Thanks for a Great 2012, Looking Forward to 2013!

2012 has been a wonderful year, with my mediation practice taking off and this blog becoming incredibly successful. Over 200 people subscribe to the blog by email, and the web site receives an additional 1,000 hits per week. Plus, over 1,300 people now receive my monthly Update email. 

Please remember that I am available across California to help you resolve all of your employment law cases, from individual FEHA, wrongful termination, or trade secret cases to wage and hour class actions. 

Here's wishing all of you a Merry New Year! 

Ralphs Grocery v. UFCWU: Cal. Supreme Court Holds That Union Has Statutory Right to Picket in Front of Market

In Ralphs Grocery Company v. United Food and Commercial Workers Union Local 8 (12/27/12) --- Cal.4th ---, the California Supreme Court has ruled on a labor union's constitutional and statutory rights to picket in front of a grocery market's sole entrance. The opinion, by Justice Kennard with Cantil-Sakauye, Baxter, Werdegar, Corrigan, and Liu joining, gives a good summary of the proceedings below and the holdings: 

A supermarket owner sought a court injunction to prevent a labor union from picketing on the privately owned walkway in front of the only customer entrance to its store. In response, the union argued that two statutory provisions — Code of Civil Procedure section 527.3 (the Moscone Act) and Labor Code section 1138.1 (section 1138.1) — prohibited issuance of an injunction under these circumstances. The trial court denied relief, ruling that the supermarket owner had failed to satisfy section 1138.1‘s requirements for obtaining an injunction against labor picketing.  

The Court of Appeal reversed. It held that the walkway fronting the supermarket's entrance was not a public forum under the California Constitution's provision protecting liberty of speech (Cal. Const., art. I, § 2, subd. (a)), and therefore the store owner could regulate speech in that area. It further held that both the Moscone Act and section 1138.1, because they give speech regarding a labor dispute greater protection than speech on other subjects, violate the free speech guarantee of the federal Constitution‘s First Amendment and the equal protection guarantee of the federal Constitution's Fourteenth Amendment. This court granted the union's petition for review.

We agree with the Court of Appeal that the supermarket's privately owned entrance area is not a public forum under the California Constitution's liberty of speech provision. For this reason, a union's picketing activities in such a location do not have state constitutional protection. Those picketing activities do have statutory protection, however, under the Moscone Act and section 1138.1. We do not agree with the Court of Appeal that the Moscone Act and section 1138.1, which are components of a state statutory system for regulating labor relations, and which are modeled on federal law, run afoul of the federal constitutional prohibition on content discrimination in speech regulations. On this basis, we reverse the Court of Appeal's judgment and remand the matter for further proceedings.

Slip op. at 1-2. The opinion is available here.  

I am organizing a series of webinars on important recent decisions for the The State Bar of California's Labor and Employment Law Section.  We will present a webinar on Ralphs Grocery within the next two weeks or so.  I am very pleased that Justice Miriam Vogel and Paul More, who argued the case for Ralphs and the Union, respectively, have agreed to speak.  Please stay tuned for more information. 

Olofsson v. Mission Linen Supply: Court of Appeal Holds That Employer Was Not Estopped to Deny That it Approved CFRA and FMLA Leave

This decision is very fact-specific, but it is interesting regardless.  In Olofsson v. Mission Linen Supply (12/13/12) --- Cal.App.4th ---, the Court of Appeal affirmed a trial court judgment, holding that substantial evidence supported the trial court’s findings that the employer (1) did not misrepresent by deed that the employee’s leave had been approved; and (2) was not silent when it had a duty to speak under the applicable regulations.  

The decision does a good job of laying out the respective obligations of employer and employee under the CFRA and FMLA: 

California’s Moore-Brown-Roberti Family Rights Act (CFRA) and the federal Family and Medical Leave Act (FMLA) compel an employer of Mission Linen’s size to grant a leave of absence to an employee, and preserve that employee’s right to continued employment, if the employee worked 1,250 hours in the year preceding the leave and the leave is for a recognized reason, such as to care for a family member who has a serious health condition.  (Gov. Code, § 12945.2, subds. (a), (b), (c)(3); 29 U.S.C. §§ 2611(2), (4), 2612(a), 2614(a).)  The family leave laws also impose on employers a legal duty to inform employees of the conditions that must be met to qualify for family leave.  (Cal. Code Regs., tit. 2, § 7297.9; 29 U.S.C. § 2619.)  It is undisputed that Mission Linen complied with these posting requirements.   

Under the CFRA, where the employee’s need for leave is foreseeable, the employee must provide the employer with reasonable advance notice of this need.  (Gov. Code, § 12945.2, subd. (h).)  Indeed, the employer may require that employees provide at least 30 days’ advance notice before the CFRA leave is to commence if the need for leave is foreseeable based on planned medical treatment for a serious health condition of a family member.  (Cal. Code Regs., tit. 2, § 7297.4, subd. (a)(2).) Further, if the need for leave is foreseeable due to a planned medical treatment or supervision, the employee must make a reasonable effort to schedule the treatment or supervision to avoid disruption to the employer’s operations, subject to approval of the health care provider.  (Ibid.)  It is undisputed that Olofsson knew that July and August were the busiest months for Mission Linen.   

The employee must “provide at least verbal notice sufficient to make the employer aware that the employee needs CFRA-qualifying leave, and the anticipated timing and duration of the leave.”  (Cal. Code Regs., tit. 2, § 7297.4, subd. (a)(1).)  The employer in turn is charged with responding to the leave request “as soon as practicable and in any event no later than ten calendar days after receiving the request.”  (Id., subd. (a)(6).)  

Additionally, under the CFRA and implementing regulations, an employer may require that an employee’s leave request for a family member’s serious health condition be supported by a certification from the health care provider for that member.  (Gov. Code, § 12945.2, subd. (j)(1); Cal. Code Regs., tit. 2, § 7297.4, subd. (b)(1).)  As well, the employer may require that the employee provide such certification within 15 calendar days of the employer’s request.  (Cal. Code Regs., tit. 2, § 7297.4, subd. (b)(3).)

Slip op. at 1-2.

On June 14, 2004, Lars Olofsson asked his employer for seven weeks off, starting July 12, to care for his mother after surgery. On July 9, after much back-and-forth, Mission Linen rejected the request because Olofsson did not meet the 1,250-hour requirement.  Olofsson sued for wrongful termination in violation of public policy. In a bifurcated trial, the trial court held that Mission Linen was not estopped to deny that it had approved Olofsson's leave.   

