Class Action Settlement Cases–In re Touch America: Ninth Circuit Dismisses Appeal Seeking Review Of District Court Order Rejecting Proposed Class Action Settlement Holding Circuit Court Lacked Jurisdiction Over Appeal

District Court Order Rejecting Proposed Class Action Settlement of ERISA Class Action as Unfair not Appealable Ninth Circuit Holds

Plaintiffs, employees of Montana Power and participants in the company’s retirement plan (the “Plan”), filed a class action against the Plan’s trustee and against directors of Montana Power alleging violations of ERISA; the class action complaint asserted that defendants breached fiduciary duties owed to Plan participants and mismanaged the Plan. In re Touch America Holdings, Inc. ERISA Litig., 563 F.3d 903 (9th Cir. 2009) [Slip Opn., at 4713, 4717]. The defendant-directors entered into a proposed class action settlement with plaintiffs; under the terms of the class action settlement the directors would make a payment “of nearly all the funds remaining in the directors’ fiduciary liability insurance policy.” Id., at 4717. The proposed class action settlement also contained two conditions – (1) directors cooperation in the class action claims against the Plan trustee, and (2) obtaining a district court order that “bar[red] suits for contribution or indemnity against the directors.” Id. The district court rejected the proposed class action settlement, id.; in part, the court found the settlement was not fair to the class because the monetary contribution represented only “three cents on the dollar” which it found was “not good in terms of recovery” and characterized as “a pittance…of the total amount of loss,” id., at 4719. The parties appealed, id., at 4717. The Ninth Circuit dismissed the appeal.

The Ninth Circuit noted that the parties did not dispute that the order rejecting the proposed class action settlement was not a “final decision.” In re Touch America, at 4718. The Circuit Court noted also the general rule that, in order to avoid “piecemeal appeals,” only final decisions are reviewable on appeal, id. The parties, therefore, sought interlocutory review of the district court’s order, id. The Ninth Circuit explained that “some disapprovals of class settlements are appealable under the section as orders refusing an injunction.” Id. (citation omitted). And the Court set forth the rule at page 4718 as follows: “To be immediately appealable, orders disapproving class settlements must satisfy three requirements: ‘First, the interlocutory order must have the practical effect of denying an injunction. Second, the order must have “serious, perhaps irreparable, consequence[s].” Finally, the order must be one that can be “effectively challenged” only by immediate appeal.’” (Citation omitted). The Circuit Court dismissed the appeal because it found that the second requirement had not been satisfied – that is, the Court concluded that the district court order would not cause “serious, perhaps irreparable, consequences.”

Class Action Court Decisions Employment Law Class Actions Uncategorized

Starbucks Class Action Defense Cases–Reed v. Starbucks: Florida Federal Court Grants Conditional Class Action Treatment To Labor Law Class Action Against Starbucks Alleging Misclassification Of Store Managers And Failure To Pay Overtime

Class Action Complaint Alleging Violations of FLSA (Fair Labor Standards Act) based on Misclassification of Store Managers and Consequent Failure to Pay Overtime Satisfied First-Tier’s “Lenient Standard” for Conditional Class Action Certification Florida Federal Court Holds Plaintiff filed a class action against Starbucks alleging violations of the federal Fair Labor Standards Act (FLSA); the class action complaint asserted that Starbucks misclassified him (and other store managers) as exempt and failed to pay him overtime.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Budrow v. Dave & Buster’s: California State Court Affirms Defense Judgment In Labor Law Class Action Holding California Law Does Not Prohibit Sharing Tip Pools With Employees That Do Not “Directly Serve” Tables

Trial Court Properly Granted Defense Motion for Summary Judgment in Class Action Alleging Violation of California Labor Code by Sharing Tip Pools with Non-Managerial Employees that only “Indirectly Service” Tables because California Law does not Impose “Direct Table Service” Requirement on Participation in Tip Pools California State Court Holds Plaintiff filed a class action in California state court against, their employer, Dave & Buster’s, alleging labor law violations; the class action complaint was premised “on the theory that distributions from the ‘tip pool’ to persons who did not provide direct table service violated [California] Labor Code section 351.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Settlement of Class Actions–Chindarah v. Pick Up Stix: California State Court Affirms Dismissal Of Labor Law Class Action Holding Settlements Accepted By Individual Employees Covered By Putative Class Action Complaint Were Enforceable

