By Thomas Kaufman (follow me on Twitter)
As anticipated, today the California Supreme Court in Brinker v. Superior Court issued a far ranging decision that clarifies the standards for meal and rest period claims both substantively and with respect to class certification. The Court set forth fairly easy-to-follow guidelines for compliance with the law that most employers are already utilizing. The question that seemed to pose the greatest interest to the business community—whether an employer meets its obligation to "provide" a meal period by simply making one available for employees to take—was decided in the employer’s favor.
The Court also further clarified the standards trial courts should utilize in considering class certification in wage and hour cases. As a practical matter, the guidelines the Court set forth favor employers much more than employee plaintiffs. Probably the most encouraging aspect of the decision was the fact the California Supreme Court appeared to adopt much of the U.S Supreme Court’s Wal-Mart v. Dukes interpretation of the "commonality" requirement for class certification.
The only dark lining in this otherwise silver cloud was the determination that the class rest period claim below was properly certified. Even there, however, the decision turned on a unique company policy that is not likely to be replicated in other cases.
I divide this discussion by topic heading. If you are interested in just one topic, you can scroll down to find the relevant discussion there.
Class Certification Generally
In the introduction to the opinion, the Court seemed to indicate that it was ruling that a trial court need not look at the merits or elements of a claim when deciding whether to certify a case. I thought to myself, "that can’t possibly be right," and it turns out that it was not right. The Court did not set forth any such rule. Rather, the Court agreed with the dominant line of precedent that a trial court must consider the merits insofar as it needs to determine whether the essential elements of a claim can be resolved using collective proof. It may be that the answer is "yes" even though the defendant is entitled to summary judgment on the merits, but the trial court has to consider the essential elements to determine whether they can be proved with common evidence.
Most promising about the decision, was the Court’s citation of Professor Richard Nagareda’s commentary on class certification, which is the same scholarly authority the United States Supreme Court relied upon in Dukes to hold that commonality requires common issues whose resolution will resolve key issues of liability. To this end, the Brinker Court stated that
"[a] court must examine the allegations of the complaint and supporting declarations and consider whether the legal and factual issues they present are such that their resolution in a single class proceeding would be both desirable and feasible." (pp. 8-9)
Footnote 5, which immediately follows this quote, approvingly cites Prof. Nagareda:
"'[W]hat really matters to class certification’ is ‘not similarity at some unspecified level of generality but, rather, dissimilarity that has the capacity to undercut the prospects for joint resolution of class members’ claims through a unified proceeding. (Nagareda, Class Certification in the Age of Aggregate Proof (2009) 84 N.Y.U. L.Rev. 97, 131.)"
This is important because it sets forth a standard where an employer can defeat class certification by coming forth with declarations or other individualized evidence that reveals that essential elements of liability can be resolved only through individualized testimony. Such a rule is entirely consistent with every other holding the California Supreme Court set forth in this opinion.
The Brinker Court’s statement in its introduction that a trial court need not always decide the elements of a claim before class certification simply addressed the case where, regardless of whether the trial court adopted the plaintiff or defendant’s view of the substantive law, the case would still be resolvable through common proof. Such a situation is certainly the exception rather than the rule in most Labor Code class action litigation.
The Court summed up its holding on the need to resolve threshold legal issues as follows:
"Presented with a class certification motion, a trial court must examine the plaintiff‘s theory of recovery, assess the nature of the legal and factual disputes likely to be presented, and decide whether individual or common issues predominate. To the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them. Out of respect for the problems arising from one-way intervention, however, a court generally should eschew resolution of such issues unless necessary. Consequently, a trial court does not abuse its discretion if it certifies (or denies certification of) a class without deciding one or more issues affecting the nature of a given element if resolution of such issues would not affect the ultimate certification decision." (pp. 13-14; emphasis added).
Number of Rest Periods Owed
The Court answered three questions about rest periods: (1) how many rest periods must be provided in a shift of a particular length, (2) whether the rest periods must occur at certain specific times within the workday, and (3) whether the trial court was correct to certify the rest period claim below. The answers to these questions are mostly helpful to employers.