The Court of Appeal affirmed, holding that substantial evidence supported the trial court's findings. In particular, the fact that Mission Linen had Olofsson train a replacement driver to assume his duties while he was out did not estop if from denying that it approved the leave.  Slip op. at 7-8. Nor did Mission Linen's failure to approve or deny the leave within ten days of Olofsson's request support an estoppel claim.  Slip op. at 8-12. 

Here Mission Linen first responded by telling Olofsson what he had to do—fill out a form and get medical certification.  Next, Mission Linen responded when Clark told Olofsson that approval had to come from HR, he could not assume the leave had been approved, and could not check the eligibility box himself.  To underscore the point, she whited out his hand-noted approval.  This communication occurred on June 21, when Olofsson turned in the form, prior to the scheduled surgery and within the 10-day window.  In other words, Mission Linen responded that it was processing the application, and until HR said “Yes,” he was not approved for leave.  

Slip op. at 11. 

The opinion is available here.  

Richey v. AutoNation: Court of Appeal Vacates Arbitration Award Based on "Honest Belief Defense" in CFRA Action

Richey v. AutoNation, Inc. (11/13/12, mod. 12/12/12) is interesting for its discussion of CFRA and FMLA rights, as well as its discussion of standards for reviewing arbitration awards.

Avery Richey, a sales manager for defendant, was terminated four weeks before the expiration of his approved CFRA medical leave because his employer believed he was misusing his leave by working part time in a restaurant he owned. Richey sued for violation of the CFRA, and his case went to arbitration under an agreement that provided, in part, “[r]esolution of the dispute shall be based solely upon the law governing the claims and defenses set forth in the pleadings.” 

The arbitrator denied Richey’s CFRA claim based on the "honest belief" or "honest suspicion" defense. The trial court denied Richey’s motion to vacate the arbitrator’s award and granted AutoNation’s petition to confirm the award. The Court of Appeal reversed: 

The honest belief defense accepted by the arbitrator is incompatible with California statutes, regulations and case law and deprived Richey of his unwaivable statutory right to reinstatement under section 12945.2, subdivision (a). This clear legal error abridged Richey’s statutory rights under CFRA—rights based on, and intended to further, an important public policy. Accordingly, under the principles set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 and Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, the award must be vacated.

Slip op. at 2. 

After discussing a review court's limited authority to vacate an arbitrator's award (Slip op. at 7-10), the Court held that the arbitrator committed clear legal error by relying solely on the employer's belief that Richey had abused his medical leave. Focusing on the employee's reinstatement rights under the CFRA and FMLA (slip op. at 10-13), the Court then held that the arbitrator improperly shifted the burden of proof to Richey by holding for the employer based solely on his finding that Richey’s supervisor held an “honest belief” that Richey had violated company policy barring outside employment. Slip op. at 14-24. 

[Lonicki v. Sutter Health Central (2008) 43 Cal.4th 201] necessarily stands for the proposition that an employer may not, in terminating or failing to reinstate an employee who has been granted CFRA leave, defend a lawsuit from that employee based on its honest belief the employee was abusing his or her leave. Instead, the employer must demonstrate evidentiary facts sufficient to carry the burden of proof imposed by CFRA and FMLA.

Slip op. at 23. 

The Court then held that these errors of law required that the award be vacated. Slip op. at 24-28. 

Here, where the parties have agreed the arbitrator will resolve any claim “solely upon the law” and the purported legal error goes to both express, unwaivable statutory rights (the guarantee of reinstatement) and the proper allocation of the burden of proof, judicial review is essential to ensure the arbitrator has complied with the requirements of CFRA. In this instance, and on these facts, “‘granting finality to [the] arbitrator’s decision would be inconsistent with the protection of [Richey’s] statutory rights.’” 

Slip op. at 25, citing Pearson Dental, supra, 48 Cal.4th at 680. 

The Court of Appeal modified its opinion without changing the result on December 12, 2012. The order modifying and the modified opinion are here.  I assume that the employer will seek review in the California Supreme Court and I will let you know what happens there.  

Garvey v. KMart: Judge Alsup Rules For The Defense in "Suitable Seating" Case After Trial

The first of the "suitable seating" class actions has gone to trial, and it has resulted in a judgment -- though limited -- for the defense. 

In Garvey v. KMart Corporation (N.D. Cal. Case No. C 11-02575), the plaintiff alleged that KMart violates Labor Code section 1198 and Industrial Welfare Commission Wage Order No. 7 by failing to provide suitable seating to cashiers.  The case went to trial in November on a class limited to cashiers employed at a single KMart store. The court summarized its holding as follows: 

“All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats,” according to the law in California. In this civil action, class counsel have failed to prove that the nature of the work reasonably permits the seating modification urged by counsel at trial. Possibly a different modification involving a lean-stool would be provable but this record does not support it.

Slip op. at 1.  

A few notes regarding the trial: Plaintiff called six live witnesses, and defendant called four. The court gave each side 12 hours for witnesses at trial; both sides finished with time to spare. The court found "no genuine commonality issues" at trial and denied defendant's decertification motion. 

After describing the cash register work stations and procedures in detail, the Court found that most work done by cashiers could be done while seated, but cashiers need to stand "many times over the course of an hour." Slip op. at 12. The Court then found that class counsel's proposal -- re-arranging the work space to allow a stool to be stored under the counter in the register area -- would be "too unsafe, too inefficient, and too inconvenient to customers and cashiers."  Slip op. at 13-17.  

Next, the Court discussed -- and criticized -- a "secret" KMart policy that any cashier would be given a seat if he or she asked for one. The Court spoke critically of KMart's defense at several points. Perhaps because the Court felt annoyed by KMart's alternate efforts to use the policy as a defense and then to keep it out of evidence at trial, the Court held: 

After all of Kmart’s machinations, it would be poetic justice to hold Kmart to the full implications of its so-called policy, namely to hold that providing a seat in the existing configuration would be safe and practical. This would, however, not be actual justice, nor actual safety.

Slip op. at 18. 

The Court then took the highly unusual step of setting forth what it called "the best case for a plaintiff class." Slip op. at 18.  In the Court's view, this would involve the use of "lean-stools" that "allow an individual to place most of their weight on a supported seat, while remaining in a more upright, leaning position." Slip op. at 18-20. 

The Court then held that KMart "has a genuine customer-service rationale for requiring its cashiers to stand": 

[I]t is reasonable for Kmart to require its cashiers to stand while processing customers out the door so as to maximize the efficiency of the process and to project to its customers an attitude of efficiency and readiness to assist customers. 

