Davis v. Kiewit Pacific Co.: Court Finds Triable Issue as to Managing Agent Status, Overturns Summary Adjudication of Punitive Damages

In Davis v. Kiewit Pacific Co. (9/18/13, pub. 10/8/13) --- Cal.App.4th ---, the trial court entered a judgment for plaintiff Lisa Davis after a jury found defendant Kiewit Pacific Co. liable for gender discrimination, hostile work environment harassment, retaliation, and failure to prevent harassment, gender discrimination, or retaliation. However, before trial, the trial court granted Kiewit's motion for summary adjudication on Davis's claim for punitive damages, concluding there were no triable issues of material fact whether a managing agent of Kiewit had engaged in or ratified any oppressive, malicious and/or fraudulent conduct against her. The Court of Appeal reversed, finding triable issues of material fact on managing agent status. 

Davis worked for Kiewit on a construction project. She alleged that she complained of harassment to the project manager, Kyle Preedy, and Kiewit's EEO officer, John Lochner. On Kiewit's motion for summary adjudication of punitive damages, she argued that Preedy and Lochner were its managing agents. 

The Court found that Preedy's declaration in support of the motion "simply parroted" the managing agent standard set forth in White v. Ultramar, Inc. (1999) 21 Cal.4th 563, and did not state "sufficient evidence to make a prima facie showing that there was no triable issue regarding whether Preedy was a managing agent of Kiewit." Slip op. at 16. Even if Kiewit had introduced such evidence, Davis met her burden to raise a triable issue of material fact on the issue. Specifically:

Preedy, as the Project's manager, was Kiewit's top on-site manager. He had the responsibility to oversee and manage the $170 million project, including over 100 Kiewit employees working on the site. Preedy's duties included interfacing with stakeholders on the Project, contract administration, operations and personnel oversight, and making sure the Project was completed according to the contract. In performing those duties, a trier of fact could reasonably infer he exercised substantial authority and discretion regarding a broad range of issues involving the Project, including compliance with Kiewit's policies and the hiring, supervision, and laying off of Project employees. Absent evidence showing that management of a $170 million project with supervision of 100 employees is an insignificant part of Kiewit's business, a trier of fact could reasonably infer from the above evidence that Preedy "exercised substantial discretionary authority over significant aspects of [Kiewit's] business" and therefore was a managing agent of Kiewit.

Slip op. at 17-18. 

Lochner's declaration also failed in that it stated conclusions of law, rather than factual evidence. Slip op. at 20. In any event, Davis met her burden of raising a triable issue based on the following facts: 

Lochner, as Kiewit's EEO officer, had the duties and responsibilities to enforce its policies against discrimination, retaliation, and harassment based on gender and other protected classes. A trier of fact could therefore reasonably infer he had the authority and discretion regarding enforcement of those policies because he did not conduct, or direct anyone else to conduct, an investigation regarding the [alleged harassment]. In his declaration, Lochner stated, as Kiewit's district EEO officer, he was responsible for administering Kiewit's policies that prevent discrimination, retaliation, and harassment based on gender and other protected groups for the Northwest District. Lochner stated he "conducted training for staff employees (supervisory personnel); took and responded to employee complaints about EEO and other issues; and conducted or oversaw investigations regarding a variety of employee relations issues including alleged discrimination, retaliation and/or harassment." ... [A] a trier of fact could reasonably infer he had authority and discretion in making, interpreting, and applying Kiewit's EEO policies on a corporation-wide basis and therefore had authority and discretion to make decisions that ultimately determine corporate policy.

Slip op. at 21-22. 

The opinion is available here. 

City of Bell v. Superior Court (Rizzo): City Need Not Indemnify Former Official In Actions Alleging Theft of City Funds

Robert Rizzo deserves to have his picture in the dictionary next to the word "chutzpah." 

Robert Rizzo, the former Chief Administrative Officer of the City of Bell (City), has been sued by the City, as well as the Attorney General acting on behalf of the City, for restitution for his alleged looting of the City's coffers. He has also been criminally charged with multiple counts of misappropriation of public funds. Rizzo, by complaint for declaratory relief, seeks a judgment that the City is contractually obligated to provide him with a defense to these civil and criminal actions. We conclude that, as a matter of law, the City does not owe Rizzo such a defense. 

