This month’s key California employment law cases involve civil procedure (class and representative actions) and wage and hour (retaliation) issues.

Civil Procedure – Class and Representative Actions- Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017)

Summary: Plaintiff may not voluntarily dismiss individual class representative’s claims following order denying class certification in order to obtain an immediate appeal.

Facts: In a consumer class action, plaintiffs represented a putative class alleging the Microsoft Xbox 360 video game system was defective because it scratched game discs. The federal district court denied plaintiffs’ motion for class certification. The Court of Appeals for the Ninth Circuit denied plaintiffs’ petition for interlocutory review of the district court’s order. The named plaintiffs then moved to dismiss their case with prejudice, hoping it would allow them to appeal the order striking the class claims. The district court allowed the dismissal. This tactic has been allowed in some circuits since Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S. Ct. 2454 (1978), which held that denial of class certification is not the “death knell” of a case and thus not immediately appealable. Here, defendant argued that if the district court permitted plaintiffs to dismiss their claims, the case was over because no live claim would continue, and the litigation must end; or, if plaintiffs’ claims were deemed to be live at that point, the district court’s order did not constitute a final order and was thus not appealable. The Ninth Circuit reversed, allowing the appeal and holding that the district court had abused its discretion in striking the class action allegations.

Court’s Decision: The U.S. Supreme Court reversed, finding that federal courts of appeal lack jurisdiction to review an order denying class certification after the named plaintiffs have voluntarily dismissed their claims with prejudice. Here, the district court’s decision to deny class certification was not final and accordingly could not be appealed unless the court of appeals permitted an appeal under Federal Rule of Civil Procedure 23(f), which here the Ninth Circuit did not.

Practical Implications: Class action cases are common in the employment arena, and this decision will make it substantially more difficult (and expensive) for plaintiffs in a proposed class action to continue to pursue a case in federal court following denial of class certification. Accordingly, the period following denial of class certification could be a good time to resolve the remaining issues in a case through settlement.

Wage & Hour - Retaliation - Arias v. Raimondo, Case No. 15-16120, 2017 WL 2676771 (9th Cir. June 22, 2017)

Summary: Employer’s attorney can be held liable under FLSA for retaliating against client’s employee who sued client for violations of workplace laws.

Facts: Plaintiff worked for defendant’s dairy business. When defendant hired plaintiff, it did not complete and file a Form I-9, and therefore failed to confirm plaintiff’s employment eligibility to work in the United States. Defendant used the lack of an I-9 and the fact that plaintiff was undocumented to coerce him into staying employed, even threatening to notify federal immigration authorities about plaintiff’s undocumented status if he left to work for another employer. Plaintiff sued for a variety of workplace violations including failures to pay overtime and to provide meal and rest periods. Raimondo, defendant’s attorney, implemented a plan to derail plaintiff’s lawsuit by having him taken into custody by immigration officials, and blocking plaintiff’s attorney from representing him. Plaintiff then filed suit against Raimondo and defendant alleging unlawful retaliation under the Fair Labor Standards Act (“FLSA”). Raimondo’s defense was that because he was never plaintiff’s employer he could not be held liable under the FLSA for retaliation against someone who was never his employee. The federal district court dismissed plaintiff’s lawsuit, finding that defendant’s attorney could not be held liable for retaliating against plaintiff under the FLSA.

Court’s Decision: The Court of Appeals for the Ninth Circuit reversed, finding that the FLSA’s anti-retaliation provisions refer to any person who retaliates, as opposed to the wage and hour provisions of the FLSA which focus on employers. Accordingly, Raimondo could be held liable for retaliation under the FLSA despite not being plaintiff’s employer.

Practical Implications: An employer may not retaliate against an employee by using the employer’s attorney as its proxy. An employer’s attorney must also be careful not to engage in any conduct that could make him or her liable for retaliation under the FLSA.