San Francisco Minimum Wage Going UP

1/1/09 - the SF Minimum Wage increases to $9.79. And let's not forget that poster! Here's a free one. The $9.79 minimum applies to all private sector employers. But city government contractors have a higher minimum wage $11.54. And here is your poster, government contractor! Happy new year anyway.

Court of Appeal: Employer Must Disclose Classmember Info Even Over Their Objection?

The general trend has been that the courts do not mind -- at all -- if employees' names and addresses are disclosed to plaintiffs' attorneys in class action cases. The most an employer can hope for is the right to send out an "opt out" form before disclosure, where employees must affirmatively deny their consent to release the information.

Well Crab Addison (operator of Joe's Crab Shack) decided to go one better: send out the "opt-out" form to all employees before it was required to disclose the information in discovery, but without specifically discussing the lawsuit at issue. Here's the form:

RELEASE OF CONTACT INFORMATION
From time to time, Joe’s Crab Shack (the “Company”) may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.

We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.
__ No, I do not consent to the Company’s disclosure of my contact information to third parties.
__ Yes, I consent to the Company’s disclosure of my contact information to third parties.
__ I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.

No sale, said the Court of Appeal, affirming the trial court:

to the extent the right to privacy is based on the release forms, there are strong reasons for not giving effect to those forms. Employees indicating that they did not want their contact information disclosed, or wanted disclosure on a case-by-case basis, were unaware at the time they signed the forms of the pending litigation to enforce their statutory wage and overtime rights through a class action lawsuit. We may presume that, had they known about the litigation, their response on the form would have been different. Additionally, the forms apprised them that their contact information could be disclosed if required by law, so they were aware of the limitation on privacy offered by the forms.

So, nice try. With a proper disclosure about any existing litigation, it's possible such a form could be given more deference by a court. But the courts seem unreceptive to efforts to preclude plaintiffs from contacting employees.

The case is Crab Addison, Inc. v. Superior Court and the opinion is here.

Travels In Pakistan, Part 1-3: The New War, The Old Culture, and Load-shedding

As part of my winter break, I've been travelling to Pakistan over the past two weeks. I kept a series of short observations about what i'm seeing, but haven’t gotten around to putting them up until now so here are the first few:

Pakistan, Entry #1: Winds of War?
There has been a lot of hoopla here lately and talk of a Coming War With India. This comes in the aftermath of the Mumbai terrorist attacks. The Indian government has accused the Pakistani government of, well we’re not quite sure here, except that the terrorists were trained by a group here in Pakistan, and the one remaining terrorist may or may not be a Pakistani citizen. Read More...

The Indian government has held that the Pakistani’s aren’t doing enough to crack down on terrorism, and have included the option of surgical strikes within Pakistan as part of their response. This has the Pakistani public up in arms and the armed forces on high alert. There was an incursion for a few minutes into Pakistani airspace by the Indian Air Force earlier this week which raised the stakes.
The Pakistan Air Force (PAF) scrambled jets over a few major cities, including Lahore, a few days after the Indian incursion, in a show of strength. People were out on their rooftops in Lahore to find out what was going on and if the Indians were attacking. The news channels here are filled with discussions of what might happen between the two nuclear-armed countries.

Coincidentally, I wasn’t in Lahore during the fighter jet flights, but was visiting a PAF base up in the mountains between Lahore and Islamabad. We vistied a relative who's married to a commando in the PDF, who told us that these kinds of airspae incursions happen all the time, but this one was in ain unusual geography and longer than usual. Later in the week, something happened that we don't iknow about, but Pakistan's armed forces were put on high alert, and he wasn't allowed to the leave the base. Some units of the Pakistan army have already been directed to Kashmir.

Most people think that the situation is more serious than it’s been for a while; India recalled all of its 100-plus ambassadors from around the world this week. Supposedly they had done that before the 1971 war as well.

Pakistan has already said that if India attacks, even a surgical strike on uninhabited bases, it would move all of its forces from the Northwest border with Afghanistan to the eastern border with India and respond. The U. S. doesn’t want that because of the ongoing issues on the Afghan border. On the other hand, U.S. drones are constantly making strikes inside Pakistan – killing a few people here, a few people there, so the U.S. army isn’t very popular in Pakistan at the moment either.

