Sheridan v. Touchstone: Employee Need Not Exhaust Administrative Remedies Before Filing Labor Code Section 6310 Retaliation Claim

Sheridan v. Touchstone Television Productions, LLC (Cal.App. 10/20/15) is clearly and concisely written, and I will quote from it liberally. 

Touchstone Television Productions (Touchstone) hired actress Nicollette Sheridan to appear in the television series Desperate Housewives, a show created by Marc Cherry. Sheridan sued Touchstone under Labor Code section 6310, alleging that Touchstone fired her in retaliation for her complaint about a battery allegedly committed on her by Cherry. The trial court sustained Touchstone’s demurrer to the complaint on the basis that Sheridan failed to exhaust her administrative remedies by filing a claim with the Labor Commissioner. The sole issue on appeal is whether Sheridan was required to exhaust her administrative remedies under sections 98.7 and 6312. We conclude that she was not required to do so and therefore reverse.

The Court reasoned as follows:

The plain language of [Labor Code] sections 6312 and 98.7 before the 2013 amendments did not require exhaustion. Both stated that a person who believed that he or she had been discriminated against in violation of the relevant Labor Code provisions “may,” not “shall,” file a complaint with the Labor Commissioner or the Division of Labor Standards Enforcement... Thus, a straightforward reading of the statutes establishes an administrative claim is permitted, but not required. 

***  

Given that exhaustion was not required under the pre-2013 versions of sections 6312 and 98.7, the 2013 enactment of section 244, subdivision (a) and section 98.7, subdivision (g), merely clarified existing law.

As a result, the Court did not consider arguments regarding the statutes' retroactivity. 

The opinion is here.

Miranda v. Anderson Enterprises: "Death Knell" Doctrine Allows Immediate Appeal from Order Dismissing PAGA Allegations

In Miranda v. Anderson Enterprises, Inc. (Cal.App. 10/15/15), the plaintiff filed a class and PAGA representative action against the defendant. The defendant petitioned to compel individual arbitration, dismiss the class and PAGA claims, and stay the trial court proceedings. The trial court granted the petition, and the plaintiff appealed that part of the order relating to his PAGA claims.

In the published portion of the decision, the Court of Appeal held that the death knell doctrine gave the plaintiff right to appeal an immediate appeal from the trial court's order dismissing the PAGA allegations. 

As an initial matter, respondents contend the trial court’s order is not presently appealable. “Orders granting motions to compel arbitration are generally not immediately appealable.” Appellant argues his appeal falls within the death knell exception, which “provides that an order which allows a plaintiff to pursue individual claims, but prevents the plaintiff from maintaining the claims as a class action, . . . is immediately appealable because it ‘effectively r[ings] the death knell for the class claims.’ ” Appealability under the death knell doctrine requires “an order that (1) amounts to a de facto final judgment for absent plaintiffs, under circumstances where (2) the persistence of viable but perhaps de minimis individual plaintiff claims creates a risk no formal final judgment will ever be entered.” 

The Court held that PAGA actions are analogous to class actions for purposes of applying the death knell doctrine, and the plaintiff could appeal from the order dismissing his PAGA action.

The opinion is available here.

Prue v. Brady Company: Plaintiff Sufficiently Alleged Wrongful Termination in Violation of the Public Policy against Disability Discrimination

In Prue v. Brady Company/San Diego, Inc. (Cal.App. 11/17/15), the plaintiff sued the defendant for wrongful termination in violation of public policy, alleging that the defendant terminated him after he suffered a work-related injury. The trial court granted summary judgment for the defendant, and the Court of Appeal reversed, holding as follows:

"Because the gist of Brady's motion was not the absence of disputed material facts but was instead whether Prue's complaint alleged sufficient facts to state a cause of action, its motion for summary judgment was, in effect, a motion for judgment on the pleadings."

The complaint "sufficiently alleged essential facts to inform Brady that [Prue] was alleging a common law cause of action for wrongful termination in violation of FEHA's public policy against disability discrimination." The complaint alleged: "(1) Prue suffered from a disability (i.e., a musculoskeletal injury); (2) he was capable of performing the essential functions of his position; (3) he was subjected to an adverse employment action (i.e., termination of his employment) because of his disability; and (4) Brady knew of his disability when it decided to terminate his employment."

The complaint did not allege only a violation of Labor Code section 132a, which prohibits retaliation against an employee who files a worker's compensation claim.

The one-year statute of limitations for violations of the Fair Employment and Housing Act (FEHA) does not apply to a common law claim for wrongful termination. Instead, the two-year limitations period under Code of Civil Procedure section 335.1 applies.

If the complaint had not adequately alleged the wrongful termination claim, the trial court would have abused its discretion in rejecting Prue's request for leave to amend.

The opinion is available here. 

