Episode 22 of the Class Re-Action podcast, discussing Voris v. Lampert, is now available

This is almost looking like a trend. We are back with Episode 22 of the Class Re-Action Podcast. We discuss Voris v. Lampert (August 15, 2019), but I don’t know if we will convert anyone with our analysis. Ahhhh?!?!

NOTE: Correcting a comment I made on the podcast about Lawson, somehow I got it stuck in my head that opinions are due 60 days after submission. It’s 90 days, and I’m either becoming senile or too much junk is taking up valuable storage space in my head.

Episode 21 of the Class Re-Action podcast, discussing Noel v. Thrifty Payless, is now available

Back so soon?!?! Yes we are, with Episode 21 of the Class Re-Action podcast. We discuss Noel v. Thrifty Payless (July 29, 2019), an objective show topic that is easy to ascertain. See what I did there?

In Voris v. Lampert, the California Supreme Court finally provides the definitive answer to the question of whether wages can be recovered via a conversion tort claim

I recall that in the early 2000’s it was common to see a conversion claim for relief included in a wage & hour complaint, on the theory that the wages owed and unpaid were property of the employee. When this was challenged by demurrer, I observed that the demurrer was successful well over half the time, but there wasn’t a definitive appellate ruling on point. The demurrers that worked would usually focus on the argument that a conversion tort for money had to specifically identify the precise amount in question (essentially, identify the specific cash in question).

Today, in Boris v. Lampert (August 15, 2019) the California Supreme Court answers a question I long ago quit wondering about: whether a conversion claim is cognizable for unpaid wages. In a split 5-2 decision, the Supreme Court said it was not.

The conversion of specific sums of money guided the majority’s analysis:

The employee’s claim is not that the employer has wrongfully exercised dominion over a specifically identifiable pot of money that already belongs to the employee—in other words, the sort of wrong that conversion is designed to remedy. Rather, the employee’s claim is that the employer failed to reach into its own funds to satisfy its debt. Indeed, in some cases of wage nonpayment, the monies out of which employees would be paid may never have existed in the first place. Take, for example,a failed start-up that generates no income and thus finds itself unable to pay its employees. Because the business accounts are empty, there would not be any identifiable monies for the employer to convert. No one would dispute that the start-up is indebted to its employees. But only in the realm of fiction could a court conclude that the business, by failing to earn the money needed to pay wages, has somehow converted that nonexistent money to its own use.

Slip op., at 15. The majority expressed some concern about the consequences of layering tort liability over what has traditionally been a species of contract recovery:

But a conversion claim is an awfully blunt tool for deterring intentional misconduct of this variety.As noted,conversion is a strict liability tort. It does not require bad faith, knowledge, or even negligence; it requires only that the defendant have intentionally done the act depriving the plaintiff of his or her rightful possession. (Moore, supra, 51 Cal.3d at p. 144, fn. 38; Poggi, supra, 167 Cal. at p.375.) For that reason, conversion liability for unpaid wages would not only reach those who act in bad faith, but also those who make good-faith mistakes—for example, an employer who fails to pay the correct amount in wages because of a glitch in the payroll system or a clerical error. We see no sufficient justification for layering tort liability on top of the extensive existing remedies demanding that this sort of error promptly be fixed.

Slip op., at 25.

I won’t go into great detail on the dissent, but it is pointed, and is well-encapsulated by this passage, which rejects the notion that wage payment recovery is best handled under contract theories:

In California, unpaid wages are not merely contractual obligations to pay a sum. This is because, as we long ago observed, “wages are not ordinary debts.” (In re Trombley (1948) 31 Cal.2d 801, 809, italics added.)

Slip op., Dissent of Cuellar, at 3. This comment is also interesting: “For some time, plaintiffs in wage cases have routinely included a claim for conversion.” Slip op., Dissent of Cuellar, at 7. It is a somewhat feisty dissent. I like it for the conviction. In closing, the dissent observes that it seems illusory to treat theft of stocks as a conversion but deny similar treatment to wages owed.

