In ruling on a motion to compel arbitration, U.S. District Judge Christina A. Snyder has held that an arbitration clause cannot prevent a plaintiff from pursuing intrinsically representative actions under PAGA, California’s Labor Code Private Attorneys General Statute, in arbitration. Cunningham v. Leslie’s Poolmart, Inc., No. 13-2122 (C.D. Cal. June 25, 2013) (order on defendant’s motion to compel arbitration, available here). Although the decision otherwise substantially sided with the defendant’s arguments that the U.S. Supreme Court’s AT&T Mobility v. Concepcion ruling preempted the plaintiff’s cited authority, Judge Snyder extensively distinguished representative PAGA actions from the class actions that fall within the ambit of Concepcion.

The plaintiff contended that PAGA claims were within the scope of the at-issue arbitration agreement, while the defendant argued that by not expressly authorizing the arbitration of representative PAGA claims, the arbitration agreement prohibited such claims altogether. See order at 7. From these divergent positions, Judge Snyder set forth a detailed survey of PAGA’s inception and provisions, and concluded that PAGA actions “are not a sub-species of class actions” but rather a type of qui tam action. Order at 11. Critically, therefore, because “a plaintiff’s right under PAGA to pursue a bounty through a representative action is closely analogous to a qui tam relator’s right to pursue a bounty, an aggrieved employee’s rights under PAGA should also be characterized as substantive.” Order at 12.

Based on that core holding, the Cunningham decision weighed in on multiple important, and often nuanced, PAGA issues, including reconciling the dissonant holdings in Franco v. Athens Disposal Co. and Quevedo v. Macy’s, Inc. The court found Quevedo to be premised on the erroneous assumption that there is such a thing as an “individual PAGA claim” and found that Franco is not preempted by Concepcion. See order at 13-14.

Moreover, Cunningham distinguishes PAGA actions from the class actions at the center of Gentry and Discover Bank, two California cases that have been in jeopardy during the post-Concepcion era: “The fact that PAGA accomplishes state policy goals through granting substantive rights rather than access to procedures distinguishes the Franco rule from the rules in Gentry and Discover Bank,” and “although the FAA preempts state law imposing the presence of certain procedures in the arbitration, the FAA does not preempt state laws ensuring that a plaintiff may assert substantive rights in arbitration.” Order at 15-16.

Finally, Cunningham distinguishes the U.S. Supreme Court’s Stolt-Nielsen S.A. v. AnimalFeeds holding. See order at 17. Although an agreement to arbitrate cannot necessarily be inferred to tacitly comprise class claims, “[t]his reasoning does not, however, apply when considering whether an agreement to arbitrate encompasses representative PAGA claims” because “PAGA claims do not bind absent employees, and hence do not require the complex proceedings that must be used when binding absent class members.” Order at 17.

California’s Court of Appeal has reversed a trial court’s denial of a motion to certify claims alleging underpayment of earned overtime pay and miscalculation of pay rates. See Bowers Cos. Wage & Hour Cases, No. G046104 (Cal. Ct. App. June 27, 2013) (available here). The defendant conceded that the policies were as the plaintiff alleged, and as a result, the court found that common questions necessarily predominated and the claims should – indeed must – be adjudicated in a class action. The Fourth Appellate District remanded the case to the trial court with the directive to grant the plaintiff’s class certification motion consistent with the subclass definitions as revised by the unanimous three-judge appellate panel. Slip op. at 1-2.

The defendant, an ambulance company, employed the named plaintiffs as EMTs and pursuant to an alternative work schedule (AWS) paid the plaintiffs and their fellow workers overtime after they worked ten hours in a day, rather than after the usual eight hours. Slip op. at 5, 7. While California law provides for certain changes to overtime pay under a properly adopted AWS system, the plaintiffs here alleged that the defendant’s formulas for setting both regular and overtime pay rates did not comply with the applicable California AWS law. Id.

The Court of Appeal found that the trial court committed reversible error in multiple respects. First, the trial court based its denial of certification on a proposed regular rate subclass not being ascertainable, but “failed to consider whether the class definition could be modified” to resolve any ascertainability deficiency. Slip op. at 17. Connecting the ascertainability analysis to the defendant’s admittedly uniform pay-rate calculation policy, the Court of Appeal underscored a hard rule of class action jurisprudence with the observation that where there is “a theory of recovery challenging an undisputed policy uniformly applied to a readily identifiable group of employees” the proposed class or subclass is ascertainable as a matter of law. Slip op. at 18.

