Articles Posted in Employment Law Class Actions

Published on:

AAA Requires Separate Arbitration Petitions by Employees Subject to Arbitration Clause with Class Action Waiver but JAMS Permits Plaintiff to Unilaterally Join Dozens of Individual Employee Claims in Single Arbitration

JMBM recently litigated a labor law class action where the employees were bound by arbitration clauses with class action waivers. Some of those agreements require arbitration before AAA. Others required arbitration before JAMS.

JMBM obtained a court order requiring “binding individual arbitration” before JAMS. Plaintiff’s counsel responded by filing an arbitration petition on behalf of 20 individuals. Plaintiff’s counsel also filed another arbitration petition with AAA on behalf of 7 individuals. In other words, plaintiff’s counsel sought to proceed with a “group” arbitration rather than “individual.” We objected.

AAA promptly decided that, as a purely procedural matter, it would not compel our client to participate in a group arbitration over its objection. Because we were not willing to stipulate to such a proceeding, it required plaintiff’s counsel to file 7 separate petitions. It took AAA but a few days to make this decision.

JAMS, on the other hand, took more than a month to conclude that, purportedly as a procedural matter, it would compel our client to participate in a group arbitration over its objection. Even more disturbing than its decision was the process utilized by JAMS to resolve the issue and the reasoning behind it.

As a preliminary matter, it is well established that the scope of an arbitration clause is to resolved either by the court or by the arbitrator. Even plaintiff’s counsel admitted this to be the law. Our disagreement with plaintiff’s counsel centered on our belief that it was a decision for the trial court to resolve under the facts of this case, while they argued that it was a matter for the arbitrator to resolve.

Unable to resolve the procedural question without a legal opinion, JAMS unilaterally appointed one of its mediators to rule on the issue. In other words, rather than appoint an arbitrator to address the issue – a decision that would necessitate all of the required disclosures from the arbitrator and that would provide each side with their right to object to the particular arbitrator being appointed – JAMS put the matter in the hands of a panel mediator. No statute or case authority permits such an individual to rule on the scope of an arbitration clause, but nevertheless JAMS followed this procedure.

Continue reading

Published on:

Plaintiff’s Pre-Class Certification Discovery Request for Contact Information of Putative Class Members Properly Limited to Employees who Worked in the Same Store Location as Plaintiff California Court of Appeal Holds

The decision of the California Court of Appeal in Williams v. Superior Court (Marshalls), No. B259967 (Cal. Ct. App. May 15, 2015) will have California employers breathing a sigh of relief, at least for representative actions involving multiple locations.

In Williams, the California Court of Appeals for the Second Appellate District (which includes Los Angeles County) upheld the decision of the trial court denying Plaintiff’s motion to compel the disclosure of the names and contact information for all putative class members in a representative wage and hour action brought under California’s Private Attorney General Act (“PAGA”).

Plaintiff Michael Williams alleged in his PAGA action that Marshalls failed to provide its employees with meal and rest breaks, accurate wage statements, reimbursement for business-related expenses, and earned wages as required by California law.

At the outset of the case and prior to Plaintiff sitting for his own deposition, Plaintiff served interrogatories seeking production of the names and contact information for all non-exempt employees of Marshalls. Defendant objected to the requests and Plaintiff moved to compel.

Continue reading

Published on:

In Considering Class Action Certification Order in Labor Law Class Action, California Supreme Court Holds Rest Periods Not Mandated Prior to Meal Periods, and Employer must Provide Meal Breaks but need not Ensure Employee Takes Meal Breaks