Slip op. at 20-22.  However, the Court held that this rationale "might (or might not) be compatible with the judicious use of lean-stools."  Slip op. at 22.  

Finally, the Court noted that the litigation regarding the single store at issue at trial is "over and ready for appeal."  Slip op. at 22.  

As for all other Kmart stores in California, counsel could not agree as to whether the result in this trial should not control (Kmart counsel particularly refused to agree), so we must proceed to consider certification of classes covering one or more other stores in California and then to try those cases. 

Subsequent trials presumably will focus on what the Court called "the best case for a plaintiff class." 

Please email me here if you would a copy of the decision. 

24 Hour Fitness: Following D.R. Horton, ALJ Finds Class Action Waiver Violates NLRA, Despite Opt Out Provision

In D.R. Horton, 357 NLRB No. 184 (2012) (discussed here), the National Labor Relations Board held that an employer violated Section 8(a)(1) of the National Labor Relations Act by requiring employees, as a condition of employment, to sign an agreement that precluded them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions.  

24 Hour Fitness, Inc. and Alton J. Sanders, Case No. 20-CA-035419, presents a twist.  The employer there allowed employees to opt out of its arbitration policy -- which included a class action waiver -- within thirty days of hire.  Despite this, an administrative law judge has found that the policy violates the NLRA.  

I will not discuss the opinion in detail.  It is available on the NLRB's web page here. 

Phillips v. Sprint PCS: Cal. Supreme Court Denies Review of Arbitration Decision

In Phillips v. Sprint PCS (9/26/12) --- Cal.App.4th --- (discussed here), the Court of Appeal issued two holdings that should be noted:

1. A defendant whose motion to compel arbitration was denied in 2006 could renew the motion after Concepcion (the defendant filed its renewed motion two months after Concepcion came down); and 
2. The arbitrator should decide whether the contract as a whole, rather than just its class action waiver clause, was unconscionable and unenforceable (the enforceability of the arbitration clause being a question for the court). 

On December 19, the California Supreme Court denied review of Phillips, so it stands as citable authority.

Goodridge v. KDF Automotive: Supreme Court Issues Grant-and-Hold Order In Arbitration Agreement Unconscionability Case

In Goodridge v. KDF Automotive Group, Inc. (8/24/12) --- Cal.App.4th --- (discussed here), the Court of Appeal held that an arbitration agreement contained in an auto dealership's purchase contract was unconscionable and unenforceable without regard to any class action waiver provision.

On December 19, the Supreme Court granted review of Goodridge and deferred briefing pending its decision in Sanchez v. Valencia Holding Company, LLC (11/23/11) 200 Cal.App.4th 11 (discussed here) review granted 3/21/12 (discussed here) (finding arbitration provision procedurally and substantively unconscionable, without regard to class action waiver).  Sanchez raises the following issue: 

Does the Federal Arbitration Act (9 U.S.C. section 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?

Goodridge is Case No. S206153. The Supreme Court's page for it is here.  

Nitro-Lift Technologies v. Howard: SCOTUS Holds That Trial Court Erred In Declaring Employees' Non-Competition Agreements Void, Should Have Allowed Arbitrator To Rule

Nitro-Lift Technologies, L.L.C. v. Howard (11/26/12) may be the only per curiam arbitration case that we see out of the United States Supreme Court this term or at any time in the near future.

Two employees entered into a confidentiality and noncompetition agreement with Nitro-Lift that contained an arbitration clause. The employees quit and went to work for a competitor. Nitro-Lift demanded arbitration, and the employees filed suit in court, seeking declaratory relief and an injunction to prevent enforcement of the agreement. The trial court dismissed the complaint, finding that the con­tract contained a valid arbitration clause, under which an arbitrator, and not the court, must settle the dispute.

The Oklahoma Supreme Court reversed, holding that despite the “[U. S.] Supreme Court cases on which the employers rely,” the “existence of an arbitration agreement in an employment contract does not prohibit judicial review of the underlying agreement.” Slip op. at 2. The Court then held the agreements void as contrary to Oklahoma public policy. Slip op. at 3.  The U.S. Supreme Court reversed, holding:

1. The Court had jurisdiction because Nitro-Lift relied on Supreme Court authority construing the Federal Arbitration Act ("FAA"). Slip op. at 3. 
2. The Oklahoma Supreme Court's decision misconstrued the FAA: "attacks on the validity of the con­tract, as distinct from attacks on the validity of the arbi­tration clause itself, are to be resolved 'by the arbitrator in the first instance, not by a federal or state court.'" Slip op. at 4. The trial court found the arbitration clause enforceable, and it was for the arbitrator to decide whether the contract as a whole was valid. Ibid. 
3. The Court also should have allowed the arbitrator to decide whether the noncompetition agreement was enforceable. Ibid. Oklahoma's laws against enforcement of noncompetition clauses must yield to federal law on enforcement of arbitration agreements. Slip op. at 5. "Hence, it is for the arbitrator to decide in the first instance whether the covenants not to compete are valid as a matter of applicable state law." Ibid. 

I know that some people reacted very strongly to this decision when it came down, but I do not find it surprising. The Court did not overturn Oklahoma's public policy against noncompetition agreements. The Court simply held that the arbitrator, rather than the courts, should determine the validity of the noncompetition agreements in the first instance.  

The opinion is available here.

Morgan v. Wet Seal, Inc.: Court of Appeal Affirms Denial of Class Certification in Expense Reimbursement Action

A somewhat belated note on this case. In Morgan v. Wet Seal, Inc. (10/12/12, pub. 11/7/12), --- Cal.App.4th ---, the plaintiffs sued their employer for requiring them (1) to purchase Wet Seal clothing and merchandise as a condition of employment (Labor Code section 2802 and 450) and (2) to travel between Wet Seal business locations without mileage reimbursement (Labor Code section 2802). The trial court denied certification, and the Court of Appeal affirmed, holding, inter alia:

The plaintiffs could offer "no class-wide method of proving Wet Seal's liability" because: (1) Wet Seal's written policies did not require employees to purchase Wet Seal clothing as a condition of employment; (2) the policies did not specify what employees were required to wear, but used vague, general descriptions; and (3) individualized inquiries would predominate. Slip op. at 14-16.

Wet Seal's mileage reimbursement policy complied with the law, and the plaintiffs' best argument was that Wet Seal's actual practices varied, which would not allow for class certification. Slip op. at 16-17.

