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.

In Newirth v. Aegis Senior Communities the Ninth Circuit addresses the federal standard for waiver of the righ to compel arbitration

I haven’t seen this federal arbitration issue pop up too often, so it stands out when it does. In Newirth v. Aegis Senior Communities (9th Cir. July 24, 2019), the Ninth Circuit applied the federal waiver standard when reviewing the District Court’s denial of a motion to compel arbitration.

The Ninth Circuit reaffirmed prior Ninth Circuit precedent, holding that, under federal law, a party seeking to prove that the right to compel arbitration has been waived must carry the burden of showing: (1) knowledge of an existing right to compel arbitration; (2) intentional acts inconsistent with that right; and (3) prejudice to the person opposing arbitration from the inconsistent behavior. Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986). The Court held that because defendant Aegis was aware of its right to compel arbitration, but made a choice not to do so in order to take advantage of the judicial forum, and because the plaintiffs were prejudiced by incurring costs in defending against a motion to dismiss, the district court was well within its right to conclude that Aegis waived the right to arbitrate.

The Court reached this conclusion despite noting that waiver of a contractual right to arbitration is not favored. Aegis didn’t help its position by filing a motion to compel arbitration and then withdrawing it to, instead, file a motion to dismiss. Oops.

The Ninth Circuit is interested in learning whether the California Supreme Court thinks Dynamex applies retroactively

Here’s a tiny little nugget of interest. Today, in Vazquez v. Jan-Pro Franchising International, Inc. (9th Cir. July 22, 2019), the Ninth Circuit issued an Order granting a Petition for Panel Rehearing. That’s not the interesting part. The stated plan to certify a question to the California Supreme Court is, however, interesting:

The opinion in the above-captioned matter filed on May 2, 2019, and published at 923 F.3d 575, is WITHDRAWN. A revised disposition and an order certifying to the California Supreme Court the question of whether Dynamex Ops. W. Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018), applies retroactively will be filed in due course.

Order, at 2. Do you feel like it never stops? That there is never a moment when you can say, “This is the wage and hour law of California.”? I do.

Ninth Circuit concludes that the Dynamex "ABC test" applies retroactively

I missed this little nugget when it came out last month, but it’s worth noting regardless because it may move the needle in existing cases. In Vazquez, et al. v. Jan-Pro Franchising International, Inc. (9th Cir. May 2, 2009), the Ninth Circuit considered whether Dynamex Ops. W. Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018) applied to a District Court decision that pre-dated Dynamex.

On that point, the Court agreed that the default rule of retroactive application of judicial decisions should apply after a thorough analysis of the limited bases for an exception to that default rule:

Given the strong presumption of retroactivity, the emphasis in Dynamex on its holding as a clarification rather than as a departure from established law, and the lack of any indication that California courts are likely to hold that Dynamex applies only prospectively, we see no basis to do so either.

Slip op., at 26. The Court then considered whether due process considerations could preclude retroactive application and held that such considerations did not:

Applying Dynamex retroactively is neither arbitrary nor irrational. The Dynamex court explained that “wage orders are the type of remedial legislation that must be liberally construed in a manner that services its remedial purpose.” 416 P.3d at 32. Moreover, Dynamex made clear that California wage orders serve multiple purposes. One is to compensate workers and ensure they can provide for themselves and their families. Id. But second, wage orders accord benefits to entire industries by “ensuring that . . . responsible companies are not hurt by unfair competition from competitor businesses that utilize substandard employment practices.” Id. And finally, wage orders benefit society at large. Without them, “the public will often be left to assume responsibility for the ill effects to workers and their families resulting from substandard wages or unhealthy and unsafe working conditions.” Id. It is with these purposes in mind that the California Supreme Court embraced the ABC test and found it to be “faithful” to the history of California’s employment classification law “and to the fundamental purpose of the wage orders.” Id. at 40.

Slip op., at 27-28.

The balance of the Opinion examined the merits of the case, providing significant guidance to the District Court on remand.

Separate from the content of the Opinion, I am impressed by the formatting of the Opinion. The Opinion contains a hyper-linked table of contents that improves navigation through the long decision. Because I was curious about the formatting, I did a quick spot check of recent opinions and could not find a similarly formatted document. This makes me wonder why this is not standard. I note that Judge Block, of the Eastern District of New York (sitting by designation) authored the opinion. If you happen to know why the formatting of this Opinion is so good, leave a comment.