Then there's the danger of this escalating into an all out war, whch no one wants. The traditional rivalry between Pakistan and India is alive on this side of the border, and perhaps on the other side as well.

For a moment, we were worried that our flight out of Lahore would get cancelled or delayed. After the initial hoopla though, everything seems to have settled down. As the Chinese say, "May you live in interesting times."

Pak, Entry #2: Lahore Culture and Visit to the Mountains

I had always assumed (like many in the west, I think) that Pakistan is a pretty homogenous place, culturally. After all, it’s over 90% Muslim, and was created in the partition from India in the 1940’s to be a place for many of India’s muslims to have their own homeland.

What i’ve found that Pakistan is a pretty diverse cultural place with a long history. In Lahore, after I arrived, we had dinner (on my birthday) at Coocoos, a well known restaurant in the old city of Lahore. It is an old brothel converted to a high class restaurant in a very historic building, with buddhist, hindu, and islamic artwork and architecture on display.

The history of Lahore reflects many periods, including as one of the key cities of the Moghul empire from the 1400's to the 1700's. Rulers of this empire, which went from Kabul to Delhi, included Shah Jehan, who built the Taj Mahal in India and the Badshahi Mosque in Lahore, which shares a lot of architectural characteristics with it. The Mosque is an impressive site, and has a large open courtyard that feels almost like you’ve entered another world, forgetting the busy city of Lahore while you are inside.

Next to the mosque is one of the sacred tombs of the Sikhs. Next to that is an ancient Shi'ite place of worship. Nearby is the Lahore museum, which has many interesting historical artifacts on display. In Lahore itself, many of the well laid out sections of the city and well-know roads (Mall Road, Canal St) were laid out by the British, who left their mark all over Pakistan and India.

As you move beyond Lahore, more elements of Pakistan’s past come out. I went up into the Salt Range mountains between Islamabad and Lahore and stayed there for a few days. There I visited Ketas, which contains the remains of well-known hindu and buddhist temples. There were at one point, seven temples in one holy site.

The Hindu temple is built around a small lake, which legend has it was formed when the Hindu God Shiva shed tears after the loss of his wife. It is considered one of the holiest sites for Hindus in Punjab. The Buddhist temple, better preserved, contains very narrow stairs which wind around intricate chambers all the way up to the top of the temple, which offers a striking view of the area.

Across the street are Buddhist caves, which were used by Yogis to sit in meditation and contemplation. I had read about caves being used by Yogi's and seekers of enlightenment in ancient times, but have to confess this is the first time I actually saw a cave used for this purpose. I'll definitely write more about what I felt and sensed in these caves and temples in another forum.

This site demonstrates the rich intertwined history of different religions and sects in this area. A Muslim scholar, El Burreni, went to Ketas, learned sanskrit, and is best-known for measuring the radius of the earth from there many hundreds of years ago. The temples themselves were built more than two thousand years ago.
Near there, we visited the tomb of a Sufi, who is considered a local saint, and which peacocks are known to visit. Next to his tomb was a cave where another local saint came and did prayer for forty days and forty nights. The importance placed on tombs of Sufi’s in particular, religious mystics who often wrote and quoted poetry (who espoused a very different view of Islam from the western stereotypes being promulgated via the Taliban, etc. today), was one of the more unexpected bits of Pakistani culture. Having lived in the Middle East in the midst of Islamic countries before, this was almost entirely new but entirely ubiquitous within Pakistan.

On that same trip through the mountains, we also saw some gypsy girls, who looked different than the other residents of the area. They were much fairer skinned and had very pale colored eyes. I was told they came from the northern reaches of Pakistan, and were most likely part of tribal groups that were descendants of the soldiers of Alexander the Great who passed that way on his way to India.

Somewhere up there is the home of the Ismaelis, a sect of Islam led by the Aga Khan. Somewhere near there is an area in the north called "Kafirstan" which consists of an entirely different religion and culture from the rest of Pakistan. Near the border with Afghanistan, in addition to speaking Pashtu, there are the remains of the Gandara civilization, which built many Buddhist temples and statues (included in the Big Buddhas in the mountains that the Taliban so callously blasted down a few years ago).