As Matter of First Impression, Class Action Complaint Alleging Labor Law Violations and Challenging Releases Signed by Employees within Putative Class Action under Direct Settlements Offered by Employer Following Failure to Settle with Named Plaintiffs in Class Action Properly Subject to Summary Judgment because Releases Executed by Members of Class Action were Enforceable California State Court Holds Plaintiffs filed a class action against their former employer, Pick Up Stix, alleging labor law violations; the class action complaint alleged that defendant failed to pay its employees overtime and misclassified employees as exempt from overtime pay.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Cintas Class Action Defense Cases–Serrano v. Cintas: Michigan Federal Court Denies Class Action Treatment Of Labor Law Class Action Against Cintas Holding Commonality, Typicality And Adequacy Of Representation Elements Not Met

Labor Law Class Actions did not Warrant Class Action Treatment because Hiring Process Involved too many Individual Questions to Meet Requirements for Class Action Certification under Rule 23 Michigan Federal Court Holds

Plaintiffs filed two separate class actions against Cintas Corporation, a company that provides uniforms and other supplies to various businesses across the United States, alleging labor law violations; the class action complaints asserted that Cintas discriminated against employees in violation of Title VII of the Civil Rights Act. Serrano v. Cintas Corp., ___ F.Supp.2d ___ (E.D. Mich. March 31, 2009) [Slip Opn., at 1-2]. According to the allegations underlying one class action (_Serrano_), Cintas discriminated against Michigan employees who applied for position of Service Sales Representative (SSR) on the basis of gender; according to the other class action (_Avalos_), Cintas discriminated against employees nationwide on the basis of race. _Id._, at 2. The two class actions were consolidated for pretrial purposes, _id._, at 1. Plaintiffs in the companion cases filed motions with the district court to certify each lawsuit as a class action. _Id._ The district court determined that class action treatment was not warranted in either lawsuit and therefore denied both plaintiffs’ class action certification motions.

Cintas SSRs perform a wide range of duties, and are used by the company as entry-level sales and customer service representatives. Serrano, at 2. Each SSR reports to a Service Manager, who in turn reports to a General Manager; and in addition to a “common corporate structure,” Cintas also “uses common orientation manuals and policy statements throughout its facilities” and “has standard courses and training sessions for managers and SSRs.” Id. Importantly, the class action complaints allege further that Cintas “has a standard system for hiring SSRs.” Id. The district court summarized the hiring process as including “an initial screening of the application, a series of interviews, a route ride with another SSR, standardized tests, an exchange of information among hiring managers, and a final hiring decision made by the General Manager of the Cintas facility.” Id., at 2-3. Finally, the federal court explained that “[t]he hiring process has both objective and subjective components,” and that some criteria are required while others are preferred. Id., at 3.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Sanchez v. Western Pizza: California State Court Affirms Trial Court Order Denying Defense Motion To Dismiss Class Action Complaint And Compel Arbitration Holding Class Action Waiver And Arbitration Agreement Unenforceable

Trial Court Order Denying Defense Motion to Dismiss Labor Law Class Action and Compel Arbitration of Individual Claim based on Class Action Waiver in Unsigned Arbitration Agreement Proper because Class Action Waiver Unenforceable as Contrary to Public Policy California State Court Holds Plaintiff, a delivery driver for a Domino’s Pizza owned by Western Pizza, filed a putative class action Western Pizza alleging labor law violations; the class action complaint asserted inter alia that defendant failed to reimburse its drivers for business expenses, and failed to pay minimum wage or provide itemized wage statements.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Franco v. Athens Disposal: California State Court Reverses Order In Labor Law Class Action Compelling Plaintiff To Arbitrate Individual Claims Holding Class Action Waiver Unconscionable

In Labor Law Class Action, Trial Court Erred in Granting Defense Petition to Compel Plaintiff to Arbitrate his Claims on an Individual Basis because Class Action Waiver in Arbitration Agreement Signed by Employee was Unconscionable California State Court Holds