City of Bell v. Superior Court (Rizzo) (10/4/13) --- Cal.App.4th ---, slip op. at 2.  

The opinion is available here.  

Steven G. Pearl to Discuss Settling Wage and Hour Cases

I am presenting "Increasing the Chance of Success in Settling Wage & Hour Litigation" at the Bridgeport Continuing Education 2013 Wage and Hour Conference on December 13, 2013, at the Loews Hollywood Hotel. More information here.

American Corporate Security v. Su: Employer May Not Seek Writ of Mandate To Review Labor Commissioner Determination that Employer Retaliated Against Employee

A quick note on this case. 

In American Corporate Security, Inc. v. Su (9/10/13, pub. 9/27/13) --- Cal.App.4th ---, the Labor Commissioner found that an employer (ACS) terminated an employee in retaliation for complaints about alleged Labor Code violations. ACS petitioned for a writ of mandate, and the trial court sustained the Labor Commissioner's demurrer. The Court of Appeal affirmed, finding as follows: 

A Labor Commissioner order finding retaliation is not self-executing. Slip op. at 6-8. If the employer refuses to comply with such an order, the Labor Commissioner must bring an action in court to enforce it. Ibid. Nothing prevents the employer from raising defenses in such an action. Slip op. at 8-9. Because it could defend the retaliation action in court, ACS had an adequate remedy at law and the demurrer to its mandate action was properly sustained. Slip op. at 10-11. 

The opinion is available here. 

Peng v. First Republic Bank: Failure to Provide AAA Arbitration Rules to Employee Does Not Render Arbitration Policy Unconscionable

In Peng v. First Republic Bank (8/29/13, pub. 9/26/13), --- Cal.App.4th ---, the trial court denied an employer defendant's petition to compel arbitration in an action alleging discrimination and related claims. The Court of Appeal reversed, holding: 

Failure to attach the AAA arbitration rules to the arbitration policy, by itself, did not render the policy procedurally unconscionable. Slip op. at 6-9.

A provision in the policy allowing the employer to modify it unilaterally was not substantively unconscionable. Slip op. at 10-12. Because the covenant of good faith and fair dealing limits an employer's right to modify an arbitration policy, such a right is not "so one-sided as to 'shock the conscience.'" Slip op. at 12. 

Peng v. First Republic Bank is available here. 

Pacific Shores Properties v. City of Newport Beach: Ninth Circuit Reverses Summary Judgment in Action Alleging Discrimination Against Sober Living Group Homes

This is an interesting case on discrimination in the housing context. In Pacific Shores Properties, LLC v. City of Newport Beach (9th Cir. 9/20/13), the Ninth Circuit reversed an order granting summary judgment in a case alleging that a City ordinance violated the Fair Housing Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act, and the Equal Protection Clause by having the practical effect of prohibiting new group homes for recovering alcoholics and drug users from opening in most residential zones and requiring existing group homes to undergo a permitting process.  

The Ninth Circuit held that the district court erred in disregarding evidence that the City’s sole objective was to discriminate against persons deemed to be disabled under state and federal housing discrimination laws. The plaintiffs, who were operators and residents of sober living homes,  were not required to identify similarly situated individuals who were treated better than themselves in order to survive summary judgment. Where there is direct or circumstantial evidence that the defendant has acted with a discriminatory purpose and has caused harm to members of a protected class, such evidence is sufficient to permit the protected individuals to proceed to trial under a disparate treatment theory.

The district court erred in concluding that the plaintiffs failed to create a triable issue of fact as to whether the losses that their businesses suffered were caused by the enactment and enforcement of the ordinance when the plaintiffs presented evidence that they experienced a significant decline in business after the ordinance’s enactment, that the publicity surrounding the ordinance reduced referrals, and that current and prospective residents expressed concern about whether the homes would close. In addition, costs borne by the plaintiffs to present their permit applications and to assure the public that they were still operating despite the City’s efforts to close them were compensable. 

The opinion is available here.  

Sonic-Calabasas A, Inc. v. Moreno: California Supreme Court Holds That Federal Arbitration Act Preempts California Law Prohibiting Waiver of Employee's Right to Labor Commissioner Hearing; Waiver May Be Unconscionable Depending on Totality of Circumstances

In 2011, the California Supreme Court held: (1) an employee's statutory right to a wage hearing before the Labor Commissioner, known as a Berman hearing, "with all the possible protections that follow from it, is itself an unwaivable right that an employee cannot be compelled to relinquish as a condition of employment;" (2) waiver of an employee's right to seek such a hearing is a substantively unconscionable contract term; and (3) the Federal Arbitration Act (FAA) does not preempt the Court's holdings on points one and two. Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659 (Sonic I) (discussed here). 

