Thursday, May 26, 2011

U.S. Supreme Court: States May Require E-Verify

Arizona has a mandatory "E-verify" law. Arizona's law suspends or revokes businesses' licenses if they employ illegal aliens unauthorized to work in the U.S. It also mandates the use of "E-Verify," a federal program permitting electronic verification of an employee's authorization to work in the US.
The Chamber of Commerce and civil rights groups argued that the Arizona law is preempted by federal immigration law.  All lower courts disagreed, and so did the Supreme Court.
In a fractured opinion, the Court held that the federal Immigration Reform and Control Act does not stop Arizona from either suspending business licenses or requiring use of E-Verify. In fact, the law only requires employers to use E-Verify if they wish to rely on a "good faith" defense to proof that the employer is employing unauthorized workers. 
Justice Kagan did not participate, and only four justices concurred in parts of the opinion. However, the continued viability of the Arizona law was upheld 5-3.  So, Arizona is free to require employers to employ only authorized workers or risk losing the right to operate in Arizona.
The case is Chamber of Commerce v. Whiting and the opinion is here.

Tuesday, May 17, 2011

U.S. Supreme Court on ERISA Remedies

Cigna Corporation changed its pension plan back in 1998. Janice Amara, on behalf of herself and 25,000 beneficiaries sued under ERISA, claiming CIGNA's changes violated the law.  In particular, the plaintiffs challenged the notice of changes CIGNA provided.

The district court agreed CIGNA's notice provisions were improper, particularly in a newsletter that, the court found, painted too-rosy of a picture of the impending changes and ordered monetary relief based on the conclusion that the disclosures caused "likely harm." 
On review, the Supreme Court decided the district court's reasoning was wrong, but that it reached a nearly correct result.  The Court discussed the available remedies under ERISA.

The Court held that district court have broad discretion to fashion remedies as "equitable" relief.  Without a lot of legal mumbo jumbo, equitable remedies normally are injunctions, but there are some that include money.  In the CIGNA case, the district court had held that only those plaintiffs who "relied" on the erroneous information to their detriment could recover money.  The Supreme Court disagreed, saying that not all "equitable" remedies required a showing of reliance. .

A key take-away for non-ERISA people is that the courts here found that a newsletter previewing potentially detrimental changes to the plan was incomplete and misleading. So, HR practitioners, beware of informal communications regarding changes to your ERISA covered benefit plans.

The opinion is Cigna Corp. v. Amara and the opinion is here.


Wednesday, May 11, 2011

Another Meal / Break Class Action Dies; Everyone Waiting for Brinker

Selections from the Supreme Court mailbag re Brinker meal period case.
Dear Supreme Court. The suspense is killing us. Please send Brinker soon - Love Plaintiff's bar.
Dear Supreme Court:  Take your time. - Best wishes, Defense bar.

The letter writers wait for the Supreme Court's decision in Brinker (on what the meal period laws require).  Meanwhile, the Courts of Appeal keep cranking out decisions that consistently hold meal periods do not have to be forced, and therefore meal period class actions are properly not certified when the employer demonstrates it "provides" the opportunity to take them.

The latest opinion re meal period class actions is called Lamps Plus Overtime Cases, or Flores v. Lamps Plus. As stated, the court decided that the class certification was properly denied, and along the way held that meal periods need not be forced, but merely must be authorized and permitted. The opinion is here.

Sunday, May 01, 2011

Court of Appeal Affirms Denial of Class Certification in Retail Store Exemption Case

The Court of Appeal in Mora v. Big Lots Stores held the trial court did not abuse its discretion in refusing to certify a class of hundreds of Big Lots store managers. This is another exemption class action decision, but it's interesting for a few reasons.

First, the plaintiffs went after store managers of  HUGE discount stores, where the store manager was the only exempt manager, supervising dozens of employees. They should stop doing that. (They're not going to listen).

Second, the courts are tired of the argument that larger corporations standardize their policies such that managers are necessarily non-exempt. As I just discussed in the Marlo v. UPS post, that argument does not fly. (Good news for you larger corporations).

Third, the trial court credited the employer's detailed and individualized declarations of its managers over the boiler-plate declarations submitted by the plaintiffs. Winning a class certification motion may well turn on the quality of the declarations and other evidence submitted.

