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Court of Appeal decides on grant and hold cases post Brinker

An overview of Muldrow v. Surrex Solutions Corp. (2012) 146 Cal.Rptr.3d 447, 12 Cal. Daily Op. Serv. 998; Hernandez v. Chipotle Mexican Grill, Inc. (2012) 146 Cal.Rptr.3d 424, 12 Cal. Daily Op. Serv. 10 (as modified Sept. 25, 2012) and In re Lamps Plus Overtime Cases — Cal.Rptr.3d —-, 2012 WL 3587610

 

In April, 2012 the California Supreme Court clarified on several meal and rest breaks issues deciding the Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 273 P.3d 513 (Brinker) (discussed here). Very importantly, the Supreme Court clarified that,

“An employer’s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 (or applicable Wage Order) is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30–minute break, and does not impede or discourage them from doing so…

On the other hand, the employer is not obligated to police meal breaks and ensure no work thereafter is performed. Bona fide relief from duty and the relinquishing of control satisfies the employer’s obligations, and work by a relieved employee during a meal break does not thereby place the employer in violation of its obligations and create liability…” (Emphasis added)

Prior to the aforesaid long-awaited ruling, the California Supreme Court granted reviews on a grant and hold basis pending its decision in Brinker. The Court of Appeal has recently published its opinion in three of such “grant and hold” cases reconsidered in the light of Brinker. Following is a brief discussion of the cases.

 

Muldrow v. Surrex Solutions Corp. (2012) 146 Cal.Rptr.3d 447, 12 Cal. Daily Op. Serv. 998 (Muldrow). (Aug. 29, 2012)

Plaintiff Tyrone Muldrow, on behalf of himself and a class of current and former employees of Defendant employer, Surrex Solutions Corporation (Surrex) alleged that Surrex violated California Labor Code by failing to pay overtime and failing to provide meal periods.

The trial court concluded that the class members were subject to the commissioned employees exemption and Surrex had no obligation to ensure that the employees utilize the meal periods.

In its initial opinion, the Court of Appeal affirmed the trial court’s ruling. The Supreme Court granted class’s petition for review and held it pending its decision in Brinker.

On remand post Brinker, the Court of Appeal stated as follows:

“It is undisputed that Brinker does not affect our prior conclusion that the trial court properly determined that the class employees were subject to the commissioned employees exemption. With respect to the class members’ meal break claim, in Brinker the Supreme Court held that while an employer has a duty to provide meal periods to its employees, it “is not obligated to police meal breaks and ensure no work thereafter is performed.”

Accordingly, the Court of Appeal rejected the class members’ claim that the trial court erred “in ruling that the employer was not obligated to ensure that meal period were taken,” and affirmed the judgment.

The Court of Appeal made the following relevant findings:

  • Class members who worked as employment recruiters for Surrex were engaged principally in selling a service. The Court of Appeal found substantial evidence which demonstrated that the Class members’ job, reduced to its essence, was to offer a candidate employee’s services to a client in exchange for a payment of money from the client to Surrex.
  • Class members’ commissions were sufficiently related to price. A precise formula for consultant commissions was specified in class members’ employment agreements and class members affected not only the revenue that Surrex received, but also the costs that Surrex would bear.
  • Surrex’s compensation plan constituted a bona fide commission system. Evidence demonstrated that class members consistently received payments in excess of their guaranteed draw.
  • In accordance with the ruling issued in Brinker, the trial court did not err in denying appellants’ missed meal period claim, an employer need only provide for meal periods, and need not ensure that employees take such breaks.

 

Hernandez v. Chipotle Mexican Grill, Inc. (2012) 146 Cal.Rptr.3d 424, 12 Cal. Daily Op. Serv. 10 (as modified Sept. 25, 2012) (Hernandez). Opinion filed on August 21, 2012, and certified for publication by order filed on August 30, 2012.

Plaintiff Rogelio Hernandez (Hernandez) brought putative class action against Defendant employer Chipotle Mexican Grill, Inc. (Chipotle), a fast food restaurant chain for meal and rest break violations. Defendant filed a motion to decertify the class. Subsequently, Plaintiff moved for class certification. The trial court denied the Plaintiff’s motion for certification on the grounds that individual issues predominated over common issues, and class treatment was not superior to individual actions. On the issue of rest breaks, the trial court held that, employers need only authorize and permit such breaks, which means to make them available. The Court of Appeal (in its initial opinion) found that trial court did not abuse its discretion and affirmed. The Supreme Court granted Plaintiff’s petition for review and held it pending its decision in Brinker.

On remand post Brinker, the Court of Appeal found its decision consistent with Brinker, and affirmed the trial court’s order denying class certification.

