Articles from January 2018

7th Cir. Reinstates Class Action for Volvo Plug-In Hybrid Range Misrepresentations

In the Seventh Circuit Court of Appeals’ recent opinion in Laurens, et al. v. Volvo Cars of North America, LLC, et al., the court relied on the notion of common sense (and basic contract formation principles) to cudgel Volvo’s and other automakers’ attempts to moot consumer class actions through the trend of “picking off” plaintiffs. Case No. 16-3829 (7th Cir. Aug. 22, 2017) (slip op. available here). At issue was the advertised mileage capability of a Volvo Model XC90 T8, a hybrid plug-in SUV, when running solely on battery power. The plug-in hybrid was sold at a $20,000 premium as compared to its non-hybrid counterpart, the XC90.

The court referred to the process of “picking off plaintiffs” as a “theme” with many variations, several of which “have been tried and have failed.” Slip op. at 1. In Laurens, Volvo contended, in a motion to dismiss under Fed. Rule 12(b)(1), that Khadija Laurens, one of the now-plaintiffs, lacked standing because Volvo had sent her a letter offering complete relief before she had been added to the current lawsuit (her husband, Xavier, was the initial named plaintiff). The district court agreed that the defendant’s offer had redressed her injury before she became a party to the suit, and thus dismissed the action.

In a refreshingly straightforward analysis, applying basic contract law, the Court of Appeals held that simply making an unaccepted pre-litigation offer of redress does not result in a loss of Article III standing. As the court explained: “Any first-year law student knows that contract formation requires offer, acceptance and consideration. . . .  Consider what this case would look if the parties were reversed. [Plaintiff] could not argue that she had the right unilaterally to compel an unwilling Volvo to trade a full refund in exchange for her claim.” Slip op. at 11-12. This latest variety of attempting to moot a class action via unaccepted pre-litigation offers met a demise similar to Campbell-Ewald, where the Supreme Court of the United States clearly found that a case was not mooted by an unaccepted Rule 68 offer of judgment; thus, the plaintiff still had standing in a Telephone Consumer Protection Act case. Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016).

After the appeals court reversed and remanded the Laurens action, the district court applied the ruling and, for the most part, denied the defendant’s motion to dismiss. Such uncomplicated analysis by the Seventh Circuit is welcome in the often convoluted world of Article III standing.

Authored by:
Tarek Zohdy, Associate

Monroy v. Yoshinoya: Reporting Time Gets Modernized

Yoshinoya—the Japanese-inspired fast food restaurant chain, like many modern companies, has tried to maximize its own flexibility while minimizing labor costs through an uncompensated “on-call” scheduling system. Specifically, in Monroy v. Yoshinoya, Case No. BC653419 (Los Angeles Superior Court), the plaintiff alleged that the restaurant would schedule employees for “on-call” shifts, where the employee is expected to call the manager at a specific time or two hours prior to his or her scheduled start time. If the employee is needed, he or she is called into work; if not needed, he or she is informed that he or she will not be working that day. If an employee does not call in and report to work when needed, the employee is subject to discipline. Employees do not receive any compensation for the “on-call” shifts, unless they were called into work.

Although “on-call” scheduling is a commonly-utilized practice, on November 27, 2017, Judge Elihu M. Berle denied Yoshinoya’s motion for summary judgment and ruled that its scheduling system was a violation of California’s reporting time laws. See Notice of Ruling on Defendant’s Motion for Summary Adjudication, available here. Wage Order No. 5-2001(5)(A)[1] provides that:

[E]ach workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours not more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.

Employers have consistently argued that an employee does not “report for work” unless he or she physically shows up at the work site. Employees, on the other hand, have argued that the Wage Order encompasses any time an employee is required to reserve his or her day, check in, and be prepared to work—whether that be by physically reporting or checking in by phone or other electronic means.

Prior to Judge Berle’s ruling, two federal court cases had addressed this issue: Casas v. Victoria’s Secret, LLC (C.D. Cal. April 9, 2015), No. 2:14-cv-06412-GW-VBK, and Bernal v. Zumiez, Inc., 2017 WL 3585230 (E.D. Cal. Aug. 17, 2017). In Casas, the court found that reporting for work required physically appearing at the work site, whereas Bernal found the opposite and found that “reporting for work may be accomplished telephonically.” There is not yet any California appellate authority addressing this issue.

At oral argument, Judge Berle focused on two issues: first, the fundamental fairness of requiring employees to block off their day because they may be called to work. Judge Berle pointed out that by doing so, the employee is not free to make a doctor’s appointment, agree to take care of a family member, or schedule other appointments, because he or she must reserve the day or part of the day to be available to work. Second, the judge noted that, in this case, there was the threat of discipline if the employee failed to call in or report to work if called, which created a “right to control.” Judge Berle characterized Yoshinoya’s position as amounting to employer control “without compensation.”

What this means is quite simple: employers can no longer assume that unless an employee physically reports to work, that they are not responsible for reporting time pay. Reporting for work can now potentially encompass any time an employee is required to make himself or herself available to work and report in—no matter the means of reporting.

[1] All of California’s wage orders contain the same reporting time requirement.

Authored by:
Arnab Banerjee, Senior Counsel