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Monday, July 6, 2015

Cifuentes v. Costco: Former Employer Properly Withheld Payroll Taxes When Paying Judgment

In Cifuentes v. Costco Wholesale Corporation (6/26/15) --- Cal.App.4th ---, the plaintiff sued his former employer, Costco, for breach of contract and received a judgment for more than $300,000 in back pay and front pay. Costco paid the judgment, withholding payroll taxes from the portion of the judgment attributed to lost wages. The trial court denied Costco's motion for an acknowledgement of satisfaction of judgment, and Costco appealed. The Court of Appeal reversed, holding that Costco properly withheld employment taxes from the portion of the judgment representing lost earnings:
Under prevailing federal decisional law, an award of back or front pay arises from the employer-employee relationship, and therefore qualifies as wages, even though the plaintiff is no longer employed and the award is not for actual services performed.
Addressing the effect of the plaintiff's obligation to pay his attorneys from his recovery, the Court stated:
Additionally, we reject Cifuentes' assertion the withholding was improper because it did not take into account his obligation to pay his attorney a contingency-based fee. As Costco points out, the entire award of lost wages was taxable as income regardless of whether a portion was used to pay contingent attorney fees. (C.I.R. v. Banks (2005) 543 U.S. 426, 430 ["[T]he litigant's income includes the portion of the recovery paid to the attorney as a contingent fee"].) Nor are we convinced by Cifuentes' reference to the section of the American Jobs Creation Act of 2004 authorizing an "above-the-line" deduction of attorney fees and costs incurred in connection with a claim of discrimination or retaliation. (26 U.S.C. § 62(a)(20), (21).) The award in this case was for breach of contract, not unlawful discrimination or retaliation. (See Banks, at p. 439.) 
The opinion is available here.

Friday, July 3, 2015

State Bar Labor and Employment Law Section Annual Meeting and Advanced Wage and Hour Conference Next Week

The State Bar's Labor and Employment Law Section will hold its Annual Meeting and Advanced Wage and Hour Conference on July 9 and 10, at the JW Marriott at L.A. Live in downtown Los Angeles.

The Wage and Hour Conference is Thursday, July 9. Panels include a discussion of how new technology is changing the nature of the continuous workday, an update of new laws and cases, and an updated examination of the employment relationship, plus a judges' panel and a reception at the Grammy Museum.

The Section's Annual Meeting is Friday, July 10. The meeting covers a broad range of employment law topics, including an update on recent cases, a discussion of settlement strategies, an update on ethics issues, discrimination law 101, litigating whistleblower cases, and a discussion of the Private Attorneys General Act (PAGA). The keynote speaker on Friday is Kevin Kish, the new Director of the Department of Fair Employment and Housing.

Registration and other information is available here. Hope to see you there!

Thursday, July 2, 2015

Falk v. Children’s Hospital Los Angeles: Court of Appeal Considers Statute of Limitations Tolling During Class Action

Falk v. Children’s Hospital Los Angeles (6/3/15, pub. 6/24/15) --- Cal.App.4th --- concerns whether the filing of a class action tolls the statute of limitations for claims made in a second class action. A series of wage and hour class actions were filed against Children’s Hospital Los Angeles (CHLA): 
Palazzolo v. CHLA was filed on 5/1/07 and dismissed following summary judgment on 4/7/09. The court did not address class certification. The Court of Appeal affirmed, and remittitur issued on 2/3/11. 
Mays v. CHLA was filed on 1/27/12.  
Falk v. CHLA was filed on 12/3/12. 
CHLA moved for summary judgment in Falk, arguing that Palazzolo and Mays did not toll the statute of limitations, and Falk's claims were not timely because Falk's employment ended on 8/25/06, more than four years before she filed her action. The trial court agreed and entered judgment against Falk. The Court of Appeal affirmed in part and reversed in part, holding as follows:

Under American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 and cases that followed, the statute of limitations on putative class members' claims may be tolled while class litigation proceeds. Tolling does not apply, however, if the court denies certification for a "reason that would be equally applicable to any later suit," for example, if the court denies certification for lack of numerosity, commonality, or manageability.

Tolling also does not apply where the initial class action fails to "provide the defendant with sufficient notice of the substantive claims brought against it as well as the 'number and generic identities of the potential plaintiffs.'" "The claims in the first action need not necessarily be identical to the ones in the subsequent action, but they must be substantively similar, based on the same claims and subject matter and similar evidence."

Tolling applied during the Palazzolo action because the court did not deny certification at all, let alone for a "reason that would be equally applicable to any later suit." While Palazzolo alleged violations "generically," and Mays and Falk pled them more specifically, Palazzolo and Falk raise the same overtime, meal period, and rest period claims.

Tolling began in 2007, when Palazzolo was filed, and it continued through 2011, when the Court of Appeal issued the remittitur in the Palazzolo appeal. "Under the somewhat unique circumstances here, where no certification decision was made before the action was dismissed, tolling until the date the remittitur issued, thereby conclusively ending the case and any opportunity putative class members might have had to intervene in Palazzolo, is equitable."

Tolling applied to Falk's alleged class claims, rather than applying only to her individual claims. "Because there was no ruling in Palazzolo implicating any deficiency in the putative class (as opposed to Palazzolo’s individual claims), Falk may file a successive class action."