Being in Pakistan, I'm sensing a rich cultural history with many variations and texture across this land. Pakistan is kind of a cross-roads – linking the civilizations of the Middle East, Central Asia, and the Indian subcontinent with a bit of British history thrown in too. I think one could spend a lifetime studying the very different cultures and traditions that make up this enigmatic land. And I haven't even visited Karachi, the biggest city in Pakistan, or Islamabad, the capital city, on this trip. That’ll have to be on my next trip.

Pak Entry #3: Energy: Load Shedding, CNG, and Industry.

The city of Lahore is very big –with something like 10 million inhabitants, making it one of the most populated cities in the world. There has been a significant increase in the number of cars in Lahore over the past 3-5 years, I’ve been told. In particular, the ability o finance cars has led to a “car boom” here (before you had to purchase it all in cash).

This might explain why the air in Lahore, like other big cities, is kind of polluted. Except, if you actually ride in the cars here, you’ll learn that most cars run on CNG and not petroleum/gasoline. Turns out that this ends up being both cheaper and more environmentally friendly, with very little emissions.
So, if not the cars, where is the pollution coming from? Every now and then, even in an big city like Lahore, you'll see Donkey or Horse-driven carts carrying loads. Certainly not from them!

Turns out the buses, trucks, motorcycles, and rickshaws are the main culprits. You can literally see the smoke rising out of the back of these polluters as they drive around the country. Together they probably equal or exceed the number of cars on the road at any given time.

Energy has been on my mind a lot here. Most of Lahore and the rest of Pakistan is experiencing "Load Shedding" - which are scheduled brown-outs where no electricity goes to a neighborhood. It's pretty annoying, to say the least, but does show how the economy has been growing and how demand has been rising.

Most well-to-do houses, and all businesses, have generators which pick up the slack. I visited our software development offices in Lahore, run by my brother, which has multiple generators.

It's funny that when my brother visited me in California earlier this year, the lights went out, in the heart of Silicon Valley (Moutain View) and stayed out for a few hours. It doesn’t happen often- in fact this was just one of two times I’ve seen it happen in the last year. But he got a kick out of it: " Looks like California is just like Lahore, looks like you have Load Shedding here too!”

Court of Appeal: How to Calculate Overtime on a Bonus

The First District Court of Appeal held that Costco properly calculated overtime on a production bonus in Marin v. Costco, opinion here.

I am frequently asked how bonuses and commissions affect overtime calculations. Basically, the "half time" (or whole-time in the case of double-time overtime) is due on the bonus, once the bonus is allocated to the hours that were necessary to generate it. You worked 1000 total hours including 20 overtime hours during a bonus period. The bonus is $2000. The incremental hourly rate is $2000/1000 hours = $2.00 per hour. That is the amount of wages on which no overtime previously was paid. So, you owe: 1/2 * $2.00 per hour * 20 overtime hours worked = $20.00.

Get it? The court of appeal did. That's the federal formula, and the formula the DLSE endorses. The court did not mention that California law endorses the use of federal overtime calculation rules. But it does. The plaintiffs wanted the overtime to be calculated by dividing the bonus over the straight time hours and then paying time and one-half on that figure. That would have resulted in double counting. In addition, it would have ignored the simple fact that the employee had to work all hours to earn the bonus - straight plus overtime.

So, if your eyes are crossed, welcome to wage and hour law. The opinion is linked above. It's got a detailed explanation of the rule and the arguments in favor and against.

Enjoy your holiday!

Greg

New FMLA poster

Merry Christmas from the US DOL. Here's your new FMLA poster, necessary for complying
with the new regulations when they become effective next month.

Merry Christmas / Happy Chanukah / Happy Kwanzaa! Happy New Year, too.

Greg

The Day the Earth Was Almost Destroyed

[NOTE: Now that I’m on winter break, I’m taking a partial hiatus from writing Stanford GSB related blog entries, at least until the term starts back up in January]

As a fan of Science Fiction movies, I couldn’t resist going to see “The Day the Earth Stood Still” – the new version with Keanu Reeves, on opening weekend. I’m a big fan of the old version from the 50’s, despite its dated cold war themes, and generally can’t stay away from anything Sci Fi related.

So what did I think of the new movie? I’d love to give it an enthusiastic thumbs up, but can only manage a “so-so” review.

