18th Annual Workplace Class Action Report - 2022 Edition

372 Annual Workplace Class Action Litigation Report: 2022 Edition Gunther, et al. v. Alaska Airlines, Inc., 2021 Cal. App. LEXIS 1008 (Cal. App. 4th Dist. Dec. 1, 2021). Plaintiffs, a group of flight attendants, filed a class action alleging that Defendant failed to provide accurate wage statements in violation of § 226(a) of the California Labor Code. Plaintiffs also sought penalties under the California Private Attorneys General Act of 2004 (“PAGA”). After a bench trial, the trial court concluded that § 226(a) applied to Plaintiffs because their employment was based in California and Defendant’s wage statements did not comply with § 226(a). The trial court entered judgement in favor of Plaintiffs and awarded over $25 million in penalties under § 226.3 and granted an award of attorneys’ fees to Plaintiffs’ counsel. On appeal, the California Court of Appeal affirmed in part, and reversed and remanded in part for further proceedings. The trial court had found that Defendant’s wage statements failed to state basic information required by § 226, including: (i) total hours worked by the employee; (ii) the number of piece-rate units earned and any applicable piece-rate if the employee was paid on a piece-rate basis; and (iii) the corresponding rate of pay for each. The trial court thereafter awarded $4,000 in statutory penalties to the named Plaintiff and $25,010,158 in PAGA penalties under § 226.3. The trial court subsequently awarded $944,860 in attorneys’ fees. Defendant contended that the award of over $25 million in PAGA penalties under § 226.3 should be vacated because: (i) the named Plaintiff’s initial PAGA letter failed to provide adequate notice of her claims, and she thus failed to exhaust her administrative remedies, which divested the trial court of jurisdiction to consider her PAGA claim; (ii) the trial court wrongly allowed PAGA penalties based on “estimated” violations instead of actual violations; (iii) the trial court wrongly imposed heightened penalties under § 226.3 because this statute did not apply; and (iv) the trial court erred by penalizing it for every deficient wage statement it sent out. Id . at *16. The Court of Appeal agreed with Defendant that the penalty provisions of § 226.3 did not apply to the facts at issue and that the matter must be remanded to determine the appropriate civil penalty under § 2699(f)(2). The Court of Appeal reasoned that under the plain meaning of when to apply heightened penalties in § 226.3, it would apply only where the employer either failed to provide a wage statement or failed to keep required records as required by § 226(a). Id . at *27. The Court of Appeal explained that it was undisputed that Defendant provided wage statements to flight attendants, and the only violations found by the trial court were from Defendant’s failure to include certain information in its wage statements. Thus, the Court of Appeal concluded that Defendant should have been subject to the default civil penalties in § 2699(f)(2), not the heightened penalties in § 226.3. Id . at *31-32. Accordingly, the Court of Appeal reversed and remanded the § 226.3 penalties to the trial court for further proceedings regarding civil penalties under § 2699(f)(2). In addition, the Court of Appeal upheld the trial court’s grant on attorneys’ fees. It found that the recalculation of PAGA penalties would not affect Plaintiffs’ “degree of success” as it related to the attorneys’ fees award. Id . at *38. For these reasons, the Court of Appeal affirmed in part and reversed and remanded in part the trial court’s ruling. Hallum, et al. v. FCA US LLC, Case No. CIVDS-1936782 (Cal. Super. Ct. June 21, 2021). Plaintiff, a warehouse worker, filed a class action alleging that Defendant violated various provisions of the California Labor Code (“CLC”) and the Industrial Welfare Commission’s Wage Orders. Plaintiffs asserted seven causes of action and an additional claim under the California Private Attorney General Act (“PAGA”). Defendant filed a demurrer on the basis that since Plaintiff was subject to a collective bargaining agreement (“CBA”), his claims were preempted by § 301 of the Labor-Management Relations Act (“LMRA”). The Court sustained in part and overruled in part Defendant’s demurrer. The Court ruled that Defendant failed to demonstrate the first cause of action (failure to pay all wages owed), fifth cause of action (failure to timely pay wages owed at separation), or the six cause of action (failure to furnish accurate itemized wage statements) were predicated on the CBAs or depended upon the interpretation of them. Id . at 4. The Court reasoned that the CBAs contained no language regarding these claims, and therefore the Court overruled Defendant’s demurrer as to the first, fifth, and sixth causes of action. In addition, the Court sustained the demurrer for Plaintiff’s second cause of action, which asserted a claim for failure to pay overtime. The Court noted that § 514 of the CLC precluded § 510 from applying to Plaintiff’s claim, and thus was preempted by the LMRA. The fourth cause of action for failure to provide rest periods was grounded in state law such that the Court found that it was not preempted by the LMRA, and thus it overruled the demurrer as to the rest period claim. As to Plaintiff’s seventh cause of action for violation of the Unfair Competition Law, the Court opined that it was derivative of the CLC and Wage Order violations and thus not preempted. Finally, the Court ruled that since it found that only the overtime claim was preempted, it denied the demurrer of the PAGA claim. For these reasons, the Court sustained in part and overruled in part Defendant’s demurrer.