April 13, 2012
On April 12, 2012, the California Supreme Court issued a much-anticipated decision in Brinker Restaurant Corporation v. Superior Court, No. S166350, holding that an employer’s obligation under California law to "provide" its employees with meal periods does not obligate the employer to "ensure" that duty-free meal periods are taken by its employees. While the Court’s decision resolves a number of significant and longstanding questions of wage-and-hour law in a fair and helpful manner to employers, and tracks recent developments in federal class action procedure to some extent in a manner that may prove beneficial to class action defendants more generally, Justice Werdegar’s opinion for the Court leaves open a number of issues to be developed further in the lower courts.
I. Employers Must Provide Meal Periods to Their Employees, But Need Not "Ensure" the Meal Periods Are Taken
The Supreme Court’s decision resolves a broadly significant and "contentious" issue of law that trial courts and employers have long wrestled with since the Legislature and the Industrial Welfare Commission first adopted monetary remedies for meal- and rest-break claims: What is the meaning of an employer’s obligation to "provide" its employee with a meal period when the employee works more than five hours? Plaintiffs had long argued that an employer was required not only to make a meal period available for the employee to take, but also to ensure that the employee took the meal period. Indeed, at oral argument in Brinker, plaintiffs’ counsel went so far as to contend that employers should discipline employees who do not take their meal periods to the point of firing those who routinely fail to do so.
The Court held in Brinker though that an employer satisfies its meal period 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." The Court likewise rejected plaintiffs’ "rolling five" argument that employees are entitled to a meal period for every five consecutive hours worked. The law simply requires a meal period after the fifth hour of work and another after the tenth hour of work, and "does not impose additional timing requirements."
In so holding, the Court’s decision could be read, however, as leaving open a number of questions that may give rise to further litigation and present challenges for employers attempting to comply with California’s meal-period laws. What does it mean to allow a "reasonable opportunity" to take a meal period, for example? How far must an employer go and what must it do, in a particular circumstance, in order to discharge its obligation to "actually reliev[e] [its] employee[s] of all duty"? Perhaps most significantly, it remains to be seen in the wake of Brinker how courts will ultimately resolve requests for certification of meal period claims in class actions, particularly given the Supreme Court’s remanding "the question of meal subclass certification to the trial court" in Brinker "for reconsideration in light of the clarification of the law [the Court] provided."
That said, plaintiffs could very well have a difficult time meeting their burden at the class certification stage to show that their meal-period claims involve predominant common questions of fact and law that can be proven through common class-wide proof. Brinker squarely forecloses the "ensure" theory of meal-period liability under which many plaintiffs had long sought class certification of their meal-period claims. Moreover, establishing that employees were not relieved of all duty or were not given a reasonable opportunity to take their meal periods would seem to require, more often than not, proof that is individualized to specific employees and specific meal periods. Employers may therefore often have a strong argument that, at least absent a uniform policy that effectively prevented or discouraged employees from taking their meal periods or otherwise did not afford them a reasonable opportunity to do so, the "community of interest" requirement for class adjudication of meal period claims cannot be satisfied. It remains to be seen, however, whether employers will in fact prevail on such arguments, in state and federal courts throughout California.
II. Rest-Break Claims May Be Certified When They Are Based on an Undisputed Common, Uniform Rest Break Policy
With respect to rest breaks, the Court rejected plaintiffs’ argument that employees must be permitted a rest break before taking their meal period, as nothing in the statute or wage order "speaks to the sequence of meal and rest breaks." It did agree with plaintiffs, however, that Brinker’s written rest break policy violated the pertinent wage order, and specifically, the timing aspects thereof. The Court held that employees are entitled to 10 minutes’ rest for shifts between 3 1/2 and 6 hours, 20 minutes’ rest for shifts between 6 and 10 hours, and 30 minutes’ rest for shifts between 10 and 14 hours. In contrast, there was "substantial evidence," according to the Court, that Brinker’s "uniform rest break policy authoriz[ed] breaks only for each full four hours worked."
Given that plaintiffs "presented [such] evidence" and, indeed, that "Brinker conceded at the class certification hearing the existence of a common, uniform rest break policy," and given the particular nature of the employer’s policy in Brinker that the Court determined violated, on its face, the rest-break-timing requirements of the pertinent wage order, the Court "conclude[d] the trial court properly certified a rest break subclass."
Brinker thus provides clear guidance to employers on the length and number of rest breaks that must be offered to employees. And although the Court affirmed the trial court’s certification of a rest break class on the particular facts before it, its opinion nowhere suggests that rest break claims can properly be certified against employers who do "authorize and permit" rest breaks in compliance with the timing and other requirements of the pertinent wage orders, and maintain policies designed to ensure same.