The opinion is available here

Tuesday, June 30, 2015

Nigro v. Sears: District Court Erred in Disregarding Plaintiff's Self-Serving Testimony on Summary Judgment

In Nigro v. Sears, Roebuck & Co., ___F.3d ___ (9th Cir. 2/25/15), the plaintiff sued the defendant, Sears, for disability discrimination under the FEHA and wrongful termination. The district court granted Sears's motion for summary judgment, and Nigro appealed.

The Ninth Circuit reversed, holding that Nigro's deposition and declaration testimony, while self-serving, stated more than mere conclusions, and the district court should not have disregarded them.
Here, Nigro's declaration and deposition testimony, albeit uncorroborated and self-serving, were sufficient to establish a genuine dispute of material fact on Sears's discriminatory animus. He related statements made to him both in person and over the telephone. His testimony was based on personal knowledge, legally relevant, and internally consistent. We conclude that the district court erred in disregarding Nigro's testimony in granting Sears's motion for summary judgment.
The opinion is available here

Monday, June 29, 2015

Turner v. San Francisco: First Amendment Does Not Protect Employee's Complaints that Are Motivated by Self-Interest

In Turner v. City and County of San Francisco, ___ F.3d ___ (9th Cir. 6/11/15), the plaintiff, Turner, sued the City and County of San Francisco (City), alleging that it terminated him in violation of public policy after he complained that the City improperly employed him and others as temporary exempt, rather than permanent civil service, employees. The district court dismissed the case, holding that he failed to state a claim for retaliation under the First Amendment because he had not alleged facts demonstrating that he had engaged in protected speech. Turner appealed, and the Ninth Circuit affirmed, holding that Turner's complaints were not protected by the First Amendment because they did not address a "matter of public concern." 
[A]lthough Turner’s complaint “ostensibly could invoke a matter of public concern, as it discusses civil service rules prescribed by local law, . . . Plaintiff’s voiced complaint was focused on and driven by his internal grievance.” In other words, Turner’s complaints—while potentially significant in their implications—arose primarily out of concerns for his own professional advancement, and his dissatisfaction with his status as a temporary employee.
The opinion is available here.

Wednesday, June 24, 2015

Williams v. Superior Court (Pinkerton Governmental Services): Trial Court Cannot Split PAGA Action and Compel Arbitration of Individual Issues

Williams v. Superior Court (6/9/15) --- Cal.App.4th ---, is one of those rare opinions that is written clearly and concisely. The introduction gives you almost all you need to know:
Petitioner Andre Williams filed a single-count representative action pursuant to the Private Attorney General Act, Labor Code section 2699 et seq. (PAGA), alleging that real party in interest Pinkerton Governmental Services, Inc. (Pinkerton) violated various provisions of the Labor Code [related to rest periods]. In response, Pinkerton moved to enforce petitioner’s waiver of his right to assert a representative PAGA claim, or alternatively, for an order staying the PAGA claim, but sending the “individual claim” that petitioner had been subjected to Labor Code violations to arbitration pursuant to a written agreement. The trial court denied the motion to enforce the waiver, but granted the alternative relief. Williams petitioned this court for a writ reversing the trial court’s order, arguing that it violated Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 384 (Iskanian). We agree with the trial court that under Iskanian, the waiver of a right to assert a representative PAGA claim in any forum is unenforceable. However, we conclude that petitioner’s single cause of action under PAGA cannot be split into an arbitrable “individual claim” and a nonarbitrable representative claim. Accordingly, we grant the petition.
A little additional detail: Pinkerton argued, and the trial court agreed, that there was a "threshold dispute" as to whether Pinkerton denied the plaintiff rest periods, and that Pinkerton had the right to compel the plaintiff to arbitrate this dispute. The Court of Appeal rejected this argument.

The opinion is available here.

Tuesday, June 16, 2015

Campbell-Ewald Co. v. Gomez: Supreme Court to Address Settlement Offers and the "Headless" Class Action

In Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014) (discussed here), the plaintiff filed a class action for violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(b)(1)(A)(iii), alleging that the defendant instructed or allowed a third party to send unsolicited text messages to him and others. The defendant offered to settle the case by paying the plaintiff $1,503 per violation, plus costs. The plaintiff rejected the offer.

The district court granted summary judgment on other grounds, and the plaintiff appealed. The defendant argued that the Court of Appeals lacked jurisdiction because the offer of compromise mooted the plaintiff's individual and class claims. The Ninth Circuit rejected this argument, holding that an unaccepted Rule 68 offer of compromise that would fully satisfy a plaintiff's claim does not moot either the individual or class claim. The Court distinguished Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___, 133 S.Ct. 1523 (2013) (discussed here) on grounds that Genesis Healthcare was a putative collective action under the Fair Labor Standards Act (FLSA), rather than a Rule 23 class action, and the precedents established in FLSA collective actions do not apply in Rule 23 class actions.

The United States Supreme Court granted certiorari on May 18. Campbell-Ewald Company v. Gomez, case no. 14-857, will be heard next term. SCOTUSblog has a page for the case here. The Ninth Circuit opinion is available here.