Tweak in ruling on worker searches may have big impact for Apple

Apple Inc. will get another chance to prove the seconds employees spend waiting to get their bags searched to combat theft is not enough to matter after a 9th U.S. Circuit Court of Appeals panel amended its ruling.

The decision, filed last week, is a small tweak in a Sept. 2 ruling that had been a victory for workers, reversing a summary judgment ruling by U.S. District Judge William Alsup of San Francisco in favor of Apple.

But the court's error, and the altered decision, could have a major impact.

Alsup's ruling in November 2015 concluded Apple employees were not entitled to be paid for the incremental amounts of time spent while security guards checked their bags.

In her Sept. 2 opinion, Senior U.S. District Judge Consuelo B. Marshall of Los Angeles -- who sat on the 9th Circuit panel by designation -- overruled Alsup's decision and concluded Apple's defense that the time employees spent was de minimis was not raised before Alsup.

"Apple failed to raise this argument before the district court in opposing plaintiffs' motion for summary judgment; the argument is therefore forfeited," Marshall wrote at the time.

But on Thursday, the panel replaced that line with a very different one that gives Apple a chance to argue the time spent by employees waiting for bag searches is too insignificant to warrant damages.

"It is unclear whether this issue was adequately raised in the district court, and the district court did not reach it," the panel wrote. "On remand, the parties may make their respective arguments about preservation of this issue and its merits, so the district court may consider those arguments in the first instance."

Theodore J. Boutrous Jr., a partner with Gibson, Dunn & Crutcher LLP who represents Apple, called out the mistake in a Sept. 17 filing. Frlekin et al. v. Apple Inc., 2020 DJDAR 11708 (9th Cir., filed Dec. 3, 2015).

"Apple respectfully submits that the opinion 'overlooked' a 'material point of fact or law' in stating that Apple forfeited its de minimis defense by purportedly not raising it before the district court in opposing plaintiffs' motion for summary judgment," Boutrous wrote.

While Apple did not make the de minimis argument to the 9th Circuit, Boutrous argued that was because the argument was limited to whether the time spent in bag checks constituted "hours worked" under California law.

"Now that time spent participating in checks under Apple's policy has been deemed to constitute "hours worked" whether the time spent in checks was de minimis is a material, unresolved issue that goes to whether Apple is liable or not to any particular class member," he added.

Boutrous declined to comment Friday on the new ruling.

Kimberly A. Kralowec of Kralowec Law PC, who represents the class plaintiffs, did not return messages seeking comment. In her court papers, she countered there was no valid reason the case shouldn't move to the damages phase without any more delays.

"The petition merely serves to further delay vindication of the class members' right to compensation for all 'hours worked,'" Kralowec wrote.

The 9th Circuit had referred the case to the California Supreme Court for its interpretation of California law. The state high court ruled in February the time workers spent in bag searches was compensable under the Industrial Welfare Commission wage order in question.

"Applying a strictly textual analysis, Apple employees are clearly under Apple's control while awaiting, and during, the exit searches," Chief Justice Tani G. Cantil-Sakauye wrote for the state Supreme Court.

The 9th Circuit panel also included Judges Susan P. Graber and Michelle T. Friedland. All of the judges, including Marshall, were appointed by Democratic presidents.

The state Supreme Court opinion may pose a challenge for Boutrous when the case returns to Alsup, but he will be able to litigate his de minimis defense.