Plaintiffs filed a putative class action in California state court against their employer, Brinker Restaurant, alleging various labor law violations; specifically, the class action complaint alleged that Brinker failed to provide employees with rest breaks, failed to provide employees with meal breaks, and that Brinker required employees to work “off-the-clock.” Brinker Restaurant Corp. v. Superior Court, ___ Cal.4th ___ (April 12, 2012) [Slip Opn., at 1, 4]. With respect to the meal period claim, plaintiffs argued that state law requires employers “to provide a 30-minute meal period at least once every five hours.” Id., at 5. Defense attorneys argued that state law does not so long as it provides one meal period for work shifts exceeding 5 hours and two meal periods for work shifts exceeding 10 hours, then it has complied with state law. Id. Brinker also argued that individual issues predominated so that class action treatment would be inappropriate, id. Specifically, Brinker argued that it was required only to permit its employees to take meal and rest breaks, but it was under no legal obligation to ensure that its employees take such breaks. Id., at 6. Plaintiffs moved the trial court to certify the litigation as a class action, id., at 5. The trial court agreed with plaintiffs, and granted plaintiffs’ motion to certify the lawsuit as a class action. Id., at 7. The Court of Appeal granted Brinker’s petition for writ relief and reversed. The Court of Appeal concluded that common issues did not predominate as a matter of law, and therefore the trial court erred in certifying the claims for class action treatment. Id., at 15. The California Supreme Court granted review and held (1) the trial court properly certified the rest break claim for class action treatment, (2) improperly certified the “off-the-clock” claim, and (3) needed to reconsider the meal period claim. Id., at 1-2. Importantly, with respect to the meal break claim, the Supreme Court held that “an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done.” Id., at 2.

The Supreme Court decision in Brinker has been awaited by both sides of the class action bar. Unfortunately, the decision creates as many questions as it solves. For example, with respect to the general rules governing class certification, the Supreme Court recognized that both state and federal decisions hold that consideration of the merits may overlap class certification issues. See Brinker, at 10-12. The Court also held that “[t]o the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them.” Id., at 13. However, in the next breath, the Supreme Court stated that “a court generally should eschew resolution of such issues unless necessary,” id. And relying on its prior decisions, the Court strongly discouraged trial courts from considering the merits of a claim in determining class certification. See id., at 11. But the Court summarized its holding as follows: “if the presence of an element necessary to certification, such as predominance, cannot be determined without resolving a potential legal issue, the trial court must resolve that issue at the certification stage.” Id., at 14. So precisely when trial court consideration of the merits is necessary or prohibited is less clear post-Brinker.

Continue reading

Published on:

District Court Applied Wrong Legal Criteria in Certifying Gender Discrimination Class Action Requiring Remand for Reconsideration based on Standards Enunciated in Wal-Mart v. Dukes Ninth Circuit Holds

Plaintiffs filed a putative class action against Costco Wholesale alleging that it discriminates in its promotional practices based on gender. Ellis v. Costco Wholesale Corp., ___ F.3d ___, 2011 WL 4336668 (9th Cir. September 16, 2011) [Slip Opn., at 17693, 17697]. The class action complaint was filed after the Equal Employment Opportunity Commission (EEOC) dismissed a charge that Costco engaged in gender discrimination in its practice of promoting employees. The class action complaint alleges violations of Title VII, and sought to be brought on behalf “of a Title VII class of all women employed by Costco in the United States denied promotion to [assistant general managers] and/or [general managers] positions.” Id., at 17702-03. The class action “sought class-wide injunctive relief, lost pay, and compensatory and punitive damages.” Id., at 17703. Plaintiffs moved the district court to certify the lawsuit as a class action based, in part, on the declarations of three experts – a statistician, a labor economist, and a sociologist – who opined that Costco’s female employees were “promoted at a slower rate” and were “underrepresented” in management positions relative to their male peers. Id. Costco opposed class action treatment, based in part on the declarations of 200 employees and the declarations of its own experts. Id. The district court granted class certification, id., at 17703-04. The Ninth Circuit granted Costco’s request for leave to file an interlocutory appeal, and proceeded to affirm in part, vacate in part, and remand the matter for further proceedings. Id., at 17697.

Briefly, Costco operates 350 warehouses, each containing a general manager (GM), two or three assistant general managers (AGM), and three or four senior staff managers (who are themselves divided into four categories consisting of front end managers, administration managers, receiving managers, and merchandise managers). Ellis, at 17699. The company “promotes almost entirely from within its organization” and “[o]nly current Costco AGMs are eligible for GM positions.” Id. No written policy exists explaining the criteria that Costco considers in selecting employees for consideration or in making its promotion decisions. Id., at 17699-700. Among senior staff managers, however, Costco generally rotates managers among the various categories as part of its belief that this exposure trains and develops employees for future positions as AGMs and GMs. Id., at 17700.