The old and new films are both about the arrival of an alien visitor (who looks human, to make us comfortable, and whose name is Klaatu) who lands in a major American city (Central Park in the new one, and if I’m not mistaken Washington, DC in the old one). One thing that hasn’t changed from the old Cold War theme: The government tries to take possession of the alien, and shoots him. They won’t even consider allowing him to speak to a gathering of World leaders at the UN.

Are we really that parochial? If an alien really visited the Earth and landed in the US, is this the attitude that we would take?

Unfortunately, I think they got this one right, in both versions. I’d like to think that if the representative of an advanced civilization were to arrive to deliver a message to the Earth, just happens to land in the USA, that we would let him speak to the UN – to all the nations of this planet. But I can just see our military whisking away the alien away to Guantanamo as a presumed “enemy combatant” and commandeering his ship as “foreign technology” that we want to re-engineer.

A neat new twist in the movie is the reason for the alien’s visit. In this version, Klaatu is not just the representative of alien civilizations watching the Earth; he says he is a friend of the Earth (though as we learn, this doesn’t mean he’s necessarily a friend of the human race).

He’s here to decide whether we are killing the planet or not. This green theme is a pretty good new spin, if somewhat overused these days. Klaatu tells us that there are only a few habitable planets out there, and he can’t allow us (humans) to kill this one. Quoting Klaatu (Keanu Reeves): If the earth dies, humans die too. If only the humans die, then the earth still lives on. A fair, logical argument.

Like most good science fiction, the first part of this movie actually makes you think about larger issues. It certainly made me think about habitable planets and how many there might be out there. There’s a famous equation, the Drake equation if memory serves, that takes assumptions of the number of stars, the number of planetary systems, the number of habitable planets, and the number of advanced civilizations. If you work out the numbers with only 1% for each variable, you come up with a large number of inhabited worlds.

What would happen if the probabilities were so small that there only a few habited planets out there, as is the case in this movie?

And of course, this movie does make you think about what would really happen if an alien spacecraft were to visit our planet and why.

Those are the positives. Jennifer Connolly does a pretty good job as an astro-biologist (is there such a thing? How much biological material have we actually found in outer space?). She’s also the step-mother of 11-year old Jacob, whose army engineer father she married a few years ago, but who passed away.

This is where, in my opinion, the movie starts to fall apart. Why does this have to be the case with almost all science fiction movies?

They start with an interesting concept that actually makes you think; but, as they try to bring the movie into the standard hollywood three-act script, they all end up with some variation of the standard formulas, ruining the originality of the film and making the second half into a dumb thriller or action or preachy lesson.

I don’t think I’m revealing much when I say that that at first Klaatu decides to destroy humans off the face of the earth, because he views us as a destructive force (which the government cronies and the Secretary of Defense, played excellently by Kathy Bates, do a very good job of convincing Klaatu of).

Eventually, he comes to realize that humans are more than just a destructive force. That we have strong emotions and that they include compassion and longing, etc. This in-and-of-itself is not a problem - The problem is how he comes to this realization; It’s done through the 11-year old Jacob, who single-handedly destroys this multi-million dollar Hollywood production. Well done, kid. At least you saved the Earth, sort of.

So, OK, I have to admit, as a kid, I loved it when kids played an important role in science fiction. E.T. involved kids and aliens. Wesley Crusher had an interesting role in Star Trek the Next Generation.

But this one just doesn’t work. The 11-year old snot-nosed kid, not only disobeys his mother every chance he gets, sporting an “oh I’m so cool” braided hairstyle that’s well beyond his years, but he also tells the government exactly how and where to find Klaatu, leading to the abduction of his step-mom by the government in the process. We're then led to believe that this might have been a good thing becuase he got to spend more time with the Alien.

I have to say I wanted to smack the kid off the screen so that we could get on with a real science fiction movie. Alas, it was not to be.

After seeing the movie, I looked up some reviews to see if I was alone in this sentiment and was just being a cruel, heartless adult. Here’s my favorite part of the CNN review: “Jacob is a whiny, obstinate, and disobedient little boy that would lead most extraterrestrials – and not a few of the rest of us – to reach for the destruct button.” Amen.

For other science fiction fans out there, think Jar Jar Binks. Now I wish someone would get a-hold of this flim and create a phantom edit (for those of you who don’t know someone created an edit of Star Wars: The Phantom Menace which digitally editout out Jar Jar Binks, without whose annoying antics the film might have been a relatively good film). Unfortunately you’d have to chop off the whole third act of the movie to do this. Oops.

