A detailed analysis of the arguments and counterarguments around a plaintiff’s motion to certify a class alleging meal and rest break violations has been published in the Federal Rules of Decision. See Avilez v. Pinkerton Gov’t Servs., 286 F.R.D. 450 (2012). The ruling, by Central District of California Judge David O. Carter, methodically works through the Rule 23 certification elements, and in doing so provides unusually broad guidance as to the more rigorous procedural requirements implied by the U.S. Supreme Court’s Dukes decision as well as the substantive aspects of California’s meal break statute set forth by the California Supreme Court in Brinker v. Superior Court, 53 Cal. 4th 1004 (2012).

While Pinkerton did not contest the easily-established numerosity requirement, the company did challenge typicality, the cited reason being that “some unstated number of putative class members signed a document purporting to waive their right to participate in a class action against Defendant, whereas Plaintiff signed no such document.” However, Judge Carter concluded that the defendant’s argument merely postulated that the plaintiff had a stronger claim than some other putative class members, and that there is no authority holding that such a circumstance precludes certification. Avilez at 456-7.

Judge Carter also rebuffed the defendant’s challenge to the named plaintiff’s adequacy, which was premised on a survey purporting to show that a majority of Pinkerton employees prefer the “present arrangement” with respect to meal breaks, seemingly irrespective of whether that arrangement complies with Brinker. See Avilez at 457-58. Judge Carter methodically deconstructed Lanzarone v. Guardsmark Holdings, Inc., 2006 U.S. Dist. LEXIS 95785 (C.D. Cal. Sept. 7, 2006), the defendant’s main authority supporting this point, finding that it “betrays a deep naïveté” about incumbent employees’ motivations and incentives. See Avilez at 458. Moreover, the survey that was the basis for the defendant’s adequacy argument covered only 30 employees, and the defendant failed to disclose the identity of the person who conducted the survey. Judge Carter thus struck the survey evidence, vitiating the defendant’s adequacy challenge. Avilez at 458-60.

Beyond providing plaintiffs with a favorable adequacy ruling, this analysis also offers useful benchmarks for contrasting the truly rigorous surveys that class action plaintiffs will often proffer in support of class certification. See id. For instance, the survey altogether excluded former employees, even though the defendant’s own deponent testified that former employees constituted at least half, and perhaps nearly three-quarters, of the class members. Id. Judge Carter also noted his skepticism with respect to “the motivations behind and credibility of current employees’ responses to employer-elicited questions regarding employees’ contentment with their employer’s policy.” Id. at 458.

Finally, as to the often pivotal question of whether common questions of law and fact predominate, Judge Carter’s analysis brought to bear the procedural and substantive mandates of Dukes and Brinker, and concluded that the plaintiff’s prima facie case is subject to common proof, “which is all that is necessary to meet the predominance requirement of Rule 23(b)(3).” Avilez at 469. Thus, the defendant’s challenges to predominance not focused on the prima facie case are not relevant, a finding that is in keeping with “courts ‘traditionally be[ing] reluctant to deny class action status’ under predominance requirement of Rule 23(b)(3) ‘simply because affirmative defenses may be available against individual members.’” Avilez at 469, citing Lorber v. Beebe, 407 F. Supp. 279, 294 (S.D.N.Y. 1975).

As the U.S. Supreme Court continues to take aim at class actions, federal and state trial courts are policing abuses that illuminate why employers would prefer that workplace protections not be broadly enforced by class and representative actions. For instance, a federal judge in the influential Southern District of New York recently found that an FLSA defendant engaged in deceptive and intimidating communications intended to dissuade class members from opting into a class action involving the non-payment of overtime. See Zamboni v. Pepe West 48th Street LLC, No 12-3157 (S.D.N.Y. Mar. 12, 2013) (order re: class member communications).

The Zamboni plaintiffs alleged that employees eligible to opt into the conditionally-certified FLSA class were summoned to a meeting presided over by the defendant employer, where they were instructed to sign, without reading, a document disavowing overtime work. One of the employees present at the meeting testified that he was handed a document and told to “read it quickly and sign it even quicker.” Order at 4. After initially being rebuffed when he asked to see a copy of the signed document, the employee discovered that it included the statement, “I do not believe that I am owed any monies for unpaid wages . . . or for any other reasons.” Id. Additionally, the employee was told that he could not opt into the FLSA class if he signed the document, even though the document had no actual bearing on employees’ ability to be members of the FLSA class. Id. Judge James C. Francis IV concluded that “it was inherently coercive for the defendants to solicit from each employee a statement that he does not have a claim for unpaid wages.” Order at 9.

Echoing the analysis around unconscionable contracts, Judge Francis found that “an employee who signs such a statement . . . may well believe that . . . he is precluded from opting in to this litigation. Furthermore, an employee could well sign such a statement without full recognition of the extent of his rights and potential claims under the FLSA.” Order at 9. As a remedy, Judge Francis ordered that a notice be disseminated informing the employees that they had not in fact waived FLSA rights and that the lawsuit’s opt-in period be extended. Order at 10.

