Update on the TRO Issued in the Case Involving California’s AB 51 Anti-Arbitration Law

By John Lewis and Joseph S. Persoff on January 16, 2020 Posted in Arbitration

On Jan. 10, 2020 Chief District Judge Kimberly J. Mueller further defined the scope, issues and duration of the Temporary Restraining Order (TRO) she initially issued on Dec. 30, 2019. We blogged about the new California legislation and the TRO issued in Chamber of Commerce of the United States of America v. Bacerra, No. 2:19-cv-02456 on Oct. 11, 2019 and Dec. 30, 2019 respectively.

Now, in a Jan. 10, 2020 minute entry Judge Mueller explained the scope of the TRO and the supplemental briefing permitted. The minute entry stated:

After careful consideration of the parties’ arguments, the court granted the parties leave to file supplemental briefing . . . addressing jurisdiction, including standing, and the parties’ positions with respect to the severability of any provisions of AB 51, if the court grants the motion for preliminary injunction at least in part. * * * Pending the court’s issuance of an order on the preliminary injunction motion, the Temporary Restraining Order the court issued on December 30, 2019 shall remain in effect until January 31, 2020, while MODIFIED to clarify that defendants are temporarily enjoined from enforcing AB 51 to the extent it applies to arbitration agreements covered by the Federal Arbitration Act.

These qualifications relating to jurisdiction, standing, severability and coverage likely resulted from the parties’ briefing and arguments on Jan. 10th. During oral argument, Defendants took the position that the new law does not directly attack arbitration agreements but instead addressed their formation. They also argued that the Chamber of Commerce lacked standing to challenge AB 51. Continue Reading

Ninth Circuit (Barely) Acknowledges the Dukes Case in Discrimination Class Action Litigation

By Greg Mersol on January 13, 2020 Posted in Discrimination

Ten years ago, the Ninth Circuit upheld the certification of a sprawling nationwide class action in Dukes v. Wal-Mart Stores, Inc., only to see that decision overturned a year later by the Supreme Court. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). In the intervening decade, the Supreme Court similarly up-ended the Ninth Circuit authority that tried to limit the use of arbitration agreements design to rein in class action litigation. See, e.g., AT&T Mobility v. Concepcion, 113 S. Ct. 1740 (2011). For its part, the Ninth Circuit has side-stepped issues discussed in Dukes, such as perpetuating its own doubtful proposition that Daubert standards don’t apply at the certification stage. We’ve blogged that issue here.

A recent decision, however, gives at least grudging acknowledgment of Dukes’ central holdings. In Moussouris v. Microsoft Corp., Case No. 18-35791 (9th Cir. Dec. 24, 2019), the plaintiffs brought claims that were essentially identical to those that had originally been brought in the Dukes case many years earlier. They accused the employer of company-wide gender discrimination and sought certification of a class of over 8,600 women for claims of both disparate impact and disparate treatment under Title VII and state law. The district court refused to certify the proposed class and the plaintiffs sought appeal pursuant to Rule 23(f), a request the court granted. Continue Reading

Third Circuit Finds Multiple Problems With Certification of Off-the-Clock Claims

By Greg Mersol on January 8, 2020 Posted in Off-the-clock

A recent case from the Third Circuit casts a spotlight on many of the problems inherent in so-called off-the-clock claims for overtime.

In Ferreras v. American Airlines, Case No. 18-3143 (3d Cir. Dec. 24, 2019), the plaintiffs claimed that various employer time-keeping policies resulted in employees not being paid for all hours worked. One was an automatic deduction of 30 minutes for meal breaks. Another was a “”grace period” for employees to clock in and clock out that assumed that employees worked only during their scheduled shifts. The company permitted employees to apply for pay if they did work outside of those periods or during a meal period but, they claimed, they were dissuaded from doing so.

