Litigating California Wage & Hour and Labor Code Class Actions

imposing this unprecedented requirement would undermine the guarantee made
by Proposition 64’s proponents that the initiative would not undermine efficacy of
the UCL as a means of protecting consumer rights, because requiring all
unnamed members of a class action to individually establish standing would
effectively eliminate the class action lawsuit as a vehicle for the vindication of
such rights. 290
The ramifications of Tobacco II are substantial. In many wage and hour class actions, the
plaintiffs use a UCL claim to extend the statute of limitations on their statutory claims to four
years. In most of these cases, however, a significant portion of the certified class did not
lose any money or property as a result of the violation, but plaintiffs argue that the mere
fact that some class members have no damages does not preclude certification. For
example, significant numbers of managers may not have worked any overtime, or
significant numbers of a meal period class may have actually taken all their meal periods.
After Tobacco II, trial courts may still certify classes despite the existence of members of
the class without any grounds for recovery. 291
While this is largely the way the courts had
handled class action traditionally, if the California Supreme Court had adopted the position
of the dissent in Tobacco II, it might have substantially undercut the ability to use the UCL
292 293
as a vehicle for advancing Labor Code class actions.
290
291
292
293
Id. at 321.
See Sav-On, 34 Cal. 4th at 333 (explaining that “a class action is not inappropriate simply because each member of the
class may at some point be required to make an individual showing as to his or her eligibility for recovery or as to the
amount of his or her damages”).
Nevertheless, the reforms instituted by Proposition 64 still do apply where the class representatives themselves lack
any basis for recovery. See, e.g., Birdsong v. Apple, 590 F. 3d 955, 959-62 (9th Cir. 2009) (dismissing putative class
action where plaintiffs alleged that injury was possible, but failed to allege that they themselves suffered any actual
harm).
Another key development in regard to the application of the UCL was the decision of the California Supreme Court in
Sullivan v. Oracle, 51 Cal. 4th 1191 (2011). There, the Court held that overtime work performed by out-of-state
employees within California can serve as the basis for a claim under California’s FLSA claims by competition law. Cal.
Bus. & Prof. Code § 17200 (“UCL”). However, the Court also held that out-of-state employees outside California cannot
serve as the basis for a California UCL claim. Although the Sullivan Court explicitly limited its decision to “the
circumstances of this case,” it is anticipated that the plaintiff’s bar will argue that a logical extension of its reasoning
suggests that similar conclusions may result for non-California-based employers. The Sullivan Court declined to opine
on the different burdens that a non-California-based employer may face in applying California overtime laws to
nonresident employees working in California, but the plaintiff’s bar will undoubtedly seek to obtain judicial rulings that
the California Supreme Court’s conflict of laws analysis suggests no reason for why a different conclusion would result
for non-California-based employers.
Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 66