Governor Vetoes Employment Arbitration Bill

I wrote recently in the Daily Journal ("Does the FAA cover your agreement?") about AB 465 (Legislative Counsel's Digest here), which would have enacted Labor Code section 925, providing, inter alia, as follows:

No person may require another person, as a condition of employment, to agree to the waiver of any legal right, penalty, forum, or procedure for any employment law violations; no person may threaten, retaliate, or discriminate against another person based on a refusal to agree to such waiver; any such waiver required as a condition of employment or continued employment is unconscionable, against public policy, and unenforceable; any waiver of a person’s employment rights must be knowing, voluntary, in writing, and expressly not made as a condition of employment.

Governor Brown vetoed AB 465 on October 11. His veto message is here.

New Law Adds Gender Identity Protection in Public Contracts

On October 7, 2015, Governor Brown signed Senate Bill 703, enacting section Public Contracts Code section 10295.35, which provides that state agencies "shall not enter into any contract for the acquisition of goods or services in the amount of one hundred thousand dollars ($100,000) or more with a contractor that, in the provision of benefits, discriminates between employees on the basis of an employee’s or dependent’s actual or perceived gender identity, including, but not limited to, the employee’s or dependent’s identification as transgender."

Legislative Counsel's Digest is available here. 

Valencia v. SCIS: Federal Airline Deregulation Act Does Not Preempt Meal and Rest Period Claims

In Valencia v. SCIS Air Security Corporation (10/16/15) --- Cal.App.4th ---, the defendant, SCIS, provided security services to airlines for their in-flight catering operations. The plaintiff, a former SCIS employee, filed a putative class action against SCIS, alleging failure to provide meal and rest periods, along with other wage and hour violations. The trial court granted SCIS's motion for summary adjudication in part, holding that the plaintiff's claims for missed meal and rest periods were preempted by the federal Airline Deregulation Act (ADA). The Court of Appeal reversed, holding as follows:

The ADA does not preempt the plaintiff's meal and rest period claims. The Court distinguished Northwest, Inc. v. Ginsberg (2014) __ U.S. __, 134 S.Ct. 1422, 1428 (ADA preempts customer's claim that airline violated state contract law by canceling frequent flyer program). 

Instead, this case is analogous to People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772 (discussed here) (Federal Aviation Administration Authorization Act of 1994 (FAAAA) does not preempt Unfair Competition Law (UCL) claims based on alleged independent contractor misclassification) and Dilts v. Penske Logistics, LLC (9th Cir. 2014) 769 F.3d 637 (discussed here) (FAAAA does not preempt truck drivers' meal and rest period claims). ADA and FAAAA use the same statutory preemption language, and precedent in one is instructive for the other.

The court remanded for reconsideration of the plaintiff's motion for class certification.

The opinion is available here.

Carlson v. Home Team Pest Defense: Court Affirms Order Denying Enforcement of Unconscionable Arbitration Agreement

A quick word on Carlson v. Home Team Pest Defense (8/17/15) --- Cal.App.4th ---, an individual action in which the Court of Appeal affirmed a trial court order denying the defendant's motion to compel arbitration, holding as follows:

The arbitration agreement was procedurally unconscionable because it was a contract of adhesion presented it on a take-it-or-leave it basis, and the defendant did not provide the plaintiff with its specific Dispute Resolution Policy or the AAA arbitration rules incorporated into it. If the plaintiff had refused to sign, she would have lost both the job offer and her unemployment insurance benefits.

The agreement was substantively unconscionable primarily because the agreement required the plaintiff to arbitrate all claims, but allowed the defendant to sue the plaintiff in court for violation of its competition and intellectual property claims. The trial court's finding that the agreement was "one-sided, objectively unreasonable, and lacked mutuality" was supported by other factors as well.

The Federal Arbitration Act (FAA) did not preempt California's unconscionability analysis, which is a "generally applicable contract defense" under the FAA.

Given all of the substantively unconscionable provisions of the arbitration agreement, the trial court did not abuse its discretion by invalidating the entire agreement, rather than severing a provision requiring the parties to share the costs of arbitration from the agreement. Severing all of the one-sided provisions from the agreement would have required the court to re-write it entirely.

The opinion is available here.

Connor v. First Student: Cal. Supreme Court Grants Review of Investigative Consumer Reporting Agencies Act Case

The California Supreme Court this week granted review in Connor v. First Student, Inc. (8/12/15) --- Cal.App.4th --- (discussed here). The issue presented is as follows:

Is the Investigative Consumer Reporting Agencies Act (Civ. Code, § 1786 et seq.) unconstitutionally vague as applied to background checks conducted on a company’s employees, because persons and entities subject to both that Act and the Consumer Credit Reporting Agencies Act (Civ. Code, §1785.1 et seq.) cannot determine which statute applies?

Connor v. First Student is Case No. S229428, and the Court's web site for it is here. 

Happy Thanksgiving!