The trial court did not base its decision on the merits of the plaintiffs' claims. Slip op. at 17-20. Nor did the trial court abuse its discretion in referring to a district court case as "instructive" or following its reasoning, or by refusing to follow State or federal cases relied on by the plaintiffs. Slip op. at 20-25.

A class action was not the superior method of resolving the case because individual factual inquiries "would pose overwhelming case management difficulties," and the plaintiffs had not proposed a "manageable trial plan." Slip op. at 30-31.

The opinion is available here.

Dahlia v. Rodriguez: Ninth Circuit Grants En Banc Review of Police Officer Whistleblower Action

In Dahlia v. Rodriguez, 689 F.3d 1094 (9th Cir. 8/7/12) (discussed here) a three-judge panel of the Ninth Circuit held that the First Amendment does not protect a police officer who reports allegedly illegal conduct by fellow officers. On December 11, the Ninth Circuit granted en banc review of that decision. A copy of the Court's order is here. The Ninth Circuit's page for en banc cases (here) states that the case is "To be calendared the week of March 18, 2013, in San Francisco, California." 

More information to follow. In the meantime, I have added Dahlia to our Watch List of pending cases.  

Veronese v. Lucasfilm: Court of Appeal Reverses Pregnancy Discrimination Verdict

Veronese v. Lucasfilm (12/10/12) --- Cal.App.4th ---, arises from a plaintiff's verdict in a pregnancy discrimination action. I will not go through the facts in any detail, but the Court focused on the following: the interactions between the parties were brief and took place largely through email, the plaintiff did not work for the defendant (other than shadowing another employee for several hours), and the jury awarded some $93,000 in past economic damages, $20,000 in non-economic damages, and more than $1.1 million in attorney fees and costs.

The First District Court of Appeal reversed, finding a number of instructional errors: 

• Failing to instruct the jury that it could not find discrimination "based upon a belief that Lucasfilm made a wrong or unfair decision" or "an error in business judgment." Slip op. at 20-25. The Court noted: "Numerous California cases contain language similar to" the proposed instruction, and several federal and out-of-state decisions have found error in the failure to give a business judgment instruction. The Court concluded that the defendant "was entitled to exercise [its] business judgment, without second guessing," and the failure to so instruct was error. Slip op. at 25. 
• Giving an instruction that read, “A potential hazard to a fetus or an unborn child is not a defense to pregnancy discrimination.” Slip op. at 25-30. Distinguishing Automobile Workers v. Johnson Controls, Inc. (1991) 499 U.S. 187, the Court held that the defendant had no policy to exclude women from any position, and it "did not contend—nor could it—that any concern for a fetus was a 'defense to discrimination.' So, even if the instruction were literally true, abstractly correct, it was not proper." Slip op. at 26-27. 
• Failing to give the jury any instruction on the plaintiff's claim for failure to prevent discrimination. Slip op. at 30-31. 
• Failing to instruct the jury on the difference between the plaintiff's termination claim and her failure to hire/failure to promote claim. Slip op. at 30-31. 

The Court held that these errors prejudiced the defendant, requiring reversal. Slip op. at 32-35.

The Court considered, but did not decide, whether the trial court erred in giving CACI 2500, which requires the plaintiff to show that discrimination or retaliation were "a motivating reason" for the failure to hire the plaintiff. Slip op. at 19-20. Noting that Harris v. City of Santa Monica is pending in the State Supreme Court, the Court of Appeal declined to rule on this issue. 

I'm not great at handicapping these things, but the fact that Harris is due in the next 90 days leads me to believe that the California Supreme Court may issue a grant-and-hold order in this case.

The opinion is available here.

American Express v. Italian Colors: SCOTUS Schedules Oral Argument In Class Action Waiver Case

On Wednesday, February 27, the Supreme Court will hear oral argument in American Express Co. v. Italian Colors Restaurant (discussed here), which raises the following issue:

Whether the Federal Arbitration Act permits courts, invoking the “federal substantive law of arbitrability,” to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.

The Court's docket is here. The Second Circuit opinion is here, and SCOTUSblog has a web page for the case here. I have added the case to our Watch List and we will do a webinar on it when the Court issues its decision next year.  

Brinker Grant-and-Hold Redux: Goodbye Lamps Plus and Chipotle, Hello Bradley (and Brookler, Sort Of)

Remember Brinker? The wage and hour case to end all wage and hour cases? It's OK if you don't; you can find my discussion of it here.  But if you do, you might also remember that the California Supreme Court issued grant-and-hold orders in eight cases related to Brinker and that the "Br" alliteration was very strong, at least at first: 

Brinkley v. Public Storage (Case No. S168806)
Bradley v. Networkers International LLC (Case No. S171257)
Faulkinbury v. Boyd & Associates (Case No. S184995)
Brookler v. Radioshack Corporation (Case No. S186357)
Hernandez v. Chipotle Mexican Grill (Case No. S188755)
Tien v. Tenet Healthcare (Case No. S191756)
Lamps Plus Overtime Cases (Case No. S194064)
Muldrow v. Surrex (Case No. S200557) 

There has been a tremendous amount of activity on these cases over the last few weeks.  Here's the roundup.  

Three of the cases were remanded to the Second Appellate District, Division Eight: Lamps Plus Overtime Cases (8/20/12) (discussed here); Hernandez v. Chipotle Mexican Grill, Inc. (8/21/12) (discussed here); and Tien v. Tenet Healthcare Corp. (10/4/12) (discussed here). In each case, the Court of Appeal pre-Brinker had affirmed a trial court order denying class certification.  And in each case, the Court of Appeal on remand affirmed its pre-Brinker order.  

The California Supreme Court weighed in yesterday, denying the plaintiffs' petitions for review and ordering Lamps Plus and Hernandez v. Chipotle depublished.  The Court has not acted on the plaintiffs' petition in Tien v. Tenet Healthcare, which was filed on November 14.  

In Brookler v. Radioshack Corporation (unpublished 8/26/10), the Court of Appeal (Second District, Division Seven) reversed a trial court order decertifying a meal and rest period class action (discussed here).  The Court relied heavily on Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949. On remand after Brinker, the Court of Appeal last week held that the trial court's decertification order was consistent with Brinker and affirmed.  The Court of Appeal once again left its decision in Brookler unpublished, but you can find it here.  

In Bradley v. Networkers International LLC (unpublished 2/5/09), the plaintiffs filed suit for unpaid overtime and meal and rest period violations.  The trial court denied their motion for class certification, and the Court of Appeal (Fourth District, Division One) affirmed in an unpublished decision.  

