O’Connor v. Uber: The Ninth Circuit Unravels the Class Certification Orders in Appeals From Four Related Actions

In O’Connor v. Uber Technologies, Inc., a Ninth Circuit panel, in four related appeals from District Judge Edward Chen’s rulings, reversed the denial of Uber Technologies Inc.’s motions to compel arbitration, also reversed the district court’s class certification orders and found the Rule 23(d) orders entered by the district court were moot. The opinion impacts claims of hundreds of thousands of present and former Uber drivers who attempted to proceed as classes in these actions.

Writing for the majority, Judge Richard R. Clifton began the Sept. 25, 2018, opinion by acknowledging that in Mohamed v. Uber, 848 F.3d 1201, 1206 (9th Cir. 2016), the same panel (judges Richard Tallman, Clifton and Sandra Ikuta) reversed the district court’s orders denying Uber’s motion to compel arbitration. Then, in the O’Connor appeals, the plaintiffs made additional arguments supporting their position that the arbitration agreements were unenforceable, but they were again rejected as “unpersuasive” in the new opinion. And because class certification was based on the unenforceability of the arbitration agreements, those orders and related Rule 23(d) rulings had to be reversed as well.

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Ninth Circuit Affirms Decertification of FLSA Off-the-Clock Case

No, that isn’t a typo – it was the Ninth Circuit.

Those familiar with collective action litigation are already familiar with the two-step paradigm most courts use to evaluate collective action claims. In the first stage, commonly misnamed “conditional certification,” the court determines whether to authorize notice to the putative class. In doing so, most courts apply a modest burden of proof to show that the proposed class members are “similarly situated” under Section 16(b) of the act. Most motions are granted at this stage. Following a period of opt-in and additional discovery, the defendant may file a motion (also commonly misnamed) for decertification. Most such motions are granted either then or on the eve of trial.

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California Courts Limit Derivative Wage Statement Claims

A common tactic for plaintiffs bringing wage and hour claims is to tack onto those claims an inaccurate wage statement claim under California Labor Code § 226. Here’s an example: A plaintiff brings a claim alleging that she was not paid overtime; she brings a second claim alleging she was provided inaccurate wage statements because the wage statements she was issued do not reflect the overtime wages she should have been paid. The benefit of this tactic is the potential of recovering $4,000 per employee as well as an award of costs and reasonable attorney’s fees.

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And Yes, Epic Systems Applies to Independent Contractors, Too

Unreported opinion will also impact potential counterstrategy

Just three months ago, the Supreme Court rendered its decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1632 (2018), in which it rejected perhaps the largest remaining obstacles to the enforcement of class action waivers in arbitration agreements in the employment context, concluding that they did not violate the National Labor Relations Act (NLRA). We blogged that decision here. Although the Court’s opinion also seemed dispositive of whether such agreements could be avoided under the Fair Labor Standards Act (FLSA), at least one claimant tried to continue to litigate the issue, one disposed of last week in Gaffers v. Kelly Servs., Inc., No. 16-2210 (6th Cir. 2018). We blogged that decision here. And now the Sixth Circuit has addressed whether Epic Systems would apply to arbitration agreements with putative independent contractors who contended that they should have been treated as employees.

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California Meal Period Claim Done In by Collective Bargaining Agreement

While the proportion of private sector employees represented by unions is down, unions retain an important workplace role, and the terms of collective bargaining agreements can both affect and be fatal to wage and hour litigation. That was the lesson learned by the plaintiffs in Ehret v. Winco Foods, LLC, Case No. E067575 (4th Dist. Cal., Aug. 13, 2018). In Ehret, grocery cashiers brought California Private Attorney General Act claims against their employer on the basis that they and their coworkers were not offered meal periods during shifts that were between five and six hours long.

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Eleventh Circuit Overturns Default Judgment for Failing to Pay Arbitrator’s Fee

With the Epic Systems case broadly supporting employers’ rights to use arbitration agreements with class waivers, what is now emerging is the result of the necessary trade-off. Employers can, in the wake of Epic Systems, use arbitration agreements to compel the arbitration of putative class claims on an individual basis. But the quid pro quo is that they must then deal with the case in arbitration. A recent case suggests the perils of arbitration once the dispute is sent there.

