Articles from April 2012

As analysts and practitioners on both sides continue to digest last week’s sprawling Brinker decision from the California Supreme Court (Brinker Restaurant Corp. v. Super. Ct., No. S166350 (Cal. Apr. 12, 2012), available here), the consensus is emerging that Brinker is a “mixed” result, with some of the newly-articulated doctrines more pleasing to the defense bar. However, amid the predominant air of compromise as to meal breaks and the requisites for class certification, workers can claim a clear, and surprising, victory on one particular issue: rest breaks. The defendant and its amicus supporters had argued that employees are entitled only to a single rest break in an 8-hour day, but the court categorically rejected this interpretation of the at-issue Labor Code and Wage Order provisions.

Indeed, it was as to rest breaks that the unanimous decision issued its strongest rebuke to the Court of Appeal opinion under review. “Employees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.” Slip op. at 20. Therefore, in the typical eight-hour shift, entitlement to a second rest break vests after six hours of work has passed and work on the seventh hour commences.

The employers’ “single rest break” theory was thus rejected, despite many observers having predicted that the rest break claim would be the most vulnerable. One tangible consequence of the ruling will be that many rest break class actions that had been either formally or informally stayed will now proceed, with the employer/defendants’ exposure on rest break claims now greater than during the protracted pre-Brinker phase.

In a stinging rebuke to recent Supreme Court decisions that demonstrate an implicit faith in arbitration, United States District Judge Max O. Cogburn has observed that “arbitration under the Federal Arbitration Act is a process that, although retaining the appearance of constitutionality by involving the courts in confirming an award, does not even attempt to retain the appearance of fairness.” Memorandum of Decision and Order at 1, Wells Fargo Advisors, LLC v. Watts, No. 5:11-cv-00048 (W.D. N.C. Mar. 9, 2012). The full opinion is available here. This bleak assessment of arbitration arose in connection with Wells Fargo’s motion to confirm an arbitration award. Although the at-issue arbitration award was confirmed, the award of attorney’s fees was not.

It appears that Judge Cogburn was affronted by Wells Fargo’s counsel challenging the court’s authority to “refuse to enforce an illegal contract.” Id. Judge Cogburn proceeded to catalogue the inequities attendant to arbitration, noting defendants’ built-in advantage over plaintiffs in arbitration and Wells Fargo’s counsel’s testimony that she has never lost any of the 30 to 40 arbitrations she handles each year. Id. at 2. Judge Cogburn punctuated his written opinion with this stark statement: “Now there’s a level playing field.” Id. The confirmation of the arbitration award was a Pyrrhic victory, at least for the defendant’s lawyers, as the award of attorney’s fees was wholly vacated.

As to the adhesive arbitration agreements that have become more prevalent since last year’s decision in AT&T Mobility v. Concepcion, Judge Cogburn observed that the “argument that the parties voluntarily agreed to arbitration and that the process saves money is also disingenuous.” Id. He went on to explain that, “[s]ince financial institutions and large employers have virtually all of the available lending capital and a large number of the jobs, individuals have no recourse but to agree to an arbitration clause,” and “since the individuals seldom win and are forced to reimburse costs and attorney fees, the only ones saving money are large institutions like the claimant.” Id. at 2-3.

While not binding authority, Judge Cogburn’s candid decision will no doubt be invoked to cut through the platitudes that so often accompany arbitration discussion and analysis.

In a major victory for employees, the United States Supreme Court has denied Ralphs’ Petition for Certiorari in Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2011), which held that AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), does not apply to representative actions brought pursuant to PAGA, the Labor Code Private Attorneys General Act of 2004. Coupled with the California Supreme Court’s refusal to review Brown, the decision now stands on strong footing that unequivocally exempts PAGA from the ambit of Concepcion and the Federal Arbitration Act.

The essence of today’s long-awaited Brinker decision (available here) is that an employer satisfies its obligations under California’s meal break laws “if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.”  Brinker at 36.  The Court thus adopted a moderate approach: seeing that employees are permitted to take their breaks, while also accounting for scheduling flexibility and taking a realistic view of the demands of the modern workplace. 

While California requires employers to “provide” employees who work five hours or more with a 30-minute off-duty unpaid meal period, the practical application of this provision has been frequently contested in state and federal courts in recent years.  Brinker finally defines employers’ obligation to “provide” and stops short of requiring that the employer “ensure” employees take their breaks.  Brinker at 36.  In a seemingly pragmatic nod to worker autonomy, the Court left the decision of whether or not to take a break entirely to the employee. 

As to the “rolling five-hour” issue, the Court struck a similarly practical note, holding that California’s meal period requirement “imposes no meal timing requirements beyond those in [Labor Code] section 512” and “an employer’s obligation is to provide a first meal period after no more than five hours of work and a second meal period after no more than 10 hours of work.”  Brinker at 50.