First, on the number of rest periods, the Court adopted a rule that the number of work hours in a shift should be divided by 4 and rounded to the nearest whole number, and the employee is entitled to that number of rest periods, except that no rest period at all is required if the shift is less than 3-1/2 hours. So, the rule now is: (1) for a shift under 3-1/2 hours, the employee gets no rest period; (2) for a shift between 3-1/2 and 6 hours, the employee gets 1 rest period; (3) for a shift between 6 and 10 hours, the employee gets 2 rest periods, (4) for a shift between 10-14 hours, the employee gets 3 rest periods. That seems fairly simple to implement, and the employee always has the option to skip a rest period that he or she has been authorized to take.
Timing of Rest Periods
The Court held that, as a general matter, the employer should set these rest periods near the middle of a 4-hour block of time, but the employer "may deviate from that preferred course where practical considerations render it infeasible." There is no particular rule, however, that the rest period must come before the meal period. As to the showing an employer would need to make to justify permitting rest periods only at times away from the middle of the 4-hour blocks of time, the Brinker Court declined to announce a bright line rule: "At the certification stage, we have no occasion to decide, and express no opinion on, what considerations might be legally sufficient to justify such a departure." The only hint they gave was to say that with a normal eight-hour shift:"[a]s a general matter, one rest break should fall on either side of the meal break." In the next breath, however, the Court hedged this statement: " Shorter or longer shifts and other factors that render such scheduling impracticable may alter this general rule." (p. 23).
As a practical matter, to the extent employees are free to take breaks as they see fit, this will all be an academic discussion with no practical impact. This rule primarily applies to industries where rest periods are actually scheduled for set times, and not where employees are free to take their breaks at their discretion.
Certification of Rest Period Claim
It appears from the record presented that Brinker Corp. controlled the timing of rest breaks. The Court affirmed the granting of certification of the rest period class because Brinker’s policy allegedly allowed only one break for each four hours worked. Hence, as a matter of policy, employees who worked shifts between 6 and 8 hours in length allegedly were deprived of the right to take a second rest period required by law. Although rest periods are waivable, the Brinker Court confirmed that the employee has to be given permission to take a rest period before the employee can be said to lawfully have waived the rest period:
"No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it." (p. 26).
Because the theory of class certification in this case was that the company policy was facially unlawful and actually applied as it was written ("facts" that California Supreme Court had to accept as true for purposes of this decision), the record presented the limited type of case where class certification is appropriate:
"Claims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment." (p. 25).
Although this aspect of the ruling is certainly a disappointment for Brinker Corp., it is ultimately consistent with the narrow, defense-view of class certification—i.e., that certification is proper only where there is a single policy or practice that can be judged collectively lawful or unlawful. This ruling on rest period certification does not have widespread application to most of the cases employers face.
This part of the decision has to be read as a huge victory for employers.
Requirement to "Provide" a Meal Period
There was concern that the "provide" standard would be defined in some muddled way that would just create more litigation. The California Supreme Court actually set forth a fairly clear standard, however. To provide an off-duty meal period consistent with California law means to give the employee 30-minutes where he or she is free to do what he or she wants, whether or not the employee chooses to use that time for work:
"[The] meal period requirement is satisfied if the employee (1) has at least 30 minutes uninterrupted, (2) is free to leave the premises, and (3) is relieved of all duty for the entire period. . . Employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please." (p. 31).
The only limitation placed, is not really a limitation at all, but a factual issue. The employer cannot coerce or pressure employees to skip their meal breaks:
"[The] employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks." (p. 36).
This does not appear to mean that employees who feel that they shouldn’t take breaks because they have a lot of work to get done have a valid claim for meal breaks. Rather, this appears to means that you cannot have a nominal policy to give breaks coupled with an actual practice where you pressure employees not to take them. If individual employees claim they were given too much work to allow them to take breaks, that would seem to create individualized issues not suitable for certification.
Timing of Meal Period
After oral argument in November, there was a great concern that the California Supreme Court was going to announce a rule that if an employee took a meal period early in the shift, he or she would have to be granted a second meal period five hours later, even if the total hours of work in the day were less than ten. Fortunately, the California Supreme Court rejected that holding entirely and announced that the only timing requirements are that (1) a first meal break must be provided after no more than five hours of work, and (2) a second meal break must be provided after no more than 10 hours of work.The final word of the unanimous Court was as follows:
"Wage Order No. 5 imposes no meal timing requirements beyond those in section 512. Under the wage order, as under the statute, an employer’s obligation is to provide a first meal period after no more than five hours of work and a second meal period after no more than 10 hours of work." (p. 50).
