during that particular five-hour shift, period. The main problem with plaintiff's argument is that he appears to be confusing the concept of totally "waiving" a meal period with the concept of agreeing to take an "on duty" meal period in lieu of an "off duty" meal period. Because the word "waiver" in the first part of § 512(a) clearly means a waiver of any meal period, it cannot mean a waiver of a particular type of meal period later in the same statute. Moreover, neither the Wage Order nor § 226.7 establish that "on duty" meal periods are waived meal periods for purposes of § 512. The definition of "on duty" meal period in Wage Order P 11 makes no reference to the term "waiver." Similarly, § 226.7(a), which provides that no employer shall require any employee to work during any meal period or rest period mandated by an applicable order of the [IWC]," does not establish that "on duty" meal periods are waived meal periods, because "on duty" meal periods are by definition consensual.

Thus, the defendant's motion was granted, and the plaintiff's motion was denied.