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Friday, May 13, 2016

Alvarado v. Dart Container Corp.: Cal. Supremes Grant Review to Decide Overtime Rate of Pay Issue

In Alvarado v. Dart Container Corporation of California (Cal.App. 1/14/16) (discussed here), the California Court of Appeal held: (1) California law does not provide a method of calculating overtime rates of pay where the employer pays its employees an hourly rate of pay, plus a flat sum daily attendance bonus; (2) the employer here properly followed the formula set forth in the Code of Federal Regulations for paying overtime.

The Supreme Court granted review on May 11. Alvarado is case no. S232607, and the Court's web page for it is here

Wednesday, May 4, 2016

Chen v. Allstate: Depositing Money into Escrow Account Does Not Moot Putative Class Action; Plaintiff Must Have "Fair Opportunity" to Move for Certification

In Campbell-Ewald Co. v. Gomez (SCOTUS 1/21/16) (discussed here), the Supreme Court of the United States held that an unaccepted offer to satisfy the named plaintiff ’s individual claim does not render a putative class action moot. The Court did not decide the following issue: 
We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount. That question is appropriately reserved for a case in which it is not hypothetical.
Chen v. Allstate Insurance Company (9th Cir. 4/12/16) is that case. Two plaintiff filed a putative class action against Allstate for violation of the Telephone Consumer Protection Act (TCPA). Before the plaintiffs moved for class certification, Allstate made a Rule 68 offer of judgment to satisfy their individual monetary and non-monetary demands. One plaintiff accepted the offer, but the other, Pacleb, rejected. Allstate moved to dismiss the case, arguing that it was now moot, the district court denied the motion, and the Ninth Circuit gave Allstate permission to appeal. 

While the appeal was pending and shortly after the Supreme Court issued its decision in Campbell-Ewald, Allstate deposited $20,000 into an escrow account pending entry of an order or judgment granting full monetary and injunctive relief to Pacleb. Allstate then added this as a basis to reverse the district court's order. The Ninth Circuit declined to do so, holding as follows: 

The judgment that Allstate offered would afford Pacleb complete relief on his individual claims for damages and injunctive relief. Pacleb did not seek an admission of liability or declaratory relief, and an admission of liability is not required to afford him complete relief. And although Allstate's offer would not necessarily preclude Pacleb from obtaining nation-wide injunctive relief, Pacleb failed to show that injunctive relief limited to him personally would be inadequate. 

Regardless, "Even if, as Allstate proposes, the district court were to enter judgment providing complete relief on Pacleb's individual claims for damages and injunctive relief before class certification, fully satisfying those individual claims, Pacleb still would be entitled to seek certification." 

Pitts v. Terrible Herbst, 653 F.3d 1081 (2011) (discussed here), in which the Ninth Circuit held that an unaccepted offer in full satisfaction of a plaintiff's claims does not moot a putative class action, remains good law after Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013) (discussed here), in which the Supreme Court held that when a named plaintiff's individual claims are moot in a collective action under the Fair Labor Standards Act (FLSA), the action was no longer justiciable based solely on the collective action allegations made in the complaint. Genesis Healthcare is limited to FLSA collective actions, rather than Rule 23 class actions. 

Allstate did not afford any "actual relief" to Pacleb by placing $20,000 in an escrow account. Pacleb did not actually receive the money, and a court still could award him "effectual relief." Allstate did not deposit the money with the court or relinquish all interest in it. 

Assuming, without deciding, that "a court has authority in an appropriate case to enter judgment for complete relief on a plaintiff’s individual claims over the plaintiff’s objection," a court should not do so until the plaintiff has "a fair opportunity to show that certification is warranted." 

