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California Employer Wins Key Class Action Ruling

July 30, 2008

In a ground breaking development, the California Court of Appeal for the Fourth Appellate District (San Diego) has ruled that class actions are inappropriate procedural vehicles to address claims that employers have not provided meal/rest breaks, or that they are allowing employees to work off the clock.  In Brinker Restaurant Corp. v. Superior Court (Hohnbaum), 08 CDOS 9247 (July 22, 2008), the court of appeal rejected class claims in a case involving a major restaurant chain. 

The defendant operates 137 restaurants in California, including Chili’s Grill & Bar, Romano’s Macaroni Grill, and Maggiano’s Little Italy.  The company had a written policy in compliance with state law that employees receive a 30-minute meal period when their shift is over five hours, and that they are eligible for one 10-minute rest break for each four hours worked.  The policy expressly stated that if employees do not follow these rules, they may be subject to discipline, up to and including termination.

With respect to off-the-clock work, the employee handbook stated that it is the employee’s responsibility to clock in and out and that working “off the clock” is considered a violation of company policy.

The plaintiff class complained that the company willfully violated California laws providing for rest breaks.  They also alleged willful violation of the state laws on meal periods, and further claimed that the company required its employees to work off the clock during meal periods.  (See Cal. Labor Code sections 226, 226.7, 512, as well as Industrial Welfare Commission Wage Order No. 5 covering the restaurant industry, among others.)

The court of appeal ruled that these claims could not be adjudicated in a class action, as each person’s claim will inevitably turn on an individual factual determination.  The court made due note of the rules governing class certification.  It said that while the decision to certify a class rests within the sound discretion of the trial court, it will be reversed if based on “improper criteria” or “erroneous legal assumptions.”

The California class action rules generally parallel those applicable in federal court.  The class representative has the burden of establishing that there is: (1) a sufficiently numerous, ascertainable class, (2) a well defined community of interest; and (3) that certification will provide substantial benefits to the litigants and the courts, i.e., that proceeding as a class is superior to other methods.

Whether class certification is appropriate is essentially a procedural question.  It does not relate to the merits of the underlying claim.  As the Brinker court noted, the issue when class certification is sought, rather, is whether “the issues which may be jointly tried, when compared to those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.”

One error by the trial court in Brinker was the failure to analyze what law applied to the class claims.  While the trial court was not required to rule on the merits, it was required to at least take the applicable law into account in assessing whether a class action is a superior procedural vehicle.  As the court of appeal aptly noted:  “[H]ad the court correctly decided the elements of plaintiffs’ rest, meal break and off-the-clock claims, it could have only concluded liability could only be established by making individual inquiry into each plaintiff’s claims, and they thus are not amenable to class treatment.”

In addition the court made important rulings regarding the standard to be applied in rest break and meal break litigation. 

First, the court noted that if an employee’s shift is less than 3.5 hours, no rest break is required.  Moreover, there is no requirement that a rest break be provided before a meal break, or that the break periods be granted at specific times.  Flexibility is the key, as long as the breaks are, in fact, provided.  Thus the court noted:  “[T]he language of [the applicable regulation] is clearly intended to provide employers with some discretion to not have rest periods in the middle of a work period if, because of the nature of the work or the circumstances of a particular employee, it is not ‘practicable.’ This discretion is of particular importance for jobs, such as in the restaurant industry, that require flexibility in scheduling breaks because the middle of a work period is often during a mealtime rush, when an employee might not want to take a rest break in order to maximize tips and provide optimum service to restaurant patrons.  As long as employer makes rest breaks available to employees and strive, where practicable, to schedule them in the middle of the first four-hour work period, employer is in compliance . . . .”

Another key aspect of the Brinker decision deals with meal breaks.  The trial court had ruled that a meal break must be provided before the five hour mark in an employee’s shift, and noted that the Department of Labor Standards Enforcement expects employers to grant break periods and meal periods toward the middle of an employee’s work period.  The court rejected this analysis.  The court noted that while Labor Code § 512 imposes a duty on employers to make a 30 minute meal period available to employees who work more than five hours a day, there is no specific requirement as to precisely when the break is taken, as long as it is offered.

Perhaps the most important aspect of the court’s decision is its ruling that as long as employers provide the opportunity for rest and meal breaks, they are not required to ensure that employees actually take them.  In this regard, Brinker is the first state court case to adopt the reasoning of the federal district court in White v. Starbucks Corp., 497 F. Supp.2d 1080 (N.D. Cal. 2007).  The court of appeal, quoting the White opinion, noted:  “The interpretation that [plaintiff] advances – making employers ensurers of meal breaks – would be impossible to implement for significant sectors of the mercantile industry (and other industries) in which large employers may have hundreds or thousands of employees working multiple shifts.  Accordingly, the court concludes that the California Supreme Court, if faced with this issue, would require only that an employer offer meal breaks, without forcing employers actually to ensure that workers are taking these breaks.  In short, the employee must show that he was forced to forego his meal breaks as opposed to merely showing that he did not take them regardless of the reason.”  (497 F. Supp.2d at 1088-89; see also Brown v. Federal Express Corp., 249 F.R.D. 580 (C.D. Cal 2008).)  The court of appeal in Brinker adopted the conclusion of the White court, and applied the exact same reasoning to the rest break claim as well. 

The Brinker case clearly is good news to employers who have policies in compliance with state law.  If you have any questions about this groundbreaking ruling, or any other aspect of your labor and employment relations, feel free to contact one of our attorneys.