June 24, 2019

No “End Run” Around Brinker Under Section 17200

The California Court of Appeal has affirmed a complete victory by Safeway Inc. over a certified class of wage-and-hour plaintiffs. Esparza v. Safeway Inc., et al., B287927 (Los Angeles County Super. Ct. No. BC369766, June 10, 2019). The published opinion reinforces three major points for defending against California wage-and-hour class actions:

Brinker Means What It Says

First, Esparza forcefully rejects the argument that a meal-period plaintiff can use the Unfair Competition Law, Business & Professions Code sections 17200, et seq. (the “UCL”) to obtain classwide recovery of meal period premiums without demonstrating that the employer failed to “provide” meal periods under the standards articulated in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004.

Plaintiffs filed the Esparza action in 2007, alleging (among other claims) that Safeway failed to provide meal periods to its retail employees throughout California, and failed to pay one-hour premiums to those employees when due. Plaintiffs stated claims directly under Labor Code section 226.7, and also under the UCL.

In 2013, Plaintiffs obtained class certification on their UCL claim only, asserting that Safeway’s alleged failure to pay any meal period premiums prior to June 17, 2007, constituted an unfair business practice in itself, without regard to whether Safeway actually “provided” meal periods. Safeway sought to overturn the certification order, arguing that no premium could become due in the first place without proof that Safeway had “failed to provide” a meal period under the standards set forth in Brinker, and that such proof would require individualized inquiries sufficient to prevent class certification. Plaintiffs argued that no individualized inquiries were necessary because the trial court did not need to determine whether Safeway had provided the underlying meal periods. Rather, Plaintiffs proposed that the court could assign a “market value” to the workplace “protections” and the “compensation guarantee” of the meal-period premium statute, and find that all class members were deprived of that “market value” because Safeway allegedly never paid any premiums at all. Plaintiffs also argued that, to measure the appropriate recovery, the trial court could simply add up the late, missed and short meal periods shown in Safeway’s records and “presume” that a premium should have been paid for each one. The Court of Appeal found that Plaintiffs had sufficiently identified common questions, and affirmed class certification. Safeway Inc. v. Superior Court (2015) 238 Cal.App.4th 1138, 1162-1163.

Back in the trial court, Safeway moved for summary adjudication against the certified class claim, arguing that Plaintiffs’ theories sought to bypass Brinker and impose liability against Safeway for every short, missed or late meal period that occurred, without regard to why it had occurred. The trial court granted the motion, noting that Plaintiffs’ theory “assumes employees have a vested right to one-hour premiums for every missed meal period, whether or not Safeway was liable for a violation. [Plaintiff] assumes Safeway must pay, whether or not it broke the law. This assumption violates Brinker . . . .”  The Court of Appeal has now held that the trial court was correct, emphasizing that, “[a]ppellants expressly eschewed predicating liability on classwide violations of the meal period statute. Appellants cannot recover the remedy for classwide violations while disclaiming any intent to prove them.”  

The Court of Appeal’s opinion makes clear that an employer is not “automatically” liable for each and every short, late or missed meal period – under the UCL or the Labor Code – and that an employee seeking a classwide remedy must prove on a classwide basis that the employer actually failed to provide the meal periods in question.

The UCL Means What It Says

Esparza also rejected Plaintiffs’ effort to expand the remedies available under the UCL to include a “market value” theory of damages, as opposed to restitution.

In its summary adjudication motion, Safeway pointed out that the only remedies available under the UCL are restitution and injunction, as opposed to damages. Safeway argued that Plaintiffs’ theories did not identify “money or property” that could be the subject of restitution, and that Plaintiffs’ “market value” concept described (if anything) a novel concept of damages, rather than restitution. The trial court agreed, finding that, “[t]his theory describes damages, not restitution.” The Court of Appeal found no error in the trial court’s ruling, noting that Plaintiffs failed to raise a triable issue as to “whether Safeway’s challenged conduct harmed the class members in a manner entitling them to restitution.”

PAGA Means What It Says

Finally, Esparza enforced both the administrative notice requirement and the one-year statute of limitations applicable to claims under the Private Attorneys General Act of 2004, Labor Code section 2698, et seq. (“PAGA”).

Plaintiffs amended their complaint in February 2009 to assert a PAGA claim arising from the meal-period allegations discussed above. Plaintiffs acknowledged that Safeway had ceased its allegedly unlawful practices upon which the PAGA claim was based on June 17, 2007. Nonetheless, Plaintiffs did not give the prerequisite PAGA notice to the Labor and Workforce Development Agency (the “LWDA”) until July 2008, after the expiration of the one-year statute of limitations. Plaintiffs argued that their PAGA amendment (Feb. 2009) “related back” to their original complaint (June 2007), regardless of the fact that Plaintiffs failed to notify the LWDA of their claims until after the statute of limitations had passed. The trial court rejected their argument, and the Court of Appeal affirmed, holding that such an expansion of the relation-back doctrine would “frustrate the intent of the Legislature to require compliance with administrative procedures as a condition to filing an action.”