Note: As a film-maker myself, I’m not supposed to be suggesting that anyone do anything that infringes on the copyright of Hollywood films, so I can’t really condone a phantom edit. (BUT IF YOU HAVE ONE, LET ME KNOW, I’D BE HAPPY NOT ONLY TO WATCH IT BUT TO WRITE ABOUT IT HERE IN MY BLOG. EVEN BETTER: what if someone were to edit out the kid and put in Jar Jar Binks, the movie might be actually be more fun and less annoying!).

Court of Appeal: No Defense Attorneys' Fees for Frivolous Claims?

The Court of Appeal agreed with the district court that Laura Young's FEHA claim for harassment against her former supervisor was frivolous, vexatious, etc. The trial court, however, awarded only one dollar in attorneys' fees against Young. The court's rationale was that since employer Exxon was going to pay the supervisor's fees, and since Exxon did not complain that the action against Exxon itself was frivolous, the court should not award fees that Exxon would ultimately recover.

Does that make a lot of sense? Yes, but only if you're gutting the attorneys' fees statute. Employers are responsible to pay for employees' defense costs under Labor Code section 2802, unless the employee is found to have engaged in actual unlawful harassment. So, a frivolous claim against an employee by implication is part of the claim against the employer, no? And given most claims against individual managers are barred as a matter of law, and given awards of attorneys' fees are as rare as hen's teeth anyway, one would think that a court would want to give effect to the Legislature's decision to permit an award of attorneys' fees when claims are frivolous. Right?

No. The court of appeal agreed with the trial court and held that where, as in this case, the employer is paying an individual employee's defense costs, the trial court need not award attorneys' fees if the claim against the employer is not frivolous. You don't believe me? Here's the quote:

In short, despite its finding that Young’s case against Lopez was frivolous and vexatious, the trial court had the discretion to deny attorney fees to Lopez. Because the award would benefit only Exxon, a defendant which was not otherwise entitled to an award and which did not show it incurred any significant fees on Lopez’s behalf that it would not have incurred in any event, we see no abuse of discretion in the trial court’s decision.

By the way, the attorneys' fees statute, Government Code section 12965(b) is very simple and says nothing about differing standards for employers and employees.

In actions brought under this section,the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs, including expert witness fees, except where the action is filed by a public agency or a public official, acting in an official capacity.

The statute says nothing about basing awards on who pays the fees. I know it says "discretion," but the courts have held that prevailing plaintiffs are generally entitled to fees as a matter of right, while prevailing defendants have a heavy burden to establish the claims were "frivolous, unreasonable, or without foundation." I think the courts may have lost sight of the plain language of the statute over the years.

While I'm complaining, the Court of Appeal also decided not to publish its analysis of Young's claims on the merits. That means the bar will not benefit from the court's detailed analysis of Young's claims for discrimination, harassment, retaliation, etc. The decision should be published if only because Young claimed a mental disability and that her outbursts and conduct in violation of policy were attributable to the disability. The Court distinguished Gambini v. Total Renal Care, discussed here, and held that Young's disability did not exempt her from termination for her misconduct.

Anyway, I'm sure Exxon is happy to have won the case. But there was a dark lining in a silver cloud that may affect employment litigation for the rest of us. The opinion in Young v. Exxon is here.

Court of Appeal: Summary Judgment Against Plaintiffs Challenging Starbucks' Application

California employers cannot ask applicants to disclose certain convictions for marijuana-related misdemeanors that are more than two years old. Starbucks knew that, and included a disclaimer on the back of its application, viz:

CALIFORNIA APPLICANTS ONLY: Applicant may omit any convictions for the possession of marijuana (except for convictions for the possessions of marijuana on school grounds or possession of concentrated cannabis) that are more than two (2) years old, and any information concerning a referral to, and participation in, any pretrial or post trial diversion program.”

Although that may read like a proper disclaimer, it was included in a larger paragraph of disclaimers located away from the general convictions question, which did not exclude such marijuana convictions. So, the California disclaimer did nothing to stop Erik Lords and his band of merry putative classmembers from filing suit, claiming the application form was defective. Erik and co. wanted about $26 million in penalties. Aggrieved applicants get a penalty of $200 or actual damages for faulty applications.