The Court of Appeal made the following relevant findings:

  • In the light of Brinker, Court of Appeal found that trial court’s legal analysis was correct that, employers need only provide employees with breaks.
  • Substantial evidence supported the trial court’s ruling that individual issues predominate. The Court of Appeal noted as follows:

“The declarations and depositions of putative class members showed Chipotle did not have a universal practice with regard to breaks. Some employees declared they always missed meal breaks; some declared they received meal breaks, but not rest breaks; one declared his meal and rest breaks were combined; some did not declare they were denied meal breaks; and others declared their breaks were delayed. Employees declared their meal breaks were interrupted with varying degrees of frequency, as demonstrated by one employee who declared he was frequently denied his first rest break, but always denied his second break. In the 73 declarations provided by Chipotle, employees declared they had always been provided breaks. Hernandez himself admitted that except for one occasion, managers in the Manhattan Beach restaurant always provided him with an opportunity to take his breaks, but managers in the Hawthorne restaurant denied him meal breaks two or three times a week. The evidence before the trial court suggested that in order to prove Chipotle violated break laws, Hernandez would have to present an analysis restaurant-by-restaurant, and perhaps supervisor-by-supervisor. Given the variances in the declarations, Hernandez did not demonstrate a common practice or policy.”

  • Court of Appeal found substantial evidence that the time records may be unreliable and accordingly rejected the Plaintiff’s argument that time records can prove on a classwide basis that Chipotle failed to provide employees with breaks.
  • Plaintiff’s sampling expert failed to demonstrate that Chipotle had a practice of denying breaks.
  • Substantial evidence supported that class certification was inappropriate due to the conflict of interest that existed amongst class members.

 

In re Lamps Plus Overtime Cases — Cal.Rptr.3d —-, 2012 WL 3587610 (In re Lamps). Opinion filed on August 20, 2012, and certified for publication by order filed on September 5, 2012.

Plaintiffs Marlon Flores, Hooman Khalili, and Ryan McGuinness brought putative class action on their own behalf and on behalf of similarly situated nonmanagerial employees against Defendant employer Lamps Plus, a retail lightning chain (Lamps Plus) for meal and rest break violations, among other violations. Plaintiffs moved for class certification of current and former employees in the putative class of nonmanagerial, nonexempt hourly employees.

Lamps Plus had an employee handbook which included a meal and rest breaks policy. The policy provided that its nonexempt employees “must” take an uninterrupted meal period of at least 45 minutes after not more than five hours of work. Employees were “entitled” to take a second meal period if they worked more than 10 hours. “Employees were required to take unpaid meal periods…” Nonexempt employees were “authorized and permitted” to take a 15-minute paid rest period “for every four hours, or major fraction of four hours, that they worked.” The policy also provided for written waiver of the meal periods for employees working a shift of six hours or less, as well as written waiver of the second meal period for those employees working between 10- and 12-hour shifts. Employees signed and acknowledged the receipt of the policy.

The trial found that individual issues predominated over common issues as to the meal and rest period claims, and class treatment was not superior to individual actions. The trial court reasoned, with regard to meal and rest breaks, that employers need only authorize and permit them, which means make them available, but not ensure they are taken. The Court of Appeal (in its initial opinion) found that trial court did not abuse its discretion and affirmed. The Supreme Court granted Plaintiff’s petition for review and held it pending its decision in Brinker.

On remand post Brinker, the Court of Appeal found its decision consistent with Brinker, and affirmed the trial court’s order denying class certification.

The Court of Appeal made the following relevant findings:

  • In the light of Brinker, Court of Appeal found that trial court’s legal analysis was correct that, employers need only provide employees with breaks. For the same reason, the trial court did not improperly reach the “merits” of plaintiffs’ claims.
  • Substantial evidence supported the trial court’s ruling that individual issues predominate. The Court of Appeal stated as follows:

“The declarations, depositions, and questionnaire responses of putative class members showed that Lamps Plus did not have a universal practice of denying employees their breaks. The evidence establishes that Lamps Plus had a meal and rest period policy conforming to the applicable laws and wage orders, and that Lamps Plus disciplined its employees for failing to comply with the policy. Further, the breadth of supposed “violations” is widely variable. Some employees declared they often missed meal and rest breaks; others declared they always received their meal and rest breaks; and still others declared that they always received either their meal break or their rest breaks, but not both. Some employees declared their meal breaks were uninterrupted, and others claimed interruptions of varying degrees. Even the named plaintiffs have divergent experiences, despite all having worked at the same store and reported to the same manager. They each report a different number of alleged violations and differing reasons for the claimed violations.”

Pointers:

  • Brinker has significantly impacted the class certification of meal and rest period claims and it seems unlikely that Courts would certify a class of meal and rest breaks claims unless an employer has a uniform practice or policy of violating California Labor Code requirement of providing meal and rest breaks, for individual issues would mostly predominate over common issues.
  • Employers should note that all the three cases have focused on the principle that, “employer need only provide for meal periods, and need not ensure that employees take such breaks.” However, it is an incomplete reading of Brinker. As stated above, correctly an employer is not obligated to police meal breaks and ensure that no work is performed. But before that, an employer has an obligation to relieve its employees of all duties, relinquish control over their activities and permit them a reasonable opportunity to take uninterrupted breaks and should not impede or discourage employees from doing so.