I have much to be thankful for: family, friends, good health. I am so grateful, and so fortunate,  that I get to do work that I love for a living. And I am very grateful for all of you who have asked me to work with you, particularly over the last year. Thank you, and have a happy Thanksgiving.

Cal. DOJ v. CalPERS: Court of Appeal Rules on Public Employee Disability Retirement and Reinstatement Issues

Just to note this case for our colleagues who do public entity work.

California Department of Justice v. Board of Administration of California Public Employees’ Retirement System (Resendez) (10/13/15) --- Cal.App.4th --- discusses the following issues:

Appellant California Department of Justice (DOJ) appeals from a judgment in favor of respondents Angelita Resendez and Board of Administration of California Public Employees’ Retirement System (CalPERS) in this action concerning reinstatement to a peace officer position following disability retirement. On appeal, it is undisputed that Resendez is no longer incapacitated for duty based on the orthopedic condition that led to her disability retirement. DOJ contends: (1) in determining whether Resendez was still physically or mentally incapacitated for duty, CalPERS should have verified Resendez was not suffering from any other condition that would prevent her from meeting the minimum standards for peace officers set forth in Government Code section 10312 ; (2) DOJ does not have a mandatory duty under section 21193 to reinstate an employee that CalPERS determines is no longer incapacitated; and (3) DOJ may condition an offer of reinstatement under section 21193 on compliance with the standards of section 1031. We conclude CalPERS properly made its reinstatement determination based on the condition for which Resendez received disability retirement, DOJ has a mandatory duty to reinstate Resendez after CalPERS concludes she is no longer incapacitated, and DOJ may not require Resendez to comply with conditions prior to reinstatement. 

The opinion is available here.

Connor v. First Student: Investigative Consumer Reporting Agencies Act Is Not Constitutionally Void for Vagueness, and Employee May Maintain Action for Alleged Violations

The Investigative Consumer Reporting Agencies Act (ICRAA) (Cal. Civ. Code, § 1786 et seq.) and the Consumer Credit Reporting Agencies Act (CCRAA) (Cal. Civ. Code § 1785.1 et seq.) regulate agencies that gather information on consumers to provide to employers, landlords, and others for use by those persons in making employment, rental, and other decisions. The ICRAA governs agencies (and those to whom it provides information) with regard to investigative consumer reports, i.e., reports containing information on a consumer's character, general reputation, personal characteristics, or mode of living. The CCRAA governs agencies (and those to whom it provides information) with regard to consumer credit reports, i.e., reports of information bearing on a consumer's credit worthiness, credit standing, or credit capacity. Both acts impose obligations on the agencies regarding disclosure to consumers when the agencies furnish reports, and limit when and to whom those reports may be furnished. The obligations and limitations, however, are different for each act, as are the remedies for violations of the act; generally, the ICRAA imposes greater obligations and stricter limitations, and allows greater remedies.

In Connor v. First Student, Inc. (8/12/15) --- Cal.App.4th ---, the plaintiff sued the defendants for violation of the ICRAA, alleging that the notices they gave to her regarding their intent to conduct background checks failed to comply with the law. The trial court granted summary judgment for the defendants, holding that the ICRAA is unconstitutionally vague in its application. The Court of Appeal reversed, holding as follows: the ICRAA applied to the background checks at issue; the fact that the CCRAA might also apply to those same background checks did not render the ICRAA void for vagueness; and Ortiz v. Lyon Management Group, Inc. (2007) 157 Cal.App.4th 604, holding that the ICRAA was void for vagueness, was wrongly decided because it failed to consider case law governing the interpretation of overlapping statutes.

The opinion is available here.

New Labor Code Section 226.2 Creates Safe Harbor for Employers Who Have Not Compensated Piece Rate Workers Separately for Non-Productive Time

In Gonzalez v. Downtown LA Motors, LP (2013) 215 Cal.App.4th 36 (discussed here), the Court of Appeal held that an auto repair shop that paid its repair technicians on a piece rate basis (paying per job done, rather than per hour worked) must compensate those employees separately for their non-productive time (time spent waiting for the next repair job or doing other non-repair tasks directed by the employer). In Bluford v. Safeway Stores, Inc. (2013) 216 Cal. App. 4th 864 (discussed here), the Court held that employers also must compensate their piece rate workers separately for their rest period time. (Unlike meal period time, which is non-compensable time off the clock, rest period time is compensable time on the clock.)

On October 10, 2015, Governor Brown signed legislation enacting Labor Code section 226.2, which provides a safe harbor to employers who have not complied with these requirements in the past. As stated in Legislative Counsel's Digest:

Existing law prohibits an employer from requiring an employee to work during any meal or rest or recovery period mandated by an applicable statute or specified regulation, standard, or order, establishes penalties for an employer’s failure to provide a mandated meal or rest or recovery period, and requires rest or recovery periods to be counted as hours worked. Existing law establishes the Division of Labor Standards Enforcement in the Department of Industrial Relations for the enforcement of labor laws, including laws related to wage claims. Existing law requires every employer, semimonthly or at the time of each payment of wages, to furnish each employee with an accurate itemized statement in writing showing specified information. A knowing and intentional violation of this provision by an employer is a misdemeanor, as specified. 

