How These Attys Turned Up The Heat On Apple In Wage Fight

By Rachel Rippetoe

Last month, U.S. District Judge William Alsup moved forward a class action that hadbeen stuck in a six-year loop.

He said March 3 that he'd enter an order finding Apple liable for paying a class of California retail workers for time they spent undergoing bag checks off the clock, and said damages would be decided at a jury trial.

For the small team of lawyers squaring off against DLA Piper and management-side mainstay Littler Mendelson PC in the NinthCircuit and the California Supreme Courtsince 2015, the announcement came as asigh of relief.

"It certainly is David against Goliath," Lee S.Shalov, a partner at McLaughlin & Stern LLP and one of the lead plaintiffs attorneys, told Law360 Pulse. "We don't have themanpower that they do, but we have a lot of determination and grit."

Shalov said the case has now come full circle.

The class was certified in August 2015, butthen Judge Alsup granted Apple's request for summary judgment, arguing that the time workers spent waiting in line for bag checks wasn't compensable because they didn't have to bring the bags in to work. In 2017, the Ninth Circuit referred thecase to the California Supreme Court, asking the high court to determine whether employees should be compensated for bagchecks under California law.

The California Supreme Court ruled in February 2020 that employees should bepaid for bag checks under the state's labor laws and sent the case back to the Ninth Circuit, where in September a panel directed the district court to grant summary judgment to the workers.

The fight isn't over, though. Apple indicated it would argue the amount of unpaid time was de minimis, or too insignificant to constitute a California labor law violation, a defense that has already garnered the judge's skepticism. Apple's lawyers have notreturned a request for comment.

The tech giant has also argued it has a right to ask any employee who makes a claim togive a deposition or appear in court, something that the plaintiffs' attorneys said could cause a chilling effect. The workers oppose this, and Judge Alsup ruled Apple can only take 90-minute depositions of certain class members with the court's approval.

Still, Judge Alsup's finding Apple liable is a hard-earned victory for Shalov and his partner Brett Gallaway, as well as McLaughlin & Stern associate Jason S. Giaimo, Kimberly A. Kralowec at Kralowec Law PC and her associate Kathleen Rodgers.

"We really fought hard," Shalov said of his team of five. "We pushed for everything that we thought we were entitled to, and we never gave up."

How It Started

Shalov and Gallaway began representingAmanda Frlekin, a former employee of anApple store, in a California class action in 2013. At the time, they were also working on other security-check wage cases in New York, Ohio and Massachusetts.

Then in December 2014, the U.S. Supreme Court in Integrity Staffing Solutions v. Busk held that workers at an Amazon warehouse were not entitled to payment for the time they spent undergoing anti-theft security checks.

The justices ruled that the time employees spent undergoing security checks was not integralor indispensable to their job duties, and thus federal law does not require that they be paid for that time.

At that point, Shalov and Gallaway said, they realized the California suit was their best chance of winning a case against Apple.

Under the California Labor Code, they said, so long as workers remain under their employer's control, they must be compensated. So they focused their efforts on California, which is home to 53 Apple stores, more than any other state.

"And we argued successfully that refusing or prohibiting an employee from physically leaving the premises of an Apple store before they submit to a bag check is the definition of control, "Gallaway said.

Once the press became aware of Gallaway and Shalov's case in California, dozens more employees contacted them. The attorneys went through tens of thousands of pages of documents concerning bag check policies, employee pay stubs and emails. They also rounded up more than 25 depositions from employees and collected more than 30 declarations.

Apple tried to dismiss the case, arguing each employee's claim was too individualized to certify a class. But the court agreed with the plaintiffs, finding the common issues could belitigated on a class basis and the individual issues could be dealt with on a claims basis.

In August 2015, the workers successfully won class certification.

