CALIFORNIA CLASS ACTION LAW

Central District Approves $4,385,000 and 30% Attorney Fee Award in Class Settlement of Cicero v. DirecTV, Inc.

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Judge Avern Cohn of the Central District of California approved a wage and hour class settlement in Cicero v. DirecTV, Inc., 2010 WL 2991486 (C.D. Cal. July 27, 2010) (not reported).  Judge Cohn approved a payout fund to class members of $4,385,000, a 30% attorney fee award of $1,950,000 to class counsel, and incentive awards of $7,500 and $5,000 the representative plaintiffs.

The class action claimed violations of California’s wage and hour laws.  The named plaintiffs are former satellite television installation and service technicians who brought this case individually and on behalf of all other similarly situated current and former satellite installation and/or service technicians against their former employers Mountain Center, Inc., and Ironwood Communications Inc. (currently DirecTV, Inc. doing business as DirecTV Home Services, collectively “Defendant”) for allegedly violating California’s labor and unfair competition laws. Named Plaintiffs alleged that Defendant violated applicable provisions of the Industrial Welfare Commission’s (“the IWC”) Wage Orders, the Labor Code, and the Business and Professions Code by: (1) failing to provide employees duty-free meal periods; (2) failing to reimburse employees for tools necessary to the performance of the employees’ work; (3) failing to pay wages for all hours worked, including hours worked in excess of eight per day and forty per week; (4) failing to pay all wages owed employees upon termination of the employment relationship; and (5) failing to provide accurate wage statements.

The parties engaged in two mediations of the matter before the Hon. William Cahill (Ret.) in March, 2009, and subsequently before the Hon. Diane Wayne (Ret.).

The Court approved the attorneys’ fees request, which represented 30% of the total gross settlement amount.  The Court noted that:

California recognizes the common fund doctrine for the award of attorneys’ fees. Under California and Ninth Circuit precedent, a court has discretion to calculate and award attorneys’ fees using either the lodestar method or the percentage-of-the-fund method. Wersha v. Apple Computer, Inc., 91 Cal.App. 4th 224, 253 (2001); Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir.2002). The Court, in its discretion, finds that the percentage method is a fair, reasonable, and appropriate method for awarding attorneys’ fees in this case. . . .

Overall, although this percentage is slightly higher than the 25% benchmark for fees in class action cases, it is consistent with other wage and hour class actions where the recovery is less than $10 million. Moreover, there have been no objections to the amount of attorneys’ fees. The Court therefore finds that the amount of attorneys’ fees is warranted by the complexity of the case and Class Counsel’s dedication of extraordinary time and resources to the prosecution of this claim.

Id. **6-7.

By CHARLES H. JUNG

One Year Statute of Limitations Applies to Waiting Time Penalty Claim Where Wages Not Sought

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Hon. Howard R. Lloyd today issued an unpublished opinion today confirming that a one year statute of limitations pursuant to Cal. Code Civ. Proc. § 340(a) applies to a plaintiff’s claim for waiting time penalties.  Pinheiro v. ACXIOM Information Security Services, Inc., 2010 WL 3058081 (N.D. Cal. August 03, 2010) (Slip Op.)

Plaintiff argued that a three year statute of limiations applied, citing Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 999 P.2d 706, 96 Cal.Rptr.2d 518 (2000), in which the plaintiff sought both unpaid wages and waiting time penalties.  The court rejected this argument and granted defendant’s motion to dismiss this claim without leave to amend.

Plaintiff Carla Pinheiro was an employee of defendant Aerotek, Inc. (Aerotek), an employment agency. She alleges that she was assigned to work as a temporary customer service representative for defendant Quest Diagnostics Clinical Laboratories, Inc. (Quest). The gravamen of Pinheiro’s complaint as to Aerotek is that Aerotek wrongfully terminated her employment (Sixth Claim for Relief) and failed to timely pay her final wages in violation of California Labor Code sections 201-203 (Seventh Claim for Relief). Plaintiff also asserts a claim against Aerotek under California Bus. & Prof.Code section 17200 (Eighth Claim for Relief) based upon the alleged failure to timely pay her final wages.

Aerotek moved to dismiss Pinheiro’s seventh and eighth claims for relief concerning the alleged failure to timely pay her final wages.

The Court found that, based upon the law as it currently stands, plaintiff’s seventh and eighth claims for relief as to Aerotek should be dismissed.

Cal. Labor Code §§ 201-203 COA

At issue was whether Pinheiro’s claim for waiting time penalties is subject to a one-year statute of limitations (Aerotek’s view) or to a three-year limitations period (Pinheiro’s position). The court held that the one-year statute of limitations under Cal.Code Civ. Proc. § 340(a) applies, and plaintiff’s seventh claim for relief therefore is time-barred. See McCoy v.Super. Ct., 157 Cal.App.4th 225, 68 Cal.Rptr.3d 483 (2008) (holding that in action seeking only waiting time penalties, and not wages, the one-year statute of limitations under Cal.Code Civ. Proc. § 340(a) applies). Cf. Ross v. U.S. Bank Nat’l Ass’n, Case No. C07-02951 SI, 2008 WL 4447713 *4 (N.D. Cal., Sept. 30, 2008) (concluding that the three-year statute of limitations period under Cal. Labor Code § 203 applied where plaintiff sought unpaid wages, as well as waiting time penalties). Plaintiff’s cited authority, Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 999 P.2d 706, 96 Cal.Rptr.2d 518 (2000), in which the plaintiff sought both unpaid wages and waiting time penalties, but the Court held that this “does not compel a contrary conclusion.”

