Cochran v. Schwan’s Home Service: Unlimited Minutes Did Not Eliminate Reimbursement

Cochran v. Schwan’s Home Service, Inc., 228 Cal. App. 4th 1137 (2014), separates an employer’s obligation to reimburse required personal-phone calls from the calculation of the amount owed. The Court of Appeal reversed an order denying class certification after concluding that unlimited minutes and third-party payment of a bill did not defeat reimbursement liability. It remanded for a new certification analysis rather than certifying a class itself.

The certification dispute rested on the wrong expense premise

Cochran sought to represent roughly 1,500 customer service managers who allegedly used personal phones for work without reimbursement. The trial court found several certification requirements satisfied but concluded that individualized inquiries into phone plans, who paid each bill and whether employees changed plans would overwhelm common issues. Cochran, slip op. at 2–4.

The employer argued that a worker with an unlimited plan might incur no additional charge. The trial court also considered whether Cochran’s girlfriend paid his bill. Those facts appeared important only if liability required a new out-of-pocket cost attributable to a particular call. The appellate court rejected that underlying interpretation of Labor Code section 2802.

Required calls entail a reimbursable use

Section 2802 requires an employer to indemnify necessary employment expenditures. Drawing on the statute’s purpose of preventing employers from shifting operating expenses to employees, the court held that mandatory work calls on a personal cell phone require a reasonable percentage of the phone bill to be reimbursed. The obligation applies to limited and unlimited plans. Cochran, slip op. at 6–7.

The court further explained that liability does not depend on whether a third person paid the bill, whether it was paid at all, or whether the employee bought a different plan for work. An employer should not escape its obligation because the worker’s family or carrier effectively absorbed the expense. Nor should determining liability require an unnecessary inquiry into private financial arrangements. Id. at 7–8.

The decision nevertheless retained the requirement that personal-phone calls be required for work. It did not hold that every employee who owns a phone has a reimbursement claim. Voluntary convenience, a supplied alternative and other services or equipment require attention to necessity and the actual work arrangement.

Damages and representative proof remained unresolved

A common liability rule does not supply a uniform dollar figure. The court left the reasonable allocation to the parties and trial court in the circumstances of the case. Different plans and patterns of use may affect amount even though they do not negate the obligation recognized by the opinion. Id. at 7.

The proposed statistical proof also needed further review. The court directed attention to Duran v. U.S. Bank National Ass’n, 59 Cal. 4th 1 (2014), including representativeness, selection bias, sample size and error. A proposed daily amount or survey does not become legally adequate merely because the liability theory is common. Cochran, slip op. at 3–6, 8.

Exact disposition and practical boundary

The August 12, 2014 published opinion reversed the denial of certification, directed reconsideration under the correct section 2802 interpretation and permitted revised briefing. Cochran recovered appellate costs. The appellate ruling was not a final damages award, an order approving the proposed survey or a holding that certification inevitably would follow.

For California employees and employers, the durable distinction is between a reimbursable work requirement and the reasonable amount attributable to it. The first asks whether personal-phone calls were required and unreimbursed; the second calls for a supportable allocation. A flat monthly bill does not resolve the first question, and a valid liability theory does not excuse weak proof of the second.

The current text of section 2802 continues to require necessary-expense indemnification. The opinion’s focused call-related holding should not be presented as a ruling on every home-office cost, every software subscription or every modern device policy. MCX Legal’s practical guide to a personal-phone reimbursement request addresses the records that make the actual work requirement and allocation reviewable.

Practical implications of the decision

For employees, the practical effect is to preserve proof that the job required personal-phone calls and then support a reasonable allocation, crediting payments already received. For employers, the unlimited-plan argument does not replace a reimbursement method. A group claim still requires its own certification and proof analysis; the appellate reversal was not a final classwide damages award.

Questions about this issue

Did Cochran certify the class?

No. It reversed the denial and required reconsideration under the correct reimbursement rule and sampling principles.

Did the court set a mandatory percentage?

No. It left the reasonable reimbursement calculation to the particular case.

Does third-party payment eliminate liability?

The court rejected that premise for required personal-phone calls; who paid the bill did not defeat the obligation.

Read the primary source: Cochran v. Schwan’s Home Service — filed opinion PDF.