Yesterday, the Court of Appeal issued its new decision, which is published, holding that the the trial court erred in refusing to certify the class with respect to each of plaintiffs' claims, except for the off-the-clock claims, which the Court remanded for reconsideration in light of Brinker and the new Bradley decision.  

I will write more about Bradley in the next couple of days.  In the meantime, the opinion is available here.  

Reyes v. Liberman Broadcasting: Supreme Court Grants Review of Class Action Waiver Decision Pending Iskanian

As suspected, the California Supreme Court has granted review in Reyes v. Liberman Broadcasting Inc. (8/31/12) --- Cal.App.4th --- (discussed here) pending its decision in Iskanian v. CLS Transportation L.A., LLC (6/4/12) 206 Cal.App.4th 949, review granted 9/19/12 (discussed here).

Reyes is a putative wage and hour class action and PAGA representative action in which the Court of Appeal held:

1. The arbitration agreement at issue did not authorize class arbitration. 
2. Given the possibility that California law prior to Concepcion barred enforcement of the arbitration agreement for this reason, the defendant did not waive its right to arbitration by not making its motion sooner. 
3. The NLRA does not prohibit enforcement of arbitration agreements that do not provide for class arbitration. 

The Supreme Court's docket for Reyes is here.  

Lui v. City and County Of San Francisco: Court Of Appeal Affirms Finding That Strenuous Field Duties Were An Essential Function Of Police Department's Administrative Positions

In Lui v. City and County of San Francisco (12/11/12) --- Cal.App.4th ---, a police officer who had suffered a major heart attack retired after the SFPD told him it had no positions available that did not require him to perform the strenuous physical duties regularly performed by patrol officers in the field, known as the "EJF List" of duties. The officer filed suit for violation of the FEHA (disability discrimination, failure to accommodate, failure to prevent discrimination, retaliation, and refusal to engage in the good faith interactive process). The trial court granted summary adjudication of the retaliation claim and entered judgment on the remaining claims after a bench trial. The officer appealed, arguing that the trial court erred in finding that strenuous field duties are essential functions of the administrative positions he sought.

The Court of Appeal affirmed, holding:

[T]he evidence supports the trial court's finding that, even though officers in administrative positions are not frequently required to engage in such activities, the strenuous duties are essential functions of the positions because the Department has a legitimate need to be able to deploy officers in those positions in the event of emergencies and other mass mobilizations.

Slip op. at 2. 

The Court did not decide who bore the burden of proving the position’s essential functions. "[E]ven if defendant bore the burden of proving the duties in the EJF List are essential functions of the administrative positions plaintiff seeks, the trial court’s findings are supported by substantial evidence...." Slip op. at 11. 

On the critical issue, the Court held as follows:

[T]he evidence shows the duties in the EJF List are essential functions of the administrative positions at issue in the present case because there are a limited number of officers available to the Department to perform those functions. (§ 12926(f)(1)(B).) Because the Department only has a limited number of full duty officers, for each officer in a modified-duty assignment, there is one less officer available to be deployed in an emergency. 

***  

The evidence further showed that the Department needs to be able to mobilize as many full duty police officers as possible to respond to mass celebrations, demonstrations, and earthquakes and other large-scale emergencies, during which the officers would be required to perform the types of duties listed in the EJF List. 

Slip op. at 13-14. The Court "declined to second-guess" the Department's determination that all officers needed to be able to perform the EJF functions. Slip op. at 17. 

The Court distinguished Cripe v. City of San Jose, 261 F.3d 877 (9th Cir. 2001), on grounds that the defendant there failed to show that the reassignment of a relatively small number of officers to administrative-only assignments would impact its ability to respond to emergencies. Slip op. at 20-23. 

The Court distinguished Cuiellette v. City of Los Angeles (2011) 194 Cal.App.4th 757, on grounds that the defendant there "had a longstanding policy and practice of allowing sworn officers to perform 'light duty' assignments that did not entail several essential functions of a peace officer such as making arrests, taking suspects into custody, and driving a police vehicle in emergency situations." Slip op. at 23. 

Cuiellette supports the proposition that employers must provide accommodations into permanent light-duty assignments if such assignments exist; Cuiellette does not support the proposition that employers are required to create permanent light-duty assignments to accommodate disabled employees. 

Slip op. at 24. 

Finally, the Court found that substantial evidence supported the trial court’s finding that the plaintiff could not perform the duties in the EJF List. Slip op. at 27-28. 

The opinion is available here. 

Kloeckner v. Solis: SCOTUS Issues Decision on Jurisdiction for Federal Employee Merit Systems Protection Board "Mixed Case" Appeals

The Supreme Court of the United States on Monday issued its decision in Kloeckner v. Solis. In a per curiam opinion by Justice Kagan, the Court held that a federal employee who claims that federal agency action appealable to the Merits System Protection Board violates an anti-discrimination statute should go to district court not the Federal Circuit, regardless of whether the case was decided on procedural grounds or the merits.  

More concisely stated (thanks to SCOTUSblog's Lyle Denniston):  

An employee of a federal agency who believes that she suffered a serious problem at work — like, for example, getting fired — and who is persuaded that the reason for the action was discrimination based, say, on sex or age, has a right to take the case to a specialized board with the power to decide the claim. If the worker is dissatisfied with the result at the board, she has a right to go to court.  

The decision's syllabus provides a more detailed explanation: 

The Civil Service Reform Act of 1978 (CSRA) permits a federal employee subjected to a particularly serious personnel action such as a discharge or demotion to appeal her agency’s decision to the Merit Systems Protection Board (MSPB or Board). Such an appeal may allege that the agency had insufficient cause for taking the action under the CSRA itself; but the appeal may also or instead charge the agency with discrimination prohibited by a federal statute. See 5 U. S. C. §7702(a)(1). When an employee alleges that a personnel action appealable to the MSPB was based on discrimination, her case is known as a “mixed case.” See 29 CFR §1614.302. Mixed cases are governed by special procedures set out in the CSRA and regulations of the MSPB and Equal Employment Opportunity Commission (EEOC).   

Under those procedures, an employee may initiate a mixed case by filing a discrimination complaint with the agency. If the agency decides against the employee, she may either appeal the agency’s decision to the MSPB or sue the agency in district court. Alternatively, the employee can bypass the agency and bring her mixed case directly to the MSPB. If the MSPB upholds the personnel action, whether in the first instance or after the agency has done so, the employee is entitled to seek judicial review. 