The Supreme Court of the United States granted review and vacated that decision, remanding the case for further consideration in light of AT&T Mobility LLC v Concepcion 563 U.S. ___ (2011) (discussed here). 

The California Supreme Court issued its new decision last week. Reversing its earlier decision, the Court held as follows: 

Although the Berman statutes (Cal. Labor Code sections 98 to 98.8) provide important benefits to employees by reducing the costs and risks of pursuing a wage claim (slip op. at 6-10), the FAA as construed by Concepcion preempts Sonic I's holding that a waiver of Berman procedures in an arbitration agreement is, in and of itself, unconscionable and contrary to public policy. Slip op. at 23. 

Because a Berman hearing causes arbitration to be substantially delayed, the unwaivability of such a hearing, even if desirable as a matter of contractual fairness or public policy, interferes with a fundamental attribute of arbitration — namely, its objective "'to achieve "streamlined proceedings and expeditious results."'" Sonic I's rule is thus preempted by the FAA. 

Slip op. at 25-26 (internal citations omitted). 

Unconscionability remains a valid defense to petitions to compel arbitration in the wake of Concepcion, but such rules must not facially discriminate against arbitration, must be enforced evenhandedly, and "must not disfavor arbitration as applied by imposing procedural requirements that interfere with fundamental attributes of arbitration, especially its lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes." Slip op. at 28-29. For example, state law rules requiring a neutral arbitrator or requiring the employer to pay the unique costs of arbitration do not interfere with fundamental attributes of arbitration and are not preempted. Slip op. at 29. 

Although waiver of Berman hearing procedures is not unconscionable per se, "waiver of these protections in the context of an agreement that does not provide an employee with an accessible and affordable arbitral forum for resolving wage disputes may support a finding of unconscionability." Slip op. at 33. 

The Court remanded to the trial court "to examine the totality of the agreement's substantive terms as well as the circumstances of its formation to determine whether the overall bargain was unreasonably one-sided." Slip op. at 33. The Court ordered the trial court to consider "not only what features of dispute resolution the agreement eliminates but also what features it contemplates." Slip op. at 33.  The Court noted: 

The unconscionability inquiry is not a license for courts to impose their renditions of an ideal arbitral scheme. Rather, in the context of a standard contract of adhesion setting forth conditions of employment, the unconscionability inquiry focuses on whether the arbitral scheme imposes costs and risks on a wage claimant that make the resolution of the wage dispute inaccessible and unaffordable, and thereby "effectively blocks every forum for the redress of disputes, including arbitration itself."

Slip op. at 35.

The unconscionability analysis outlined is not preempted by the FAA. It does not facially discriminate against arbitration, it applies equally to arbitration and nonarbitration agreements that require employees to forgo the Berman protections in resolving wage claims, and as applied it does not pose an obstacle to the achievement of the FAA's objectives as construed in Concepcion. Slip op. at 37.

Finally, the US Supreme Court's recent holding in American Express Co. v. Italian Colors Restaurant (2013) 570 U.S. __ (discussed here) does not affect the Court's reasoning. Slip op. at 42-48. 

Italian Colors involved the harmonization of the FAA with other federal law; it did not involve preemption of state laws dealing with historical police powers. Slip op. at 44. Further, whereas the class action waiver in Italian Colors "eliminated no statutory entitlement specifically designed to help vindicate the rights at issue there, the same is not true of the waiver of statutorily provided Berman protections in this case." Slip op. at 45. 

Concepcion held that the FAA preempts a state-law rule that interferes with fundamental attributes of arbitration "even if [the rule] is desirable for unrelated reasons," such as facilitating the prosecution of "small-dollar claims that might otherwise slip through the legal system." Concepcion did not hold that the FAA preempts state-law rules designed to facilitate prosecution of small-dollar claims even when the rules do not interfere with fundamental attributes of arbitration... 

Slip op. at 47-48. 