The court of appeal agreed with the trial court and the plaintiffs that the general disclaimer was improperly placed away from the general convictions question. Had the properly worded disclaimer been placed next to the conviction question, it would have been legally correct, the court said.

But the court of appeal detected a couple of problems with Lords' prayer. [I kill me]. First of all, none of the named plaintiffs had a marijuana conviction. Second, all had read the allegedly hidden language. Third, none was denied employment because of a wrongfully disclosed conviction.

So, the court said:

We see nothing in the statute to support plaintiffs’ claim that the Legislature ntended to protect the privacy interests of job applicants who had no marijuana convictions in their background. As we explain below, we decline to adopt an interpretation that would turn the statute into a veritable financial bonanza for litigants like plaintiffs who had no fear of stigmatizing marijuana convictions.

The case is Lords v. Starbucks and the opinion is here.

Stanford Business, Entry 15: The Last Class, Finals, and Clint Eastwood

We finished classes on Thursday of last week, and this week is Finals Week. It’s hard to believe that a third of the school year is already over, and very soon after we start back up in January, the program will be half over. I guess that’s both part of the upside and the downside of being in a one-year program: it goes very quickly.

The Last Day Of Class.
On the last day of class, we had Strategy (which was as short half-term class, which I enjoyed, unlike many of my classmates judging from their comments), Finance (which was perhaps too long of a class), and Economics.
I have to admit that I was sad to end our Economics class. We’ve had this class since the pre-term, and I think I’ve only missed it only once (when, for some odd reason, we had it at 8:30 am, rather than it’s usual 1:15 pm time slot). OK OK, if you read this blog, you’ll notice that at the beginning of the term, I wasn’t so hot on this class.

But it has grown on me, especially since we started discussing Macroeconomics. Given the events going on in the US and World economies, this class may have become (in my opinion) our most interesting class, and professor Flanagan seems adept at teaching us how to think about obscure concepts like the marginal product of labor, potential GDP, and the reserve requirements of the Fed, very clear. So much so that I think I’ll actually miss not having econ moving forward! Who would’ve thunk it?

Clint Eastwood rides onto campus.
On the evening after the last day of classes, many of the Sloans went to a local hockey game (the team was the San Jose sharks), organized by one of our classmates who’s a hockey aficionado. For many of our international students, this was their first time ever seeing hockey. I ended up not going because there was another event on campus that I found interesting: A showing Clint Eastwood’s film, Letters from Iwo Jima, followed by a discussion with Mr. Eastwood himself. I guess he doesn’t live that far away (Carmel) so it’s not too long of a trip, but this seemed like a pretty unique opportunity, not to be missed.

The movie itself was pretty dramatic– it was about the “defense” of Iwo Jima from the American invaders (and was a counterpart to Eastwood’s earlier movie, Flags of our Fathers). The movie was almost entirely in Japanese with English subtitles. Even though I speak some Japanese, I couldn’t understand a word and had to read the English.

Clint (may I call him Clint??) was introduced by a professor at Stanford who had written a book or two about history and the movies. This seemed like a good idea, but ended up being painful because the guy went on with a very lengthy introduction of Eastwood, while Clint sat there on stage, patiently waiting for his chance to well, say something.

This guy quoted lines from his Dirty Harry movies, and otherwise demonstrated his excellent knowledge of Clint Eastwood’s career. More than a few of us in the audience were thinking: “OK dude, so you’re a smart professor. Now shut it and let Clint Eastwood talk, which is why we came here tonight”.

In some ways, this event was a great example of what’s good and bad about academia. On the one hand, we had an Oscar winning director come to show his movie and discuss it with us. That doesn’t happen every day in the real world. On the other hand, we had a know-it-all professor who was trying to show how he “knew it all” and wanted to demonstrate his knowledge about the subject, when we, the audience, were primarily interested in the subject itself and not the professor’s take on it!
In his defense, the professor (I forget his name) did ask some good questions and eventually let Clint answer them, which was interesting. At the end of the discussion, the professor started to close down the event with: “Well, thank you Clint Eastwood for coming here to Stanford tonight.”