The prevailing plaintiffs were represented by Shannon Liss-Riordan of Lichten & Liss-Riordan P.C., Boston, Massachusetts.

Ninth Circuit considers claim preclusion where WARN Act settlement deficiency was sought from non-settling defendant

Taylor v. Sturgell, 553 U.S. 880 (2008) was written specifically to torment me. But, since it was issued, I haven’t seen its analysis of res judicata in class cases arise too often. Here, claim preclusion meets a bankruptcy court’s approval of a class settlement against other parties in Wojciechowski v. Kohlberg Ventures (9th Cir. May 9, 2019). The quick summary of the two cases sums it up well.

Wojciechowski filed an adversary class action against the ClearEdge entities in the bankruptcy court. He alleged that the two ClearEdge entities were a “single employer” under the Worker Adjustment and Retraining Notification (“WARN”) Act, 29 U.S.C. §§ 2101–2109, and that the entities violated that act when they fired him and other employees without 60 days’ advance notice. Wojciechowski settled that action. Per the settlement agreement, the class released all claims it had against “(i) Defendants ClearEdge, Power, Inc. and ClearEdge Power, LLC and their respective estates,” and “(ii) each of the Defendants’ current and former shareholders, officers, directors, employees, accountants, attorneys, representatives and other agents, and all of their respective predecessors, successors and assigns, excluding any third parties which may or may not be affiliated with Defendants ClearEdge Power, Inc. and ClearEdge Power LLC, including, but not limited to Kohlberg Ventures LLC.” Kohlberg was not involved in the bankruptcy proceedings or in settlement negotiations. The bankruptcy court approved the settlement agreement and closed the case soon after. The ClearEdge estates paid a portion of the class members’ WARN Act wages and benefits.

Wojciechowski then filed this putative class action. He alleges that Kohlberg, as a “single employer” with the ClearEdge entities, violated the WARN Act when it fired him without advance notice. Wojciechowski seeks “an award for the balance of the Class’[s] WARN Act wages and benefits.” That is, he seeks what the class is owed under the Act less the amount received from the ClearEdge estates.

Slip op., at 4-5. In this instance, the Court had little difficulty concluding that the scope of preclusion was clearly specified in the settlement approved in the first suit before the bankruptcy court. Kohberg argued that it was not a party to the initial settlement and could not be limited by it. The Ninth Circuit quickly rejected that argument, observing that two parties can contract to settle a claim on just about any terms they want, particularly when it is then approved by a court.

No tolling for the wicked, at least when it comes to Fed. R. Civ. P. 23(f) petitions

In a move that surely caused money to change hands between law nerds gambling on federal rules interpretations through off-shore gambling sites, the United States Supreme Court held, in Nutraceutical Corp. v. Lambert (February 26, 2019), that Fed. R. Civ. P. 23(f) — the portion of Rule 23 that permits parties to request permission for interlocutory review of class certification decisions within 14 days of the issuance of the decision — is a mandatory, but nonjurisdictional, claim-processing rule, and therefore not subject to tolling or other exceptions for reasons of equity or fairness. The decision was unanimous.

Central District of California Local Rule 23-3 finally addressed in published Ninth Circuit opinion

For years I've heard grumbling about Civil Local Rule 23-3 of the United States District Court for the Central District of California.  I may have been been responsible for some of that grumbling myself.  If you haven't run into this rule, Local Rule 23-3 requires the filing of a class certification motion within 90 days of the commencement of the action.  While many judges would accept stipulations to waive the rule, some did not.  In ABS Entertainment Inc. v. CBS Corp. (9th Cir. Aug. 20, 2018), the Ninth Circuit finally addressed this Local Rule in a published opinion (I believe there was commentary in an unpublished opinion a number of years ago):

Central District of California Local Rule 23-3 sets a strict 90-day time frame from the filing of a complaint to the motion for class action certification. This bright line rule is in direct contrast to the flexibility of the Federal Rule, which calls for a determination on class certification “[a]t an early practicable time after a person sues or is sued as a class representative.” Fed. R. Civ. P. 23(c)(1)(A). That flexible approach makes sense. The class action determination can only be decided after the district court undertakes a “rigorous analysis” of the prerequisites for certification. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011) (quoting Gen. Tele. Co. of SW v. Falcon, 457 U.S. 147, 161 (1982)). To undertake that analysis may require discovery. Kamm v. Cal. City Dev. Co., 509 F.2d 205, 210 (9th Cir.1975) (“The propriety of a class action cannot be determined in some cases without discovery;” “To deny discovery in [such cases] would be an abuse of discretion.”).

