Articles from April 2011

In Bright v. 99¢ Only Stores, 118 Cal. Rptr. 3d 723 (Cal. Ct. App. 2010), the California Court of Appeal held that the so-called “suitable seating requirement” under Wage Order 7 exposes employers to liability for civil penalties under California’s Private Attorney General Act in addition to any statutory or compensatory damages. See Wage Ord. No. 7-2001, sub 14(A), available here.

The trial court sustained the defendant’s demurrer, which posited that because Wage Order No. 7 contains its own civil penalty provision, there could be no PAGA civil penalties, but the Court of Appeal reversed. Writing for the unanimous three-justice panel, Justice Kriegler observed that the Wage Order’s adequate seating provision does not in fact have its own civil penalty provision, and consequently, it is governed by subdivision (f) of PAGA.

Bright is a small, but significant, step in the development of the body of common law that will govern PAGA claims and a welcome counterbalance to decisions that seemingly regard PAGA claims as technical excrescences, rather than the valid and distinct claims they are. (See, e.g., Villacres v. ABM Indus., Inc., 117 Cal. Rptr. 3d 398 (Cal. Ct. App. 2010), which held that PAGA claims that had never been pleaded, litigated or released in a prior class action settlement were nonetheless barred by res judicata.)

Most importantly, Bright confirms that an employer that fails to provide the adequate seating required by Wage Order 7 is liable for an assessment of PAGA civil penalties, either in an action brought by the Labor Workforce Development Agency (LWDA) or in a private attorney general action brought by a private litigant. Significantly, too, PAGA representative actions are not required to be certified (per Arias v. Superior Court, 46 Cal. 4th 969 (Cal. 2009)), and therefore need not establish the familiar requisites of class treatment (numerosity, typicality, commonality, and adequacy).

The Court of Appeal’s opinion in Bright v. 99¢ Only Stores is available here.

Following on the Court’s relatively pro-class action decision in Taylor v. Sturgill, class action advocates are hoping for another victory in Smith v. Bayer, 593 F.3d 716 (8th Cir.), cert. granted, 131 S. Ct. 61 (U.S. Sept. 28, 2010) (No. 09-1205). However, two justices thought to be favorably disposed toward the plaintiffs gave indications at the January 11th oral argument that they are perhaps not prepared to embrace the relatively formalistic approach that would be required in order to prevent the denial of class certification in a federal district court from being res judicata as to a substantively identical class action in state court.

First, in response to the familiar argument that class actions are the only way many consumer claims will ever be litigated because of the prohibitive cost of individual actions, Justice Sotomayor abruptly cut off plaintiffs’ counsel and said, “Actually not true.” She elaborated with a critique incongruous with the expectation that she would be a reliably pro-class action vote: “The issue is how much money the lawyers are going to receive, really, because plaintiff gets . . . a statutory violation amount, which is going to be the same whether it’s in a class action or an individual action, so it’s really not the plaintiff who stands to win.” Later in the oral argument, Justice Breyer posed a challenging hypothetical, in which he suggested “if . . . an intervenor, joins a litigation late, and there have been a lot of procedural rulings, . . . that intervenor takes the case as he finds it. . . . [I]s your client analogous to that person who joins litigation late?” Against the well-established rule that an intervenor is not entitled to a procedural tabula rasa, the plaintiffs’ attorney struggled to explain why a subsequent state court class representative would be entitled to a full procedural reprise of class certification, whereas an intervenor is not even entitled to a full complement of discovery.

Oral argument is a notoriously unreliable basis on which to predict Supreme Court outcomes, and justices will frequently play against type to co-opt arguments that they oppose. As we enter an era of increasing federal dominion over class actions, the decisions in several key cases this term (Smith v. Bayer, Dukes v. Wal-Mart and AT&T v. Concepcion) could change the class action landscape considerably.

The Smith v. Bayer oral argument transcript is available here.

Governor Jerry Brown’s appointment of Julie Su as California’s Labor Commissioner (the titular head of the Division of Labor Standards Enforcement, or DLSE) has been met with near-unanimous approval and enthusiasm by the plaintiffs’ bar and a marked lack of express opposition on the part of either defense firms or other natural opponents of the unabashedly “pro-worker” attorney. (Ms. Su has devoted the entirety of her legal career to causes on behalf of those unable to afford legal services at prevailing market rates, with an emphasis on low-wage and immigrant workers’ rights.) Julie Su brings the sort of exemplary credentials to the post that typically mute ideology-based criticism. A graduate of Stanford University and Harvard Law School and a past recipient of a MacArthur Foundation “genius grant,” Ms. Su most recently served as Litigation Director for the Asian-Pacific American Legal Center, where she began her career directly out of law school in 1994.

Though Ms. Su’s appointment requires Senate confirmation, expected sources of opposition have been restrained, if not entirely silent. While the prominent wage-and-hour defense firm Jackson Lewis speculates on its California Workplace Law Blog that it “would not be surprised if the DLSE’s meal-period enforcement position changed,” it neither supports nor opposes the appointment, cautioning only that “[i]t will be important to closely monitor the DLSE web site and any upcoming speeches Ms. Su may deliver for any developments.” The full article is available here. And in its post announcing the Su appointment, the California Chamber of Commerce is assiduously factual, relating only the progression of Ms. Su’s extraordinary career, without venturing even the sort of cautionary aside in the Jackson Lewis article. That post is available here.

At the other end of the spectrum, Ms. Su’s reception is typified by the optimism expressed by the State Building & Trades Counsel of California: “In Julie Su, workers now have a strong, proven advocate for upholding their rights.” Their post is available here. Ms. Su’s confirmation appears to be a certainty, and her tenure as Labor Commissioner is expected to mark a pro-worker era in California.

At its essence, the Dukes v. Wal-Mart appeal that was argued before the Supreme Court last week is not about the ultimate merits — whether Wal-Mart discriminated against female employees by disproportionately promoting males — but whether that ultimate merits determination can be made in a single, class-wide adjudication. As in many class actions where injunctive or declaratory relief is sought under FRCP 23(b)(2), the key certification issue in Dukes is whether common issues of law or fact exist. For the Dukes plaintiffs, this means that they must identify a specific Wal-Mart policy that is applicable class-wide, so that they can point to that policy as being the impetus behind the gender discrimination. This challenge is heightened by the rarity of overtly discriminatory policies within today’s corporate culture. The days of “smoking gun” memos describing nefarious policies and practices are long gone, except perhaps as a plot device in a book or film.

Accordingly, many of the questions posed by Justices during the Dukes oral argument seemed designed to get to the heart of what specific policy, if any, was at issue in this case. For example, Justice Kennedy pressed Wal-Mart’s lawyer, Gibson Dunn’s Theodore Boutrous, as to whether deliberate indifference to discrimination could qualify as a policy, while Chief Justice Roberts wanted to know whether, if the head office received regular reports from its stores revealing widespread patterns of discrimination, “[a]t some point, can’t they conclude that it is their policy of decentralizing decisionmaking that is causing or permitting that discrimination to take place?”.

These questions exemplify an important issue, not just in Dukes but in any class action alleging a uniform policy or practice as the basis for establishing the commonality necessary for certification. To the extent that Dukes endorses the principle of law embodied in Justice Kennedy’s inquiry — that deliberate indifference may be regarded as a de facto policy — it could provide a helpful analytical tool for plaintiffs.

The official transcript of the Dukes oral argument is available here.