Cal. Bus. & Prof.Code § 17200 COA

The court held that remedies under California Labor Code § 203 are penalties, and not restitution, and therefore cannot be recovered under the UCL. In re Wal-Mart Stores, Inc. Wage & Hour Litig., 505 F.Supp.2d 609, 619 (N.D. Cal.2007); Tomlinson v. Indymac Bank, F.S.B., 359 F.Supp.2d 891, 895 (C.D. Cal.2005).  The court dismissed the 17200 claim as to Aerotek without leave to amend.

Alison Marie Miceli, Michael James Grace, and Graham Stephen Paul Hollis for Plaintiff.

Jonathan Morris Brenner, Caroline McIntyre, and Alison P. Danaceau for Defendants.

By CHARLES H. JUNG

California Supreme Court Rejects Private Right of Action for Plaintiffs in Tip Pooling Class Action Under Labor Code Section 351

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The California Supreme Court today issued its opinion in Lu v. Hawaiian Gardens Casino, Inc., an eagerly anticpiated decision where the issue was whether Labor Code section 351 provides a private cause of action for employees to recover any misappropriated tips from employers.  The Court concluded that “section 351 does not contain a private right to sue.”

Labor Code section 351 prohibits employers from taking any gratuity patrons leave for their employees, and declares that such gratuity is “the sole property of the employee or employees to whom it was paid, given, or left for.” Several appellate opinions have held that this prohibition, at least in the restaurant context, does not extend to employer-mandated tip pooling, whereby employees must pool and share their tips with other employees. (See Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal. App. 3d 1062, 1067 (Leighton); see also Etheridge v. Reins Internat. California, Inc. (2009) 172 Cal. App. 4th 908, 921-922; Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 878-884; Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.)

Plaintiff Louie Hung Kwei Lu (plaintiff) was employed as a card dealer at defendant Hawaiian Gardens Casino, Inc. (the Casino), from 1997 to 2003. The Casino had a written tip pooling policy.  Plaintiff brought a class action against the Casino and its general manager. His complaint alleged that the Casino‟s tip pooling policy amounted to a conversion of his tips, and violated the employee protections under sections 221 (prohibiting wage kickbacks by employer), 351 (prohibiting employer from taking, collecting, or receiving employees‟ gratuities), 450 (prohibiting employer from compelling employees to patronize employer), 1197 (prohibiting payment of less than minimum wage), and 2802 (indemnifying employee for necessary expenditures). The complaint also alleged that the Casino‟s conduct giving rise to each statutory violation constituted an unfair business practice under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.).

The trial court granted the Casino‟s motion for judgment on the pleadings on the causes of action based on sections 351 and 450. It agreed with the Casino that neither section contained a private right to sue. The court also granted the Casino‟s successive motions for summary adjudication on the remaining causes of action. Plaintiff appealed.

The Court of Appeal held, “pursuant to the analysis in Leighton, that tip pooling in the casino industry is not prohibited by Labor Code section 351.” However, it reversed the trial court‟s order granting summary adjudication of the UCL cause of action based on section 351. While section 351 itself contains no private right to sue, the Court of Appeal concluded this provision may nonetheless serve as a predicate for a UCL claim because plaintiff presented triable issues of fact as to whether section 351 prohibited certain employees who participated in the tip pool from doing so because they were “agents” of the Casino.

Less than two months later, another Court of Appeal expressly disagreed with the holding on section 351 of the appellate court below. (See Grodensky v. Artichoke Joe’s Casino (2009) 171 Cal.App.4th 1399, review granted June 24, 2009, S172237.) The Supreme Court granted review to resolve the conflict on this narrow issue.

The Court concluded that the statutory language does not “unmistakabl[y]” reveal a legislative intent to provide wronged employees a private right to sue.  Based on a review of section 351‟s legislative history, the Court also concluded that there is no clear indication that the legislative history showed an intent to create a private cause of action under the statute.

Justice Ming W. Chin wrote the opinion for the California Supreme Court, with all other Jusitices concurring.  Judge David L. Minning of the Los Angeles Superior Court was the trial judge.

The attorneys for appellant were Spiro Moss, Dennis F. Moss, and Andrew Kopel.

David Arbogast submitted an amicus curiae brief for the Consumer Attorneys of California.

Respondents were represented by Tracey A. Kennedy and Michael St. Denis

Anna Segobia Masters and Jennifer Rappoport submitted an amicus curiae brief for the California Gaming Association on behalf of Defendants and Respondents.

Dennis F. Moss and Tracey A. Kennedy argued in front of the Court.

By CHARLES H. JUNG