III. Off-the-Clock Claims
Finally, in affirming the Court of Appeal’s vacatur of the certification of the off-the-clock work subclass, the Supreme Court noted that "for this claim neither a common policy nor a common method of proof is apparent," and that "[t]he only formal Brinker off-the-clock policy submitted disavows such work, consistent with state law," underscoring the importance to employers of maintaining such policies to protect against liability for off-the-clock claims. Although the Court allowed for the possibility of certifying off-the-clock claims where there is "substantial evidence of a systematic company policy to pressure or require employees to work off the clock," significantly, the Court held that a "presumption" arises that "employees" "are doing no work" when "employees are clocked out."
IV. Class Certification Principles
In addition to resolving the foregoing issues of substantive wage-and-hour law, the Supreme Court in Brinker articulated a number of important principles of class certification procedure of broad applicability to class action defendants in California state court, and not just employers defending against meal-and-rest-break claims. Notably, the Court’s opinion dealt with state, not federal, procedural issues, yet approvingly cites a number of important and recent federal cases decided under Rule 23 of the Federal Rules of Civil Procedure.
The principal procedural question Brinker addressed was the extent to which questions regarding the elements of a plaintiff’s claims must be addressed at the class certification stage, as opposed to the "merits" stage after certification has been decided. The Court on more than one occasion noted that it was reaching questions of underlying substantive law that the parties invited the court to reach, which the trial court may not have needed to at the class certification stage. Although the Court stated that courts need not, and should not ordinarily, reach questions pertaining to the ultimate merits of plaintiffs’ claims unless doing so is "necessary to a determination whether class certification is proper," the Court also made clear that courts "may properly evaluate" "evidence or legal issues germane to the certification question [that] bear as well on aspects of the merits," and "must" do so "if the considerations necessary to certification ‘overlap the merits,’" as they "often" do when courts examine "whether common or individual questions predominate." Indeed, the Court quoted and relied on the United States Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011), in recognizing that "analysis of a class certification’s propriety frequently . . . will entail some overlap with the merits of the plaintiff’s underlying claim. That cannot be helped.’"
Consequently, the standard for class certification under California state law set forth in Brinker may not differ that much from the federal standard articulated by the U.S. Supreme Court in Wal-Mart, and from other recent federal decisions. The Court held that trial courts "must examine the issues framed by the pleadings and the law applicable to the causes of action alleged." And "[t]o the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them." Whether California state courts will interpret this guidance to require the sort of "rigorous analysis" mandated in federal court under Federal Rule 23 remains to be seen.
An important question left open by Justice Werdegar’s opinion joined by all the Justices is the role that affirmative defenses play in the predominance analysis at class certification. The majority did not address this question, but a separate concurrence by Justice Werdegar, joined in by only one other Justice, noted that "individual issues arising from an affirmative defense can in some cases support denial of certification." The concurrence specifically identified overtime "misclassification suits" as "sometimes" involving affirmative defenses that necessitate "consideration of numerous intricately detailed factual questions" and thus militate against a finding of predominance needed for class certification.
The California Supreme Court’s long-awaited decision in Brinker resolves a number of significant questions concerning employers’ obligations to provide meal and rest breaks to their employees in California, and the amenability of claims arising therefrom to class adjudication in California state court, in a generally fair and beneficial manner to employers. Brinker does leave open or raise a number of additional questions, however, that may need to be resolved through further litigation and that may present additional challenges for employers seeking to comply with California’s meal-and-rest-break laws.
Gibson, Dunn & Crutcher LLP represented amici curiae the United States and California Chambers of Commerce in Brinker Restaurant Corp. v. Superior Court (Hohnbaum) and represented Wal-Mart Stores, Inc. in Wal-Mart Stores, Inc. v. Dukes.
Gibson Dunn is a leader in the Labor and Employment area, handling some of the most high profile and important cases in the field. American Lawyer named us the 2012 Labor and Employment Department of the Year, as well as to an unprecedented second term as the Litigation Department of the Year. This past year, we obtained a landmark victory for Walmart in the Dukes case, where the U.S. Supreme Court reversed certification of the largest employment discrimination class in history. And in the wage-and-hour context, we have defeated multiple nationwide and statewide class actions, including overturning a $52.5 million judgment for Farmers Insurance before the Ninth Circuit in a precedent-setting exemption case and securing a recent class certification victory in California on behalf of Marie Callender‘s in a nationwide class action involving claims for unpaid overtime.
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