But the case was sunk as soon as it began. Apple and the plaintiffs both entered motions for summary judgment, and that November Judge Alsup agreed with Apple's claim that despite California's more stringent labor laws, bag checks did not meet the control standard, because employees could simply choose not to bring a bag to work.

"He gave Apple the second bite of the apple, if you will," Gallaway told Law360 Pulse.

"That's not the first time you've used that, Brett," Shalov replied.

Reversing the Judge's Reversal

They wasted no time filing an appeal. They brought in Kralowec and Rodgers, who are based in San Francisco and are well respected for their appellate work in California, and Giaimo from McLaughlin & Stern to help handle the load, Shalov said.

The small team began poring over regulatory history and relevant wage orders dating back to 1916, Kralowec said.

"That was actually really interesting," she said. "From an intellectual standpoint, it was the kind of project that appellate lawyers often enjoy.

"Judge Alsup had relied on a number of decisions when making the summary judgment in Apple's favor, namely Overton v. Walt Disney Co., where the court rejected a claim that a Disney employee should be compensated for the time he spent traveling on a shuttle from his parking space to work.

Kralowec said the team spent a lot of time trying to find ways to distinguish the case from Apple's case, or perhaps to even use the ruling in their favor. They argued that transportation to work was different from being forced to stay after a shift.

There were many indicators of control in Apple's bag check policy, the plaintiffs' lawyers said.

For instance, employees could be disciplined if they declined to go through the security check."It was very thoroughly briefed by the end," Kralowec said. "I couldn't think of any arguments that we hadn't made or that the other side hadn't made by the time we got to those final supplemental briefs.

"Ultimately, the Supreme Court and the Ninth Circuit agreed that Apple's bag check policy passed the threshold of control.

'Apple's Taking Its Own Employees to Trial'

Judge Alsup on April 14 ordered that notice of the claims process be sent to all applicable current and former employees by June 13.

Apple could be liable for several types of damages, Shalov and Gallaway said. Claimantscould receive liquidated damages, which is the amount they would have been paid had they logged their time undergoing bag checks, but they could also be awarded penalty fees of up to $4,000 each under the California Labor Code, as well as interest on their unpaid wages.

Gallaway said Apple, which claimed that it stopped the practice of bag checks in December 2015, is fighting these penalties, saying it acted in good faith and that the amount of time employees weren't paid for bag checks was too small to warrant a penalty. However, Gallaway and Shalov predicted that Apple may have to shell out millions to the class.

They said Apple intends to ask employees who filed claims for depositions and possibly to appear at trial to determine damages.

In a March hearing, Judge Alsup said Apple would have to demonstrate a good reason for depositions from claimants. Shalov and Gallaway said Apple's tactics could deter members of the class from making claims.

"From an optics perspective, Apple's already been proven to be in the wrong," Gallaway said.

"So by requesting that a majority of these employees that step forward be deposed, Apple'staking its own employees to trial. We see that as an attempted chilling effect. But it's a little bit confusing to us how Apple would want to do that to the people that make its engine run."

The Impact of the Case

Since Shalov and his team won over the California Supreme Court, several other security check wage cases have followed.

In March 2019, Dick's Sporting Goods agreed to pay $2.9 million to a class of 10,700 current and former California employees for the time they spent in security checks. Blue Apron in March 2020 also agreed to a $2 million settlement of a class action over security checks.

The Ninth Circuit revived Nike and Converse employee security check class claims in July 2019, after the Apple decision in the California Supreme Court.

"We've kind of been a pioneer for these security check cases in California, and in our wake there have been a ton of wins," Gallaway said. "The majority of these cases have settled, and they all cited our case. "Gallaway said he worked in retail in college, and he remembers going through security checks at the end of his shift.

He said he understands why these companies have a security check policy, but the time spent waiting to have a bag checked ultimately adds up.

"A lot of these people are students, or have families or kids," Gallaway said. "These five, 10,15, 20 minutes add up. It's not only an impediment, but it's a significant amount of unpaid compensation."

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