Section 7703(b)(1) of the CSRA provides that petitions for review of MSPB decisions “shall be filed in the . . . Federal Circuit,” except as provided in §7703(b)(2). Section 7703(b)(2) instructs that “[c]ases of discrimination subject to the provisions of [§7702] shall be filed under [the enforcement provision of a listed antidiscrimination statute].” Those enforcement provisions all authorize suit in federal district court. The “cases of discrimination subject to the provisions of §7702” are those in which an employee “(A) has been affected by an action which [she] may appeal to the [MSPB], and (B) alleges that a basis for the action was discrimination prohibited by” a listed federal statute; in other words, “mixed cases.” 

In 2005, while an employee of the Department of Labor (DOL or agency), petitioner Carolyn Kloeckner filed a complaint with the agency’s civil rights office, alleging that DOL had engaged in unlawful sex and age discrimination by subjecting her to a hostile work environment. Following applicable EEOC regulations, DOL completed an internal investigation and report, and Kloeckner requested a hearing before an EEOC administrative judge. While the EEOC case was pending, Kloeckner was fired. Because Kloeckner believed that DOL’s decision to fire her was based on unlawful discrimination, she now had a “mixed case.” Kloeckner originally brought her mixed case directly to the MSPB. Concerned about duplicative discovery expenses between her EEOC and MSPB cases, she moved to amend her EEOC complaint to include her claim of discriminatory removal and asked the MSPB to dismiss her case without prejudice for four months to allow the EEOC process to go forward. Both motions were granted. In September 2006, the MSPB dismissed her appeal without prejudice to her right to refile by January 18, 2007. The EEOC case, however, continued until April 2007, when the EEOC judge terminated the proceeding as a sanction for Kloeckner’s bad-faith discovery conduct and returned the case to DOL for a final decision. In October, DOL ruled against Kloeckner on all of her claims. Kloeckner appealed to the Board in November 2007. The Board dismissed Kloeckner’s appeal as untimely, viewing it as an effort to reopen her old MSPB case months after the January 18 deadline.  

Kloeckner then brought this action against DOL in Federal District Court, alleging unlawful discrimination. The court dismissed the complaint for lack of jurisdiction. It held that, because the MSPB dismissed Kloeckner’s claims on procedural grounds, she should have sought review in the Federal Circuit under §7703(b)(1); in the court’s view, the only discrimination cases that could go to district court pursuant to §7703(b)(2) were those the MSPB had decided on the merits. The Eighth Circuit affirmed.   

Held: A federal employee who claims that an agency action appealable to the MSPB violates an antidiscrimination statute listed in §7702(a)(1) should seek judicial review in district court, not the Federal Circuit, regardless whether the MSPB decided her case on procedural grounds or on the merits. Pp. 7–14.  

(a) Two sections of the CSRA, read naturally, direct employees like Kloeckner to district court. Begin with § 7703, which governs judicial review of MSPB rulings. Section 7703(b)(1) provides that petitions to review the Board’s final decisions should be filed in the Federal Circuit—“[e]xcept as provided in paragraph (2) of this subsection.” Section 7703(b)(2) then provides that “[c]ases of discrimination subject to the provisions of [§7702]” “shall be filed under” the enforcement provision of a listed antidiscrimination statute. Each of the referenced enforcement provisions authorizes an action in federal district court. Thus, “[c]ases of discrimination subject to the provisions of [§7702]” shall be filed in district court. Turn next to §7702, which provides that the cases “subject to [its] provisions” are cases in which a federal employee “has been affected by an action which [she] may appeal to the [MSPB],” and “alleges that a basis for the action was discrimination prohibited by” a listed federal statute. The “cases of discrimination subject to” §7702 are therefore mixed cases. Putting §7703 and §7702 together, mixed cases shall be filed in district court. That is where Kloeckner’s case should have been, and indeed was, filed. Regardless whether the MSPB dismissed her claim on the merits or threw it out as untimely, she brought the kind of case that the CSRA routes to district court. Pp. 7–8.    

(b) The Government’s alternative view—that the CSRA directs the MSPB’s merits decisions to district court, while channeling its procedural rulings to the Federal Circuit—is not supported by the statute. According to the Government, that bifurcated scheme, though not specifically prescribed in the CSRA, lies hidden in the statute’s timing requirements. But the Government cannot explain why Congress would have constructed such an obscure path to such a simple result. And taking the Government’s analysis one step at a time makes it no more plausible. Pp. 8–13. 

The opinion is available here.  

See’s Candy Shops, Inc. v. Superior Court (Silva): Court of Appeal Issues Decision On Employer's Time Rounding Policy In Wage and Hour Action

In See’s Candy Shops, Inc. v. Superior Court (Silva) (10/29/12) --- Cal.App.4th ---, the plaintiff filed a putative wage and hour class action against See's Candy Shops. After the trial court certified the class, the plaintiff moved for summary adjudication of four affirmative defenses relating to See's policy of rounding clock-in and clock-out times to the nearest tenth of an hour. Two of the defenses -- not fully discussed in the appellate opinion -- concerned whether any unpaid time was de minimis. The other two defenses -- which are discussed -- concerned whether See's rounding policy complied with California and federal law.

The trial court first denied summary adjudication, then granted the plaintiff's motion for reconsideration and granted summary adjudication. See's filed a writ petition, which the Court of Appeal summarily denied. The Supreme Court granted See's petition for review and ordered the Court of Appeal to issue an alternative writ. The Court of Appeal then reversed the order granting summary adjudication. 

The Court of Appeal held: 

[T]he rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and "it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked."  

Slip op. at 27, citing 29 C.F.R. § 785.48; and DLSE Enforcement Policies and Interpretations Manual (2002, rev.) §§ 47.1, 47.2.  

The Court then held that the plaintiff had not met her burden of showing that she was entitled to judgment on this defense as a matter of law, and, even if she had, See's "met its burden to show triable issues of fact regarding whether its nearest-tenth rounding policy was proper under California law because it was used in a manner that did not result over a period of time in the failure to compensate the employees for all the time they actually worked."  Slip op. at 27-29.  

The full opinion is available here.

Oxford Health Plans LLC v. Sutter: SCOTUS Grants Certiorari In Class Arbitration Action

The Supreme Court on Friday granted certiorari in Oxford Health Plans LLC v. Sutter (Case No. 12-135), a follow-up to Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010) (discussed here). Here is the issue presented:

In Stolt-Nielsen v. AnimalFeeds International Corp., 130 S. Ct. 1758, 1776 (2010), this Court made clear that "class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to arbitration." In this case, an arbitrator concluded that the parties affirmatively consented to class arbitration on the basis of a contract provision stating: "No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration." The question presented is:

Whether an arbitrator acts within his powers under the Federal Arbitration Act (as the Second and Third Circuits have held) or exceeds those powers (as the Fifth Circuit has held) by determining that parties affirmatively "agreed to authorize class arbitration," Stolt-Nielsen, 130 S. Ct. at 1776, based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract.