Plaintiff, a trash truck driver, filed a putative class action against his former employer, Athens Disposal, alleging labor law violations; the class action complaint asserted that Athens denied its employees meal and rest periods. Franco v. Athens Disposal Co., Inc., 171 Cal.App.4th 1277 (Cal.App. 2009) [Slip Opn., at 2]. According to the allegations underlying the class action, Athens failed to pay its employees overtime, and failed to provide meal periods or to pay employees an additional hour of compensation for each workday that they missed a meal period. Id., at 3. Defense attorneys moved to dismiss the class action complaint and to compel arbitration based on the terms of the employment agreement with plaintiff, id., at 2. The employment agreement contained an arbitration clause as well as a provision waiving class action relief or the right to bring an action in “a private attorney general capacity.” Id. Plaintiff countered that the class action waiver was unconscionable, id. The trial court disagreed and granted Athens’ motion to compel plaintiff to proceed with arbitration on an individual basis. Id. The California Court of Appeal reversed, concluding that the class action arbitration wavier was unconscionable “given ‘the modest size of the potential individual recovery, the potential for retaliation against members of the class, [and] the fact that absent members of the class may be ill informed about their rights.’” Id. (quoting Gentry v. Superior Court, 42 Cal.4th 443, 463 (Cal. 2007)). The appellate court further held that the arbitration clause was unconscionable in that it sought to prevent plaintiff from serving as a private attorney general, it conflict with California’s Private Attorneys General Act of 2004 (PAGA). Id.

In its petition to compel arbitration and to dismiss the class action, Athens argued that the arbitration agreement was governed by the Federal Arbitration Act (FAA). Franco, at 3-4. Indeed, the employment agreement expressly provided that it was governed by the FAA, and that any arbitration would be conducted under the employment arbitration rules of the American Arbitration Association (AAA). Id., at 4. The petition to compel arbitration was simplicity itself: “Under the FAA, arbitration was mandatory.” Id. Plaintiff argued that the class action waiver was invalid under Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005), which defense counsel sought to distinguish. Id., at 4-5. The trial court agreed that Discover Bank did not cover employment cases and granted the motion to compel. Id., at 5. Plaintiff sought reconsideration based on Gentry, which the trial court denied based in part on its conclusion that plaintiff’s meal and rest period claims were not suitable for class action treatment because of the specific inquiries that would be required of the various claims. See id., at 5-7.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Lu v. Hawaiian Gardens Casino: California State Court Affirms Summary Judgment For Defense In Labor Law Class Action Except For Class Action Claim Under UCL

Class Action Challenging Casino-Employer’s Tip-Pooling Policy Properly Thrown Out on Summary Judgment, but Single Claim – alleging Casino Violated Unfair Competition Law (UCL) by Sharing Tips with Employer’s Agents – Reversed because Triable Issue of Fact Existed as to Whether Employer Participated in Tip Pool in Violation of California Law State Court Holds

Plaintiff filed a class action against his employer, Hawaiian Gardens Casino, alleging violations of California’s Labor Code and of the state’s unfair business practices statute; specifically; the class action complaint asserted defendant’s written tip pool policy governing casino dealers, which “requires dealers to segregate 15 or 20 percent of the tips they receive at the close of each shift” but permits the dealers to keep the remaining portion of the tips they receive, violated California law. Lu v. Hawaiian Gardens Casino, Inc., ___ Cal.App.4th ___, 88 Cal.Rptr.3d 345, 350 (Cal.App. 2009). According to the allegations underlying the class action, the money placed into the tip pool was distributed among “designated employees who provide service to customers, such as the chip service people (also known as ‘chip runners’), poker tournament coordinators, poker rotation coordinators, hosts, customer service representatives or ‘floormen,’ and concierges.” _Id._ However, defendant’s policy expressly prohibited “employers, managers, or supervisors” to participate in the tip pool, _id._ Defendant moved for summary judgment on the grounds that its tip pooling policy did not violate California law, relying in part on _Leighton v. Old Heidelberg, Ltd._, 219 Cal.App.3d 1062 (Cal.App. 1990). _Id._, at 349. The trial court granted defendant’s motion and dismissed the class action, and the appellate court affirmed.

Defendant paid its dealers the minimum hourly wage every two week, without deduction for any tips they received; defendant did not use the tip pool to “offset or pay” the salaries it paid dealers and did not divert any of the money “for its own use.” Lu, at 350. The dealers’ take home pay was “significantly” in excess of the minimum wage, id. Plaintiff alleged that the casino’s tip pooling policy “constituted a conversion of his wages, and violated employee protections contained in Labor Code section 221 (employers may not compel wage kickbacks); section 351 (employers may not take, collect or receive gratuities); section 450 (employers may not compel employees to patronize the employer); section 1197 (employers may not pay less than minimum wage); and section 2802 (employer indemnification for employee’s necessary expenses).” Id. The class action alleged further that defendant’s policy constituted an unfair business practice, id. The appellate court noted that Leighton held that California law does not prohibit tip pooling in restaurants, but that no California case had addressed tip pooling in casinos. Id., at 349. Plaintiff argued that Leighton was distinguishable because “unlike restaurants where tips are left on the tables, in casinos, gratuities are handed directly to dealers, with the result that such gratuities belong solely to the dealers.” Id. Like the trial court, the Court of Appeal disagreed, concluding that “nothing in Labor Code section 351 prohibits tip pooling in casinos.” Id. The appellate court held further that while certain labor laws did not provide a private right of action, they could “nonetheless serve as predicates for suits under the UCL” and, accordingly, the trial court’s order was reversed as to that limited issue, id.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Moore-Thomas v. Alaska Airlines: Ninth Circuit Reverses Dismissal Of Class Action For Failure To Arbitrate Under RLA And Holds Class Action Improperly Removed To Federal Court