The plaintiffs brought suit under the New Jersey counterpart to the Fair Labor Standards Act and sought certification under Rule 23. Incidentally, because the FLSA does not apply to air carriers, they likely could not have brought claims under federal law. 29 U.S.C. section 213(a)(1). The plaintiffs moved for class certification and the district court certified the case, dismissing many of the arguments raised by the defendant as either premature or inaccurate. We’ll discuss the grounds below. Continue Reading

District Court Temporarily Enjoins Enforcement of California’s AB 51 Anti-Arbitration Provision

By Joseph S. Persoff, John Lewis and Greg Mersol on December 30, 2019 Posted in Arbitration

A federal judge has issued a temporary restraining order halting the enforcement of Assembly Bill 51, California’s latest attempt to prevent arbitration of claims brought under the California Fair Employment and Housing Act. We initially wrote about this statute, which sought to criminalize the use of arbitration agreements, on Oct. 11, 2019.

AB 51, slated to take effect on Jan. 1, 2020, had three main aspects. It provided that:

An employer cannot require that an employee agree to arbitrate any potential claim under FEHA as a condition of employment;
An employer cannot threaten, retaliate or discriminate against an applicant for employment or an employee for refusing to consent to arbitration of a potential claim under FEHA; and
An agreement that requires an employee to opt-out of a waiver or to take action to retain their rights “is deemed a condition of employment.”

California Court of Appeal Concludes Practice Is More Important Than Policy for Class Certification

By Joseph S. Persoff on December 30, 2019 Posted in Class Certification

A California Court of Appeal issued a Christmas Eve ruling setting out the significance of a written employment policy for class certification purposes. In Cacho v. Eurostar, Inc., the court held that a correct, yet incomplete, meal break policy does not support class certification, absent other evidence suggesting that common, rather than individual, issues predominate. The court went one step further, also holding that an incorrect written policy, without evidence of implementation, does not support class certification.

In this case, the employer’s written meal break policy provided that “Employees working over five (5) hours in any workday qualify for at least one-half (1/2) hour, unpaid, off-duty meal break during that workday.” The policy did not, however, provide that an employee’s meal break should commence within the first five hours of work and does not authorize a second meal break for shifts exceeding 10 hours—as the law requires. The Court of Appeal explained that this lack of completeness did not support class certification because the written policy was not contrary to law and there was no other evidence that the employer had a common policy or practice not to provide timely first meal breaks or not to provide a second meal break for shifts exceeding 10 hours. Continue Reading

Second Circuit Finds That Rule 68 Can Be Used To Settle FLSA Claims

By Greg Mersol on December 26, 2019 Posted in FLSA

Many litigants in FLSA cases find practical obstacles in settling the matters, particularly when there are disputes regarding what exactly has happened or when the underlying claim turns out to be very small.

This process is made more difficult by the judicial interpretation of the FLSA’s enforcement provision, section 16, which permits the Department of Labor to supervise settlements. Courts have reached different conclusions regarding the interpretation of this power and whether it means that FLSA settlements can be reached only with DOL or judicial approval. The parties may wish to avoid obtaining approval for any number of reasons that may include the cost of doing so, the time delay in seeking approval or a desire for confidentiality. Can the parties, as they do with virtually every other kind of employment case, find a means of settling their matters without having to seek review?

The Fifth Circuit in 2012 distinguished between disputed and undisputed claims. In Martin v. Spring Break ’83 Productions, L.L.C., that court held that parties could resolve disputed claims without judicial or DOL supervision. We blogged that decision here. The court contrasted the resolution of a genuine dispute with an instance where there was no dispute that the employer owed the overtime or minimum wage claimed, but was using some undue force to coerce a lesser settlement. Unfortunately, as that case has not gained universal acceptance, it leaves unsupervised releases in doubt, at least outside of the Fifth Circuit. Continue Reading

Eighth Circuit Affirms $4.6 Million Fee Award Against the EEOC

By Greg Mersol on December 20, 2019 Posted in EEOC

How Many Decades of Litigation is Enough?