The Supreme Court's docket sheet for Oxford Health is here.  The UCL Practitioner has an excellent post on the case here. SCOTUSblog has its coverage here.  

I have added Oxford Health to our Watch List of impending important decisions.  

Meyer v. Portfolio Recovery Associates: Ninth Circuit Affirms Class Certification Order and Preliminary Injunction in Telephone Consumer Protection Act (TCPA) Action

A quick note on an interesting non-employment class action.

In Meyer v. Portfolio Recovery Associates, LLC (9th Cir. 10/12/12) the plaintiffs sued a debt collection agency, PRA, for violation of the Telephone Consumer Protection Act (TCPA). 47 U.S.C. § 227. The district court issued a preliminary injunction to prevent PRA from using an automated dialing system to place calls to cellular telephone numbers with California area codes that PRA obtained via skip-tracing. The court also certified a class of individuals whom PRA so contacted.

The Ninth Circuit affirmed, holding:

1. The court had jurisdiction to enter its order, despite: (a) the plaintiff having filed a premature notice of appeal from the court's minute order denying the motion; and (b) the court having signed, but not entered, an order transferring the matter to another district court judge.  Slip op. at 12256-12257. 
2. The court did not abuse its discretion in provisionally certifying the class under Rule 23(b)(2), despite PRA's arguments that: (a) individualized issues of consent should have precluded a finding of typicality or commonality; (b) the class definition was overbroad because it may include debtors who provided express consent to be contacted on their cellular telephones; and (c) that the plaintiff was not an adequate class representative due to convictions for offenses involving dishonesty (the convictions were more than ten years old).  Slip op. at 12257-12260. 
3. The court did not abuse its discretion in granting the preliminary injunction because the plaintiff showed: (a) a likelihood of success on the merits; (b) that he was likely to suffer irreparable harm in the absence of preliminary relief; (c) that the balance of equities tipped in his favor; and (d) that an injunction was in the public interest.  Slip op. at 12260-12264.   

The Court raised but did not decide the interesting issue of whether the plaintiff could obtain the injunction without showing irreparable harm because the TCPA specifically provides for injunctive relief.  Slip op. at 12262-12263.  

The opinion is available here. 

Alamo v. Practice Management Info. Corp.: Court of Appeal Rules On Causation and Mixed Motive Defense

While we're all waiting for the California Supreme Court to rule in Harris v. City of Santa Monica, I wanted to note (briefly) Alamo v. Practice Management Information Corporation (9/24/12) --- Cal.App.4th ---, which also addresses the mixed motive defense.  

The plaintiff sued for pregnancy discrimination, retaliation, and wrongful termination.  The trial court instructed the jury that the plaintiff had to show that her pregnancy leave was "a motivating reason" for her discharge and refused to instruct the jury that the defendant would not be liable if it showed that it would have made the same decision in the absence of any discriminatory or retaliatory motive.  The jury found in the plaintiff's favor, and the trial court awarded prevailing party attorney fees to the plaintiff.  

The Court of Appeal affirmed, holding: 

• The language and legislative purposes of FEHA do not support a requirement of "but for" causation, and the court's use of the CACI "motivating factor" instructions was proper.  Slip op. at 9-15.  
• The Court did not have to determine whether the mixed motive defense applied, and the trial court did not err in refusing to give a mixed motive instruction, because both sides tried the case as a single motive, not a mixed motive, case.  Slip op. at 15-19.  
• The trial court did not err in awarding attorney fees to the plaintiff, even though the verdict form failed to specify whether she prevailed on the statutory FEHA cause of action or the common law wrongful termination cause of action. Slip op. at 19-22.  

The defendant filed a petition for review in the Supreme Court on November 28.  The Supreme Court has not ruled on the petition.  The Court's docket is here.  

At Tuesday's oral argument in Harris, none of the Justices sounded very unenthusiastic about either "motivating factor" standard or "but for" causation. I am assuming that the Court will grant review in Alamo and remand after it issues Harris.  

The full text of the opinion is available here.  

Harris v. City of Santa Monica Oral Argument

Law.com has a good review of yesterday's oral argument in Harris v. City of Santa Monica. For anyone who has not been following along, Harris raises the following issues: 

1. The employee's burden of proof in an action under the FEHA (e.g., that the discriminatory animus was "a motivating factor," a "substantial factor," or the "but for cause" of the alleged adverse employment action); 
2. Whether the defendant in such an action may raise a mixed-motive defense (i.e., that it had both discriminatory and non-discriminatory motives for the alleged adverse employment action or would have taken the same action in the absence of any discriminatory motive); and 
3. Whether such a mixed-motive (or same decision) defense is a complete defense or merely bars the plaintiff from obtaining certain remedies.  

Justice Liu was the most active questioner.  He and others seemed to be leaning toward holding that such a defense is available, that the plaintiff must prove that discriminatory animus was a "substantial factor" in causing the adverse employment action, and that when the defendant proves such a defense, the plaintiff will not be eligible for economic damages or reinstatement.  

The decision is due in 90 days, which is March 4, 2013.  Within a week or two of the decision coming down, the State bar of California Labor and Employment Law Section will present a webinar on the Court's decision.  Both Paul Cane, who argued as amicus for the defense,  and David deRubertis, who argued for the plaintiff, have agreed to speak.  Stay tuned for more information.  

Genesis HealthCare Corp. v. Symczyk: Supreme Court Hears Oral Argument in FLSA Action

The Supreme Court of the United States yesterday heard oral argument in Genesis HealthCare Corp. v. Symczyk (Case No. 11-1059), which presents the following issue:  

Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff's claims. 

The Court's docket sheet is here, transcripts of the oral argument are here, and SCOTUSblog has a report on the argument here.  

I have mentioned before that I am organizing a series of webinars on new decisions for the State Bar of California's Labor and Employment Law Section.  Genesis HealthCare is one of the decisions that we will cover, likely within a week or two of the Court issuing the decision.  Stay tuned for more information. 

Kilgore v. KeyBank: Ninth Circuit Schedules Oral Argument

An en banc panel of the Ninth Circuit Court of Appeals will hear Kilgore v. KeyBank, N.A. (Case No. 09-16703) on December 11, 2012, 10:00 a.m., in Pasadena.  

