Ninth Circuit Clarifies “Day of Rest” Rule in Dismissing PAGA Claim

In Mendoza v. Nordstrom, Inc., 9th Cir. No. 12-57130 (8/03/2017), the Ninth Circuit affirmed a judgment against Nordstrom, Inc. for violation of California’s “day of rest” law. Plaintiff Christopher Mendoza had argued that Nordstrom violated Labor Code section 551, which grants employees a right to one “day’s rest” in seven and section 552, which provides that no employer “shall cause his employees to work more than six days in seven,” and thus was subject to penalties. Mendoza had claimed that he had worked more than six days three times during his employment, including times where he worked 11, 7, and 8 days. The district court had held that the seven-day period was “rolling” and based on any consecutive 7-day period, rather than based on a workweek, but that here this did not apply because Nordstrom employed Mendoza for six hours or less “on at least one day” of a week, triggering an exemption under section 556, and that there was no coercion (Mendoza willingly performed the work).

On appeal, the Ninth Circuit held that the District Court was incorrect on two counts.
First, sections 551 and 552 should be based on a workweek basis, such that each 7-day workweek (usually Monday through Sunday or Sunday through Saturday) operated as its own 7-day period. Employees are only entitled to one day of rest in each workweek. Second, the Court held that the exemption under section 556 only applied if the employee did not work more than 6 hours in any day of a workweek,, not just one day of a workweek.

However, the district court’s errors did not change the ultimate result because Mendoza (and other plaintiffs) were not “aggrieved employees” under the Private Attorneys General Act, because in each instance in which they worked 7 or more days in a row, those days were split over two workweeks, and in each one of those workweeks there was at least one day of rest. Therefore, a dismissal of the PAGA claim was appropriate.

An Employee’s Exempt Status May Be Determined by Reference to Other Workweeks

In Batze v. Safeway, Inc. (May 3, 2017) 10 Cal. App. 5th 440, the Court of Appeal held that although the determination of exempt or nonexempt status should be made on weekly basis, a jury may extrapolate evidence from weeks in which evidence is available to make inferences regarding weeks in which evidence is not available.

Plaintiffs were grocery store assistant managers. They brought individual claims for unpaid overtime against Safeway after the court denied class certification. Plaintiffs claimed that they were misclassified as exempt employees because a majority of their time was not spent on managerial duties. The trial court found in favor of defendants, finding that plaintiffs spent over fifty percent of their time performing managerial tasks, and met all other qualifications for exempt status. Plaintiffs appealed on the grounds that because (1) defendants bore the burden of proof, and (2) because the ratio of nonexempt to exempt activities must be determined on weekly basis, no inferences could be made regarding weeks in which defendants produced no evidence, the trial court’s decision was incorrect.

The California Court of Appeal affirmed. It found that substantial evidence supported the trial court’s decision. Although an employee’s exempt or nonexempt status may vary each week, the trier of fact can make reasonable inferences about an employee’s activities in earlier or later periods, particularly when an employee’s duties have not changed significantly over time. Defendants produced sufficient evidence to enable the trial court to make reasonable inferences about those periods during which evidence was not available.

The practical implication is that an employer’s best practices are to have weekly evidence of an employee’s activities. When impracticable, a factfinder could make reasonable inferences to fill in the evidentiary gaps.

Dukes Holding Not Applicable to Meal/Rest Period Class Action

Lubin v. Wackenhut Corp. is yet another recent published case (the other being Augustus v. ABM Security Services, see here) affirming the right of security guards to off-duty meal and rest breaks while limiting the applicability of the U.S. Supreme Court’s decision in Dukes v. Walmart to wage and hour claims.  It also draws into question the ability of a California employer to post a single security guard at a worksite without incurring stiff penalties and attorney fees or having to pay at least two hours a day of premium pay for failure to provide meal and rest periods.

Lubin was the class representative of Wackenhut representing a class of security guards posted at commercial businesses, governmental entities, gated communities, industrial facilities, banks, schools, and retail centers, and elsewhere.  Lubin moved for class certification on the ground that Wackenhut (now G4S Secure Solutions) had failed to provide off-duty meal and rest breaks (Labor Code 226.7 and Wage Orders), and as a result their pay stubs were inaccurate (under Labor Code 226(a)).  The trial court granted Lubin’s motion for class certification in May 2010.

The next year, while the case was still pending, the U.S. Supreme Court decided Wal-Mart Stores, Inc. v. Dukes (2011) 564 U.S. 338, which held that a nationwide class of female Wal-Mart employees could not be certified on gender grounds because individual issues predominated.  Wackenhut then moved for decertification, citing Wal-Mart as a significant change in law justifying reconsideration of class certification.

The court’s order granting Wackenhut’s decertification motion stated two main bases for its ruling: (1) that individualized issues predominated; and (2) that there was no way to conduct a manageable trial of plaintiffs’ claims.  The trial court was persuaded by the Supreme Court’s reasoning in Wal-Mart that “Wal-Mart’s ‘policy’ of allowing discretion by local supervisors over employment matters” did not permit class treatment, as the plaintiffs could not identify “a common mode of exercising discretion that pervade[d] the entire company.”  Moreover, the Supreme Court “disapproved of determining damages through statistical sampling, which it termed ‘Trial by Formula.”  This was relevant because Plaintiff in Wackenhut proposed assessing damages through statistical sampling.

The Court of Appeal reversed.  It noted that the Supreme Court clarified that Wal-Mart does not “stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability.” (Tyson Foods, Inc. v. Bouaphakeo (2016) ___ U.S. ___, ___ [136 S.Ct. 1036, 1048].)  Rather, Wal-Mart was a special case because it involved the class treatment of discrimination rather than wage-and-hour claims.  In Tyson, the Supreme Court upheld the use of statistical evidence to calculate the additional time class members spent donning and doffing, even though differences in the type of gear worn meant that plaintiffs may have taken different amounts of time to don and doff.  Thus, statistical modeling was not dead after all.

The next question was whether the “single guard staffing model,” where only one guard is assigned to a particular worksite and thus cannot go on an off-duty break as there is no one to relieve him or her, was sufficient to “prevent” an off-duty meal period.  The court opined that the question of whether “the class members’ duties do not allow for a meal break solely because no other guards are available to cover for them during their meal periods” is not a question that could be decided on class certification. Rather, this “nature of the work” defense involved questions of fact best suited for summary judgment or trial.  However, the court of appeal previewed its view on the merits:  “Client preference cannot be determinative under the wage order.”  In other words, just because a client prefers one guard instead of two guards, that may not relieve the security company of the duty to insist that two guards be provided or to at least enter into a dialogue on the issue.

Wackenhut could not discharge its affirmative duty to provide lawful meal and rest breaks without presenting evidence that it had precautions in place to ensure that its clients considered and applied the “five-factor test outlined by the DLSE” in determining whether the nature of the work at each site necessitated an on-duty meal period before requiring class members to take such meal periods.

Finally, the court found that the of statistical sampling in this case is distinguishable from the method rejected by the Supreme Court in Wal-Mart because, in that case, the plaintiffs proposed to use representative evidence as a means of overcoming the absence of a common policy, whereas here, the common policy was found to exist.

Not surprisingly, Wackenhut’s attorneys have filed a petition for review with the California Supreme Court.  The issues are currently being briefed. Time will tell whether it will remain economically feasible in California for a business to hire a single security guard.

Lubin v. Wackenhut Corporation (Cal. Ct. App. 2d Dist. Nov. 21, 2016) 2016 S.O.S. 5883 [B244383]. Click here for full opinion.