Articles from November 2012

The National Labor Relations Board (NLRB) has issued a potentially influential ruling that extends its earlier interpretation of AT&T Wireless v. Concepcion in D.R. Horton. That decision struck an arbitration clause that included a class action waiver as a condition of employment. See D.R. Horton, 357 NLRB No. 184 (Jan. 3, 2012). Now the NLRB has held that making a class action waiver a condition of employment is an unfair labor practice, even where the waiver is not part of an arbitration clause. See Convergys Corp., 2012 NLRB LEXIS 742 (Oct. 25, 2012).

Convergys, which provides customer service support, had required all job applicants to sign a form stating that the applicants “will not lead, join, or serve as a member of a class or group of persons bringing such a claim or lawsuit.” Convergys at 2. Regardless, Convergys employee Hope Grant filed an FLSA collective action alleging that Convergys failed to pay her and similarly situated workers for essential tasks undertaken before and after their core customer service duties. Id. Convergys moved to strike any class and collective allegations pursuant to the waiver form all employees had signed as part of applying for their jobs at Convergys. Id.

In holding that the class action waiver violates the National Labor Relations Act, the NLRB identified D.R. Horton as the controlling authority, finding that “despite the fact that the D.R. Horton decision concerned a mandatory arbitration agreement, rather than a lawsuit which waived the employees’ rights to maintain a class or collective action, it is clearly dispositive of this case.” Convergys at 3. The NLRB rejected Convergys’ attempts to distinguish D.R. Horton. The fact that Grant was a job applicant rather than an employee was found to be of no consequence, both because the NLRA covers job applicants and because Grant was an employee when she filed the class action. See id.

D.R. Horton is the subject of a pending appeal in the Fifth Circuit, which rendered it “procedurally infirm,” according to Convergys, another argument that was rejected by the NRLB. See Convergys at 3, n.2. Accordingly, in addition to making clear that D.R. Horton prohibits both mandatory arbitration clauses and class action waivers as conditions of employment, Convergys underscores that D.R. Horton remains good law while the appeal works its way through the Fifth Circuit.

In addressing California’s so-called “day of rest” statutes (Cal. Lab. Code §§ 551 and 552), District Court Judge Cormac Carney has ruled that employees may waive their entitlement to a day off after six days of work, in a decision so broad as to perhaps render the purported right to a day of rest illusory. See Mendoza v. Nordstrom, No. 10-0109 (C.D. Cal. Sept. 21, 2012) (Memorandum of Decision). While Judge Carney ruled that Nordstrom could not manipulate the statutes’ plain meaning — “to prohibit employers from causing employees to work seven consecutive days” — the decision turned on an exceptionally literal understanding of what it is for an employer to “cause” an employee to work seven consecutive days. Memorandum at 8.

There was no dispute that the plaintiffs had in fact worked seven or more consecutive days, seemingly in violation of the labor code. And while the plaintiffs conceded that they had ostensibly chosen to exceed the six-day limit, they argued that this was in response to informal pressures. Plaintiff Christopher Mendoza claimed that “Nordstrom caused him to work for more than six consecutive days by exploiting his desire to earn a decent living, by making promotion within Nordstrom contingent upon additional work, and by giving him positive feedback on his performance evaluations after working beyond his scheduled hours.” Id. at 14. Mr. Mendoza noted that his willingness to forego days off was reflected in his performance reviews, earning praise. See id. at 16-17.

However, Judge Carney found the plaintiffs’ motivation to have been entirely self-directed. As to plaintiff Christopher Mendoza, the ruling concluded that he “was not forced or coerced into accepting additional shifts; he reasonably sought additional work to earn more money and maintain his benefits.” Id. at 18. Similarly, as to plaintiff Megan Gordon, who alleged that she covered for an absent employee because she believed that doing so was a tacit requirement, Judge Carney fully credited Nordstrom’s evidence that the store had no formal policy “requiring employees to cover ‘no show’ shifts.” Id. at 19.

Carney also noted that no evidence was presented that demonstrated overt coercion by Nordstrom. Of course, if employees believe that foregoing their statutorily mandated days off is a de facto rule for remaining in the good graces of their employer and advancing within the company, there will rarely be a need for coercive actions on the employer’s part.

The parties have agreed to settle a class action in which a class of nearly 200,000 consumers alleged that a popular children’s clothing retailer collected customers’ addresses, emails, phone numbers and ZIP codes during credit card transactions, in violation of section 1747.08 of California’s Song-Beverly Credit Card Act of 1971. See Seebrook v. The Children’s Place Retail Stores, Inc., No. 11-0837 (N.D. Cal. October 25, 2012) (Motion for preliminary approval). The settlement will resolve five consolidated class actions, pending court approval.

The proposed settlement presents class members with the choice of either a 30% coupon or $10 gift card, redeemable only at California Children’s Place locations. Additionally, the settlement’s injunctive relief component provides class members with the option of removing their personal information from the store’s marketing campaign database, and includes a commitment from The Children’s Place to revise its procedures for collecting customer information during credit card transactions.

While the Memorandum of Points and Authorities in support of the preliminary approval motion acknowledges that “the dollar value of the settlement per Class member may be relatively small,” it goes on to explain that where the relief negotiated in a settlement is directly responsive to the underlying allegations, and those allegations are difficult to prove, such a settlement is appropriate. See MPA at 13:22-27, citing Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 55 (2008).

A federal judge in California’s Southern District has approved a settlement on behalf of consumers who used several popular online flower and gift sellers — Pro Flowers, Red Envelope, Cherry Moon Farms, Secret Spoon and Sharri’s Berries. Plaintiffs allege that these companies violated state and federal law by enrolling customers who made purchases through their websites into “membership programs” without their knowledge or consent. See In re: EasySaver Rewards Litigation, No. 09-02094 (S.D. Cal. filed Aug. 13, 2012).

The plaintiffs contend that they and other consumers were unwittingly enrolled in these programs. Specifically, the complaint alleges that, after customers provided their personal and payment information and completed their purchase, a window popped up thanking them for their order and offering a gift code for $15.00 off their next purchase. The window also contained a link to click on to claim the gift code. When customers clicked on it and input their zip code, they were then enrolled in the membership program and charged an activation fee and monthly fee, using the payment information they had used to complete their purchase. Plaintiffs allege that the pop-up window was part of an intentionally misleading and deceptive scheme.

The estimated two million class members are eligible to receive both a $20 credit and a cash refund as a result of the settlement. The total settlement fund is valued at $12.5 million, though the settlement proceeds include over $40 million in coupons that can be used by the settling consumers for purchases with the settling merchants.