On May 21, 2018, the United States Supreme Court upheld the legality of arbitration agreements containing class action waivers. In a 5-4 decision written by Justice Gorsuch, the Court held that arbitration agreements providing for individualized proceedings were valid, and neither the Federal Arbitration Act’s (“FAA”) savings clause, nor the National Labor Relations Act (“NLRA”) suggest otherwise.
Continue Reading U.S. Supreme Court Upholds Enforceability of Mandatory Employment Class Action Waivers

It is a rare occasion that the phrase “joint employer” has positive implications for any business. However, a panel sitting on the California Court of Appeals recently gave one party in a joint employer arrangement cause to celebrate when it held in Castillo v. Glenair, Inc., 22 Cal. App. 5th 348 (2018) [1], that the settlement of an earlier wage and hour class action filed against the party’s retained staffing company barred the instant suit alleging the same claims on behalf of the same class.
Continue Reading Court Rejects Plaintiffs’ Attempt to Double-Dip in Settlement Pool

On Monday, April 30, 2018, the California Supreme Court issued a landmark decision in the matter of Dynamex Operations West, Inc. v. Superior Court of Los Angeles. In a voluminous, 82-page decision, the California Supreme Court reinterpreted and ultimately rejected the Borello test for determining whether workers should be classified as either employees or independent contractors for the purposes of the wage orders adopted by California’s Industrial Welfare Commission (“IWC”) in favor of a worker-friendly standard that may upend the existing independent contractor labor market.

In particular, the Court embraced a standard presuming that all workers are employees instead of contractors, and placed the burden on any entity classifying an individual as an independent contractor of establishing that such classification is proper under the newly adopted “ABC test” which will be discussed in further detail below.
Continue Reading The Dynamex Decision: The California Supreme Court Restricts Use of Independent Contractors

Last week, the ridesharing giant, Uber, secured a resounding legal win when a federal judge dismissed a putative class action lawsuit alleging the company violated the Fair Labor Standards Act by failing to pay drivers overtime. The ruling is enormously important, not simply for Uber, but for the growing rideshare technology industry as a whole.

Less than a decade ago, outside of calling a cab company and hoping for the best, the notion of reliably getting from ‘here to there’ via a few button presses on a cell phone was unthinkable. Things have changed. Uber—the now-ubiquitous application that allows patrons to hail various styles of ride—has wholly disrupted the transportation service industry. According to the latest estimates, over 160 thousand Uber drivers dot the roads. Those drivers provide approximately 40 million rides each month, and the company’s 2017 valuation reached $69 billion. The term “Uber” has become a verb (e.g., “I’ll Uber there”) analogous to “just Google it” or “xerox the document.”


Continue Reading Uber Drivers’ Class Action Lawsuit Hits Permanent Red Light

On November 7, 2017, after a four-day trial, a federal jury in Los Angeles, California returned a verdict in favor of Dollar Tree Stores, Inc. in a class action filed against the company by former employee Francisca Guillen. The case was pending in the Central District of California before Hon. Michael W. Fitzgerald.
Continue Reading Jury Returns Verdict in Favor of Dollar Tree in Electronic Wage Statement Class Action

The California Supreme Court issued its long awaited ruling in Williams v. Superior Court, in which it clarified the scope of discovery in actions brought under the Private Attorneys General Act of 2004, Labor Code § 2698 et seq., also known as PAGA. (Williams v. Superior Court, __ Cal.5th __ (July 13, 2017, S227228) (“Williams”).) At first glance employers may be concerned by the breadth of discovery the California Supreme Court permits under PAGA, however, in reality the case generally reaffirms the status quo by holding that the scope of discovery in PAGA actions is essentially the same as the scope of discovery in class actions. Specifically, the Court holds that as in class actions, the contact information of the individuals a PAGA plaintiff purports to represent is generally discoverable in the same manner as it has been for many years in wage and hour class actions. While trial courts cannot condition disclosure of employee contact information on the plaintiff making a prima facie showing on the merits of his claims, the same defenses that exist in class actions to such discovery also exist in PAGA actions. While the employer has a substantial burden of proof, the California Supreme Court reaffirmed that employers still have defenses based on undue burden and the need to protect employee privacy rights to limit such discovery. With the overall discussion of discovery issues, the Court also makes pronouncements that can be helpful to employers in other aspects of PAGA litigation, such as its statements indicating that a PAGA action must be manageable to proceed to trial.
Continue Reading California Supreme Court Reaffirms Broad Right to Discovery in PAGA Actions

The Court’s opinion in Scott v. Chipotle Mexican Grill demonstrates how employers can successfully combat class action claims that employees were misclassified as exempt. The successful defense of the class certification motion relied chiefly on deposition and declaration testimony to highlight inconsistencies, variations, and individualized inquiries that prevented resolution of the claims at issue on a class-wide basis.
Continue Reading Sheppard Mullin Secures Major Victory for Chipotle in Nationwide Misclassification Action By Demonstrating Variations Among Proposed Class Members

The ability of hospitals to use meal period waivers was called into question by a 2015 Court of Appeal decision in Gerard v. Orange Coast Memorial Medical Center (Gerard I), which held that the provision in Wage Order 5 allowing waivers even when employees work over 12 hours was invalid.  Following two more years of litigation, we can now inform you that the three-member panel that reached the 2015 decision in Gerard I, reversed itself on March 1, 2017 in Gerard II.  In its new opinion, the Court of Appeal adopted Sheppard Mullin’s argument and confirmed that the special meal period rules for health care employees in Wage Order 5 are, in fact, valid.
Continue Reading California Court of Appeal Affirms Validity of Hospital Meal Period Waivers

Twelve years after he introduced the Class Action Fairness Act of 2005, Representative Bob Goodlatte (R-VA) has introduced the Fairness in Class Action Litigation Act of 2017 (“the Act”), which would significantly change the federal class action landscape by creating several procedural mechanisms designed to head off lawyer-driven class action litigation.  The stated purpose of the Act is to “(1) assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims; (2) diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system; and (3) restore the intent of the framers of the United States Constitution by ensuring Federal court consideration of interstate controversies of national importance consistent with diversity jurisdiction principles.”  The Act contains many game-changing provisions, five of which are detailed below.
Continue Reading Proposed Legislation May Significantly Limit Class Action Litigation in Federal Court

On January 13, 2017, the United States Supreme Court consolidated and granted review of the three following cases involving the legality of arbitration agreements which contain class action waivers:  National Labor Relations Board v. Murphy Oil USA, Inc., from the 5th Circuit, Epic Systems Corp. v. Lewis, from the 7th Circuit, and Ernst & Young LLP v. Morris, from the 9th Circuit.

The NLRB, most notably with its 2012 decision in D.R. Horton, has routinely held that arbitration agreements containing class action waivers violate employees’ rights under the National Labor Relations Act (“NLRA”).  The courts, however, have taken a variety of stances on the issue, and these three cases present the Supreme Court with an opportunity to resolve an issue that has divided the Circuits.


Continue Reading U.S. Supreme Court to Decide Class Action Waiver Divide