In Kilgore v. KeyBank, N.A., 673 F.3d 947 (3/7/12) (discussed here), a three-judge panel held that the Federal Arbitration Act ("FAA") preempts California's Broughton-Cruz rule, which prohibits the arbitration of claims for broad, public injunctive relief. See Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066 (prohibition on compelling arbitration in public injunctive relief cases under the Consumer Legal Remedies Act); Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 (prohibition on compelling arbitration in public injunctive relief cases under the Unfair Competition Law). The plaintiffs in Kilgore are student loan borrowers who filed a putative class action against lenders seeking to enjoin them from collecting loans or reporting loan balances to credit reporting agencies. 

The docket is available through the PACER system here.  

American Express Co. v. Italian Colors Restaurant: SCOTUS Grants Certiorari in Class Action Waiver Case

In In re American Express Merchants' Litigation, 667 F.3d 204 (2d Cir. 2012), the Second Circuit Court of Appeals invalidated an arbitration clause in a credit card agreement where it found that the clause would effectively preclude the plaintiffs from pursuing claims under the federal antitrust law. The court distinguished Concepcion on grounds that Concepcion addressed the relationship between the FAA and state law, while the case before it raised federal statutory claims. The court cited several cases invalidating arbitration clauses where it was shown that a class action waiver would preclude the plaintiffs from pursuing individual federal statutory actions. The Second Circuit found that Concepcion did not overrule those decisions. 

The Supreme Court granted cert. on November 9, sub nom American Express Co. v. Italian Colors Restaurant (Case No. 12-133).  The issue presented is as follows:  

Whether the Federal Arbitration Act permits courts, invoking the “federal substantive law of arbitrability,” to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.   

The Court's docket is here.  The Second Circuit opinion is here, and SCOTUSblog has a web page for the case here.  I have added the case to our Watch List and we will do a webinar on it when the Court issues its decision next year.  

U.S. Airways v. McCutchen: SCOTUS Hears Oral Argument in ERISA Action

The Supreme Court of the United States on November 27 heard oral argument in U.S. Airways, Inc. v. McCutchen (Case No. 11-1285) which raises the following issue: 

Whether the Third Circuit correctly held -- in conflict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits -- that Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid, even where the plan’s terms give it an absolute right to full reimbursement. 

The Supreme Court's web page for the case is here.  The oral argument transcript is here.  Reuters covered the argument here. 

Vance v. Ball State University: SCOTUS Hears Oral Argument in Title VII Supervisor Liability Action

On November 26, 2012, the Supreme Court of the United States heard oral argument in Vance v. Ball State University (Case No. 11-556). The question in Vance is whether, "as the Second, Fourth, and Ninth Circuits have held, the Faragher and Ellerth 'supervisor' liability rule (i) applies to harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, or, as the First, Seventh, and Eighth Circuits have held (ii) is limited to those harassers who have the power to 'hire, fire, demote, promote, transfer, or discipline' their victim."

The transcript is here. SCOTUSblog reported on oral argument here. SCOTUSblog concludes that the Court may DIG the case (deny certiorari as improvidently granted) because the plaintiff could not show under either test that the alleged harasser was her supervisor.  

Franco v. Arakelian Enterprises: Court of Appeal Holds That Gentry Remains Good Law After Stolt-Nielsen and Concepcion

This is the second time that this case has resulted in a published appellate decision. The first time, in Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277, the Court of Appeal held: 

1. Gentry v. Superior Court (2007) 42 Cal.4th 443, invalidated a class action waiver in an action for meal and rest period compensation; and 
2. Gentry invalidated an arbitration clause prohibiting an employee from acting as a private attorney general under the Labor Code Private Attorneys General Act (PAGA). 

On remand, the defendant again moved to compel arbitration, arguing that Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. ___ and AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___ overruled Gentry. The trial court denied the petition, and the Court of Appeal affirmed, holding: 

We conclude that Gentry remains good law because, as required by Concepcion, it does not establish a categorical rule against class action waivers but, instead, sets forth several factors to be applied on a case-by-case basis to determine whether a class action waiver precludes employees from vindicating their statutory rights.  And, as required by Stolt-Nielsen, when a class action waiver is unenforceable under Gentry, the plaintiff's claims must be adjudicated in court, where the plaintiff may file a putative class action. 

Franco v. Arakelian Enterprises, Inc. (11/26/12) --- Cal.App.4th ---, slip op. at 3.  With regard to the second point, the Court explained: 

Stolt-Nielsen held that class arbitration is not permitted unless the parties have expressly or implicitly agreed to it.  Gentry, on the other hand, concerned the enforceability of class action waivers that prevent the vindication of unwaivable statutory rights and that constitute exculpatory clauses.  Nevertheless, Gentry concluded that, if a class action waiver is unenforceable, the court should invalidate the waiver and send the case to arbitration, where the plaintiff may attempt to certify a class. But under Stolt-Nielsen, class arbitration is not permitted unless the parties agree to that procedure.  Plainly, in a case where Gentry applies — to invalidate a class action waiver — the parties have not agreed in any fashion to allow class arbitration.  Consequently, under Stolt-Nielsen, the remedy under Gentry should be the denial of the motion or petition to compel arbitration, permitting the case to be heard in court, where the plaintiff may seek to certify a class.  

Slip op. at 47 (citations omitted). 

The decision includes a thorough discussion of the Supreme Court's development of arbitration law, slip op. at 17-27, and the law on vindication of statutory rights.  Slip op. at 27-45. It also includes an interesting discussion of Concepcion and post-Concepcion decisions and commentary.  Slip op. at 47-64. 

I assume that the defendant will petition the California Supreme Court for review. As discussed here, the Supreme Court on 9/19/12 granted review in Iskanian v. CLS Transportation L.A., LLC (6/4/12) 206 Cal.App.4th 949, which held that Concepcion overruled Gentry and that Concepcion applies to PAGA actions. It will be interesting to see whether the Court grants review in Franco pending Iskanian. 

The opinion is available here.  

Aryeh v. Canon Business Solutions: Cal. Supreme Court Calendars Oral Argument

In Aryeh v. Canon Business Solutions (discussed here), the California Supreme Court will decide the following issues:  

1. May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code section 17200 et seq.)? 
2. May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action? 
3. May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action? 

The Supreme Court has scheduled oral argument for December 4, 2012, at 9:00 a.m.  Los Angeles oral arguments are at the Ronald Reagan State Office Building, 300 South Spring Street, 3rd Floor, Los Angeles.  In the afternoon session, the Court will hear argument on Harris v. City of Santa Monica (discussed here) another of our Watch List cases.