After dealing with the ascertainability issue, the Court of Appeal turned to the trial court’s finding that the plaintiffs hadn’t satisfied the numerosity requirement, and concluded that the modest numerosity threshold had been amply satisfied. Slip op. at 18-21.

Finally, as to the often-pivotal issue of whether common issues of law or fact predominate, the panel concluded that “Plaintiffs’ theory challenges the uniform policy Defendants applied to all class members and whether that policy violates California law is a question eminently suited for class treatment. The policy’s existence and terms may be established at trial through Defendants’ testimony and documents without any individualized evidence.” Slip op. at 23.

Though the decision has been designated as unpublished, it is likely to spark calls for that designation to be changed to published under the California Rules of Court insofar as it provides a clear, well-reasoned, and detailed statement of law concerning a much-repeated circumstance.

With U.S. business owners celebrating the Supreme Court’s embrace of “the liberal federal policy favoring arbitration” and hastening to add arbitration clauses with class action waivers to the stack of first-day paperwork for new hires to sign, news from China suggests an approach far more aggressive than anything Rule 23 contemplates. Charles Starnes, co-owner of Florida-based Specialty Medical Supplies, arrived at his Beijing factory last week intending to lay off 30 employees. However, Starnes was preempted by the employees, who rather than being escorted out of the building by an officious HR employee, took Starnes hostage. The employees/captors have since benefitted from the Chinese government’s apparent indifference, if not its affirmative support, as Starnes remains in captivity.

Accounts vary as to exactly what happened, though it seems that Starnes’ meeting with employees went awry like an unsuccessful mediation writ large, with employees having expected a more generous severance package. Instead of responding with the usual counter-offer, they put Starnes in something that looks a lot like a conventional jail, albeit with more elegant bar beveling than is usually seen in prisons. Apparently, according to the Washington Post, “a lot of CEOs get taken hostage in China.”

The paper documents a similar incident that took place in Shanghai, in January of this year, but no others, noting only that workers taking their boss hostage “doesn’t make for international headlines.” This time, however, it did make headlines. Even so, Starnes remains in captivity, as no international groundswell has demanded his release. No word on whether Starnes will be required to resolve the dispute with his captors under the efficient, streamlined auspices of arbitration.

The Supreme Court today issued its long-awaited rulings on both the federal Defense of Marriage Act (DOMA) and California’s Proposition 8, striking down a key DOMA provision as unconstitutional and dismissing the state case on lack-of-standing grounds, thereby clearing the way for gay marriage to again be legal in California.

The principal consequence of the DOMA ruling is that legally married same-sex couples will be eligible for the same federal benefits as heterosexual couples. See Windsor v. United States, 570 U. S. ____ (2013) (slip opinion available here). In the Proposition 8 ruling, the Court ruled that the plaintiffs didn’t have standing to challenge the lower court’s ruling that struck down the voter initiative banning gay marriage. See Hollingsworth v. Perry, 570 U. S. ____ (2013) (slip opinion available here).

The narrow Hollingsworth majority didn’t consist of the usual suspects, as Chief Justice Roberts wrote the opinion, joined by Ginsburg, Breyer, Kagan and Scalia. Dissenting in the DOMA decision, Scalia was ironically consistent in urging that the Supreme Court limit itself to a modest, deferential role. See Windsor, slip op., dissent at 1 (“We have no power to decide this case. And even if we did, we have no power under the Constitution to invalidate this democratically adopted legislation. The Court’s errors on both points spring forth from the same diseased root: an exalted conception of the role of this institution in America.”).

While the entirely technical Proposition 8 ruling was without the soaring language that has characterized Supreme Court decisions on issues of broad consequence, the DOMA opinion contained several quotable passages, including: “By creating two contradictory marriage regimes within the same State, DOMA forces same-sex couples to live as married for the purpose of state law but unmarried for the purpose of federal law, thus diminishing the stability and predictability of basic personal relations the State has found it proper to acknowledge and protect.” Windsor, slip op. at 22.