Justice Liu, who has become a leading voice in employment law over the last year, wrote the majority opinion, joined by Chief Justice Cantil-Sakauye and Justices Kennard, Werdegar, and Corrigan. Justice Corrigan concurred in the result but expressed the opinion that unconscionability should be found only where the agreement is "so one-sided as to 'shock the conscience.'"  Justice Chin, joined by Justice Baxter, joined in part and dissented in part, arguing that the FAA preempts the Court's approach, and the Court should find the agreement at issue not unconscionable, rather than remanding to the trial court to determine the issue. 

The opinion is available here. 

Governor Brown Vetoes Bill to Amend FEHA After Harris v. Santa Monica

Governor Brown has vetoed legislation intended to address the California Supreme Court's decision in Harris v. City of Santa Monica (2013) 56 Cal.4th 203 (discussed here), which held:

A plaintiff in an action under the Fair Employment and Housing Act (FEHA) must prove that unlawful discrimination was a “substantial factor motivating” the alleged adverse employment action;  

A defendant in such an action may use a “mixed-motive” defense by proving, by a preponderance of the evidence, that it would have made the same decision absent such discrimination;  

A defendant making such a showing need not concede that unlawful discrimination played any role in its decision-making process; and  

If the defendant makes such a showing, the plaintiff may not obtain reinstatement, backpay, front pay, or noneconomic damages, but may obtain declaratory relief, injunctive relief, and reasonable attorney’s fees and costs.

In response to Harris, the California legislature passed SB 655, which would have defined "substantial motivating factor" as follows: 

For purposes of this section, “substantial motivating factor” means a factor that contributed to the employment action or decision. It shall be more than a remote or trivial factor, but need not be the only or main cause of the employment action or decision. Evidence that the person claiming to be aggrieved had a protected characteristic at the time of the employment action or decision is not, by itself, sufficient proof that the protected characteristic was a substantial motivating factor. 

SB 655 also would have provided a $25,000 civil penalty in any action in which the employee proved that discrimination was a substantial motivating factor for an adverse employment action, even if the employer proved that it would have made the same decision without considering the protected characteristic or activity.

Governor Brown vetoed SB 655 on October 10, 2013. He wrote in his veto message:

I think Supreme Court Justice Goodwin Liu got it right in his well-reasoned opinion in [Harris] and I see no reason for further legislative intervention. 

Additional information is available here.  

Leos v. Darden: Supreme Court Issues Another Arbitration Grant-and-Hold

In Leos v. Darden Restaurants, Inc. (6/4/13, pub. 6/24/13) --- Cal.App.4th --- (discussed here), the Court of Appeal reversed a trial court order denying a defendant's motion to compel arbitration in a sexual harassment, retaliation, and wrongful termination action. 

The California Supreme Court has granted review and deferred briefing pending its decision in Baltazar v. Forever 21, Inc. (Case No. S208345) (discussed here) which presents the following issue: 

Is an arbitration clause in an employment application that provides "I agree to submit to binding arbitration all disputes and claims arising out of the submission of this application" unenforceable as substantively unconscionable for lack of mutuality, or does the language create a mutual agreement to arbitrate all such disputes? (See Roman v. Superior Court (2009) 172 Cal.App.4th 1462.) 

Leos v. Darden is Case No. S212511, and the Supreme Court's web page for it is here. 

Diaz v. First American Home Buyers Protection Corporation: Unaccepted Offer of Judgment Does Not Moot Individual Action

In Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 569 US __ (2013) (discussed here), the Supreme Court of the United States "assume[d], without deciding," that an employer's Rule 68 offer of judgment mooted an employee's individual claim in an FLSA putative collective action, even though the plaintiff did not accept the defendant's Rule 68 offer. 

In Diaz v. First American Home Buyers Protection Corporation, ___ F.3d ___ (9th Cir. 10/4/13), the plaintiff filed a putative class action alleging a number of state law claims. The district court dismissed certain claims and denied class certification, and the defendant made a Rule 68 offer of judgment on the remaining individual claims. The plaintiff rejected the offer, and the district court dismissed her claims for lack of subject matter jurisdiction.  