This bill would require the itemized statement provided to employees compensated on a piece-rate basis to also separately state the total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period, and the total hours of other nonproductive time, as specified, the rate of compensation, and the gross wages paid for that time during the pay period. The bill would require those employees to be compensated for rest and recovery periods and other nonproductive time at or above specified minimum hourly rates, separately from any piece-rate compensation. The bill would define “other nonproductive time” for purposes of these provisions to mean time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis. Because a knowing and intentional violation of these requirements would be a crime, the bill would impose a state-mandated local program. 

The bill, until January 1, 2021, would provide that an employer shall have an affirmative defense to any claim or cause of action for recovery of wages, damages, liquidated damages, statutory penalties, or civil penalties based solely on the employer’s failure to timely pay the employee the compensation due for rest and recovery periods and other nonproductive time for time periods prior to and including December 31, 2015, if, by no later than December 15, 2016, the employer complies with specified requirements, subject to specified exceptions.

Legislative Counsel's Digest is available here. 

Jumaane v. City of Los Angeles: Continuing Violation Doctrine Did Not Apply, and Plaintiff Did Not Prove Discrimination, Harassment, or Retaliation During Limitations Period

In Jumaane v. City of Los Angeles (11/10/15) --- Cal.App.4th ---, Jabari Jumaane sued the City of Los Angeles for disparate impact and disparate treatment discrimination based on race (African-American), harassment based on race, and retaliation. Jumaane alleged that the adverse employment actions against him included suspensions in June, 1999, and again in April, 2011. Jumaane filed his DFEH complaint on April 16, 2002, and filed suit thereafter.

The City prevailed in the first trial, held in 2007, but the trial court reversed based on juror misconduct, and the Court of Appeal affirmed. In the second trial, held in 2013, Jumaane prevailed on all claims, except his disparate treatment discrimination claim. The trial court denied the City's nonsuit motion, the City appealed, and the Court of Appeal reversed, holding as follows:

Jumaane could not recover for acts occurring more than one year before he filed his DFEH complaint. For the continuing violation doctrine to apply, the plaintiff must prove that conduct occurring outside the limitations period was (1) similar or related to the conduct that occurred earlier; (2) the conduct was reasonably frequent; and (3) the conduct had not yet become permanent. While substantial evidence supported a finding as to the first two elements, Jumaane failed to show that the conduct taking place in the 1990s had not become permanent by the time of his June, 1999, suspension.

Substantial evidence did not support a finding of disparate impact race discrimination during the limitations period. Jumaane failed to meet his burden to show that any facially neutral discipline policy of the City's had a significant adverse impact on African-Americans. While Jumaane introduced evidence to show that there "appeared to be a disproportionate amount of discipline against Blacks" during the early 1990s, this evidence did not show disparate treatment during that time period, let lone during the time period at issue.

Substantial evidence did not support a finding of harassment based on race during the limitations period. The only alleged harassment during the limitations period was the suspension in April, 2011, but a disciplinary suspension "does not constitute harassment under FEHA as a matter of law."

Substantial evidence did not support a finding of retaliation during the limitations period. Assuming for the sake of argument that Jumaane proved a prima facie case of retaliation, he could not demonstrate that the City's proffered legitimate reason for suspending him was pretextual.

Jumaane's claims for failure to prevent discrimination, harassment, and retaliation also failed.

The opinion is available here.

Performance Team Freight Systems v. Aleman: Truck Drivers Failed to Demonstrate that Their Independent Contractor Agreements Fell Outside Scope of FAA

Performance Team Freight Systems, Inc. v. Aleman (11/2/15) --- Cal.App.4th --- is another case dealing with the scope of the Federal Arbitration Act (FAA) and the exclusion for contracts of employment of transportation workers "engaged in foreign or interstate commerce." See Garrido v. Air Liquide Industrial U.S. LP (10/26/15) --- Cal.App.4th --- (discussed here); Garcia v. Superior Court (Southern Counties Express, Inc.) (5/15/15) --- Cal.App.4th --- (discussed here). 

In Performance Team, a number of truck drivers filed individual DLSE wage and hour claims against the respondent. The respondent then filed a superior court action to compel arbitration and stay the DLSE actions pursuant to an arbitration clause in the drivers' independent contractor agreements. The trial court denied the motions, holding that the drivers were transportation workers engaged in foreign or interstate commerce and therefore excluded from the scope of the FAA. The court further held that the drivers' claims fell outside the scope of their independent contractor agreements.

