CALIFORNIA CLASS ACTION LAW

Category: Wage & Hour

Chicago Sued Over BlackBerry Overtime

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A  Chicago police sergeant has brought an FLSA collective action against the city for overtime pay related to the off-hours use of his BlackBerry PDA device.  The complaint in Allen v. City of Chicago, No. 10-CV-03183, was filed in U.S. District Court for the Northern District of Illinois.  You can view the complaint here.

The complaint alleges that it is brought by a Chicago Police Sergeant on behalf of himself and other similarly situated members of the Chicago Police Department for purposes of obtaining relief under the federal Fair Labor Standards Act of 1938 as amended, 29 U.S.C. §201, et. seq. (hereinafter “FLSA”) for unpaid overtime compensation, liquidated damages, costs, attorneys’ fees, declaratory and/or injunctive relief, and/or any such other relief the Court may deem appropriate.

Defendant has willfully violated the FLSA by intentionally failing and refusing to pay Plaintiff and other similarly situated employees all compensation due them under the FLSA and its implementing regulations over the course of the last three years. Defendant administered an unlawful compensation system that failed to provide hourly compensation and premium overtime compensation to employees that work overtime hours “off the clock.” Plaintiff and similarly situated employees were issued personal data assistants (“PDA’s”), such as BlackBerry devices, that they are required to use outside their normal working hours without receiving any compensation for such hours. Defendant’s deliberate failure to compensate its Chicago Police Department employees for these hours worked violates federal law as set forth in FSLA.

The plaintiff’s attorneys are MaryAnn Pohl and Paul D. Geiger.

By CHARLES H. JUNG

Northern District Approves 28.9% Fee Award in Wage and Hour Class Action Settlement

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Judge Jeffrey S. White approved a wage and hour class action settlement of a non-reversionary $1.8 million, inclusive of $520,000 in attorneys fees, in Ozga v. U.S. Remodelers, Inc., No. C 09-05112 JSW, 2010 WL 3186971 (N.D. Cal. Aug. 9, 2010).

Plaintiff filed a class action in the Alameda Superior Court on February 17, 2009, alleging that Defendant U.S. Remodelers Inc. violated the California Labor Code and violated California Industrial Welfare Commission Wage Orders by: (1) requiring its Installer employees to work substantial amounts of time without compensation; (2) regularly failing to provide Installers with meal and rest periods; and (3) refusing to reimburse expenses that Installers incurred in the performance of their work duties, including travel expenses and equipment costs.

Defendant removed the action to this Court, and Plaintiff subsequently moved to remand.  But before the hearing on the motion to remand, the parties reached a settlement, which was facilitated, in part, by a mediation that occurred on October 1, 2009, before Michael Loeb.  The parties also engaged in some discovery, and Class Counsel interviewed a number of Settlement Class members.

The Court finds that the terms of the Settlement are fair, adequate and reasonable. As noted, the settlement was reached after the parties engaged in discovery, conducted a meditation, and continued to engage in arms-length negotiations. The parties agreed to a Settlement payment of $1,800,000.00, none of which will revert to the Defendant. The overall reaction to the settlement has been positive. The Claims Administrator has received 156 claim forms from the 270 Class Members. (Id., ¶¶ 20-21.) Neither the Claims Administrator nor the Court received any objections to the Settlement. No Class Member appeared at the final approval hearing to object. According to the Claims Administrator, assuming the Court were to grant in full Plaintiff’s motion for attorneys’ fees and costs and service awards, approximately $1,108,917.72 would be available to distribute Class Members who submitted timely claim forms, for an average award of just over $7,000. (Id. ¶¶ 16-18.)

The Court approved costs to be paid to the Claims Administrator of $10,000.00 from the Settlement Fund.

Attorneys Fees, Costs, and Service Awards

Plaintiff brought an unopposed fee application, seeking $600,000.00 in attorneys’ fees, $11,274.89 in costs, and $10,000.00 in service awards to him and to class member Boris Moskovich.

