Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Cal. App.: Class certification of unfair competition claim upheld for Safeway and Vons employees, (Jul 24, 2015)

By Edward L. Puzzo, J.D.

A trial court did not abuse its discretion in certifying a class of employees who alleged that the pre-2007 practice of Safeway and Vons to never pay a wage premium for missed meal break periods, as required under state labor, was an unfair practice under the state unfair competition law, the California Court of Appeal in Los Angeles has ruled (Safeway, Inc. v. Esparza, July 22, 2015, Manella, N.).

Enrique Esparza and others brought a putative class action against Safeway, Inc. and The Vons Companies, alleging that they failed to provide required meal and rest breaks to their employees, and failed to pay compensation for those missed breaks. The lower court certified a “meal break class” consisting of over 200,000 employees who worked for Safeway or Vons between December 28, 2001 and June 17, 2007 who were subject to the unfair business practice under California’s Unfair Competition Law (UCL) of never paying meal break premium wages under any circumstances. Safeway and Vons appealed the class certification.

Unfair competition. The UCL defines “unfair competition” broadly to include “any unlawful, unfair or fraudulent business act or practice.” The court explained that it makes unlawful practices violating other laws independently actionable, and also makes actionable practices deemed unfair even if not specifically proscribed by some other law. Plaintiffs’ made their claim under the UCL based upon the additional compensation employees are entitled to under the California Labor Code when their employer fails to provide meal breaks. The California Supreme Court ruled that such claims are not actions brought for the nonpayment of wages; they are actions for the non-provision of meal or rest breaks.

Plaintiffs were store-level hourly employees who alleged that, on many occasions, they were directed to work through meal breaks, or were otherwise unable to take breaks due to heavy workloads. A review of Safeway and Vons payroll records found, prior to June 2007, they had never paid any employee who was forced to miss a rest or meal period the extra hour of pay they were entitled to under the Labor Code.

In opposition to plaintiffs’ claims, Safeway and Vons argued that an employer is under no obligation to pay meal break premiums if it provides lawful meal periods, even if the employee chooses to not take his meal period. Based on declarations from 2,000 employees and 31 store managers and expert testimony, they argued that the majority of employees took their meal breaks, and that there was no companywide practice of depriving employees of meal periods. They contended that there had been no violation of the Labor Code, and therefore the UCL claim must also fail.

In reply to those contentions, plaintiffs stated that Safeway and Vons’ argument side-stepped the plaintiffs’ main contention: that the practice of these employers prior to June 17, 2007 was to never pay the meal break premiums, and that this system-wide practice was an unlawful and unfair business practice under the UCL regardless of the number of employees actually deprived of premium wages.

In granting the class certification, the trial court noted that plaintiffs’ contention–that meal break premiums were never paid prior to June 17, 2007–was never contested. The court found it unlikely that there had never been a circumstance when an employee was owed the missed meal period premium, and therefore it was more likely that there was a system-wide error in payroll procedures, which would make Safeway and Vons liable to the class.

Appellate court’s review. The appellate court found no error or abuse of discretion in the trial court’s grant of class certification. The crux of Safeway and Vons’ argument was that no UCL claim for an unfair practice was tenable absent an underlying claim for a Labor Code violation. The appellate court disagreed.

The trial court recognized that a system-wide practice of never providing for the payment of appropriate premium wages, along with a showing that Safeway and Vons engaged in that harmful practice, could be an unfair business practice under the UCL.

Plaintiffs’ presented evidence that prior to 2007, employees had been directed and pressured by supervisors not to take meal breaks, and that there was no mechanism by which the premium pay related to meal breaks was calculated or determined when due. Their expert estimated over 27 million possible meal break violations. The plaintiffs’ theory of liability was capable of common proof, as required for class certification. In the view of the court, plaintiffs adequately demonstrated the existence of the unlawful practice, and that the matter was suitable for class treatment. Finally, plaintiffs’ theory of liability did not require that all class members accrued unpaid meal break premiums, but only that on a system-wide basis, Safeway and Vons denied the class members the benefits of the compensation guarantee and enhanced enforcement owed under the Labor Code.

The case is Civil Action No. B255216.

Attorneys: James L. Payne (Payne & Fears) for Safeway, Inc. Mike Arias (Arias Ozzello & Gignac) for Enrique Esparza.

Companies: Safeway, Inc.

Cases: StateUnfairTradePractices CaliforniaNews