The Court of Appeal reversed, holding as follows:

Even if the drivers were transportation workers engaged in foreign or interstate commerce - an issue which the Court did not decide - the drivers failed to meet their burden to demonstrate that their independent contractor agreements were "contracts of employment."

The only evidence relevant to the issue of whether the individual respondents entered into contracts of employment was presented by Performance Team, which submitted the subject agreements and the declaration of its driver manager. Each agreement was labeled “Independent Contractor Agreement” and specifically described each individual respondent as an “independent contractor.” Each agreement further stated: “For all purposes, [individual respondent] shall be an independent contractor and not an employee of [Performance Team].”

Absent such evidence, the trial court erred in finding that the FAA did not apply.

The trial court also erred in finding that the drivers' claims fell outside of the scope of the arbitration agreement. The agreement provided: "Any dispute between the parties with respect to the interpretation or the performance of the terms of this Agreement may be submitted to arbitration...." The drivers contended that they performed the trucking services required by the agreements, and resolving the drivers' claims would require interpretation of the agreement's terms. The claims thus fell squarely within the scope of the arbitration agreement.

Finally, the Court erred in finding unconscionability. Although the agreement was substantively unconscionable because it required the parties to share the cost of arbitration and failed to provide a procedure similar to a Berman hearing, the drivers failed to introduce evidence that the agreement was procedurally unconscionable. 

The opinion is available here.

Garrido v. Air Liquide: FAA Does Not Apply in Action by Interstate Transportation Worker; Gentry Factors Apply, and Trial Court Properly Denied Motion to Compel Individual Arbitration

In Garrido v. Air Liquide Industrial U.S. LP (10/26/15) --- Cal.App.4th ---, the plaintiff worked as a truck driver for the defendant, delivering industrial gases in California and neighboring states. He filed a putative class action alleging wage and hour violations against the defendant. The defendant moved to compel individual arbitration pursuant to arbitration agreement, which stated that it was governed by the Federal Arbitration Act (FAA).

The trial court denied the motion to compel arbitration. Analyzing the case under Gentry v. Superior Court (2007) 42 Cal.4th 443, the court held that the defendant could not enforce the agreement because doing so would prevent the plaintiff from bringing a class claim and would stand as an obstacle to his right to vindicate statutory labor rights. The defendant appealed, and the Court of Appeal affirmed, holding as follows:

Although the agreement stated that it would be governed by the FAA, the FAA did not apply here. The FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," which includes "transportation workers." As a truck driver transporting goods across state lines, the plaintiff was a "transportation worker," and the FAA did not apply.

Without the FAA, the California Arbitration Act (CAA) applied.

Although the California Supreme Court held in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, that Gentry’s rule against employment class waivers was preempted by the FAA, Gentry still controls cases where the FAA does not apply. "While Iskanian made clear that the Gentry rule is preempted by the FAA, it did not go beyond that finding. Therefore, the Gentry rule remains valid under the CAA."

Substantial evidence supported the trial court's finding that the four Gentry factors were met: the potential recovery for any individual was modest; there existed a potential for retaliation against the employees; the plaintiff testified that he did not know of his rights during his employment, and the court could infer that the same was true of the other employees; and requiring each employee to bring a separate action would create "real world obstacles to the vindication of class members’ rights..."

"In light of these determinations, the trial court correctly found that a class proceeding here would be a significantly more effective way of allowing employees to vindicate their statutory rights," and the defendant could not enforce the arbitration agreement.

The opinion is available here.

Cardenas v. Fanaian: Court of Appeal Discusses Retaliation under Labor Code Section 1102.5

In Cardenas v. M. Fanaian, D.D.S., Inc. (10/1/15) --- Cal.App.4th ---, the plaintiff complained to police that her wedding ring had been stolen at work, and the defendant terminated her because the police investigation was disrupting the workplace. Cardenas sued for violation of Labor Code section 1102.5 and wrongful termination in violation of public policy. A jury found in her favor, the trial court entered judgment, and the defendant appealed. The Court of Appeal affirmed, holding as follows:

An action under section 1102.5 is a stand-alone, statutory action that exists independently of, and does not depend upon, an action for wrongful termination in violation of public policy. "To establish a prima facie case of retaliation under section 1102.5(b), a plaintiff 'must show (1) she engaged in a protected activity, (2) her employer subjected her to an adverse employment action, and (3) there is a causal link between the two.'" As in other retaliation actions, if the employer demonstrates a legitimate business reason for its action, the employee then bears the burden of demonstrating that the employer's reason is pretextual. 

Section 1102.5 does not require the employee to show that the alleged illegal activity violates a policy that "inures to the benefit of the public at large rather than to a particular employer or employee."

Section 1102.5 also does not require the employee to show that the alleged illegal activity involved "business enterprise wrongdoing."

The opinion is available here. 