I’m not 100% settled on where I come down on these competing arguments, but, for purposes of California law, the majority defines where things stand.

Another Court of Appeal holds that PAGA claims cannot be split and sent partially to arbitration

Right now, Lawson v. ZB, N.A., review granted Mar. 21, 2018, S246711, is making its way through the California Supreme Court. The case asks whether a representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) (‘PAGA”) seeking recovery of individualized lost wages as civil penalties under Labor Code § 558 fall within the preemptive scope of the Federal Arbitration Act (9 U.S.C. § 1 et seq.). Lawson was argued on June 5, 2019. Supplemental briefing was requested and received, and the matter was deemed submitted on June 27, 2019. That means a decision is imminent.

Today, in Mejia v. Merchants Building Maintenance, LLC (August 13, 2019), the Court of Appeal (Fourth Appellate District, Division One) another Court of Appeal came down on the side of the Courts of Appeal that have concluded that PAGA claims cannot be split so as to direct a portion to arbitration:

We agree with the conclusion of the Lawson and Zakaryan courts on this question, and conclude that a single PAGA claim seeking to recover section 558 civil penalties may not be "split" between that portion of the claim seeking an "amount sufficient to recover underpaid wages" and that portion of the claim seeking the $50 or $100 per-violation, per-pay-period assessment imposed for each wage violation. The result is that an employee bringing a PAGA claim to recover the civil penalties identified in section 558 may not be compelled to arbitrate that portion of her PAGA claim that seeks an amount sufficient to recover underpaid wages pursuant to that statute, while the rest of the claim that seeks the $50 or $100 per-pay-period per violation portion of the penalty remains in a judicial forum. We therefore affirm the trial court's order denying the MDM defendants' motion to compel arbitration in this case

Slip op., at 6.

As for reading tea leaves, the Lawson matter (perhaps to be known as the ZB matter due to a change in the name of the case), as noted above, requested supplemental briefing on this question:

If this court concludes Labor Code section 558's "amount sufficient to recover underpaid wages" is not a "civil penalty" recoverable under the Private Attorneys General Act (Lab. Code, § 2698 et seq.), should the trial court be ordered to deny ZB's motion to compel arbitration?

Lawson docket. That question suggests that at least someone on the Supreme Court is thinking about whether an aggrieved employee can recover unpaid wages at all through Labor Code § 558. There’s a curve for you.

Interesting meal and rest break questions certified by Ninth Circuit to the California Supreme Court

This is interesting. On August 1, 2019, the Ninth Circuit certified a pair of questions to the California Supreme Court in Cole v. CRST Van Expedited, Inc. (No. 17-55606) (9th Cir. Aug. 1, 2019). Before we get ahead of ourselves, the California Supreme Court still needs to agree to take up the certified questions. They do so at an exceedingly high rate, but it isn’t a done deal…yet. So, what about those questions? The questions posed are as follows:

1.Does the absence of a formal policy regarding meal and rest breaks violate California law?

2.Does an employer’s failure to keep records for meal and rest breaks taken by its employees create a rebuttable presumption that the meal and rest breaks were not provided?

Slip op., at 4. The case arises in the context of the operation of truck drivers working for a shipping company. The discussion of the reason for the certification clarifies where the Ninth Circuit seeks guidance:

The California Supreme Court did not directly address in Brinker whether the absence of a policy providing for meal and rest breaks constitutes a violation of California labor law. However, in Duran v. U.S. Bank Nat’l Ass’n, 325 P.3d 916,933 n.28 (Cal. 2014), the California Supreme Court observed that “[i]n regard to other wage and hour claims, some courts have held that the absence of a uniform policy supports [class] certification if such a policy is required by law. We express no opinion on this question.” (emphasis in the original).

Slip op., at 11. After noting Benton and Bradley, the Court also observed the concurring comment in Brinker:

In Brinker, Justice Werdegar noted that “[i]f an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” 273 P.3d at 545 (Werdegar, J., concurring).

