class action lawsuits


Contributed by Kershaw, Cutter & Ratinoff Attorney, Ian M. Hunter

www.kcrlegal.com

On September 27, 2010, the 9th Circuit issued an opinion in the case of Wang v. Chinese Daily News, No. 08-55483, a case brought by California-based employees of a Chinese-language newspaper for violation of the Fair Labor Standards Act (“FLSA”) and California wage and hour law.  The District Court had certified the FLSA claim as a collective action and further certified the California claims under Rule 23(b)(2) and 23(b)(3).  The District Court had granted partial summary judgment to the plaintiffs, held jury and bench trials and entered judgment for the plaintiffs.  The employer, CDN appealed, challenging aspects of each ruling by the District Court and the jury’s verdict.

In affirming the judgment of the District Court, the 9th Circuit made several key holdings that California wage and hour practitioners may find interesting.  One in particular stands out, as wage and hour lawyers wait for the California Supreme Court to rule in Brinker and Brinkley and face arguments that class certification should be delayed or denied until those rulings.[1]

In Wang[2], as in many wage and hour cases, one key issue was what it means for an employer to “provide” a meal break under California Labor Code section 512(a).  As the Wang court noted:

A pair of cases now pending in the California Supreme Court present the question whether employers need only “provide” meal breaks in the sense that they do    not impede their employees from taking such breaks, or whether employers have an affirmative obligation to ensure that workers are actually relieved of all duties during a meal period.

In arguing either side of this particular issue, practitioners may have a tendency to make the issue black or white, as if the California Supreme Court’s only choice is between two extremes.  I.e., plaintiffs argue that it is ludicrous for employers to think that so long as they post a compliant meal break policy, they need make no further efforts to make those breaks available to employees; defendants, on the other hand, argue that employers should not be required to force employees to take those breaks.  Of course, the answer likely falls somewhere in between, as the court in Wang held.  Employers do have a minimal obligation to make breaks available, and that is unlikely to be impacted by the ultimate ruling in Brinker and Brinkley. The Court in Wang found:

Even if the California Supreme Court interprets California law to place only minimal obligations on employers, the evidence presented to the jury was sufficient to support a finding that CDN did not “provide” reporters with meal breaks. The evidence showed that reporters did not have time to take meal breaks because they worked long, harried hours and faced tight deadlines. There was testimony that reporters were required to carry pagers all the time and be on call from morning until night without ever getting a sustained off-duty period. The evidence showed that reporters did not keep time cards and that pay stubs did not reflect time actually worked. Several reporters also testified that they could rarely take uninterrupted 30 minute breaks. CDN never told reporters that meal breaks were available and never told them to keep track of meal breaks on a time card.  In short, reporters could not take daily, uninterrupted 30 minute breaks regardless of whether they desired to do so. Under either possible reading of California Labor Code § 512(a), CDN did not “provide” its reporters with meal breaks. Substantial evidence therefore supports the jury’s verdict.[3]

In an environment where employee scheduling is less structured than in many other workplaces, the 9th Circuit held that the employer cannot take an entirely “hands-off” approach to meal breaks.  At the very least, “provide” means the employer must take some action to make it realistically possible for employees to take daily, uninterrupted 30-minute meal breaks.  In the Wang scenario, this may mean, at a minimum, the employer must ensure that reporters have sufficient time before deadlines to accomplish all work tasks and have 30 uninterrupted minutes for a break and that on-call reporters have at least 30 uninterrupted minutes off-call.  In a more rigid employment relationship, where employees are on-duty until relieved, this may entail ensuring that “workers are actually relieved of all duties during a meal period.”[4]

What this all means practically for litigants in wage and hour class actions is that Brinker and Brinkley may not possess the talismanic significance we tend to attribute to them.  The California Supreme Court is likely to offer a nuanced and fact-based understanding of “provide” under the Labor Code, one which neither employers nor employees will be able to wield as a club in all cases.  Moreover, unless the question is a close one in any particular pending class action, there is not necessarily any need to wait for the Brinker and Brinkley opinions.  Employers do have an affirmative obligation to make meal periods realistically available to employees.