Continue reading

Published on:

Class Action Treatment of Sex Discrimination in Promotion Claim Against Wal-Mart not Proper because Commonality Requirement not Met and because Rule 23(b)(2) Class Inappropriate given Monetary Relief Sought Supreme Court Holds

Plaintiffs filed a putative labor law class action against Wal-Mart Stores, alleging systematic discrimination against women in pay and promotion in violation of Title VII. Wal-Mart v. Dukes, 564 U.S. ___ (June 20, 2011) [Slip Opn., at 1]. The class action sought injunctive and declaratory relief, but also sought monetary damages in the form of backpay. Id. The theory underlying the class action against Wal-Mart was not that the company had “any express corporate policy against the advancement of women” but, rather, that Wal-Mart’s local managers “[exercised] discretion over pay and promotion…disproportionately in favor of men, leading to an unlawful disparate impact on female employees.” Id., at 4. As the Supreme Court explained, “The basic theory of the[] case is that a strong and uniform ‘corporate culture’ permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers – thereby making every woman at the company the victim of one common discriminatory practice.” Id. The district court certified a nationwide class action against Wal-Mart consisting of approximately 1.5 million current and former female employees, id., at 1. The Ninth Circuit affirmed the class action certification order, id. The Supreme Court granted certiorari and reversed.

By way of background, the Supreme Court noted that Wal-Mart is the largest private employer in the United States, operating 4 types of retail stores (Discount Stores, Neighborhood Markets, Sam’s Clubs and Superstores) that are “divided into seven nationwide divisions, which in turn comprise 41 regions of 80 to 85 stores apiece,” each with 40-53 separate departments and anywhere 80-500 employees. Wal-Mart, at 1-2. Decisions regarding pay and promotion “are generally committed to local managers’ broad discretion, which is exercised ‘ in a largely subjective manner.’” Id., at 2, quoting 222 F.R.D. 137, 145 (N.D. Cal. 2004). With respect to the individual named plaintiffs, Betty Dukes began working for Wal-Mart in 1994 and was eventually promoted to customer service manager before being demoted all the way down to greeter due to “a series of disciplinary violations.” Id., at 3. Dukes admitted that she violated company policy, but claimed that her demotions were “retaliation for invoking internal complaint procedures and that male employees have not been disciplined for similar infractions.” Id. Christine Kwapnoski worked at Sam’s Club “for most of her adult life” and held various positions, “including a supervisory position,” but she claimed that her male manager yelled at her and other female employees (but not at men) and told her to dress better, wear makeup and “doll up.” Id. Edith Arana worked at Wal-Mart from 1995-2001, and in 2000 repeatedly asked her store manager about management training “but was brushed off.” Id. She followed internal complaint procedures and was advised to bypass her store manager and apply directly to the district manager for management training, but she elected not to do so. Id. Arana was fired in 2001 for failing to comply with the company’s timekeeping policy. Id.

Continue reading

Published on:

Trial Court Order Requiring Starbucks to Identify and Disclose Job Applicants with Marijuana Convictions Violates the Privacy Rights Sought to be Redressed by Putative Class Action California Appellate Court Holds