The Ninth Circuit reversed. First, it noted that the issue has not been addressed until now: 

The Supreme Court has yet to address this issue. See Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1528–29 (2013) (“While the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not properly before us.” (footnote omitted)). Nor have we squarely addressed the issue. In Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091–92 (9th Cir. 2011), we held “that an unaccepted Rule 68 offer of judgment – for the full amount of the named plaintiff’s individual claim and made before the named plaintiff files a motion for class certification – does not moot a class action” (emphasis added), but we did not squarely address whether the offer mooted the plaintiff’s individual claim. We assumed that an unaccepted offer for complete relief will moot a claim, but we neither held that to be the case nor analyzed the issue. See id. at 1090–92. In GCB Communications, Inc. v. U.S. South Communications, Inc., 650 F.3d 1257, 1267 (9th Cir. 2011), we noted that a case will “become moot” when “an opposing party has agreed to everything the other party has demanded,” but we did not address the effects of an unaccepted Rule 68 offer, an issue not presented in that case. We therefore treat this as an open question in this circuit.  

Slip op. at 8. 

The Court then turned to Justice Kagan's dissent in Genesis Healthcare and found it persuasive. Slip op. at 10-14. 

We are persuaded that Justice Kagan has articulated the correct approach. We therefore hold that an unaccepted Rule 68 offer that would have fully satisfied a plaintiff’s claim does not render that claim moot. This holding is consistent with the language, structure and purposes of Rule 68 and with fundamental principles governing mootness. These principles provide that “[a] case becomes moot only when it is impossible for a court to grant ‘any effectual relief whatever to the prevailing party.’” Knox v. Serv. Employees Int’l Union, 132 S. Ct. 2277, 2287 (2012) (quoting City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000)). Here, once First American’s offer lapsed, it was, by its own terms and under Rule 68, a legal nullity. 

Slip op. at 14. 

Diaz v. First American is available here. 

Brown v. Superior Court: Supreme Court Grants Review of Another Arbitration Matter

In Brown v. Superior Court (Morgan Tire & Auto, LLC) (6/4/13) --- Cal.App.4th --- (discussed here), the Court of Appeal reversed in part a trial court order compelling individual arbitration of wage claims, holding that the Federal Arbitration Act (FAA) does not preempt California law prohibiting waiver of an employee's right to bring a representative action under the Labor Code Private Attorneys General Act (PAGA).

The California Supreme Court has granted review of that decision and deferred briefing pending its decision in Iskanian v. CLS Transportation of Los Angeles (Case No. S204032) (discussed here), which presents the following issues:

1. Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights? 
2. Does the high court's decision permit arbitration agreements to override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.)? 
3. Did defendant waive its right to compel arbitration? 

Brown v. Superior Court is Case No. S211962, and the Supreme Court's web page for it is here.

HM DG, Inc. v. Amini: Court Enforces Arbitration Clause That Does Not Specify How Arbitrator Will Be Selected

In HM DG, Inc. v. Amini (9/20/13) --- Cal.App.4th ---, the trial court denied a petition to compel arbitration because the arbitration clause at issue "is uncertain in that it does not specify before what agency o[r] person the matter will be arbitrated, [or] how the arbitrator will be selected, but merely sets for[th] alternative options for these terms." 

The Court of Appeal reversed. 

Code of Civil Procedure section 1281.61 specifically contemplates the existence of an enforceable arbitration agreement even where the "arbitration agreement does not provide a method for appointing an arbitrator . . . ." The statute further provides that "[i]n the absence of an agreed method, or if the agreed method fails . . . , the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator." (Ibid.) As we shall explain, because the court has the power to appoint an arbitrator under section 1281.6 when the parties fail to agree upon a method for appointment, we conclude that neither the absence of a definite method, nor the presence of "alternative options," for appointing an arbitrator renders an otherwise valid arbitration agreement unenforceable. 

Slip op. at 2. The Court remanded for the trial court to determine whether other grounds exist to deny the petition under section 1281.2. 

The opinion is available here. 

Steven G. Pearl Recognized as One of Ten California "Rising Stars"

I am very honored to be recognized as one of ten "Rising Stars" on the Daily Journal's list of "Top 50 Neutrals" in California. 

To answer a couple of questions that I encounter frequently: 

Yes, I handle the full spectrum of employment law cases, including discrimination, harassment, and retaliation cases, trade secret and non-competition cases, and of course, wage and hour. 

And yes, I will come to you, whether you are in San Diego or San Francisco. 

Please contact my case manager, Dana Sweetman, for availability: (310) 201-0010 or Dana@ADRServices.org.