[1] See Brinker Rest. Corp. v. Super. Ct., 165 Cal. App. 4th 25 (2008), review granted, 196 P.2d 216 (Cal. Oct. 22, 2008); Brinkley v. Pub. Storage, Inc., 167 Cal. App. 4th 1278, 1290 (2008), review granted, 198 P.3d 1087 (Cal. Jan. 14, 2009).

[2] Wang (slip opinion) at 16410, citing Brinkley, Brinker, and Jaimez v. DAIOHS USA, Inc., 181 Cal. App. 4th 1286, 1303 (2010).

[3] Wang (slip opinion) at 16410-11.

[4] See Jaimez, 181 Cal. App. 4th at 1303; Cicaros v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962.

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Yesterday a Senate committee convened to discuss investigations the U.S. Government Accountability Office conducted on 15 for-profit colleges. As we’ve reported in previous posts, a growing number of schools have been engaging in deceptive marketing and fraudulent financial aid practices. The U.S. GAO report undergirds our own findings that the schools exploit prospective students’ economic hardship and federal funding, while lying to students about their accreditation and job placement opportunities to boost their bottom lines.

According to Senator Michael Enzi (R-WY), “It is crystal clear that some programs at for-profit schools are misleading students and possibly defrauding taxpayers out of millions of dollars in student aid funds.”

As federal funding for financial aid is expected to total $145 billion this year alone, this is a potentially huge problem.  Are we moving from one predatory lending scheme to another?  It may seem overly sensational to compare our problems with subprime mortgage lending to the student loan industry, but talk to former students struggling to pay off their student loan debts while barely finding a job in their field.  You may feel a sense of déjà vu creep in while tent city images return to your memory bank of televised tragedy.  Students who had to take more than one loan find that most of their loans cannot be consolidated, and when extreme hardship forces them into bankruptcy, they often cannot be released from student loan debt.

According to the Bankruptcy Law Network, a blog about bankruptcy news:

The big difference between student loans and unwieldy home loans is the inability of most borrowers to rid themselves of the resulting debt. Federal student loans can follow the borrower to the grave. They have no statute of limitations and can be collected from the estate of the borrower even after death.

Statistics analyzed in 2003 by the Department of Education state that an average of 1 in every 3 students defaults his or her student loan.  Now add into the equation how many for-profit schools encourage prospective students to lie on  financial aid forms so that they can attend their non-accredited or sub-standard program that does not lead to the job opportunities they claim, and a bigger, and more frightening, picture emerges. 

Director of policy and research for the National Association of College Admissions Counseling, David Hawkins, testified at today’s hearing. “In an unregulated environment,” he stated, “the potential for misrepresentation and outright fraud is a clear and present threat, which can result in harm to students and, in the case of federal aid and loans, to the taxpayer.”

We should encourage our lawmakers to crack down on these unscrupulous institutions and add consumer protections to student loans.  And meanwhile, let’s spread the word to as many people as we can so others don’t fall into the cycle of student loan debt and pervasive joblessness.

To learn more about how to avoid deceptive recruiting tactics read our previous post “Tips to Avoid Trade School Fraud,” and follow our Fight Trade School Scams Facebook Page to contribute to the conversation.

For additional media coverage on this topic, see:

Consumerist.com: For-Profit Colleges Caught on Video Encouraging Financial Aid Fraud

Consumer Affairs: For-Profit Schools get More Scrutiny

NPR: For-Profit Colleges Encouraged Fraud, Used Deceptive Marketing, GAO Reports

Bloomberg: Harkin Seeks Data on For-Profit Schools After Hearing

New York Times Education Blog:  Commentary:  A Plea to Add Consumer Protections to Student Loans

For more information about the student loan industry, visit http://studentloanjustice.org/