On retreating from Russia after the disastrous 1812 invasion, Napoleon famously commented, “It is but a step from the sublime to the ridiculous.” That adage applies equally well to the latest opinion in the now 14-year old dispute between the EEOC and trucking company CRST.

We’ve blogged various chapters of this saga in the past (3/21/2012, 4/20/2011, 10/7/2013 and 5/19/2016). In a nutshell, based on a charge filed in 2005, the EEOC brought a lawsuit in 2007 against the employer, purportedly on behalf of approximately 270 individuals, contending sex discrimination in its training program. Rather than build a case based on evidence, the Commission refused to honor its statutory mandate to attempt informal resolution of the claims, and, as the district court found, hadn’t even investigated most of them. Once litigation commenced, the Commission insisted on the production of thousands of documents, but simultaneously evaded efforts to ferret out who the class members might be. Even when class members were identified, 120 of them refused to appear for deposition, and the remainder were dismissed on summary judgment for either substantive or procedural defects (including the EEOC’s own failures) in their claims. Continue Reading

Louisiana District Court Decertifies FLSA Class of Warehouse Supervisors

By Greg Mersol on December 4, 2019 Posted in FLSA

We’ve noted many times that while employees prevail on most motions for conditional certification under the FLSA, employers tend to prevail on the second stage motion for decertification. A recent case reflects that continuing reality, but also highlights weaknesses in the two-stage paradigm that work to the disadvantage employers irrespective of the merits (or lack thereof) of the underlying claim.

In Moody v. Associated Grocers, Inc., Case No. 17-10290 (E.D. La. Nov. 14, 2019), the employee was a warehouse supervisor working in the food industry. Although classified as exempt, he contended that his primary duties, and those of other supervisors, consisted of moving and repackaging pallets, and thus he was actually non-exempt should have been paid overtime. The district court conditionally certified the case under the lower “first stage” standard, and 17 employees with the title of “supervisor” opted in. The defendant then moved to decertify the collective class, asserting that the situation of each of the class members was different. Continue Reading

California Court of Appeal Applies Dynamex Retroactively

By Joseph S. Persoff on October 14, 2019 Posted in Independent Contractors

This week, a California Court of Appeal concluded in a class action case that the California Supreme Court’s Dynamex decision applies retroactively. In another case, Vazquez v. Jan-Pro Franchising International, the Ninth Circuit Court of Appeals previously found the Dynamex decision applies retroactively, but subsequently withdrew that opinion and certified the question to the California Supreme Court, where the request is now under consideration. The implication of this decision is that employers who rely upon independent contractors may now be subject to potential exposure for wage and hour claims based on a legal standard that did not exist prior to April 2018.

In Dynamex, the California Supreme Court adopted a new test for determining whether a worker is an employee or an independent contractor. The new test essentially added two new requirements to the test that an employer must meet to establish that the worker is an independent contractor rather than an employee. Based on this significant change in the applicable test, employers have argued that the new standard should only be applied prospectively. Continue Reading

California Enacts Anti-Arbitration Legislation, but Will the FAA Limit Its Potential Impact? Not Entirely.

By John Lewis and Joseph S. Persoff on October 11, 2019 Posted in Arbitration

On Oct. 10, California Governor Gavin Newsom signed into law an attempt by California’s Legislature to limit arbitration of claims under California’s Fair Employment and Housing Act (“FEHA”). FEHA prohibits harassment, discrimination and retaliation on the basis of various protected characteristics, such as gender, age, disability or national origin.

Taking effect Jan. 1, 2020, AB 51 amends the California Labor Code to provide the following:

An employer cannot require that an employee agree to arbitrate any potential claim under FEHA as a condition of employment;
An employer cannot threaten, retaliate or discriminate against an applicant for employment or an employee for refusing to consent to arbitration of a potential claim under FEHA; and
An agreement that requires an employee to opt-out of a waiver or to take action to retain their rights “is deemed a condition of employment.”

Further, violation of the law constitutes an “unlawful employment practice” under FEHA and is a criminal misdemeanor. Continue Reading