The Ninth Circuit, in Wang v. Chinese Daily News, Inc., upheld a jury verdict in favor of reporters suing a newspaper on wage and hour claims. The Ninth Circuit affirmed the district court in all respects, including rulings that
- The reporters, as a matter of law, did not qualify for the “creative professional exemption” from overtime requirements;
- The lawsuit could be certified as a class action under Rule 23(b)(2); and
- The court could correct coercive employer communications by permitting class members to decide whether to opt out after the trial results were known.
The plaintiffs sued Chinese Daily News, Inc. (“CDN”) for unpaid overtime compensation, denial of meal and rest breaks, inaccurate wage statements, and untimely termination pay, in violation of the FLSA, the California Labor Code, and the UCL, Bus. & Prof. Code § 17200. The plaintiffs sought monetary damages, restitution, attorneys’ fees, and injunctive relief.
The District Court’s Rulings
Class Certification and Member Opt-Outs
The district court certified the FLSA claim as a collective action and certified the state-law claims as a class action under Rule 23(b)(2), which authorizes certification where the relief sought is predominately injunctive or declaratory in nature. The class notice resulted in an extraordinarily large opt-out rate: notices went to 187 individuals and resulted in 155 opt-out forms. The plaintiffs responded by filing a motion to invalidate the opt-outs. The district court granted the motion, noting “the opt out period was rife with instances of coercive conduct, including threats to employees’ jobs, termination of an employee supporting the litigation, the posting of signs urging individuals not to tear the company apart, and the abnormally high rate of opt outs.”
Exemption Status and Meal/Rest Breaks
The district court granted summary judgment in favor of plaintiffs, holding that CDN’s reporters did not qualify for the “creative professional exemption,” which for journalists requires that an employee’s primary duty to be “performing on the air in radio, television or other electronic media; conducting investigative interviews; analyzing or interpreting public events; writing editorials, opinion columns or other commentary; or acting as a narrator or commentator.” Therefore, CDN was required to provide the reporters 30-minute meal breaks when they worked more than five hours per day. At trial, the jury found that CDN had failed to provide reporters with meal breaks.
The Court of Appeals Decision
Class Certification and Opt-Out Issues
CDN challenged the district court’s decision to certify the class under Rule 23(b)(2), arguing that the plaintiffs’ claims for monetary damages predominated over their claims for injunctive relief. The Court of Appeals affirmed the 23(b)(2) certification, agreeing with the district court that “the monetary relief claims . . . appear to be on equal footing with the claims for injunctive relief” and that there were substantial claims for injunctive relief since future compliance by CDN was potentially the remedy of greatest value to the plaintiffs.
CDN also challenged the district court’s decision to invalidate the opt outs and to delay holding a second opt-out process until after the trial. The Court of Appeals found that the district court did not abuse its discretion in invalidating the first opt-out process based on the conclusion that CDN had engaged in coercive conduct. District courts have the power to regulate the opt-out process, especially when a party engages in conduct that threatens the fairness of the litigation, and the district court acted within its discretion when it ordered that a second opt-out process would be conducted after the trial.
Exemption Status and Meal/Rest Breaks
With regard to the plaintiffs’ exemption status, the Court of Appeals affirmed summary judgment for the plaintiffs, finding that CDN failed to demonstrate that the reporters’ job duties satisfied the criteria for the creative professional exemption. The Court of Appeals relied on the fact that many of the articles the plaintiffs wrote were “standard recounts of public information created by gathering facts on routine community events, as opposed to the product of in-depth analysis.” The Court of Appeals also noted that “CDN’s articles do not have the sophistication of the national level papers at which one might expect to find the small minority of journalists who are exempt.”
Because the plaintiffs were non-exempt, they were entitled to the meal break provisions of the California Labor Code. The Court of Appeals noted that two cases are pending before the California Supreme Court that present the question of whether employers need only “provide” meal breaks – in the sense that they do not impede their employees from taking such breaks – or whether employers have an affirmative obligation to ensure that workers are actually relieved of all duties during a meal period. The evidence presented to the jury showed that reporters faced tight deadlines, were required to carry pagers and be on call all the time without ever getting a sustained off-duty period, the reporters did not keep time cards and that pay stubs did not reflect the time actually worked.
Consequently, the Court of Appeals concluded that, even if the California Supreme Court interprets California law to place only minimal obligations on employers, the evidence was sufficient to support a finding that CDN did not “provide” the class with meal breaks.
What Wang Means for Employers
The decision’s various rulings will encourage more litigation against California employers. The decision makes clear that any coercive communication with class members regarding the opt-out decision could prompt not only a corrective notice but an order that gives class members the luxury of deciding whether to opt out after the results of the trial are known.
The decision also reinforces advice that employers should take affirmative steps to ensure that nothing stands in the way of employees breaks. Even minor demands, such as requiring employees to carry pagers or to meet many time-sensitive deadlines, may lead a trier of fact to conclude that an employer has failed to provide meal breaks.