Court Orders Briefing In Case Considering Whether Obligation to Arbitrate Is Unilateral Or Bilateral

I mentioned not long ago that the California Supreme Court had dismissed Wisdom v. AccentCare, Inc. (2012) 202 Cal.App.4th 591, review granted 3/28/12 (discussed here), a case in which the Supreme Court was set to decide whether certain language in an arbitration agreement was unilateral (requiring only one side to arbitrate) or bilateral (requiring both sides to arbitrate). The parties in Wisdom settled their case, and the Supreme Court dismissed it.

To replace Wisdom on its docket, the Court has ordered briefing in Baltazar v. Forever 21, Inc. (12/20/12) 212 Cal.App.4th 221, review granted 3/20/13 (discussed here). In Baltazar, the Court of Appeal reversed a trial court order denying arbitration, holding inter alia, that the agreement at issue there was not unconscionable because it imposed a bilateral obligation to arbitrate.

Baltazar is Case No. S208345, and the Supreme Court's web page for it is here.  

Ellis v. Toshiba America: Court Affirms Sanctions In Class Action Attorney Fee Dispute

Ellis v. Toshiba America (8/7/13) --- Cal.App.4th --- is an unusual case (to say the least) dealing with class action attorney fees.

Two firms filed a consumer class action against Toshiba. The case settled in mediation, giving class members warranty extensions and repair vouchers. One firm, Sklar Law Office (SLO), objected to the form of the agreement and class notice, but after further negotiation, filed a motion for settlement approval stating its intent to seek fees of almost $25 million (25 percent of a settlement value placed at almost $99 million), to be apportioned between class counsel. Toshiba objected and sought discovery regarding the fee request.

The trial court approved the settlement, awarding over $1 million in fees to SLO's co-counsel. SLO continued to request the remainder of the $25 million, and a battle ensued. Toshiba sought Sklar's electronic billing records, and Sklar objected. The Court ordered Sklar to sit for deposition and to produce the billing records in native format. At deposition, Sklar testified that she had converted her files to .pdf format and deleted the original electronic files with a program called "Wipe and Delete." The trial court ordered SLO to allow a forensic inspection of its computers, and it refused. 

The trial court ultimately awarded SLO 176,900 in fees (for work during the merits phase of the class action by SLO staff), awarding nothing for Sklar's own work; and deducted $165,000 in sanctions awarded to Toshiba for Sklar's failure to comply with court discovery orders and her failure to meet and confer in good faith. 

The Court of Appeal affirmed. 

The Court first granted in part Toshiba's motion to strike portions of the appellant's appendix because it appeared that SLO had altered the record on appeal. The Court awarded monetary sanctions to Toshiba for bringing the motion to strike. Slip op. at 26-29. 

The Court next held that the trial court acted within its discretion in awarding monetary sanctions against SLO for misuse of the discovery process. Slip op. at 29-32. The Court found that SLO both refused to obey the trial court's orders and failed to meet and confer in good faith. 

The Court then held that the trial court did not exceed its jurisdiction in making the ordering inspection of SLO's computers: 

Sklar requested over $24 million in attorney fees. In support, she provided hard copies of her billing records purporting to show that she worked at a superhuman rate, followed by a CD with PDF copies of those time records (which she acknowledges had been redacted). Sklar later represented that she had deleted all the original electronic billing records that arguably might have cast doubt on the accuracy of her billing. We therefore reject Sklar‘s complaint that the court exceeded its jurisdiction when it authorized Toshiba‘s inspection of her hard drive to determine whether any of that electronically stored information survived her destruction of the files.

Slip op. at 33. 

Finally, the Court held that the trial court did not abuse its discretion in awarding only a fraction of the requested fees and denying any fees to Sklar herself. Slip op. at 33-44. Sklar was not credible, her records were not usable to calculate a lodestar figure, and the trial court had other good cause to award fees as it did. 

The Court did remand the matter for the trial court to rule on SLO's request for up to $115,000 in costs. The trial court had not ruled on the issue. 

Ellis v. Toshiba America is available here. 

Smith v. Clark County School District: ADA Plaintiff May Avoid Summary Judgment by Explaining Contradictory Statements In Applications for Disability Benefits

In Smith v. Clark County School District, ___ F.3d ___ (9th Cir. 8/21/13), Jacqlyn Smith worked for a school district, first as a teacher and then as a literary specialist. After aggravating a back injury, Smith applied for medical leave and disability benefits. 