Mendoza v. Nordstrom: Cal. Supreme Court Agrees to Decide Wage Issues Certified by Ninth Circuit

In Mendoza v. Nordstrom, Cal Supreme Court Case No. S224611 (9th Cir,. No. 12-57130; 778 F.3d 834, Central District of California; 8:10-cv-00109-CJC-MLG), the Ninth Circuit certified three questions to the California Supreme Court. The Supreme Court agreed to review the issues, which are as follows:

(A) California Labor Code section 551 provides that ‘[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.’ Is the required day of rest calculated by the workweek, or is it calculated on a rolling basis for any consecutive seven-day period? 

(B) California Labor Code section 556 exempts employers from providing such a day of rest ‘when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.’ (Emphasis added.) Does that exemption apply when an employee works less than six hours in any one day of the applicable week, or does it apply only when an employee works less than six hours in each day of the week? 

(C) California Labor Code section 552 provides that an employer may not ‘cause his employees to work more than six days in seven.’ What does it mean for an employer to ‘cause’ an employee to work more than six days in seven: force, coerce, pressure, schedule, encourage, reward, permit, or something else?

Mendoza is a putative class and PAGA action, so I've listed it under those categories on the blog.

The Supreme Court's web page for Mendoza is here. You can request automatic e-mail notifications from the Court here.

In re Acknowledgment Cases: Court Addresses Reimbursement of Police Training Costs

A quick word on In re Acknowledgment Cases (8/12/15, pub. 8/31/15) --- Cal.App.4th ---, in which the Court of Appeal held as follows:

Los Angeles Administrative Code section 4.1700 requires police officers hired by the LAPD to reimburse the city for certain training costs if they quit within five years of graduation and go to work for another law enforcement agency within one year after quitting. The city requires LAPD recruits to sign an "acknowledgment," stating that they will reimburse the city as stated in section 4.1700.

Labor Code section 2802 requires an employer to reimburse an employee for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties." Where a statute or ordinance requires an employee to have a license, the employee must bear the cost of the license. However, where the law does not require the license, but the employer itself requires either training or licensure, the employer must bear such cost.

State law requires every peace officer to complete an introductory training course, known as POST training. Employers are not responsible for the cost of such training under section 2802.

The city requires additional training, beyond that required under state law. Under section 2802, the city must bear the cost of this training. "Accordingly, both LAAC section 4.1700 and the acknowledgment are void to the extent that they require reimbursement for the cost of training other than basic POST certification training."

The appellants argued that the city must pay for all training costs because the city requires recruits to go through such training at the LAPD Academy. The Court did not reach this issue. The Court also did not decide "whether the city can require recruits who are already POST certified, including lateral officers, to attend POST training at its academy and to reimburse it for the cost of that portion of the training pursuant to LAAC section 4.1700."

The opinion is available here.

Governor Signs Legislation Confirming Wage Order Meal Period Waivers for Employees in the Health Care Industry

Industrial Welfare Commission Wage Orders 4 and 5 have special provisions for meal periods that apply only to employees in the health care industry, as defined. Unlike employees in other industries, under Wage Orders 4 and 5, employees in the health care industry who work more than eight hours in a workday may waive one of their two meal periods, even if they work more than twelve hours in the workday.

In Gerard v. Orange Coast Memorial Medical Center (2/10/15) 234 Cal.App.4th 285 (discussed here), the Court of Appeal held that this provision contradicts Labor Code section 512 and is invalid. The California Supreme Court granted review of Gerard, and it is pending on the Court's docket.

In the mean time, Governor Brown on October 5 signed SB 327, which amends Labor Code 516 to provide:

Notwithstanding subdivision (a), or any other law, including Section 512, the health care employee meal period waiver provisions in Section 11(D) of Industrial Welfare Commission Wage Orders 4 and 5 were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. This subdivision is declarative of, and clarifies, existing law.

This is urgency legislation that takes effect immediately.

The text of the bill is available here.

Governor Brown Signs Legislation Amending Fair Pay Act

On October 6, Governor Brown signed legislation amending the State's Fair Pay Act. Cal. Labor Code section 1197.5. Broadly speaking, the Fair Pay Act prohibits employers from paying their employees less than employees of the other sex for equal work in the same establishment and under similar working conditions, "except where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex."

The amended law changes some of these terms and provides protections for employees who complain of violations. It provides:

(a) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: 

(1) The wage differential is based upon one or more of the following factors: 

(A) A seniority system. 

(B) A merit system. 

(C) A system that measures earnings by quantity or quality of production. 

(D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential. 

(2) Each factor relied upon is applied reasonably. 

(3) The one or more factors relied upon account for the entire wage differential.

The new law makes the following changes as well:

Employers must keep records of wages and other terms and conditions of employment for three years, rather than two;

Employers may not: (1) discriminate or retaliate against employees who take action to enforce the law; (2) prohibit employees from discussing their wages or the wages of others, or aiding or encouraging other employees from enforcing their rights under the law;

Employees discriminated or retaliated against may sue for reinstatement, lost wages and benefits, and equitable relief;

A civil action has a statute of limitations of "one year after the cause of action occurs."

