Seventh Circuit Affirms Judgment Against Class in Off-Duty BlackBerry Use Case

There certainly has been no shortage of publicity about the potential for wage and hour claims for time spent by hourly employees using smartphones or other electronic devices for work while off duty. Many employers have tried to address the need to pay for such time, and to avoid litigation, by promulgating procedures for such employees to record and be paid for the hours they work on mobile devices. That should be the end of it, but litigation continues when employees, for their own reasons, choose not to follow those procedures or to put in for the additional time. But is the employer responsible for that?

That was the issue presented in Allen v. City of Chicago, Case No. 16-1029 (7th Cir. Aug. 3, 2017). In that case, the city of Chicago apparently provided BlackBerry devices for officers working in its organized crime division. Incidentally, the case was filed in 2010, when such devices were more common – the opinion does not reflect whether the falloff in the popularity of that product resulted in different mobile devices being provided. Officers who used the BlackBerrys when off duty, a frequent occurrence due to the nature of their work, could submit “time due slips” to their supervisors to be paid for that time. In many cases, however, the officers simply did not submit those slips and thus were never paid for the time they had spent on their mobile devices during off hours. As the trial court found, while supervisors could in theory cross-check the work done by the officers with their time slips to find instances where work was done but not compensated, doing so was largely impractical. Following a six-day bench trial, the trial court entered judgment against the class. Continue Reading

Ohio District Court Dismisses Contract-Based Wage and Hour Class Action

A mud-covered pig is still a pig

We’re used to seeing off-the-clock cases for minimum wage and overtime, but at times such claims aren’t available, such as when the employees are paid well above the minimum wage and either do not work overtime or are paid for it. In most states, and under the FLSA, such claims are really ones for breach of contract rather than for wage and hour violations. The question then arises whether such contract claims, ones that employees worked off the clock but received minimum wage and overtime, can be asserted on a class-wide basis.

This was the issue in Hopkins v. U.S. Bancorp., Case No. 1:16-cv-552 (S.D. Ohio Aug. 17, 2017). In that case, the employee sought to bring class-wide claims on the basis that he and others were not paid for all hours worked. He premised his claim upon the breach of an oral contract in which he claimed he was told orally in a job interview that he would make about $15 per hour plus benefits. What made the case dangerous was not the amount of wages, which was relatively small (and, frankly, somewhat weak), but the plaintiff’s effort to bolster that claim by wrapping a class action claim around it on behalf of thousands of other workers. Continue Reading

Convergys Corporation and LogistiCare Solutions, Incorporated v. NLRB – The Fifth Circuit Considers Class and Collective Action Waivers Without Arbitration Agreements

The U.S. Court of Appeals for the Fifth Circuit decided two cases considering the impact of the National Labor Relations Act (NLRA) on class or collective action waivers required by companies for their applicants and employees.

Convergys Corporation

The first decision, in Convergys Corporation v. NLRB, No. 15-60860 (5th Cir. Aug. 7, 2017), addressed whether the company violated the NLRA by having applicants and employees sign stand-alone class and collective action waivers and then taking steps to enforce the waivers. Circuit Judge Jennifer Walker Elrod, writing for the majority, found that Convergys did not violate Section 7 of the NLRA by requiring execution of the waivers and did not violate the NLRA in enforcing the waivers.

Notably, Judge Elrod explained that the court had “already rejected the Board’s position that Section 7 guarantees a right to participate in class or collective actions, holding that the use of a class or collective action is a procedure rather than a substantive right.” Continue Reading

Digging In Its Heels: Disputing The DOJ’s Position, The NLRB Remains Defiant In Supreme Court Brief That Individual Arbitration Agreements Violate Employee Rights Under The NLRA