Defendant Improperly Removed Labor Law Class Action to Federal Court and Therefore District Court Erred in Dismissing Class Action for Lack of Subject Matter Jurisdiction Ninth Circuit Holds Plaintiff filed a class action against Alaska Airlines alleging labor law violations; the class action complaint asserted that defendant willfully failed to pay its former employees all wages due upon termination as required by Oregon law. Moore-Thomas v. Alaska Airlines, Inc., ___ F.

Class Action Court Decisions Employment Law Class Actions Uncategorized

FLSA Class Action Defense Cases–Gortat v. Capala Brothers: New York Federal Court Grants Plaintiffs’ Motion To Dismiss Crossclaims Against Named Plaintiffs In Labor Law Class Actions

In FLSA Class Action, Plaintiffs’ Motion to Dismiss Crossclaims by Defendants Granted because Negligence and Breach of Fiduciary Duty Claims could not Survive New York Federal Court Holds, but Conversion Claim not Challenged and Defendants Granted Leave to Amend Tortious Interference Claim

Six plaintiffs filed a class action against their employer, Capala Brothers, a construction company, alleging violations of the federal Fair Labor Standards Act (FLSA) and the New York Minimum Wage Act; in response to the class action complaint, defendants counterclaimed against the plaintiffs for conversion, negligence, tortious interference with contract, and breach of fiduciary duty. Gortat v. Capala Brothers, Inc., 585 F.Supp.2d 372, 374 (E.D.N.Y. 2008). The counterclaims to the class action were premised on the following: (1) the negligence claims alleged that four plaintiffs were negligent in replacing a roof to a building, resulting in $40,000 in rain damage, that three plaintiffs were negligent in failing to secure electrical motors at the site, which were also damaged by rain, that two plaintiffs were negligent in allowing concrete to harden in a concrete mixer, and that two plaintiffs were negligent in failure to secure two certain equipment resulting in their loss; (2) the tortious interference with contract claim alleged that three plaintiffs interfered with the employment contracts of current Capala employees, “caused lower moral[e], dissent and lower productivity” causing $100,000 in damage to Capala, and that one plaintiff, after quitting, “interfered with the employment contracts of the other four plaintiffs” causing $300,000 in damages to Capala, and (3) the breach of fiduciary duty claim alleged that plaintiffs “fail[ed] to provide ‘adequate and timely notice’ before quitting…as required by their employment contracts” causing Capala to default on certain construction contracts and suffer $400,000 in damages. Id., at 374-75. Plaintiffs answer the conversion counterclaim, but moved to dismiss the remaining counterclaims, id., at 374. The district court granted plaintiffs’ motion.

The district court first addressed the negligence claims, explaining that New York law “prohibits employers from making any deduction from employee wages except as required by law or regulation or as authorized by the employee for his or her benefit,” including claims for negligence or lost profits. Gortat, at 375 (citations omitted). The federal court concluded that while defendants’ crossclaims were not “obvious examples of attempted wage deduction,” they served the same function and so could be “treated as such to prevent employers from circumventing the protection of employee wages” provided for by New York law. Id., at 375-76. Accordingly, it granted the motion to dismiss defendants’ negligence claims against the named plaintiffs, id., at 376. With respect to the tortious interference claims, the district court observed that plaintiffs were terminable at will and that plaintiffs could not be liable unless they engaged in “culpable” conduct. Id. The court found that the allegations failed to allege wrongful conduct adequate to support the interference claim, so those claims, too was dismissed. Id. Turning to the breach of fiduciary duty claim against the plaintiffs, the federal court noted that defendants were required to pleading “both the existence of a duty based on a relationship of trust and confidence and breach of that duty.” Id. (citation omitted). Failing to give advance notice of terminating their employment, standing alone, did not constitute a sufficient basis to support the breach of fiduciary duty claim, id., at 376-77.

Class Action Court Decisions Employment Law Class Actions Uncategorized