The district court’s actions here demonstrate the impracticability of the 90-day limit, particularly in combination with the district court’s summary and unexplained denial of the parties’ joint stipulation to extend the 90-day deadline based on the need for pre-certification discovery. See Barbara J. Rothstein & Thomas E. Willging, Federal Judicial Center, Managing Class Action Litigation: A Pocket Guide for Judges 9 (3d ed. 2010) (“Considering [Fed. R. Civ. P. 23(c)(1)], you should feel free to ignore local rules calling for specific time limits; such local rules appear to be inconsistent with the federal rules and, as such, obsolete.”); Federal Judicial Center, Manual for Complex Litigation, Fourth § 21.133 (“Some local rules specify a short period within which the plaintiff must file a motion to certify a class action. Such rules, however, may be inconsistent with Rule 23(c)(1)(A)’s emphasis on the parties’ obligation to present the court with sufficient information to support an informed decision on certification. Parties need sufficient time to develop an adequate record.”).

Although the district court’s application and interpretation of its Local Rules is entitled to “a large measure of discretion,” Lance, Inc. v. Dewco Servs., Inc., 422 F.2d 778, 784 (9th Cir. 1970), Local Rules cannot be incompatible with Federal Rules. Fed. R. Civ. P. 83(a)(1). We conclude that the bright-line of Local Rule 23-3 is incompatible with Federal Rule of Civil Procedure 23.

Slip op., at 49-50.  I only wonder whether the inclusion of this discussion at the end of a massive copyright opinion will give it more attention -- perhaps enough to lead to a repeal of Local Rule 23-3 entirely -- or less because it will get lost at the end of this unusually long opinion.

Morris v. Ernst & Young, LLP, 834 F.3d 975 is officially vacated by Ninth Circuit

Following the Epic decision by the Supreme Court, today the Ninth Circuit formally vacated Morris v. Ernst & Young, LLP in a per curiam Opinion.  And I bet you were wondering if they would Resist!  They did not.

In China Agritech, Inc. v. Resh, the United States Supreme Court confirms that American Pipe tolling isn't what we thought

American Pipe, we had some good time.  Sniff.  But now you're dead to me.  Pack your stuff and get out. The Unites States Supreme Court, in China Agritech, Inc. v. Resh, et al. (June 11, 2018), answered a question that, as far as I have observed, wasn't being asked with any stridency for years.  That question was whether American Pipe equitable tolling applied to a subsequent class action (as opposed to individual action) when the plaintiff bringing the second action (a putative class member from the first) would have a time-barred claim absent the equitable tolling.

Top-filers, start your engines!

The Ninth Circuit, in two separate cases, certifies wage and hour law questions to the California Supreme Court

On May 9, 2018, a panel of the Ninth Circuit certified questions to the California Supreme Court in two different cases involving airlines.  In Ward v. United Airlines, Inc., the Court asked for review of the following two questions:

(1) Wage Order 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement (CBA) in accordance with the Railway Labor Act (RLA). See 8 C.C.R. § 11090(1)(E). Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code § 226 by an employee who is covered by a CBA?

(2) Does California Labor Code § 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?

Order, at 2-3.

In Oman v. Delta Air Lines, Inc., the Court asked for review of the following three questions:

(1) Do California Labor Code §§ 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? See Cal. Labor Code §§ 1182.12, 1194; 8 C.C.R. § 11090(4).

(3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? See Gonzalez v. Downtown LA Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct. App. 2013); Armenta v. Osmose, Inc., 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005)? 

Order, at 2.

Of the two sets of questions, Delta certainly presents questions that are likely of broader applicability.