Bernstein v. Virgin America, Inc.

Background

The plaintiffs were flight attendants who worked for Virgin America, Inc. and Alaska Airlines, Inc. in California. They alleged violations of California wage-and-hour laws, including failures to pay minimum wage, overtime, and for all hours worked; failures to provide meal and rest periods and accurate wage statements; failures to pay waiting-time penalties; and violations of California’s Unfair Competition Law. They also sought civil penalties under the California Private Attorneys General Act of 2004 (PAGA).

The court certified a class and subclasses. In earlier summary-judgment rulings, the court granted plaintiffs’ claims concerning minimum wages, all hours worked, overtime, meal and rest periods, wage statements, waiting-time penalties, the Unfair Competition Law, and PAGA, while denying summary judgment on claims involving time spent completing incident reports and on requested declaratory and injunctive relief. The court later entered a judgment awarding damages, interest, statutory penalties, and PAGA civil penalties.

The Ninth Circuit later reversed the rulings concerning minimum wage and payment for all hours worked, holding that Virgin’s block-time compensation system did not violate the relevant California laws. It also reversed the finding that Virgin was subject to heightened PAGA penalties for subsequent violations beginning in September 2015. The Ninth Circuit affirmed the remainder of the court’s holdings and remanded for further proceedings. The Supreme Court denied Virgin’s petition for review.

Issues and rulings

PAGA penalties under Labor Code section 204. Virgin argued that the Ninth Circuit’s reversal of plaintiffs’ individual claim about payment for all hours worked also eliminated the related PAGA claim. The court rejected that argument. It held that the individual claim challenged how Virgin measured pay, while the PAGA claim separately challenged when Virgin paid wages. The court therefore left the PAGA section 204 claim intact.

Plaintiffs argued that penalties should be calculated under the higher rate for a willful or intentional violation: $200 for each violation plus 25% of the amount withheld. The court held that plaintiffs had waived that argument because they had not raised it in their earlier summary-judgment motion or on appeal. The court therefore applied the $100 initial-violation rate, resulting in $7,046,100 in penalties.

Wage-statement and waiting-time penalties. Virgin argued that a good-faith dispute about whether California wage laws applied should eliminate these penalties. The court declined to reconsider the issue because the Ninth Circuit had affirmed the court’s prior ruling on these claims, and the district court was required to follow the appellate court’s mandate. The court held that plaintiffs remained entitled to wage-statement and waiting-time penalties.

Waiting Time Penalties Subclass. Virgin argued that waiting-time penalties should be limited to subclass members owed overtime wages. The court rejected that position. It held that meal- and rest-period violations could support waiting-time penalties and accepted the parties’ recalculated total of $2,249,470.58.

Further reduction of PAGA penalties. Virgin requested a 75% reduction of the remaining PAGA penalties. The court rejected that request, reasoning that the remaining violations caused concrete injury and that the reduction already made for the reversed claims accounted for the Ninth Circuit’s decision. The court continued to consider the ambiguity in the law at the time of the violations and retained a 25% discretionary reduction. It reduced the PAGA penalties to $12,277,500.

Disposition

The court granted in part and denied in part plaintiffs’ motion to amend the judgment. It ordered plaintiffs to submit a proposed amended judgment within fifteen court days, either signed by Virgin or showing Virgin’s agreement as to its form.