In conclusion:
We hold the judgment Allstate has consented to would afford Pacleb complete relief on his individual claims for damages and injunctive relief. To date, however, Pacleb has not actually received complete relief on those claims. Those claims, therefore, are not now moot. In addition, because “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted,” id., we will not, as Allstate urges, direct the district court to enter judgment on Pacleb’s individual claims before Pacleb has had a fair opportunity to move for class certification. Finally, even if Pacleb’s individual claims were otherwise fully satisfied, he could continue to seek class certification under Pitts.
The opinion is available here

Tuesday, May 3, 2016

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing: Cal. Supreme Court Grants Review in Attorney Fee Arbitration Battle

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc. (2016) 244 Cal.App.4th 590 is not an employment law case, but it raises an interesting arbitration issue that may end up having an impact on employment law practice. The California Supreme Court granted review on April 27, and the issues presented are listed as follows:
(1) May a court rely on non-legislative expressions of public policy to overturn an arbitration award on illegality grounds?  
(2) Can a sophisticated consumer of legal services, represented by counsel, give its informed consent to an advance waiver of conflicts of interest?  
(3) Does a conflict of interest that undisputedly caused no damage to the client and did not affect the value or quality of an attorney’s work automatically (i) require the attorney to disgorge all previously paid fees, and (ii) preclude the attorney from recovering the reasonable value of the unpaid work?
The first issue obviously is of greatest interest for our purposes. Sheppard Mullin is case number S232946, and the Court's web page for it is here.

Monday, May 2, 2016

Espejo v. Southern California Permanente Med. Group: Defendants Properly Authenticated Electronically Signed Arbitration Agreement

In Espejo v. Southern California Permanente Medical Group (Cal.App. 4/22/16), Jay Espejo, M.D., sued Southern California Permanente Medical Group (SCPMG) and others for wrongful termination and whistleblower retaliation. The trial court denied defendants' motion to compel arbitration based on an electronically signed arbitration agreement. The Court of Appeal reversed, holding as follows: 

Defendants were not required to authenticate the arbitration agreement until Espejo challenged it. A party petitioning to compel arbitration must make a prima facie showing that an agreement exists, but not that it is enforceable. Only after the party opposing the petition challenges the agreement's authenticity does the petitioner bear the burden of proving it. As a result, the trial court erred in striking a supplemental declaration - not filed with the moving papers - that defendants used to authenticate the arbitration agreement. 

Defendants met their burden of authenticating Espejo's electronic signature on the arbitration agreement. 
[Defendants' declarant] detailed SCPMG’s security precautions regarding transmission and use of an applicant’s unique user name and password, as well as the steps an applicant would have to take to place his or her name on the signature line of the employment agreement and the [arbitration agreement]. Based on this procedure, she concluded that the “name Jay Baniaga Espejo could have only been placed on the signature pages of the employment agreement and the [arbitration agreement] by someone using Dr. Espejo’s unique user name and password. . . . [¶] Given this process for signing documents and protecting the privacy of the information with unique and private user names and passwords, the electronic signature was made by Dr. Espejo” on the employment agreement and the [arbitration agreement] at the date, time, and IP address listed on the documents.
The opinion is available here

Friday, April 29, 2016

Ling v. P.F. Chang's: Court Rules on Attorney Fee Award in Overtime and Meal Period Arbitration

In Ling v. P.F. Chang's China Bistro, Inc. (Cal.App. 3/25/16), Cynthia Ling sued P.F. Chang's for unpaid overtime and missed meal and rest periods, alleging that Chang's improperly classified her as an exempt employee while working as a floor manager. An arbitrator found that Ling was exempt as a floor manager, but also found that Chang's failed to provide her with meal periods during a brief training period. The arbitrator awarded Ling approximately $8,500 for missed meal periods and Labor Code section 203 waiting time penalties. Finding that Chang's was the prevailing party, the arbitrator awarded it $29,000 in costs under Code of Civil Procedure section 1032 and over $200,000 in attorney fees under Labor Code section 218.5.

The trial court corrected the award, holding that Ling was the prevailing party on her meal period claim and remanding to the arbitrator to award her fees, exclusive of those incurred solely in pursuing her unsuccessful overtime claim.

On remand, the arbitrator rejected Ling's fee request, relying on Kirby v. Immoos Fire Protection, Inc. (4/30/12) 53 Cal.4th 1244 (discussed here), but awarded Ling her costs as the prevailing party under CCP 1032(a)(4). The trial court confirmed the award, and both parties appealed. The Court of Appeal affirmed, holding as follows:

The trial court properly corrected the arbitrator's initial award because the arbitrator exceeded his powers by issuing an award that "contravened an explicit legislative expression of public policy."
Because plaintiff's missed meal periods claim (as it related to her service as a floor manager) and overtime claim required identical proof, the attorney's fees award for defending the 'factually inextricably intertwined' meal periods claim was effectively a fee award for defeating plaintiff's overtime claim, prohibited by section 1194.
The Court rejected Chang's argument that the Federal Arbitration Act (FAA) prohibited the trial court from remanding the attorney fee issue. Similar to the California Arbitration Act (CAA), the FAA provides for vacatur where an arbitrator exceeds his or her powers.