On August 9 the National Labor Relations Board (NLRB or Board) filed its responsive brief in one of three cases before the Supreme Court that may determine the future validity of individual arbitration agreements in the employment sector. Since 2012, the Board’s position has been that arbitration agreements prohibiting collective or class litigation or arbitration impermissibly interfere with employees’ rights to engage in “concerted activity” under Section 7 of the National Labor Relations Act (NLRA). The Board’s latest brief was filed in NLRB v. Murphy Oil USA, Inc., No. 16-307, which arose from the Fifth Circuit and has been consolidated with two other cases involving Epic Systems Corp. (No. 16-285) and Ernst & Young (No. 16-300) from the Seventh and Ninth Circuits. We have extensively covered the lengthy run-up of the cases involving Epic Systems Corp., Ernst & Young and Murphy Oil USA, Inc., including the grant of certiorari, in a Jan. 17, 2017, blog post here; a subsequent Sixth Circuit opinion in a June 1, 2017, blog post; and the Department of Justice (DOJ) change of position in a June 20, 2017, blog post.

The NLRB’s brief is notable in that it reflects the Board digging in its heels on the hotly contested position that the NLRA guarantees an employee’s right to engage in collective or class procedures, regardless of the presence of an arbitration agreement under the Federal Arbitration Act (FAA) requiring individual arbitration. In a June about-face, the DOJ broke from the Board’s position and switched sides to join the employers, arguing in an amicus brief that the Board is incorrect – that “the NLRA does not specifically bar enforcement of agreements to arbitrate statutory claims or declare such agreements to be unlawful.”

Continue Reading

Esparza V. Ks Industries, L.P. – Separating PAGA & Unpaid Wage Claims – A Ray Of Sunshine?

We have been following how California courts deal with the intersection of Private Attorneys General Act (“PAGA”) claims and individual arbitration agreements after Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) (“Iskanian”) for some time.  See, for example, our blog posts from October 7, 2015, March 8, 2017 and March 30, 2017 on the subject.  This area of law is confusing and has suffered from a lack of legislative or judicial guidance.

Now, a California court of appeals has added substantial clarity by ruling that claims for unpaid wages based on California Labor Code Section 558 where a percentage of recovery is not allocated to the Labor and Workforce Development Agency are not covered by PAGA and must be arbitrated.

In Esparza v. KS Industries, L.P., No. F072597 (Cal. Ct. App. 5th Dist., Aug 2, 2017), a former employee sought damages, individually and on behalf of other employees, seeking unpaid wages, civil penalties, interest, attorneys’ fees and costs under the Labor Code and for violation of PAGA.  When KS Industries filed a motion to compel arbitration, the employee responded that a claim for civil penalties under PAGA cannot be arbitrated, and that includes claims for recovery of wages.  The trial court denied the motion to compel and the request for a stay.  And KS Industries appealed.  Continue Reading

Florida Court Denies Conditional Certification of FLSA Case Involving Restaurant Staff

As we’ve noted before, many courts have applied the standard for conditional certification so leniently that in places the requirement of a group of “similarly situated” employees under the FLSA has all but disappeared. So, it’s refreshing to see a case that still requires at least a minimal showing of a similarly situated class – and in particular one involving restaurants, one of the most fertile sources of collective action litigation.

In Cedeno v. Kona Grill, Inc., Case No. 8:17-cv-01039-JSM-AEP (M.D. Fla., July 24, 2017), the plaintiff was a sous chef at a Kona Grill restaurant in Sarasota, Florida. He brought a collective action for alleged unpaid overtime, contending that he and others had been misclassified as exempt. He sought to represent employees holding a range of positions in the restaurant’s 46 locations in the United States and Puerto Rico. Continue Reading

Second Circuit Vacates District Court Judgment in Sex Discrimination Case Permitting an Arbitrator to Certify a Class Including Absent Class Members

In a sex discrimination case we have been following for almost six years, the Second Circuit has added a measure of rationality by vacating a lower court opinion that would have permitted an arbitrator’s certification of a class that included approximately 44,000 absent class members who had not consented to join.

