Labor Employment Law Blog

By Thomas Kaufman and Travis Anderson

In Sky Sports, Inc. v. Superior Court, (2nd Dist., Div. 3, Dec. 15, 2011) Case No. B233820, the California Court of Appeal held that a defendant does not waive its right to compel arbitration of a class action by waiting to file a motion to compel arbitration until the class has been certified, where some of the class members, but not the class representative, signed arbitration agreements with defendant.

By Thomas Kaufman and Travis Anderson

On December 13, 2011, the Ninth Circuit issued its most recent decision in the Sullivan v. Oracle saga. See Sullivan, D.C. No. CV-05-00392-AHS (9th Cir. Dec. 13, 2011). The decision followed the June 30, 2011 opinion of the California Supreme Court, in which the Court answered a question that the Ninth Circuit had posed to it: whether employees of a California-based employer who worked entirely outside California could sue the employer under the California Unfair Competition Law ("UCL") for the employer's alleged failure to pay overtime to non-California employees as required under the federal Fair Labor Standards Act ("FLSA"). See Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011). Upon remand of the case from the California Supreme Court, the Ninth Circuit held that the state court's opinion was "conclusive" and justified granting summary judgment to Oracle on the UCL claims of these non-California employees. Separately, the Ninth Circuit held that California overtime law applies to non-residents who perform work within the state, another question that it posed to the California Supreme Court to answer. This blog entry, however, focuses solely on the discussion of out-of-state employees' use of the UCL to vindicate FLSA rights.

By Maranda W. Rosenthal & Thomas R. Kaufman

On September 16, 2011, the Ninth Circuit handed down one of the first decisions to interpret and apply the game-changing decision in Wal-Mart Stores, Inc. v. Dukes, et al., 564 U.S. ___ (2011) (“Dukes”). Although Ellis v. Costco Wholesale Corp. (“Ellis”) is not as ground-breaking as the Dukes decision, it does provide some insight as to how the courts will apply the arguably employer friendly precedent established by Dukes.

On July 12, 2011, California's Second Appellate District Court of Appeal issued a decision in Brown v. Ralphs Grocery Company regarding the enforceability of arbitration agreements in the employment context that limit employees' rights to assert class and representative actions. This was the first published state court decision in California regarding employment arbitration agreements since the United States Supreme Court's groundbreaking decision in AT&T Mobility, LLC v. Concepción ("AT&T Mobility"), where the Supreme Court held that California case law invalidating class action waivers in consumer arbitration agreements is preempted by the Federal Arbitration Act ("FAA").  (For a detailed analysis of the AT&T decision, please visit Sheppard Mullin's labor and employment blog dated April 27, 2011.)

On June 20, 2011, the United States Supreme Court released its widely-anticipated decision in Wal-Mart Stores, Inc. v. Dukes, et al., 564 U.S. ___ (2011) ("Wal-Mart"). In Wal-Mart, the Supreme Court reversed the Ninth Circuit Court of Appeals and held that the proposed nationwide gender discrimination class action against the retail giant could not proceed. In a decision that will come as welcome news to large employers and other frequent targets of class action lawsuits, the Supreme Court (1) arguably increased the burden that plaintiffs must satisfy to demonstrate "common questions of law or fact" in support of class certification, making class certification more difficult, especially in "disparate impact" discrimination cases; (2) held that individual claims for monetary relief cannot be certified as a class action pursuant to Federal Rule of Civil Procedure 23(b)(2), which generally permits class certification in cases involving claims for injunctive and/or declaratory relief; and (3) held that Wal-Mart was entitled to individualized determinations of each proposed class member's eligibility for backpay, rejecting the Ninth Circuit's attempt to replace that process with a statistical formula.

On Wednesday, April 27, 2011, the United States Supreme Court decided AT&T Mobility LLC v. Concepcion. Although factually, the case involved consumer products and arbitration agreements, the decision may have a significant impact on employers and employees who enter into arbitration agreements, as well as class action practice.

In two opinions published on July 7, 2010, the Second and Fourth Districts of the California Court of Appeal refused to allow two objectors to derail two different class action settlements. In these two wage and hour class actions, the objectors challenged the proposed settlements on fairness grounds, and the courts once again affirmed the deferential review standard while rejecting the objectors arguments.

On April 21, 2010, the Ninth Circuit Court of Appeals confirmed that a putative class action removed to federal court under the Class Action Fairness Act (CAFA) does not lose federal jurisdiction just because the court denies class certification. The case, United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO, et al. v. Shell Oil Company, et al., No. 10-55269, ___ F.3d ____ (9th Cir. Apr. 21, 2010), began as a putative class action in California state court. Plaintiffs alleged that defendants' oil refineries violated California's Unfair Competition Law, Business & Professions Code § 17200, and failed to provide meal periods, rest periods, timely and accurate wage statements and wages due at the time of termination. Defendants removed the case to federal court under CAFA, 28 U.S.C. § 1332(d)(2), which provides removal jurisdiction if any member of the putative class is diverse from any defendant, if the amount in controversy exceeds $5,000,000.

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In Ghazaryan v. Diva Limousine, the California Court of Appeal reversed a trial court's denial of a class certification motion in a wage and hour class action. The Court of appeal ordered the trial court to certify two subclasses.

In what is a major victory for California employers, the California Court of Appeal held yesterday in Brinker Restaurant Corp. v. Superior Court (Hohnbaum) that employers are not obligated to ensure that employees actually take meal and rest breaks, and that companies therefore cannot be held liable for alleged meal and rest break violations unless employees are "forced to forgo" these breaks.

The First Appellate District of the Court of Appeal has followed the California Supreme Court’s recent Gentry opinion finding a class action waiver unconscionable and therefore unenforceable.  In Murphy v. Check ‘N Go Of California, Inc. (which has been certified for publication), the appellate court upheld an order denying the employer’s attempt to compel arbitration of a wage and hour case.  Relying on Gentry v. Superior Court (2007) 42 Cal. 4th 443, the Murphy Court concluded that (1) the court, rather than the arbitrator, is empowered to decide the unconscionability issue and (2) the class action waiver contained in the arbitration agreement is unconscionable and therefore unenforceable.

Unfortunately, the California Supreme Court recently granted a request to depublish a Court of Appeal opinion regarding class actions that was helpful to California employers.  The effect of the opinion had been to constrain courts' ability to certify class actions in certain circumstances.  Now that the opinion has been depublished, it can no longer be cited by litigants in California cases.

On February 28, 2007, the California Court of Appeal held that employees' ability to sue employers collectively under the Unfair Competition Law ("UCL") and the Private Attorneys General Act of 2004 ("PAGA") cannot be assigned to labor unions.  The Court further held that UCL representative actions must meet the procedural requirements established for class action lawsuits.  In Amalgamated Transit Union Local 1756 v. Superior Court, L.A.S.C. B191879, two labor unions that represent mechanics and transit operators filed a lawsuit on behalf of their members alleging that the defendant-employers had committed meal and rest period violations, failed to pay wages, and violated the UCL.  The unions also requested injunctive relief and restitution under the UCL and PAGA.  The lawsuit was brought as a representative action under the UCL and PAGA, rather than as a class action lawsuit.