Additional information, including the text of the bill and a red-lined version of section 1197.5, is available here.

Governor Signs Bill to Provide Employers Opportunity to Cure Certain Wage Statement Claims in PAGA Actions

On October 2, 2015, Governor Brown signed Assembly Bill 1506, which amends the Labor Code Private Attorneys General Act of 2004 (PAGA) to provide employers the opportunity to cure certain check stub violations before being sued. AB 1506 is urgency legislation that goes into effect immediately. Here's how it works:

Labor Code section 226 requires employers to provide certain information to their employees on their wage statements, including the inclusive dates of the pay period (section 226(a)(6)) and the name and address of the employer (section 226(a)(8)). PAGA allows employees to seek civil penalties for violations of section 226.

Under the existing Labor Code section 2699.3(c), employers may cure certain violations within the time frames provided. If the employer cures, the plaintiff may not sue under PAGA.

The new law adds Labor Code sections 226(a)(6) and (8) to the list of statutes that the employer may cure. For the wonks out there, it actually accomplishes this by deleting sections (6) and (8) from the list of statutes for which there is no opportunity to cure.

Amended section 2699(d) provides:

A violation of paragraph (6) or (8) of subdivision (a) of Section 226 shall only be considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice sent pursuant to paragraph (1) of subdivision (c) of Section 2699.3.

Amended section 2699.3(c)(2)(B)(ii): provides:

No employer may avail himself or herself of the notice and cure provisions of this subdivision with respect to alleged violations of paragraph (6) or (8) of subdivision (a) of Section 226 more than once in a 12-month period for the same violation or violations contained in the notice, regardless of the location of the worksite.

Legislative Counsel’s digest is available here.

Navarro v. Encino Motorcars: Ninth Circuit Defers to Federal Regulations, Holds that Car Dealership's "Service Advisors" Are Not Exempt from FLSA Overtime Requirement

A quick word on Navarro v. Encino Motorcars, ___ F.3d ___ (9th Cir. 3/24/15), which I missed earlier in the year. The plaintiffs worked as service advisors at a car dealership. Their job was to greet customers, evaluate service needs, suggest required services, and suggest additional services above and beyond those required to resolve the customers' complaints. They filed suit for payment of overtime wages under the Fair Labor Standards Act (FLSA). The district court dismissed their overtime claim, holding that they fell within the FLSA's exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles." The Ninth Circuit reversed, holding as follows:

The FLSA requires covered employers to pay their employees minimum wage and overtime compensation. The FLSA exempts "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" from the overtime requirement. Federal regulations define these terms, and the parties agreed that the plaintiffs were not "salesmen, partsmen, or mechanics" as defined within the regulations. The question then was whether the Court should defer to the regulations.

First, the FLSA does not define the terms "salesman, partsman, or mechanic" and it is ambiguous as to their meaning. This is particularly so given that the exemptions are to be applied only to those "plainly and unmistakably within their terms and spirit."

Second, because the regulation was duly promulgated after a notice-and-comment period and has not changed since its promulgation in 1970, the Court reviewed the regulation under the "reasonableness" standard set forth in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984). 

Third, the regulation represents a reasonable interpretation of the statute and is consistent with the presumption that the exemptions should be construed narrowly. The Court noted that "there are good arguments" supporting the defendant's reading of the exemption, "But where there are two reasonable ways to read the statutory text, and the agency has chosen one interpretation, we must defer to that choice."

The opinion is available here.

Decambre v. Rady Children's Hospital: Court Affirms in Part and Reverses in Part Order Granting Anti-SLAPP Motion in Doctor's Action for Discrimination, Harassment, Retaliation, and Defamation

Over the last month, we have seen two cases dealing with anti-SLAPP motions in the employment law context. In Park v. Board of Trustees (8/27/15) --- Cal.App.4th --- (discussed here), a discrimination action, the Court held that a University's decision to deny tenure arose from protected communicative activity. The Court then remanded to the trial court for a determination of the plaintiff's likelihood of success on the merits. In Barker v. Fox & Associates (9/10/15) --- Cal.App.4th --- (discussed here), a defamation action, the court reversed an order denying the defendant's anti-SLAPP motion, finding that the plaintiff had waived his argument that the alleged statements were not privileged, and that the plaintiff had failed to show a reasonable probability of success on the merits.