Plaintiffs filed a putative class action against Starbucks for allegedly violating California marijuana laws by asking prospective employees to disclose, on a preprinted form, whether they had suffered any marijuana convictions. Starbucks Corp. v. Superior Court, ___ Cal.App.4th ___ (Cal.App. April 25, 2011) [Slip Opn., at 2]. The class action complaint was premised on the fact that “[I]n the mid-1970s, the California Legislature reformed the state’s marijuana laws to require the ‘destruction’ by ‘permanent obliteration’ of all records of minor marijuana convictions that were more than two years old. Employers were prohibited from even asking about such convictions on their job applications, with statutory penalties of the greater of actual damages, or $200 per aggrieved applicant.” Id. The class action sought $26 million on behalf of 135,000 job applicants, alleging that Starbucks “failed to adequately advise job applicants not to disclose minor marijuana convictions more than two years old.” Id., at 2-3. During the litigation, the Court of Appeal held that the plaintiffs lacked standing to prosecute the class action “because none had any marijuana convictions to reveal.” Id., at 2 (citing Starbucks Corp. v. Superior Court (2008) 168 Cal.App.4th 1436). Accordingly, the trial court subsequently granted Starbuck’s motion for summary judgment and dismissed the named plaintiffs as class representatives. Id. However, rather than dismissing the lawsuit, the trial court ruled that plaintiffs could “file a first amended complaint to include only job applicants with marijuana convictions” as class members, and could “conduct further discovery to find a ‘suitable’ class representative.” Id. Toward that end, Starbucks was ordered “to randomly review job applications until it identifies job applicants with prior marijuana convictions” and to then disclose those names to plaintiffs’ counsel “unless they affirmatively opt out to a neutral administrator.” Id. Starbucks again sought writ review and the Court of Appeal reversed.

This case is surprisingly simple. As the Court of Appeal summarized its opinion, “By providing for the disclosure of job applicants with minor marijuana convictions, the discovery order ironically violates the very marijuana reform legislation the class action purports to enforce. We fail to understand how destroying applicants’ statutory privacy rights can serve to protect them.” Starbucks, at 2-3.

By way of background, the trial court believed plaintiffs had standing to prosecute this putative class action: “None of the plaintiffs had been convicted of a marijuana-related crime. But they contended that California law allowed any job applicant to receive a minimum statutory penalty of $200 per applicant if they filled out an improper job application.” Starbucks, at 3. The trial court agreed with plaintiffs, and found that every job applicant was entitled to receive the $200 statutory penalty “even those who never had sustained a marijuana conviction,” id. The appellate court disagreed, holding that “neither plaintiffs nor the tens of thousands of job applicants they purported to represent were entitled to recover statutory penalties where they did not have any marijuana convictions to disclose.” Id. Rather, “Only an individual with a marijuana-related conviction falls within the class of people the Legislature sought to protect.” (168 Cal.App.4th at 1449.)

Continue reading

Published on:

Trial Court did not Abuse Discretion in Denying Class Action Certification of Store Manager Misclassification Claim because Individual Questions Predominate California Appellate Court Holds

Plaintiffs filed a putative class action against their former employer, Big Lots Stores, alleging violations of California’s Labor Code for failure to pay them overtime or to compensate them for missed meal and rest periods. Mora v. Big Lots Stores, Inc., ___ Cal.App.4th ___ (Cal.App. April 18, 2011) [Slip Opn., at 2]. According to the allegations underlying the class action complaint, defendant “uniformly misclassifies its store manager as exempt employees based on their job description alone rather than on consideration of actual work performed, which involves a significant amount of time on nonexempt tasks.” Id. Specifically, plaintiff’s class action complaint alleged that Big Lots operates “closeout retail stores in California, [and] has intentionally and improperly designated certain employees as ‘exempt’ store managers in order to avoid payment of overtime wages and other benefits required by [California law].” Id. Plaintiffs’ counsel moved to certify the litigation as a class action; the trial court denied the motion finding “the company does not operate its stores in a standardized manner and has no systematic practice of misclassification of managers.” Id. Plaintiffs appealed. The California Court of Appeal affirmed.

The evidence presented by both sides was substantial. Plaintiffs cited defendant’s deposition testimony to establish that Big Lots “classified all its store managers in California as falling within the ‘executive exemption’” as its basis for failing to pay them overtime or provide meal and rest breaks. Mora, at 4, Plaintiffs also submitted declarations from 44 putative class members to “demonstrate[] that the basic job duties of store managers in California are the same regardless of location and that Big Lots runs all its stores in the state in a uniform and standardized manner.” Id. These declarations also stated that “Strict compliance with corporate manuals and actions plans, which set forth state-wide policies and procedures, is required; and such compliance is ensured by district managers, who supervise all store managers.” Moreover, “training of store managers is standardized, and their job performance is evaluated on the same basis and on the same form regardless of purported store-to-store differences.” Id. The declarations “averred that store managers are primarily engaged in nonexempt activities and routinely work more than 40 hours per week,” and that they “typically spend more than 75% of their time performing the same physical labor and routine clerical tasks” as nonexempt employees. Id., at 4-5. Finally, plaintiffs submitted an expert declaration in support of their motion for class action treatment. Id., at 5-6.