Classwide adjudication of workplace violations has become increasingly difficult in recent years, due to heightened certification scrutiny and the widespread use of arbitration agreements and class waivers by employers.  However, a tentative ruling by an intermediate appellate court portends an easier path, in tandem with the growing significance of the California Labor Code’s Private Attorneys General Act (PAGA).

California’s Second Appellate District, Division Eight, is expected to confirm that plaintiffs seeking civil penalties on the State’s behalf and representing fellow employees pursuant to PAGA may continue to do so even where class certification has been denied. See Nelson v. Southern Cal. Gas Co., No. B238845 (Cal. Ct. App. argued Mar. 28, 2013). During oral argument, the three-judge panel tentatively indicated that it would reverse the ruling of Los Angeles Superior Court Judge Zaven V. Sinanian (available here). Judge Sinanian denied the plaintiff’s motion for class certification, chiefly on the ground of insufficient common questions of law or fact, then subsequently ruled that the plaintiff’s PAGA claims couldn’t go forward, citing the same commonality problem that supported the denial of class certification.

Judge Sinanian issued this ruling despite the California Supreme Court having held, in Arias v. Super. Ct., that a PAGA representative action need not satisfy the familiar class certification requirements of numerosity, typicality, commonality, and adequacy of representation. Arias, 46 Cal. 4th 969 (2009) (available here). In its Arias decision, the court specifically distinguished PAGA actions from other representative actions, finding that “the employee plaintiff represents the same legal right and interest as state labor law enforcement agencies — namely, recovery of civil penalties that otherwise would have been assessed and collected by the Labor Workforce Development Agency.” Arias at 986.

The official decision in Nelson is expected to issue shortly.

As the battle between individual arbitration and litigated class actions continues across state and federal jurisdictions, California’s intermediate appellate court has underscored that, at least in California, an unconscionable contract that would otherwise be unenforceable will not be deemed enforceable merely because the subject matter is arbitration. See Compton v. Super. Ct., ___ Cal. App. 4th ___ (Cal. Ct. App. 2013) (available here).

In reaching this decision, the panel relied heavily on the California Supreme Court’s Armendariz v. Foundation Health Psychcare Servs., 24 Cal. 4th 83 (2000), a decision that defined the California standard for unconscionability at the time it was issued. Armendariz turned on the asymmetry of the at-issue arbitration provision, whereby the employer unilaterally got to determine which claims would be submitted to arbitration and which would be pursued in court. The court found such one-sidedness to be substantively unconscionable when presented in a contract of adhesion imposed by an employer on an employee, reasoning that, “[a]lthough parties are free to contract for asymmetrical remedies and arbitration clauses of varying scope, . . . the doctrine of unconscionability limits the extent to which a stronger party may, through a contract of adhesion, impose the arbitration forum on the weaker party without accepting that forum for itself.” Armendariz at 118. Reinforcing two prior appellate decisions, the court held that such arbitration agreements must have at least a “modicum of bilaterality” to be enforceable. Id. at 117.

Similarly, in Compton, the at-issue arbitration provision, along with other one-sided terms, enumerated the types of claims that could and could not be submitted to arbitration. The employer included claims most likely to be brought by employees, while excluding claims most likely to be brought by the employer, thus allowing the employer to litigate in court claims that were important to it, while forcing employees into arbitration on claims most important to them. Compton slip op. at 4-5. After discussing the provision’s many asymmetric terms, all of which accrued to the defendant employer’s benefit, the 2-1 Compton majority reversed the trial court and found the at-issue arbitration clause unconscionable. Id. at 17-22. Because the Compton majority reversed the trial court’s finding as to unconscionability, it did not address two additional grounds also offered for reversal: that the defendant waived any entitlement to arbitration and that the ability to bring class actions is protected concerted action under the National Labor Relations Act. Id. at 9-10.

The majority rejected the defendant’s contention that the Armendariz “bilaterality rule” imposes a requirement of “perfect mutuality of obligation” on arbitration contracts, but not contracts generally, thereby uniquely burdening arbitration contracts in contravention of AT&T v. Concepcion. See id. at 18-22. After extensively citing to and quoting from Armendariz, Justice Laurence D. Rubin (writing for the Compton majority and joined by Justice Madeline Flier) explained that: “Concepcion did not discuss the modicum of bilaterality standard adopted by Armendariz . . . [or] overrule Armendariz. We . . . are therefore bound to . . . apply Armendariz to this case. Accordingly, we conclude that Concepcion does not apply to invalidate Armendariz’s modicum of bilaterality rule, at least in this context.” Compton slip op. at 21 (internal citation omitted).

In dissent, Justice Tricia Bigelow found the at-issue arbitration terms entirely symmetric as to the wage and hour claims brought by the plaintiff, and concluded that the arbitration provision therefore “binds [the parties] equally.” See Compton dissent at 4. Additionally, Justice Bigelow noted that any one-sided carve-outs as to certain claims could easily be severed from the agreement. Id.

Bigelow also cited with approval the decision of the Second Appellate District, Division Two (Compton was decided within Division Eight) in Iskanian v. CLS Transp. Los Angeles, LLC, holding that a mandatory waiver of class claims does not render an arbitration agreement imposed by an employer on an employee unconscionable. The California Supreme Court has granted review in Iskanian, which is expected to reconcile the application of Concepcion in the employment context.