Certification of Meal Period Claims
The Court declined to adopt the holding of the appellate court that, on the record, individualized issues necessarily predominated because the question of whether any given employee was not "provided" a meal period would turn on facts individual to each employee. The Court held that it did not need to reach that issue because, as an analytical matter, the trial court had certified a class based on an assumption that an employee who takes a meal period early in a shift must get a second meal period within the next five hours of work, even where the employee worked fewer than ten hours in the day. Because that interpretation was wrong as a matter of law, the Court remanded the case to the trial court to decide class certification of the meal period claim anew:
"At a minimum, our ruling has rendered the class definition adopted by the trial court overinclusive: The definition on its face embraces individuals who now have no claim against Brinker. In light of our substantive rulings, we consider it the prudent course to remand the question of meal subclass certification to the trial court for reconsideration in light of the clarification of the law we have provided." (p. 51).
It is hard to see how a class can be certified in this case consistent with the rest of the Court’s decision, however.
Off-the Clock Claim
Tucked at the end of the decision is a discussion of the plaintiff’s class off-the-clock claim. This section is an important part of the decision because it is (again) consistent with the narrow view of class certification advanced in Wal-Mart v. Dukes.
The plaintiff’s theory was that employees were being forced falsely to clock out when they actually kept working. The Court held that the Court of Appeal was correct to order that this claim should not have been certified.
First, the Court reaffirmed that an employer is required to pay an employee only for work that the employer knows or should have known the employee was working. Furthermore, where an employee clocks out, "it creates a presumption they are doing no work, a presumption [plaintiff] and the putative class members have the burden to rebut." (p. 52). That is a useful tidbit to cite as a matter of substantive law.
Second, class certification was improper here because the company’s policy was to preclude off-the-clock work, and the only evidence to the contrary that plaintiffs presented was " anecdotal evidence of a handful of individual instances in which employees worked off the clock, with or without knowledge or awareness by Brinker supervisors." (p. 53). Class certification is inappropriate when it is based on anecdotes contrary to the company policy:
"where no substantial evidence points to a uniform, companywide policy, proof of off-the-clock liability would have had to continue in an employee-by-employee fashion, demonstrating who worked off the clock, how long they worked, and whether Brinker knew or should have known of their work." (p. 53).
Implicit in this ruling is a determination that the case could not have been tried using a "Trial by Formula" approach of sampling a subset of the class, determining how much they worked off the clock, and extrapolating the results to the broader class. Furthermore, the focus on a lawful policy means that, in most cases where an employer’s policy is for employees to record all of their time and never work when clocked out, class certification of an off-the-clock claim will be impossible. Again, this is a win for employers.
Contrary to numerous other opinions where the California Supreme Court disregarded DLSE opinion letters as unlawful underground regulations, this decision cites DLSE opinions favorably and suggests they are entitled to serious consideration: "The DLSE’s opinion letters . . . while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." (p. 19). This just proves what I have always said that courts cite the DLSE when they agree with it, and claim that its pronouncements are unlawful underground regulations where they disagree. Nothing in this case said that DLSE pronouncements are binding.
Finally, Justice Werdegar, who wrote the majority opinion, also writes a concurrence (joined only by Justice Liu) where she reaffirms that class actions are important and this case should not be read as categorically ruling them inappropriate for meal period claims. As a preliminary matter, this section is not part of the opinion of the Court, so it is not binding precedent in the way the majority opinion is. Furthermore, Justice Werdegar admits that class certification is generally inappropriate where individualized issues exist as to each class members liability, as opposed to the amount of damages they might recover:
"For purposes of class action manageability, a defense that hinges liability vel non on consideration of numerous intricately detailed factual questions, as is sometimes the case in misclassification suits,is different from a defense that raises only one or a few questions and that operates not to extinguish the defendant’s liability but only to diminish the amount of a given plaintiff’s recovery." (Concurrence, p. 3)
If you have further questions, please do not hesitate to contact a Sheppard Mullin attorney for guidance.