Finally, the court's opinion is a good example of how the Supreme Court's decision inSav-On Drug Stores, Inc. v. Superior Court  (2004) 34 Cal.4th 319 has affected class action law in California. The Court of Appeal does not disturb class certification decisions if (1) there is substantial evidence to support the trial court's finding (either way) and (2) the trial court applies the right legal standards. This of course can cut in favor of either the employees or the employer, depending on who won in the trial court. Needless to say, it's important to win there.

The case is Mora v. Big Lots Stores and the opinion is here.

Court of Appeal Rejects Employment Application Class Action

Several years ago, the wage and hour "flavor of the month" was the employment application. (Lately, it's been "suitable seating" and paycheck stubs). Plaintiffs filed a series of class actions usually attacking employment applications' conviction inquiries. In California, an applicant is not required to disclose misdemeanor marijuana possession convictions more than two years old, you know.

Starbucks was sued under this theory some years ago. But the Court of Appeal held in 2008 that the plaintiffs lacked standing to sue because they did not have marijuana convictions that would have had to have been disclosed.
In Starbucks I, supra, 168 Cal.App.4th 1436, we held that neither plaintiffs nor the tens of thousands of job applicants they purported to represent were entitled to recover statutory penalties where they did not have any marijuana convictions to disclose. We stated, "Only an individual with a marijuana-related conviction falls within the class of people the Legislature sought to protect." (Id. Id. at p. 1451.)

After the appeal, the trial court dismissed the named plaintiffs as lacking "standing" to sue. The plaintiffs' lawyers, though, attempted to substitute new plainitffs to continue the class action. They also limited the complaint and class to those applicants with applicable convictions.  Then, they asked the trial court to compel Starbucks to review its own applications and identify to the plaintiffs' counsel anyone who filled out an application more than two years after incurring a marijuana-related conviction. (I don't know how Starbucks would know this).  Starbucks appealed this discovery order, too.

The court of appeal held that the plaintiffs were not entitled to the discovery. The court noted that California law protects the privacy of individuals with stale marijuana convictions. The plaintiffs wanted to invade that privacy to find a new plaintiff. But the court noted that there did not seem to be any interest in pursuing this class action among the potential 135,000 applicants to Starbucks during the relevant period, despite the prior published opinion.  So, the court denied discovery and let the superior court take the next step, to dismiss the class action (most likely).

The case is Starbucks v. Superior Court and the opinion is here.

Ninth Circuit Upholds De-Certification of Exemption Class Action

Michael Marlo was a supervisor for UPS.  He filed a class action alleging violation of California wage and hour laws, based on alleged mis-classification of his position as "exempt."  The district court initially certified a class, but later "de-certified" it, holding that common issues did not predominate over individual issues.
Marlo's individual claim went to trial. A jury found in his favor on some of the claims (that he was mis-classified in certain roles), but that he was exempt when he held an "on-road" supervisor position.  After judgment, Marlo appealed the district court's de-certification of the class.

On appeal, the Ninth Circuit affirmed the district court.  The court found that the plaintiff failed to establish that common issues predominate. First, the court of appeals rejected the plaintiff's argument that UPS's "blanket" classification of a group of employees established common issues:

Marlo contends that he satisfied his burden of establishing predominance by submitting evidence of UPS’s centralized control, and uniform policies and procedures. But a blanket exemption policy “ ‘does not eliminate the need to make a factual determination as to whether class members are actually performing similar duties.’ ” In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 959 (9th Cir. 2009) (citation omitted). Specifically, the existence of a policy classifying FTS as exempt from overtime-pay requirements does not necessarily establish that FTS were misclassified, because the policy may have accurately classified some employees and misclassified others.

Of special significance, the court of appeals found that individual issues predominated because the employees' exempt status must be measured on a work-week by work-week basis:

Nor, contrary to Marlo’s assertion, did the district court err in requiring a week-by-week determination of exempt status. IWC Wage Order No. 9 states that in determining whether an employee is “primarily engaged” in exempt work, “[t]he work actually performed by the employee during the course of the workweek must, first and foremost, be examined and the amount of time the employee spends on such work . . .shall be considered.” Cal. Code Regs. tit. 8, § 11090(1)(A)(1)(e). California courts have construed this requirement to mean that “[u]nder California law, the Court must determine whether any given class members (or all the class members) spend more than 51% of their time on managerial tasks in any given workweek.” Dunbar v. Albertson’s, Inc., 47 Cal. Rptr.3d 83, 86 (Cal. Ct. App. 2006) (emphasis added). Therefore, the district court did not incorrectly apply California law by requiring a week-by-week showing of work the FTS actually performed.
The case is Marlo v. UPS, Inc. and the opinion is here.