Continue reading

Published on:

District Court did not Abuse its Discretion in Decertifying Class Action Alleging Misclassification of Employees based on its Determination that Common Question of Law and Fact did not Exist Ninth Circuit Holds

Plaintiff filed a putative class action against his employer, United Parcel Service (UPS), alleging violations of California’s Labor Code for failure to pay him overtime or to compensate him for missed meal and rest periods. Marlo v. United Parcel Service, Inc., ___ F.3d ___ (9th Cir. April 28, 2011) [Slip Opn., at 5544]. According to the allegations underlying the class action complaint, plaintiff worked as a full-time supervisor (FTS) for UPS from 1999 to 2008, and “worked more than forty hours per week on a regular basis without taking meal or rest-period breaks, or receiving overtime compensation.” Id. Because he was an FTS, UPS classified plaintiff as exempt from California’s overtime law under the executive and administrative exemptions. Id. Plaintiff alleged that he had been misclassified, and sought and obtained an order certifying the litigation as a class action. Id. The district court subsequently granted summary judgment in favor of UPS, but the Ninth Circuit reversed finding that plaintiff “ha[d] raised material issues of fact related to whether the FTS ‘customarily and regularly exercise[] discretion and independent judgment.’” Id., at 5545 (quoting Marlo v. United Parcel Serv., Inc., 254 Fed. App’x. 568, 568 (9th Cir. 2007)). On remand, however, the district court decertified the class, finding that plaintiff “had failed to establish that common issues of law or fact predominated over individual ones” as required by Rule 23(b)(3). Id., at 5544. A juy returned a partial verdict in favor of plaintiff, finding that the executive and administrative exemptions did not apply to certain supervisorial positions plaintiff held. Id., at 5546. Both sides appealed. The Ninth Circuit affirmed the decertification order, id., at 5544.

The decertification order was based on “doubt regarding the continuing efficacy of a class action in this case.” Marlo, at 5545 (quoting Marlo v. United Parcel Serv., Inc., 251 F.R.D. 476, 480 (C.D. Cal. 2008)). In part, the district court reasoned that “the existence of a uniform policy classifying FTS as exempt is insufficient absent evidence of misclassification,” and that plaintiff “had relied heavily on a survey that was neither reliable nor representative of the class.” Id. (citations omitted). The court explained at 251 F.R.D. at 486,

Continue reading

Published on:

Nationwide Class Action (excluding California and New York) Alleging Domino’s Systematically Underpaid Delivery Drivers in Violation of Fair Labor Standards Act (FLSA) Entitled to Conditional Class Action Certification because Evidence Submitted by Plaintiffs Met Minimal Burden Required at First Stage of FLSA Proceedings Minnesota Federal Court Holds

Plaintiffs filed a putative class action against their employer, Domino’s Pizza, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Domino’s failed to pay its pizza delivery drivers minimum wage. Luiken v. Domino’s Pizza, LLC, ___ F.Supp.2d ___ (D. Minn. June 21, 2010) [Slip Opn., at 1-3]. According to the allegations underlying the class action, Domino’s failed to reimburse its delivery drivers for all automobile expenses incurred in the course of their employment, id., at 4. The class action sought to represent a nationwide class, except for delivery drivers in California and New York. Id., at 2. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1. Defense attorneys opposed class action treatment, arguing that class members were not “similarly situated” because of “highly individualized fact-specific determinations taking into account driver-specific factors such as type of car, routes, and total mileage” and because “reimbursements vary by geographic region.” Id., at 2. Noting the difference between class action certification motions under Rule 23 and conditional class certification under the FLSA (technically, certification of a “collective action”), the district court granted plaintiffs’ motion.