The three-judge panel in Jock v. Sterling Jewelers, Inc., No. 15-3947 (2d Cir., July 24, 2017), vacated District Judge Jed Rakoff’s November 15, 2015 opinion which upheld that portion of a Class Determination Award that would bind absent class members who did not consent to be bound. See District Court Opinion and Order at 3-4. Judge Rakoff had found:

“. . . defendant’s argument on this point is foreclosed by earlier rulings in the case. The Second Circuit in [a 2011 Opinion, (“Jock I”)] stated that ‘there is no question that the issue of whether the agreement permitted class arbitration was squarely presented to the arbitrator’. All members of the class certified by the Arbitrator signed the . . . agreements; the arbitrator interpreted these agreements to permit class arbitration; and the Second Circuit upheld the Arbitrator’s authority to do so.” Id. at 4. Continue Reading

No Certification Where Loss of Data Prevents Class Identification

Junk fax case presents opportunities for some employment cases

Identifying potential class members is not an issue in most employment cases, as the employer likely has any number of employment records for each of the claimants, including personnel files, electronic data, tax forms, time records, and the like, many of which are required to be kept for a set period of time. But what if the records no longer exist or if the claims depend on data that cannot be located or readily retrieved?

That was the issue the Sixth Circuit faced in Sandusky Wellness Center, LLC v. ASD Specialty Healthcare, Inc., Case No. 16-3741 (6th Cir. July 11, 2017). In Sandusky Wellness, the plaintiff sought to bring a claim under the Telephone Consumer Protection Act (TCPA) and specifically the Junk Fax Protection Act Amendments of 2005 due to the plaintiff’s receipt of an unsolicited facsimile transmission. The facts giving rise to the case appear to have been largely undisputed. The defendant, a distributor of medical and pharmaceutical products, sent a fax to 40,343 providers based on a list of 53,502 names it had purchased as customer leads. Importantly, many of the names on the original list were pre-existing company customers that had in some fashion consented to the sending of fax solicitations. Eighteen months after the fax was sent, the specific names and numbers were deleted in the ordinary course of business. Thus, there was no record of who the recipients of the fax from the original list were and, similarly, no way to determine which of those recipients had consented through a prior business relationship. Continue Reading

Massachusetts District Court Denies Certification for Claims of Unpaid Meal Breaks

It has become almost part of the plaintiff playbook to bring wage and hour claims despite lawful employer policies by claiming some sort of “class-wide” policy of deviating from those policies. Sadly, this tactic works at least as often as not in collective action litigation, where many courts are quick to conditionally certify even questionable claims with the expectation that the employer will simply settle them. A recent case from the District of Massachusetts shows that this is not always the case.

In Romulus v. CVS Pharmacy, Inc., Civil Action No. 13-10305-RWZ (D. Mass. July 12, 2017), the plaintiffs were hourly pharmacy shift supervisors and assistant managers. They contended that they were required to remain in their stores during unpaid meal breaks (which they contended constituted time worked) when no other manager was present. They alleged that they were entitled to overtime under Massachusetts law for that time. It’s not clear from the opinion why they did not assert FLSA claims, but based on the case’s prior procedural history, it may have been partly due to an effort to keep the claims in state court. See Romulus v. CVS Pharmacy, Inc., 770 F.3d 67, 70–72 (1st Cir. 2014). Continue Reading

California Supreme Court Denies Sequenced Discovery in Representative PAGA Action

On July 13, 2017, the California Supreme Court rejected lower court holdings that limited an employee’s ability to secure statewide employee contact and employment information in a representative PAGA action, when the plaintiff only worked in one of the employer’s stores.

In Williams v. Superior Court of Los Angeles County (Marshalls of CA, LLC), Case No. S227228, Michael Williams sued Marshalls of CA, a retailer with approximately 130 stores in the state, for alleged wage and hour violations. Williams contended that Marshalls had failed to provide him and other aggrieved individuals with required meal and rest breaks or compensation, and that the retailer had a “systematic company-wide policy” of not paying premiums for missed breaks. Moreover, he alleged that Marshalls failed to give timely wage payment or complete and accurate wage statements to employees.

In discovery, Williams tendered two special interrogatories seeking “the name, address, telephone number, and company employment history of each nonexempt California employee in the period March 2012 through February 2014, as well as the total number of such employees.” Marshalls objected, indicating that there were approximately 16,500 employees covered. Williams moved to compel responses. Continue Reading

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