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[Gasp!] Epic Systems Decision Applies to FLSA Claims

No shocking outcome here. In Gaffers v. Kelly Services, Inc., Case No. 16-2210 (6th Cir. Aug. 15, 2018), the Sixth Circuit held that the Supreme Court’s decision in Epic Systems v. Lewis, 138 S. Ct. 1632 (2018) [which we blogged here] applies to claims under the Fair Labor Standards Act (FLSA). Gaffers itself was a garden-variety FLSA collective action in which a call center worker argued that he was not properly paid for the time it took him to log on and off the network each day. He sought to bring a collective action under the FLSA on behalf of himself and thousands of other call center workers, and 1,600 of those workers opted into the litigation. While the named plaintiff had not signed an arbitration agreement, about half the opt-in class members did. Those agreements provided that wage and hour claims must be arbitrated on an individual basis.

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The California Supreme Court To Decide Whether California’s Labor Laws Apply To Employees Who Work Only Partially In California

For a company that does 100 percent of its business in California and employs workers who perform 100 percent of their work in California, it would not be surprising for the workers’ employment to be governed by California’s labor laws. But what if the employer operates in multiple states and the employees work in multiple states, with only a small fraction of their work performed in California – do California’s labor laws apply then? That is the question the California Supreme Court recently agreed to answer.

The California Supreme Court was presented with this question in three cases involving airlines – Oman v. Delta Air Lines (Case No. S248726), Ward v. United Airlines (Case No. S248702) and Vidrio v. United Airlines (Case No. S248702). Oman and Vidrio involve flight attendants, while Ward involves pilots. In Oman, a sampling of data revealed the four plaintiffs spent at most 14 percent of their time working in California. The class member flight attendants in Vidrio spent an average of 17 percent of their time at work in airspace above California, while the class member pilots in Ward spent an average of 12 percent of their work time in airspace above California. Additionally, the class members in Vidrio and Ward are California residents who pay California’s state income tax on their income. Of the four plaintiffs in Oman, two resided in California and were based at California airports, a third was based at a California airport but was not a California resident, and a fourth was neither based at a California airport nor a California resident.

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Ninth Circuit Finds ERISA Fiduciary Duty Claims Not Arbitrable

But decision leaves open many questions . . .

With the Supreme Court’s Epic Systems decision laying to rest many of the primary arguments used to avoid arbitration, case law continues to develop regarding how arbitration may apply for claims under the Employee Retirement Income Security Act of 1974 (ERISA). [We blogged the Epic Systems decision here.] It isn’t all that surprising that the Ninth Circuit would hold that certain types of ERISA claims might not be arbitrable, but its July 24, 2018, decision in Munro v. University of Southern California, Case No. 17-55550, may represent something more than that court’s traditional hostility toward arbitration provisions.

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California State Court Rules That Loose Change Adds Up … and So Will the Penalties

We’ve all been there: You pull up to a parking spot, hop out to check whether the meter requires payment on Sunday and then grumble as you fish around in the coin tray. With any luck, you find a quarter or two. More often than not, however, you’re stuck with nickels and the nigh-useless penny. (Of course, the ensuing profanity of finding only 23 cents in your car will soon be a lost art, as most new parking meters accept credit cards or mobile payments.)

Many of us fill that coin tray with the loose change resulting from a purchase at Starbucks, and now a recent California Supreme Court ruling has ensured that California-based employees receive a little more of that earned loose change going forward. In Troester v. Starbucks Corp., 2018 WL 3582702 (Cal. Sup. Ct. July 26, 2018), plaintiff Douglas Troester was a shift supervisor at Starbucks. He filed the initial action in August 2012 on behalf of himself and others in a putative class of all nonmanagerial California employees who performed store closing tasks from mid-2009 through October 2010. Specifically, Troester claimed that on every closing shift, Starbucks’ computer software required him to clock out before initiating the software’s “close store procedure” on a separate computer terminal in the back office. After he completed that task, he activated the alarm, exited the store, locked the front door and walked his co-workers to their cars, in compliance with Starbucks’ policy. All of this, he alleged, happened off the clock.

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