The federal court explained that class action certification under the FLSA is a two-part process, and that in determining whether to conditionally certify a class (the first step in the process), the court determines whether plaintiffs have established “a colorable basis that the putative class members are the victims of a single decision, policy, or plan.” Luiken, at 4 (citation omitted). Here, plaintiffs argued that Domino’s employed “a single policy which systematically under-reimbursed them for automobile expenses incurred in the course of their employment” and, accordingly, they were “paid below the federal minimum wage.” Id. In brief, plaintiffs argued that Domino’s used a uniform set of assumptions in determining reimbursement rates, and that those assumptions were uniformly unfair. Id. Defense attorneys countered that individual issues, including the base wages paid each driver, defeat class certification. Id., at 5. Domino’s additionally argued that at least some drivers were paid more than the federal minimum wage, and plaintiffs conceded that subclasses may be necessary due to differences in base pay. Id., at 5 n.5.

Continue reading

Published on:

Labor Law Class Action Alleging Wal-Mart Discriminates Against Female Employees in Violation of Title VII of the Civil Rights Act of 1964 Properly Certified As Nationwide Class Action by District Court Ninth Circuit Holds

Plaintiffs filed a class action against Wal-Mart alleging violations of Title VII of the Civil Rights Act of 1964; specifically, the class action complaint alleged that Wal-Mart discriminates against its female employees. Dukes v. Wal-Mart Stores, Inc., ___ F.3d ___ (9th Cir. April 26, 2010) [Slip Opn., at 6137, 6146]. According to the allegations underlying the class action complaint (originally filed in 2004), Wal-Mart discriminated against women employees in violation of Title VII of the 1964 Civil Rights Act because “women employed in Wal-Mart stores: (1) are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and (2) receive fewer—and wait longer for—promotions to in-store management positions than men.” Id., at 6147. The class action complaint sought to represent a nationwide class on the grounds “that Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.” Id. The proposed class included “women employed in a range of Wal-Mart positions, from part-time entry-level hourly employees to salaried managers.” Id. Plaintiffs’ counsel moved the district court to certify the litigation as a class action, defined as “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998 who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Id., at 6148. Defense attorneys opposed class certification and stressed that the proposed class would consist of as many as 1.5 million current and former employees who worked at 3,400 stores in 41 regions. Id., at 6148 and n.3. The district court granted the motion and certified the litigation as a class action, id., at 6146-47. The Ninth Circuit affirmed. The Circuit Court opinion is quite lengthy, so we simply “hit the highlights” in this article. Defense attorneys may contact the author of the Blog for a more detailed discussion of the case.

The Ninth Circuit spent a considerable amount of time discussing the standard governing district court consideration of class certification under Rule 23 and clarified the “proper standard of Rule 23 adjudication.” See Dukes, at 6149-83. This analysis includes a discussion, and rejection, of the dissent’s “significant proof” standard. See id., at 6177-83. The Circuit Court then turned to the merits of the Rule 23 analysis, beginning with Rule 23(a)(1)’s numerosity requirement, which was not contested given the enormous size of the class. Id., at 6185. The Court also found that Wal-Mart had not waived its right to object to Rule 23(a)(3)’s typicality requirement, see id., at 6209-10, but concluded that the district court did not err in finding that the named-plaintiffs’ claims were sufficiently typical of those of the class: “Even though individual employees in different stores with different managers may have received different levels of pay or may have been denied promotion or promoted at different rates, because the discrimination they claim to have suffered occurred through alleged common practices—e.g., excessively subjective decision making in a corporate culture of uniformity and gender stereotyping—the district court did not abuse its discretion by finding that their claims are sufficiently typical to satisfy Rule 23(a)(3).” Id., at 6210. Moreover, “because all female employees faced the same alleged discrimination, the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal.” Id., at 6211. And the Ninth Circuit found no difficulty in finding that the adequacy of representation test in Rule 23(a)(4) had been met. Id., at 6212.

Continue reading