The Court rejected Ling's argument that the trial court should have vacated the initial award in its entirety, rather than merely correcting it. The trial court had no authority to vacate the award in its entirety and thus upset the arbitrator's ruling on the misclassification issue. 

The arbitrator did not exceed his authority in issuing his second award. 

The arbitrator was bound to follow Kirby and properly denied Ling attorney fees on her meal period claim. 

The arbitrator's denial of fees on the section 203 waiting time penalty claim did not deprive Ling of any unwaivable statutory right. An action for waiting time penalties based on failure to pay for missed meal periods is not an "action brought for the non-payment of wages" under section 218.5. 
Following Kirby, section 226.7 cannot support a section 203 penalty because section 203, subdivision (b) tethers the waiting time penalty to a separate action for wages. Because a section 203 claim is purely derivative of 'an action for the wages from which the penalties arise,' it cannot be the basis of a fee award when the underlying claim is not an action for wages.
The trial court erred in awarding Ling fees she incurred on her petition to vacate the first arbitration award. Neither the parties' agreement nor any statutory provision authorized any such award.

The opinion is available here

Thursday, April 28, 2016

Kilby v. CVS Pharmacy: Cal. Supreme Court Issues Suitable Seating Opinion

In Kilby v. CVS Pharmacy, Inc. (Cal. 4/4/16), the California Supreme Court addressed a number of questions that arise under the "suitable seating" section of the Wage Orders, which provides: 
(A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.  
(B) When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties. 
Wage Orders 14 (agricultural occupations) and 16 (certain on-site occupations in the construction, drilling, logging, and mining industries) include a variant of subsection (A) above. Wage Order 17 (miscellaneous employees) does not include a suitable seating requirement. 

The opinion arises from two related appeals pending in the Ninth Circuit: Kilby v. CVS, in which the named plaintiff's duties included operating a cash register, straightening and stocking shelves, organizing products in front of and behind the sales counter, cleaning the register, vacuuming, gathering shopping baskets, and removing trash; and Henderson v. JPMorgan Chase Bank, in which the named plaintiff's duties included teller duties such as accepting deposits, cashing checks, handling withdrawals and other duties, such as escorting customers to safety deposit boxes, working at the drive-up teller window, and making sure that automatic teller machines were working properly. 

In an opinion by Justice Corrigan, a unanimous Court held as follows:
(1) The “nature of the work” refers to an employee's tasks performed at a given location for which a right to a suitable seat is claimed, rather than a “holistic” consideration of the entire range of an employee's duties anywhere on the jobsite during a complete shift. If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, a seat is called for. 
The Court rejected the defendants' argument that seating is required only where an employee's "sitting" duties outweigh her "standing" duties, such that the position would be classified as a "sitting" position. Such a test could deny a seat to an employee who spends a "substantial part of his workday at a single location performing tasks that could reasonably be done while seated, merely because his job duties include other tasks that must be done standing." It also could lead to different results for employees performing similar tasks because of other duties that they perform. 

The Court also rejected the plaintiffs' argument that seating is required any time that a single task, examined in isolation, "may reasonably be performed seated." This standard would ignore the reasonableness standard and the flexibility it is intended to provide to employers. 

Instead, courts must look at the tasks actually performed or reasonably expected to be performed at each location and determine whether it is feasible for an employee to perform those tasks while seated. 

The requirements of sections 14(A) and 14(B) are not mutually exclusive. Although they may not apply at the same time, they may apply at various times during a single shift.
(2) Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances. An employer's business judgment and the physical layout of the workplace are relevant but not dispositive factors. The inquiry focuses on the nature of the work, not an individual employee's characteristics. 
The Court rejected any bright-line rule, holding instead that courts should examine "all relevant factors," including "whether providing a seat would unduly interfere with other standing tasks, whether the frequency of transition from sitting to standing may interfere with the work, or whether seated work would impact the quality and effectiveness of overall job performance." The Court reiterated that the analysis must focus on the characteristics of each work location, rather than focusing on all of the tasks performed in a shift by a given employee. 

