Reporters Not Exempt From Overtime Pay Rules

Tuesday, September 28, 2010

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Reporters Not Exempt From Overtime Pay Rules—Court

Judges Uphold $5 Million Award, Reject Claim That Journalists Were ‘Creative Professionals’

By STEVEN M. ELLIS, Staff Writer

The Ninth U.S. Circuit Court of Appeals yesterday upheld an order requiring one of the nation’s largest Chinese-language newspapers to pay $5.2 million to former and current employees for violations of federal and state pay and break requirements.

A three-judge panel rejected arguments by the Chinese Daily News that all of its reporters were creative professionals exempt from the requirements, and said that substantial evidence supported a jury’s 2007 verdict against the newspaper.

The judges also rebuffed challenges by the company—which is based in Los Angeles and New York, and is also publishes under the name World Journal—to decisions by Senior U.S. District Judge Consuelo B. Marshall of the Central District of California certifying a class and allowing employees to wait to opt out as to damages until after the jury returned its verdict.

Three former reporters brought suit in 2004 under the federal Fair Labor Standards Act and California law seeking damages and a halt to the company’s practice of forcing non-exempt employees to work 12-hour shifts six days a week while writing two to five stories daily without meal or rest breaks. The suit eventually grew to include nearly 200 reporters, advertising sales staffers and hourly employees from the newspaper’s Monterey Park and San Francisco offices.

Marshall, concluding that the claims for monetary and injunctive relief were on “equal footing,” certified the federal and state class actions, and issued an order allowing employees who were part of overall suit to opt out as to claims for monetary relief.

After approximately 90 percent of then-current employees did so, Marshall invalidated the opt outs, writing that the period “was rife with instances of coercive conduct, including threats to employees’ jobs, termination of an employee supporting the litigation [and] the posting of signs urging individuals not to tear the company apart” She also deferred any future opt-out procedure until after trial.

A jury found that the newspaper failed to provide employees with meal breaks, and Marshall held a bench trial on issues of injunctive relief, penalties, prejudgment interest, and restitution. She then established a new opt out period, and delayed distribution of unclaimed shares until the statute of limitations ran on individual claims by those who opted out.

On appeal, the newspaper argued that FLSA and state-law pay and break requirements did not apply to its reporters under a “creative professional exemption.” Judge William A. Fletcher, however, disagreed, pointing to a federal Department of Labor regulation under which journalists “who simply collect and organize information that is already public, or do not contribute a unique or creative interpretation or analysis to a news product, are not likely to be exempt.”

He said there was no question as to the reporters’ status where the defendant’s articles did not have “the sophistication of the national-level papers at which one might expect to find the small minority of journalists who are exempt,” adding that “the intense pace at which CDN’s reporters work precludes them from engaging in sophisticated analysis.”

Fletcher upheld Marshall’s decisions to invalidate the first opt-out procedure and to delay a second process until after the trial given the need to maintain the integrity of the action in the face of coercive activity, and he said that the jury’s finding that the newspaper did not provide meal breaks was supported where reporters could not take daily, uninterrupted 30 minute breaks regardless of whether they desired to do so.

He also rejected the newspaper’s argument under preemption principles that the FLSA precluded the plaintiffs from bringing an unfair business practices claim under state law.

Berkeley attorney Della Bahan represented the employees, along with C. Virginia Keeny, Cordelia Dai, and Randy Renick of Pasadena’s Hadsell Stormer Keeny Richardson. Michael M. Berger and Benjamin G. Shatz of Manatt, Phelps & Phillips represented the publisher.

Judge Stephen S. Trott and U.S. District Judge Charles R. Breyer of the Northern District of California, sitting by designation, joined Fletcher in his opinion.

The case is Wang v. Chinese Daily News, Inc., 08-55483.