Slip op. at 12.

If the California Supreme Court takes up the questions, I will be happy to handle action on the outcome for a 5% vig. Kidding. 10%. Still kidding.

The Class Re-Action Podcast is finally back, with Episode 20

We finally got around to getting Episode 20 of the Class Re-Action Podcast out. Fly! Be free! We are tweaking the format a bit to see if it helps with publication frequency. First, shows will be shorter - in the 20-30 minute range. Second, “special guests” will be, well, special. We aren’t going to hold off on publishing a show because invited guests are too busy to record. We promise to try to publish consistently, rain or shine. Mostly shine, we hope.

How long do "on-duty" meal periods have to be? 30 minutes.

This really feels like the setup for a bad joke that only employment lawyers in California would get. Question: How long does an “on-duty” meal period have to be? Answer: 30 minutes. Follow-up: But….it’s “on-duty.” Put your hand down. I’m not calling on you. In L’Chaim House, Inc. v. Division of Labor Standards Enforcement (July 31, 2019), the Court of Appeal (First Appellate District, Division One), the Court was called upon to review a wage and hour citation by the DLSE. The Court summarized, “On appeal, L’Chaim claims that under the applicable Industrial Welfare Commission (IWC) wage order, it may require its employees to work “on-duty” meal periods that, unlike periods when employees are ‘relieved of all duty,’ do not need to be at least 30 minutes long.” (Slip op., at 1.)

The Court’s discussion was more interesting than you might think, since the Court necessarily had to explain the difference between on-duty and off-duty meal periods, and what events can transform one into the other. This led to the Court’s rejection of the appellant’s position:

What L’Chaim misunderstands is that an on-duty meal period is not the functional equivalent of no meal period at all. On-duty meal periods are an intermediate category requiring more of employees than off-duty meal periods but less of employees than their normal work. Recognizing this, the trial court stated that even if L’Chaim’s employees were not entitled to “an uninterrupted meal period,” they “may at least be afforded 30[] minutes of limited duty enabling them to eat their meal in relative peace.” L’Chaim attacks the notion that its “employees may be given ‘limited duty’ while on a meal break” as creating “several absurd consequences.” According to L’Chaim, because employees do not clock out for on-duty meal periods, there is no way to track the length of those periods. In addition, “the creation of a new ‘limited duty’ requirement to [Wage Order No. 5, subdivision 11(E)] would force employers to delineate which tasks an employee is expected to perform during his or her on-duty meal period,” which L’Chaim claims “would be difficult and even potentially dangerous for the residents.”

But any such practical challenges are inherent in providing “on-duty meal periods” at all, not just periods of a particular length. Moreover, the question presented here is whether an on-duty meal period must be at least 30 minutes long, not how courts might evaluate the adequacy of the period under different factual scenarios. Thus, while we do not address what constitutes an acceptable on-duty meal period in the context of this case, what we can say is that employees of 24-hour residential care facilities for seniors are unambiguously entitled to “on-duty meal periods” under subdivision 11(E). L’Chaim’s interpretation would effectively read that requirement out of Wage Order No. 5.

Slip op., at 5. If this still doesn’t convince you, the Court made one final observation that seems pretty solid:

Finally, even if any doubt remained, we agree with the DLSE that section 512 compels the same conclusion. Under that statute, which L’Chaim does not address in its briefing, an employer is prohibited from “employ[ing] 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,” unless the employee works no more than six hours in a day and agrees to waive the meal period. (§ 512, subd. (a).) Although section 512 contains exceptions for workers in several industries, none of them apply here. And although the IWC has broad authority to “adopt or amend working condition orders with respect to . . . meal periods . . . for any workers in California consistent with the health and welfare of those workers,” at all relevant times—including when subdivision 11(E) was added to Wage Order No. 5—that authority has been specifically limited “as provided in Section 512.”

Slip op., at 7. The Wage Orders cannot negate Labor Code provisions. The balance of the decision is worth a quick read if you practice in this area.