An employer's business judgment "largely determines" the employee's duties and tasks. "However, 'business judgment' in this sense does not encompass an employer's mere preference that particular tasks be performed while standing. The standard is an objective one." 

The physical layout of the workspace is a relevant factor in the totality of the circumstances inquiry. However, "an employer may not unreasonably design a workspace to further a preference for standing or to deny a seat that might otherwise be reasonably suited for the contemplated tasks." Reasonableness "remains the ultimate touchstone." 

The Court rejected the argument that the entitlement to a seat depends on the physical characteristics of each employee. The Wage Order focuses on the nature of the work, not the nature of the worker.
(3) The nature of the work aside, if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability. 
The Court rejected the argument that "even when 'the plaintiff can establish that the "nature" of her work would reasonably permit the use of a seat, she must still prove that a suitable seat exists but was not provided. The "suitable seat" requirement is an independent element of the regulation.'" If the nature of the work reasonably permits the use of seats, the employer "bears the burden of showing compliance is infeasible because no suitable seating exists." 

The opinion is available here

Wednesday, April 27, 2016

Baughn v. Department of Forestry: Court of Appeal Affirms Denial of Anti-SLAPP Motion

There has been an up-tick over the last year in employment cases raising anti-SLAPP issues. See Park v. Board of Trustees of the California State University (2015) 239 Cal.App.4th 1258 (discussed here), Barker v. Fox & Associates (2015) 240 Cal.App.4th 333 (discussed here), Decambre v. Rady Children's Hospital (2015) 235 Cal.App.4th 1 (discussed here).

Baughn v. Department of Forestry and Fire Protection (Cal.App. 3/11/16, pub. 4/6/16) is another of these cases. The 
Department of Forestry and Fire Protection (Cal Fire) terminated Corey Baughn after another employee accused him of sexual harassment. Baughn appealed his termination to the State Personnel Board (SPB), and the parties settled the matter. Baughn later obtained temporary employment with the Ukiah Valley Fire District (Ukiah Valley). Concerned that Baughn's employment with Ukiah Valley would result in him being present at Cal Fire facilities with the person who had accused him of harassment, Cal Fire hand delivered a letter to Ukiah Valley demanding that Baughn not be present at Cal Fire's facilities. This led Ukiah Valley to terminate Baughn. 

Baughn and his union sued Cal Fire for breach of the written settlement stipulation that ended the SPB case, breach of the implied covenant of good faith and fair dealing, and intentional and negligent interference with prospective economic advantage. Cal Fire filed an anti-SLAPP motion against the union, arguing that the action arose from protected speech and that the union was not likely to succeed on the merits. The trial court denied the motion, Cal Fire appealed, and the Court of Appeal affirmed, holding as follows: 

To prevail on an anti-SLAPP motion, the defendant must show: (1) that the cause of action arises from an act of defendant in furtherance of its right of petition or free speech in connection with a public issue; and (2) the plaintiff has not made a prima facie showing that he or she will succeed on the merits. Protected conduct includes "any other [1] conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech [2] in connection with a public issue or an issue of public interest." Cal. Code Civ. Proc. 425.16(e)(4). 

Cal Fire failed to meet the first requirement because the decision to write and send the letter were not made “in connection with a public issue or an issue of public interest.” 
The issue raised in the letter did not concern a substantial number of people. It concerned the writer, the recipient, Baughn, and his earlier victim. At the very most, it concerned the defined set of Cal Fire firefighters who would use the same facility that Baughn would use in his employment with Ukiah Valley. This was a relatively small audience. 
The issue raised in the letter also did not concern a "written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law" under section 425.16(e)(2). Even if the letter concerned the SPB proceedings, those proceedings were no longer "under consideration" by the SPB or any other governmental entity. 

The trial court erred in awarding attorney fees to the union. A court may award attorney fees to a prevailing plaintiff only where it finds that the motion is frivolous or brought solely to cause delay. The trial court may no such finding here. The Court remanded for reconsideration of this issue. 

The opinion is available here.