Plaintiff’s counsel sought an award of attorneys’ fees based on the percentage method, asking for 33 1/3% of the Settlement Fund.  The court agreed to depart from the 25% benchmark.  See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (noting that 25% is benchmark and “usual” range of awards is 20-30%); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998) (stating that 25% is benchmark).  But the court would not vary from the benchmark to the degree requested by counsel.

The Court concludes that counsel did achieve an excellent result for the class, that the reaction to the settlement has been overwhelmingly positive, and that Plaintiff faced significant risk in prosecuting this case given the uncertain state of California law in similar wage and hour cases. The Court also recognizes that other courts have awarded settlement fees of up to 33 1/3% in such cases. However, the parties reached this settlement quickly and did not engage in any motion practice. See, e.g., Navarro v. Servisair, 2010 WL 1729538 (N.D. Cal. Apr. 27, 2010) (finding that proposed award of 30% of settlement fund unjustifiably departed from benchmark based in part on speed with which parties reached a settlement). Moreover, the requested percentage would amount to award that is more than double the fees actually incurred by counsel. Compare Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (awarding 33 1/3% of settlement fund which was “significantly less” than asserted lodestar).

Thus the court found that an award of  $520,000.00 was reasonable.

The court found counsels’ requests for costs in the amount of $11,274.89 reasonable.

The court also approved service awards in the amount of $10,000.00 for the lead plaintiff and for a class member.

By CHARLES H. JUNG

Northern District Approves $4.5 Million Settlement Against RadioShack, With $1.5 Million in Fees, and $5,000 Incentive Payments to Each Lead Plaintiff

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Magistrate Judge Edward M. Chen (whose confirmation to the Northern District of California bench has unfortunately been stalled for far too long) approved the class settlement and attorney fee application in Stuart v. RadioShack Corp., 2010 WL 3155645, No. C-07-4499 EMC (N.D. Cal. Aug. 9, 2010).

This class action was initiated in state court in June 2007, alleging that RadioShack had improperly failed to reimburse its employees for expenses they incurred in using their personal vehicles to perform inter-company transfers (“ICSTs”). Plaintiffs claimed for reimbursement pursuant to California Labor Code § 2802 and for a violation of California Business & Professions Code.  Subsequently Plaintiffs added a claim for recovery of penalties under the California Labor Code Private Attorneys General Act (“PAGA”).  The case was removed in August 2007. And in February 2009, Judge Chen granted the motion for class certification, certifying a class consisting of “all persons employed by RadioShack within the State of California, at any time from June 3, 2003, to the present, who drove their personal vehicles to and from RadioShack stores to carry out ICSTs and who were not reimbursed for mileage.”  On October 1, 2009–nine days before trial was scheduled to begin–the parties reached a settlement.

Under the Settlement Agreement, RadioShack will pay a total of $4.5 million for the release by the class, as an all-inclusive sum (proceeds to be distributed to the class, attorney’s fees and litigation expenses, costs of claim administration, incentive payments to the class representatives, and the PAGA award to the state), without reversion of any of the $4.5 million to RadioShack.

After attorney’s fees, litigation expenses, costs of claim administration, incentive payments, and the PAGA award to the state have been deducted from the $4.5 million, the remainder for distribution to the class members and/or donation to charity is $2,796,563.31.

Each class member’s award “depends on the number of weeks that the class member worked.”

The Court found that, importantly, “the amount available to the class after deductions for, e.g., fees and costs–i.e., $2,796,563.31–is not far off what the class might be awarded if it were to prevail on the merits after a trial.” Id. *4.

Plaintiffs’ counsel asked for an award of $1.5 million  (i.e., one-third of the total settlement amount), plus litigation expenses which total $78,436.69.

The Court has reviewed the expenses and determined that they are reasonable. The Court notes that the sum is not excessive given that this litigation has been ongoing for more than three years.

Attorneys Fees Application

The attorneys presented a fee application claiming $1.5 million as a lodestar for fees–excluding work performed in preparing for final approval and any post-judgment work that may be needed.  The $1.5 million sum represents 2,116.69 hours of work over a period of more than three years, at hourly rates of the billing attorneys ranging from $600 to $1,000.