Clint smiled his one sided smile and asked, very calmly, in that soft but authoritative voice cut him off: “Well, don’t they have any questions?”and gestured at us, the audience. It was probably the defining moment of the night, and left the professor a little flummoxed. The good news is that we the people got to ask Clint questions; I asked him about the budget on Iwo Jima ($13 million) and how he funded it (He made a call to Warner’s and got his Japanese distributor to put up some money; the movie has brought in ) and advice of funding indie movies (find someone with money and pitch it to them; this last part wasn’t that helpful but technically accurate). It was definitely the highlight of last week for me.

Final Projects and Exams.
Early this week, we had two final projects due, and two final exams.
For our modeling class (another class that I’ll miss, particularly Professor Moore’s very vivid lectures), we had a final regression analysis project. My team’s project was an analysis of the variation of Linden Dollars (The virtual currency used in the online virtual world, Second Life) vs. US Dollar exchange rate, to see if it could be explained by a variety of other factors.

For our strategy class, each group had to do a “strategy audit” of a real company. The companies ranged from online travel to sports aircraft companies, and this was our first experience in reaching out to companies outside the b-school for a b-school project. Our team did a project on TCHO, a hip new chocolate company located in San Francisco (Yes, we did get free chocolate each time we visited them).

We had our first of two final exams on Monday: Economics. Even though I think I’ve gotten good at econ, this was a much tougher exam than I’d anticipated. The fact that it was Open Book didn’t help much; we’d spent much of macro talking about employment, inflation, and GDP, and almost no time talking about deflation, which ended up being a big part of the exam. Even some of my classmates who were econ majors in undergrad weren’t totally sure about their answers. Oops. Did I say I’d miss econ and I was sad that it was over? Let me reconsider that…

We now have only one more exam before the end of the term – Finance. This class has been a tough one for many of my classmates, particularly those who have never been exposed to financial or investing topics before. It must’ve also been a tough one to teach, because we have a variety of people ranging from finance experts (people who have traded options and worked for investment banks) to finance novices (who had no idea what a call or a put were before this class).

For me, I’m somewhere in the middle – I traded options for fun many years ago so know what they are (and might I add am pretty good at losing money trading options which is why I don’t do it anymore). But I’ve had very little exposure to the theory behind them. And I definately don’t buy the finance class’s conclusion that taking on debt can be a good thing for the company. Isn’t that what got GM and other automakers in trouble in the first place? Toyota (to the chagrin of many Japanese bankers, and I would add to many b-school finance professors) has zero debt, and no one is talking about them going out of business!

Speaking of finance, the test is coming up in less than 48 hours. I really should have been studying rather than watching the Humphrey Bogart double-feature at the Stanford Theater in Palo Alto this evening. Oops. Too late to study now, will have to cram tomorrow for the test on Thursday.

No Punitive Damages for Meal and Rest Period Violations

While the wage and hour world waits for the Walmart decision, in which the court awarded roughly $170 million in meal period premiums, penalties and punitive damages. the other courts are working away.

Wait no longer. Ms. Brewer is a waitress at Cottonwood golf resort's restaurant. She sued for meal and break violations among a smorgasbord of other employment claims. She lost on her age discrimination claims. But she won on some Labor Code violations. The jury also awarded her punitive damages, over and above the meal and break premiums, penalties for improper wage statements, etc. (I bet you thought I was going to make food puns throughout this post, didn't you?)

The court of appeal reversed on punitive damages. The court decided that the Labor Code creates new rights not available at common law. Therefore, their remedies are exclusive. The court also held that a claim for unpaid meal periods and other Labor Code violations "arise" out of contract - the employment relationship. As such, punitive damages are not available as a matter of law.

Here's a long quote from the opinion to prove I read it, or at least that I know how to cut and paste:

We agree with Cottonwood’s contention, which Brewer does not dispute on appeal, that the Labor Code statutes regulating pay stubs (§ 226) and minimum wages (§ 1197.1) create new rights and obligations not previously existing in the common law. Moreover, those same statutes provide express statutory remedies, including penalties for the violation of those statutes that are punitive in nature, that are available when an employer has violated those provisions. Section 226, subdivision (e), provides that any employee “suffering injury as a result of a knowing and intentional failure by an employer to comply with [the pay stub requirements] is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.” Similarly, section 1197.1, subdivision (a) provides that any employer who pays or causes to be paid to any employee a wage less than the minimum wage “shall be subject to a civil penalty as follows: [¶] (1) For any initial
violation that is intentionally committed, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee is underpaid[;]
[¶] (2) For each subsequent violation for the same specific offense, two hundred fifty dollars ($250) for each underpaid employee for each pay period for which the employee is underpaid regardless of whether the initial violation is intentionally committed.” Here, Brewer sought and recovered the maximum $4,000 penalty available for Cottonwood’s pay stub violations, and the judgment contained an additional penalty of $15,300 pursuant to section 1197.1 for the overtime violations. We are not persuaded by Brewer’s argument that the remedies set forth in the statutory scheme were not intended to be the exclusive remedy available for statutory violations, and Brewer does not articulate any basis for concluding those penalties are so inadequate that other remedies should be permitted. Similarly, the
regulations requiring employers to provide meal breaks (§ 512) and rest breaks
(Cal. Code Regs., tit. 8, § 11090, subd. 12(A)), and providing numerous forms of
remedies for their violation, also appear to have created new rights and obligations not previously existing in the common law, and the statutory scheme provides “a comprehensive and detailed remedial scheme for its enforcement.” (Rojo v. Kliger, supra, 52 Cal.3d at p. 79.) Those remedies include an award in the nature of liquidated damages under section 226.7 (cf. Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, 1112 [because “damages [from missed
meal and rest breaks] are obscure and difficult to prove, the Legislature may
select an amount of compensation [for the violation] without converting that
remedy into a penalty” for statute of limitations purposes]), injunctive relief
(see generally § 1194.5), and potential statutory penalties (see § 558). We are convinced that, because the meal and rest break provisions of the Labor Code “established a new and comprehensive set of rights and remedies for [employees]… [and] [n]o such specialized rights and remedies existed at common law… the remedy provided in the statute ‘is exclusive of all others unless the statutory remedy is inadequate.’ [Quoting Turnbull, supra, 219 Cal.App.3d at p. 827.]” (De Anza Santa Cruz Mobile Estates Homeowners Assn. v. De Anza Santa Cruz Mobile Estates, supra, 94 Cal.App.4th at p. 916.)

* * *
We are also convinced that, even were the remedies provided by the statutory scheme not the exclusive remedies for the new rights, punitive damages would nevertheless be unavailable because punitive damages are ordinarily limited to actions “for the breach of an obligation not arising from contract” (Civ. Code, § 3294), and Brewer’s claims for unpaid wages and unprovided meal/rest breaks arise from rights based on her employment contract. Brewer argues, without citation to relevant authority, that Cottonwood’s breach of its statutory obligations under the Labor Code is a “breach of an obligation not arising from contract,” thereby supporting the award of punitive damages.

However, in analogous situations, the courts have recognized that, when a statute imposes additional obligations on an underlying contractual relationship, a breach of the statutory obligation is a breach of contract that will not support tort damages beyond those contained in the statute.(See, e.g., Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 187–192 [breach of Consumer Warranty law obligations is breach of contract and does not support tort damages for emotional distress].) We apprehend the Labor Code provisions governing meal and rest breaks, minimum wages, and accurate pay stubs constitute statutory obligations imposed only when the parties have entered into an employment contract and are obligations arising from the employment contract. The breach of an obligation arising out of an
employment contract, even when the obligation is implied in law, permits contractual damages but does not support tort recoveries. (Cf. Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 700.) Although Brewer relies on language from Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147 to assert prompt payment of wages involves sufficiently fundamental public polices that the willful failure to make such payments will support punitive damages, the court in Gould expressly recognized that, although a claim for wrongful discharge in violation of public policy would state a tort claim, a claim seeking tort recoveries based on the allegation the employer otherwise breached the employment contract agreement was barred by Foley. (Gould, at p. 1155.)

The case is Brewer v. Premier Golf Properties and the opinion is here.

IRS Standard Mileage Rate for 2009: $0.55 Per Mile

The IRS announced the standard mileage rates for 2009. Effective January 1, 2009, the reimbursement rate will be $0.55 for business use of a vehicle, $0.24 for moving and medical expenses, and $0.14 for service to charitable organizations. For the second half of 2008, the reimbursement rate actually was higher, at $0.585.

The IRS's announcement is here.

DGV