Wage/hour class litigation in California
Courts have divided on how, if at all, D.R. Horton must guide their decision-making. Compare Herrington v. Waterstone Mortgage Corp, 2012 WL 1242318 Despite the significant good news for plaintiffs’ advocates in the aftermath of Concepcion and Stolt-Nielsen, the vote is still out on how, ultimately, the cases will impact wage/hour class litigation in California. In Iskanian v. CLS Transportation Los Angeles, LLC (2012) 206 Cal.App.4th 949, the Court of Appeal compelled arbitration with a class waiver, and in so doing, rejected Brown v. Ralphs (carving out PAGA and leaving untouched Gentry’s holding that arbitration class waivers are unconscionable in the employment context), holding that Concepcion effectively overruled Gentry. To avoid the CACI constructive fraud, hire a lawyer who will help you.
Iskanian petition for review of the Court of Appeal’s decision, and as of the time of this writing, the Supreme Court has not yet decided on the petition. If the Supreme Court takes up Iskanian, it may be the defining case about the effect of Concepcion and Stolt-Nielsen on California laws protecting workers.
If the Supreme Court does not grant review, then we will be left scratching our heads about the state of California law on class-action waivers in arbitration agreements, with the Court of Appeal authority heading in every direction. The intensive merits analysis in Walmart v. Dukes at the certification stage worried many plaintiffs’ advocates that the first law of class certification - that Rule 23 and California Code of Civil Procedure section 382 elements are decided, but merits are not - had lost currency. But the California Supreme Court and numerous federal courts have largely restored order in this regard. The Brinker court, acknowledging that some “peek” at the merits would be necessary at certification to ensure the predominance of common questions, reinforced that - even post-Wal-Mart v. Dukes - such merits-based inquiries are “closely circumscribed” and “limited to those aspects of the merits that affect the decisions essential to class certification.”
In rejecting the Brinker Court of Appeal’s notion that courts must first decide upon the applicable law and resolve legal issues surrounding each element of a proposed class claim before deciding on certification, the Supreme Court expressly condemned a “free-floating merits inquiry” and eschewed resolution of most factual and legal issues at the certification stage Post-Wal-Mart v. Dukes, federal courts have likewise held that, as the Seventh Circuit put it, “the court should not turn the class certification proceedings into a dress rehearsal for the trial on the merits.”
The noted conservative Judge Posner reversed a class certification denial in a disparate impact discrimination case, explaining that the exercise of subjectivity by managers with respect to company policies did not defeat certification, but resulted in a disparate impact. (See also Sullivan, 667 F.3d at 338 (common factual issues predominated among 184 million purchasers, despite variation between state laws at issue); In re Whirlpool, 678 F.3d at 420 (finding predominance and superiority where there were common alleged design flaws, and where small individual recovery would discourage vindication on an individual basis); (alleged “common mode of exercising discretion” warranted denial of a motion to strike class allegations,
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