State high court offers solace for plaintiffs’ employment lawyers

As the U.S. Supreme Court continues to bolster the enforceability of individual arbitration contracts, plaintiffs’ employment lawyers have found another place to notch victories: The California Supreme Court handed down several pro-employee blockbusters in 2017.

The state high court confirmed plaintiffs’ power to conduct widespread discovery in Private Attorneys General Act actions, an issue of particular interest to the California plaintiffs’ bar.

The state high court also limited arbitration agreements’ scope, and, in a decision made in the last week of 2016, prohibited bosses from contacting workers during rest breaks.

“It was definitely a positive year for employees,” said Glenn A. Danas, a Capstone Law APC partner, who argued the PAGA discovery and arbitration limits cases before the state Supreme Court.

Cliff Palefsky, a plaintiffs’ employment lawyer at McGuinn Hillsman & Palefsky APC, agreed plaintiffs racked up key victories. But the court is academic and cautious in its approach, Palefsky said.

“I think they are a little gun-shy,” Palefsky said. He called the state high court an “abused court system” used to U.S. Supreme Court reversals.

Following oral arguments in October, the U.S. Supreme Court should reach a decision early next year in Ernst & Young LLP v. Morris, 16-300, which was issued by the 9th U.S. Circuit Court of Appeals,another appellate court with a pro-worker reputation that Palefsky termed “abused.”

The 9th Circuit ruled, in conflict with two other federal appellate courts, that contracts compelling workers to individually arbitrate complaints are not enforceable, because they violate a concerted activity right that the 1935 National Labor Relations Act provided.

In 2011, the U.S. Supreme Court famously ruled in Concepcion that individual arbitration contracts are enforceable per the 1925 Federal Arbitration Act, a reversal of the California Supreme Court. Concepcion, though, did not say whether arbitration law conflicted with the Labor Relations Act.

“We are in a holding pattern,” Palefsky said. “Nobody knows what the Supreme Court will do without [Antonin] Scalia.”

Palefksy called the late justice the intellectual force behind pushing for arbitration’s enforceability.

Whatever the U.S. Supreme Court decides in Ernst & Young, California plaintiffs’ lawyers would likely continue to brandish PAGA as an anti-arbitration weapon in 2018.

Under PAGA, aggrieved employees can deputize themselves as private attorneys general and seek labor code penalties on the state’s behalf.

The state Supreme Court’s landmark 2014 decision in Iskanian said that while Concepcion binds California, PAGA created a public policy interest to let workers pursue representative claims.

Iskanian triggered an increase in PAGA claims, raising questions of how, exactly, a PAGA claim worked. Is it like a class action or something else?

In Williams v. Superior Court, 2017 DJDAR 6879,the California high court ruled 7-0 that PAGA claims discovery should be conducted similar to class actions.

Opinion author Kathryn R. Werdegar,who retired later in the year, granted the request of Michael Williams, a former Marshalls retail worker, to get the contact information of Marshalls workers across the state.

Like Justice Goodwin Liu’s Iskanian opinion, Werdeger spoke to PAGA’s importance.

“Nothing in the characteristics of a PAGA suit, essentially a qui tam action filed on behalf of the state to assist it with labor law enforcement, affords a basis for restricting discovery more narrowly,” Werdeger wrote.

Defense lawyers warned that Williams is unreasonable in making attorneys perform costly, time-consuming discovery requests without — unlike a class action — proof of common plaintiff circumstances.

While disappointed, Felix A. Shafir, an appellate defense lawyer at Horvitz & Levy LLP, said that “Williams is kind of the first step in providing details and practical information about how PAGA works.” Another 7-0 opinion, written by Justice Ming Chin in April, scotched an arbitration agreement that the state high court found took away plaintiffs’ vested rights. The court found that Citibank N.A. could not compel an arbitration contract that waived credit cardholder Sharon McGill’s claim for public injunctive relief against Citibank’s allegedly deceptive credit card security plan. McGill v. Citibank N.A., S224086.

Defense lawyers are split on whether McGill went so far as to conflict with Concepcion.

Shafir said it conflicted with the U.S. Supreme Court’s contractual enforceability of arbitration contracts.

Paul W. Cane, defense attorney at Paul Hastings LLP, said that the court left unsettled whether it stood, in a post-Concepcion world, with precedent that barred arbitration agreements in which employees ceded statutory rights.

Regardless, the decision meant that “The Supreme Court won’t allow the complete cutoff of certain remedies,” Danas said, and curbs what Federal Arbitration Act preemption can do for defendants.

A bit removed from the cutting edge issues of PAGA and arbitration, the state Supreme Court also redefined in 2017 employees’ rights to a rest day.

The court found that California hourly workers’ mandatory rest breaks cannot be interrupted by a call, text, or any other communication from their bosses. Augustus v. ABM Security Services Inc., 2016 DJDAR 12608.

Another rest break decision was more split and, perhaps, the closest employers came to a victory in 2017. In Mendoza v. Nordstrom, 2017 DJDAR 9324,the state high court ruled that employers must give full-time, non-exempt workers a day off for each seven days of work.

But bosses can structure the work schedule so workers can just get one day off per a Sunday-Saturday work week, instead of on a rolling basis. That means a full-time hourly employee could conceivably work 12 straight days without a day of rest.