After reviewing the billing records submitted by counsel as well as the declarations regarding the hourly rates of counsel, the court found that the number of hours was reasonable given the length of the lawsuit and the vigorous disputes over the course of the litigation (e.g., regarding RadioShack’s defense that it had no duty to reimburse until an employee made a request for reimbursement).

The court did express some “concerns about the $1,000 hourly rate” claimed by one of the attorneys.  “Based on the Court’s experience, this is an inordinately large hourly rate, even if the Court were to assume that [the attorney] has fifty years of experience.”  But the Court concluded that “given the 2,116.69 hours incurred, the average hourly rate for a fee award of $1.5 million total is $708, an amount that the Court deems appropriate, particularly when no multiplier is being sought on top of the lodestar.”

Compared to the percentage of the fund, the court noted that “the total settlement amount to be paid by RadioShack (with no possibility of reversion), the fee award represents one-third of the settlement amount.”  The court found that this was “well within the range of percentages which courts have upheld as reasonable in other class action lawsuits.”

The court also approved an incentive award of $5,000 for each of the two class representatives, for a total of $10,000.  The Court concluded that the incentive payments were appropriate and reasonable.  “Although the class representatives did not enter this litigation until late in the proceedings, due consideration must be given to the fact that they were willing and ready to go to trial.”  The court noted that if the “class representatives had asked for a larger sum, the Court might well have reached a different conclusion, but the $5,000 sought for each representative was viewed as “relatively modest.”

By CHARLES H. JUNG

Southern District of California Denies Remand in Wage & Hour Case Asserting CAFA Jurisdiction

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In Johnson v. U.S. Vision, Inc., No. 10-CV-0690 BEN (CAB), 2010 WL 3154847 (S.D. Cal. Aug. 9, 2010) the Southern District of California faced a remand motion in a wage and hour case that had been removed pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. §§ 1332, 1441, 1453.

Judge Roger T. Benitez denied the motion to remand.  Defendant presented a calculation of damages, supporting its calcualtions with declaration from, among other people, the Assistant Controller, Operations, for U.S. Vision, Inc., responsible for enforcing Defendants’ payroll policies and procedures.  The declaration set forth Plaintiff’s most recent hourly rate of pay, as well as the specific number of optical managers and optechs employed during the Class Period, average hourly rates of pay for managers and optechs, number of employees who separated their employment with Defendants, and number of possible wage statements for each employee per year.

Plaintiff argued that Defendants miscalculated the amount in controversy because:

Defendants erroneously assumed “each class member was damaged to the same extent that Plaintiff Johnson was, and that every putative class member, among other things, worked off the clock and incurred a break violation every single day of the entire class period.” Mot. 6. Plaintiff emphasizes that Defendants have access to more specific figures to calculate the amount in controversy and that “each [class] member can be identified using information contained in Defendants’ payroll, scheduling and personnel records.” Compl. ¶ 39.

But the Court held that absent a “persuasive argument that Defendants are required to prove actual damages in order to remove this action, however, the Court must consider the amount put in controversy by the Complaint, not the ultimate or provable amount of damages.”  (citing Rippee v. Boston Market Corp., 408 F. Supp. 2d 982, 986 (S.D. Cal. 2005).)  The Court found that, having based their calculations on allegations provided in the Complaint, Defendants proved with a legal certainty that CAFA’s jurisdictional threshold is satisfied.

Despite Plaintiff’s attempt to provide supplemental information in the motion to remand, Defendants were entitled to, and did, use the factual allegations in the Complaint to calculate the amount in controversy. See Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992) (holding that defendant must use specific factual allegations or provisions in the complaint to support its argument of proper removal). The Court finds that Defendants provided detailed and competent evidence supporting their calculations and showing, to a legal certainty, that the jurisdictional threshold under CAFA is met. To the extent subsequent events show that jurisdiction would not be proper, the Court can address remand at that time. 28 U.S.C. § 1447(c).

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