On Smith's application for leave under the Family and Medical Leave Act (FMLA), Smith's doctor stated that Smith was “presently incapacitated” and could not “work at all until released by [a] doctor.” On her application for private disability benefits, Smith stated that her “dates of total disability” ranged from March 31, 2008, to “Not Sure.” On Smith's application for disability retirement under the Nevada Public Employees’ Retirement Systems (PERS), Smith's doctor certified that Smith was “unable to work due to injury or mental or physical illness.” 

At the same time, Smith and the district engaged in negotiations over whether and how she could return to work. Smith contended that she could not work as a teacher, but could work as a literary specialist. The district contended that it could not put her back into a literary specialist position, but offered a teaching position with accommodations. Smith ultimately resigned so that she could receive PERS disability retirement benefits. 

Smith sued the district in federal court, alleging that it violated the Americans with Disabilities Act (ADA) by discriminating against her and not providing reasonable accommodation. The district moved for summary judgment, asserting (1) that Smith was not a “qualified individual” under the ADA because she had represented on her applications for disability benefits that she was permanently disabled; and (2) that the district did not deny Smith a reasonable accommodation. The district court ultimately granted summary judgment, and Smith appealed. 

The Ninth Circuit reversed the judgment. It held that, in deciding whether Smith was a “qualified individual” under the ADA, the district court improperly applied the framework set forth in Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795 (1999), for analyzing the effect of inconsistent statements on applications for disability benefits. Slip op. at 9-11. Relying on Cleveland, the Court first determined that Smith's claims for FMLA leave, private insurance benefits, and PERS disability retirement did not inherently conflict with her ADA claim because they did not account for her ability to work with reasonable accommodation. Slip op. at 11-13. 

However, because Smith had made "certain statements" that "appear to conflict" with her ADA claim, the Court next considered whether Smith had met her burden of explaining these inconsistencies. Slip op. at 13-15. Looking at the facts in the light most favorable to the plaintiff, and considering that "Cleveland’s sufficient-explanation standard is not an exceedingly demanding one," the Court concluded that Smith "gave sufficient explanations for the inconsistencies between her ADA claim and her PERS and FMLA applications to survive summary judgment." Slip op. at 16. 

Smith v. Clark County School District is available here. 

Governor Brown Signs Law Addressing Exhaustion of Administrative Remedies and Other Issues

On October 5, 2013, Governor Brown signed SB 666 (Steinberg) into law. SB 666 has the following effects:

Certain licensed professionals and businesses could be subject to license suspension or revocation if the Labor Commissioner or a court determines that they have violated certain provisions of California law.

Attorneys could be subject to discipline for reporting or threatening to report the suspected immigration status of a witness or party to a civil or administrative action or his or her family member, to a federal, state, or local agency because the witness or party exercises or has exercised a right related to his or her employment.

It is not necessary to exhaust administrative remedies or procedures in order to bring a civil action enforcing certain rights. This part of the bill overturns MacDonald v. State of California (8/27/13) --- Cal.App.4th --- (discussed here), in which the Court of Appeal held that an employee must exhaust the administrative remedy set forth in Labor Code section 98.7 before pursuing statutory claims for retaliatory discharge in violation of Labor Code section 1102.5 and retaliatory and discriminatory discharge in violation of Labor Code section 6310.

An employer who retaliates or takes adverse action against any employee or applicant for employment because he or she has engaged in protected conduct may be subject to a civil penalty of up to $10,000 per violation.

Further information on SB 666, including the text of the bill, is available here.  

Vargas v. SAI Monrovia B, Inc.: California Supreme Court Issues Grant-and-Hold of Another Arbitration Decision

In Vargas v. SAI Monrovia B, Inc. (6/4/13) --- Cal.App.4th ---, the Court of Appeal again found the arbitration clause in a standard automobile retail installment sales contract unconscionable and unenforceable. As anticipated, on August 21, 2013, the California Supreme Court granted review and deferred briefing pending its decision in Sanchez v. Valencia Holding Co., LLC (2012) 201 Cal.App.4th 74, review granted March 21, 2012 (Case No. S199119), which addresses the identical arbitration clause. 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?

Vargas is Supreme Court Case No. S212033, and the Court's web page for it is here. The Court's web page for Sanchez is here.