Arbitration - Sprunk v. Prisma LLC, No. B268755, 2017 WL 3614265 (Cal. Ct. App. Aug. 23, 2017)

Summary: Employer waived right to compel arbitration against class members by not timely pursuing arbitration.

Facts: Plaintiff, a dancer, filed a wage and hour class action against defendant, owner and operator of a bar and restaurant, alleging that defendant misclassified dancers as independent contractors rather than employees, and thus failing to provide them with meal periods, minimum wages, reimbursement of expenses, and tips. Plaintiff and all other class members signed contracts containing an arbitration clause. The first version, which plaintiff signed, did not specifically address class arbitration. The second version contained an express waiver of class arbitration. Defendant filed a motion to compel arbitration against plaintiff but later withdrew the motion. After the class was certified, defendant sought arbitration against class members. The trial court denied the motion, concluding that defendant waived its right to seek arbitration.

Court’s Decision: The California Court of Appeal affirmed, holding that defendant waived its right to seek arbitration by filing and then withdrawing the motion to compel arbitration against the named plaintiff, and then waiting years and after class certification to seek arbitration against class members. Under the futility rule, a party may be excused from seeking to enforce an arbitration right when the state of the law at the time would make the effort futile. Here, however, defendant waited over a year to seek arbitration after the law was settled in California on class arbitration waivers. In addition, defendant waited four years after the complaint was filed to seek arbitration against the class members, while plaintiff conducted class-related discovery and prepared and argued an extensive class certification motion that never would have been necessary if individual arbitration had been ordered earlier in the case. Because defendant’s delay was unreasonable, the trial court’s finding of prejudice was upheld.

Practical Implications: Because employers can waive their arbitration rights if they participate in litigation, motions to compel arbitration usually should be brought early in a case.

Wage and Hour - Mendoza v. Nordstrom, Inc., No. 12-57130, 2017 WL 3297699 (9th Cir. Aug. 3, 2017)

Summary: Employees are entitled to one day of rest per each seven day workweek, but consecutive days of work that stretch across more than one workweek are not per se unlawful.

Facts: Employees brought a putative class action against defendant Nordstrom alleging that it failed to provide them with one day of rest in seven in violation of the California Labor Code. Following removal, the federal district court dismissed the case, holding that (1) Labor Code section 551 applies on a rolling basis to any consecutive seven-day period, rather than by the workweek, (2) Labor Code section 556 exempted defendant from the section 551 requirement because each plaintiff worked less than six hours on at least one day in the consecutive seven days of work, and (3) even if the exemption did not apply, defendant did not cause the employees to work more than seven consecutive days within the meaning of Labor Code section 552 because there was no coercion and plaintiffs waived their rights under section 551 by accepting additional shifts when they were offered.

The Court of Appeals for the Ninth Circuit certified three questions to the California Supreme Court: (1) is the day of rest required by sections 551 and 552 calculated by the workweek, or does it apply on a rolling basis to any seven-consecutive-day period; (2) does the section 556 exemption for workers employed six hours or less per day apply so long as an employee works six hours or less on at least one day of the applicable week, or does it apply only when an employee works no more than six hours on each and every day of the week, and (3) what does it mean for an employer to cause an employee to go without a day of rest? The California Supreme Court responded: (1) a day of rest is guaranteed for each workweek and periods of more than six consecutive days of work that stretch across more than one workweek are not per se prohibited; (2) the exemption for employees working shifts of six hours or less applies only to those who never exceed six hours of work on any day of the workweek; (3) if an employee works more than six hours on any one day in a workweek, a day of rest must be provided during that workweek, subject to other applicable exceptions; and (4) an employer causes its employee to go without a day of rest when it induces the employee to forgo rest to which he or she is entitled. An employer is not, however, forbidden from permitting or allowing an employee, fully apprised of the entitlement to rest, to choose not to take a day of rest.

Court’s Decision: The Ninth Circuit affirmed, holding that the employees were not aggrieved because neither worked six consecutive days in any one workweek.

Practical Implications: While one day of rest is guaranteed for each workweek, periods of more than six consecutive days of work that stretch across more than one workweek are not per se prohibited. Employers that want employees to work more than six consecutive days without a day of rest should not schedule them for more than six hours on any day of a workweek, or ensure employees are fully apprised of their right to a day of rest with the opportunity to take it.