Class Certification is Appropriate Where Employer has No Break Policy -- Bradley v. Networkers International, LLC

The Fourth District Court of Appeal decision in Bradley v. Networkers International, LLC is significant because it directly addresses how the landmark Brinker decision should effect class certification of meal and rest break claims.  (Bradley is also significant concerning misclassification of independent contractors but that warrants a whole separate post). 

The employer in Bradley had never promulgated any policy specifically authorizing meal and rest breaks.  Originally the trial court had denied certification and the appellate court had upheld the denial on the ground that it would be necessary to individually determine which workers had the opportunity to take breaks and whether they had voluntary chosen to waive the breaks.  The Supreme Court issued a "grant and hold" and then remanded for reconsideration in light of its Brinker decision.   

The Bradley Court explained upon remand that Brinker had changed everything.  Under the Supreme Court's new rules the same record now required class certification of the meal and rest period claims.  First, because Brinker clarified that employers have a legal obligation to affirmatively provide breaks, not having a policy is itself a common class-wide policy that warrants certification.       

Networkers argues Brinker is not controlling because in Brinker the plaintiffs challenged an express meal and break policy whereas here plaintiffs are challenging the fact that the employer's lack of a policy violated the law. This is not a material distinction on the record before us. Under Brinker and under the facts here, the employer engaged in uniform companywide conduct that allegedly violated state law.

Secondly, the lack of an affirmative meal and rest break policy effectively takes the issue of "waiver" off the table, removing it as an obstacle to certification as well.

[A]s Brinker made clear, an employer is obligated to provide the rest and meal breaks, and if an employer does not do so, the fact that an employee did not take the break cannot reasonably be considered a waiver. “No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it.”

Prior to Brinker many employers got by with arguing that they did not prohibit breaks and that it was therefore up to their workers to take meal and rest breaks and that they could not prove that they had not voluntarily chosen to take breaks.  Bradley is crystal clear in holding that this is no longer an option.  

Under Brinker, the failure to implement and enforce an affirmative break policy (including records of whether the breaks were actually taken), is a substantive violation of the employer's legal duty under the Labor Code.  Under Bradley this substantive violation will also be certified as a class action.   In short, an employer without an affirmative break policy is now officially a sitting duck.     

 

Bad "Business Judgment" is not Discrimination -- Veronese v. Lucasfilm

The challenge in discrimination cases is always proving the subjective intent of the decisionmaker.  In other words, was the decision motivated by some legitimate business reason, or did the company base its decision on the plaintiff's _______? [fill in the legally protected category] 

As there is no way to peer into the mind of a decisionmaker the fact-finder must resort to making inferences from the surrounding circumstances.  And this raises a host of thorny issues regarding what constitutes legitimate evidence to prove up this inference of discrimination, and how such evidence may be considered.   

For example, in Veronese v. Lucasfilm a jury found that Lucasfilm had not hired the plaintiff due to her pregnancy.  The reviewing court, however, reversed the verdict and remanded the case for retrial because the judge had failed to give the jury the following special instruction:

You may not find that Lucasfilm discriminated or retaliated against Julie Gilman Veronese based upon a belief that Lucasfilm made a wrong or unfair decision. Likewise, you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.

The purpose of the instruction is merely to advise the jury that it is not illegal, by itself, to treat someone unfairly or to do something that seems illogical.  Going forward some version of this instruction, which the parties and the Court referred to as a "business judgment instruction," will effectively be mandatory in all disparate treatment discrimination cases. 

Companies should not rely too heavily on this "business judgment" rule, however.  Like many legal instructions it may not have much impact on the deliberations of real juries.  Jurors are looking for logical reasons to explain what happened.  It is not particularly persuasive for an employer to argue that "our reason for firing the plaintiff may seem illogical and unfair but he still can't prove the real reason was discrimination."   Jurors are usually more than willing to chose an illegal reason over an illogical reason as the most likely version of what really happened.         

Employees Who Wear "Two Hats" Can Have Two Separate Employment Contracts -- Faigin v. Signature Group Holdings

For various legal and financial reasons large corporations frequently do business through an array of interrelated parent, subsidiary and sibling entities.  Executives and other employees are frequently shifted back and forth or end up working for two different entities at the same tme.  (I have been involved in several cases in which highly placed executives literally did not know which corporate entity employed them.) 

The holding in Faigin v. Signature Group Holdings, Inc. illustrates that one consequence of this scenario is that an employee who works for two different entities may have two different contracts.  The employee may have an integrated, written employment contract with a parent company that is terminable at-will.  But unless the contract is specifically worded to govern all employment with related entities there is no reason that a "dual employee" cannot also have a separate implied agreement with a subsidiary company that requires a higher standard for termination.   As the Faigin Court explains:

 

A subsidiary employing an individual who has a written employment contract with the parent conceivably could agree to continue to employ the individual unless there is good cause to terminate the employment even if the parent, for whatever reason, terminates the individual's employment with the parent.

 

Thus, the Court upheld a $1.37 million wrongful termination award against a subsidiary company despite the fact that the executive's written contract with the parent company stated that his employment was terminable at-will.

Employers who wish to avoid this problem might draft their an at-will termination provision to specifically govern any potential employment relationships with related companies.  But  having one corporation control the labor policies of another in this manner naturally tends to erode any claim that they are entirely separate entities and thus open the possibility of alter ego claims and the like.