Decambre v. Rady Children's Hospital (3/11/15, mod. 4/2/15) --- Cal.App.4th ---, is a third such case, which I missed when it came down earlier this year. The plaintiff was a doctor who sued several defendants, including the hospital where she worked, alleging discrimination, harassment, retaliation, wrongful termination, defamation, intentional infliction of emotional distress (IIED), and other causes of action. The trial court granted the defendants' anti-SLAPP motion to strike, finding that the defendants' decision not to renew the plaintiff's contract arose from the hospital's peer review process, which was protected as an official proceeding. The Court of Appeal affirmed in part and reversed in part, holding as follows:

Under the anti-SLAPP statute, Code of Civil Procedure section 425.16, and Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, hospital peer review proceedings constitute protected "official proceeding[s] authorized by law," and the defendants' decision not to renew the plaintiff's contract was the result of that process. The Court rejected the plaintiff's contention that there was no peer review because the defendants did not report their non-renewal to the Medical Board of California. The behavior that led to the decision not to renew did not involve a "medical disciplinary cause or reason," and no such report was required.

The defendants failed to meet their burden to show that the plaintiff's harassment, IIED, and defamation claims arose from protected activity. "The 'principal thrust or gravamen' of the plaintiff's claim determines whether section 425.16 applies," and the court must examine the alleged wrongful conduct, rather than the alleged damages, to determine that issue. Here, the trial court erred in looking to the plaintiff's alleged damages, rather than the defendants' conduct. Some of the conduct underlying the harassment and IIED claims occurred before the peer review process even began, and none of that conduct "occurred within the context of, or in furtherance of, the peer review proceedings." Similarly, the conduct underlying her defamation claim arose after the non-renewal decision and was not part of the peer review proceedings.

In contrast, the defendants did show that the plaintiff's discrimination, failure to prevent discrimination, retaliation, and wrongful termination claims all arose from the peer review process. The wrongful termination claim cannot succeed absent a termination -- the Court did not distinguish between a termination and a non-renewal -- and the FEHA claims cannot succeed absent an adverse employment action. The only adverse employment action alleged here was the non-renewal decision. The defendants' motive, even if discriminatory, did not change the fact that the alleged conduct arose from protected activity.

The defendant having shown that the conduct at issue arose from protected activity, the burden shifted to the plaintiff to show probable success on the merits. The plaintiff failed show that defendants' asserted reasons for the non-renewal were pretextual. She did not refute the defendants' reasons for non-renewal. Instead, she asserted that she "could establish sufficient facts" to prove her claims, and this was not sufficient to meet her burden. 

The plaintiff also asserted claims for violation of the Unfair Competition Law and the Cartwright Act, but I will not address those claims here. I also will not address the Court's holding on the trial court's order sustaining the defendants' demurrer to certain causes of action.

The opinion is available here. 

Tellez v. Rich Voss Trucking: Order Denying Class Certification Reversed where Trial Court States No Reasons for Ruling

Just a quick word on this one. In Tellez v. Rich Voss Trucking (9/30/15) --- Cal.App.4th ---, the trial court denied the plaintiff's motion for class certification, but did not give any reasons for doing so. The Court of Appeal reversed and remanded, holding as follows:

While trial courts generally have broad discretion on motions for class certification,

“appellate review of orders denying class certification differs from ordinary appellate review. Under ordinary appellate review, we do not address the trial court’s reasoning and consider only whether the result was correct. [Citation.] But when denying class certification, the trial court must state its reasons, and we must review those reasons for correctness. [Citation.]” 

***  

“The right result is an inadequate substitute for an incorrect process. Thus the appellate scrutiny should be on the reasons expressed by the trial court in the context of counsel’s arguments, not merely whether the trial court reached a result [that] can be justified by implication.” 

The Court remanded for the trial court to explain its reasons for denying the motion.

The opinion is available here.

Bridewell-Sledge v. Blue Cross: District Court Erred in Treating Consolidated Class Actions as Separate for Purposes of Determining Federal Jurisdiction under the Class Action Fairness Act's "Local Controversy" Exception

Bridewell-Sledge v. Blue Cross of California (8/20/15) --- Cal.App.4th --- presents a novel legal issue regarding federal diversity jurisdiction under the Class Action Fairness Act and its "local controversy" exception. If you're not familiar with it, the local controversy exception provides roughly as follows: 

The district court shall decline jurisdiction over class actions when: more than two thirds of the class members are citizens of the State where the action was filed; at least one "significant" defendant is a citizen of that State; the principal injuries alleged were incurred in that State; and no similar class action has been filed against any of the defendants in the prior three years.

Plaintiff Bridewell-Sledge filed a putative class action against the defendants for failing to pay African American and female employees at a wage rate equal to white or male employees working in the same establishment and performing equal work. 14 minutes later, plaintiff Crowder filed a putative class action against the same defendants for failing to promote African-American and female employees because of their race and gender. The superior court consolidated the actions for all purposes.

Defendants removed the consolidated actions, and the district court again consolidated them for all purposes. After an OSC re. jurisdiction, district court retained jurisdiction over Bridewell-Sledge, finding that the local controversy exception applied, but remanded Crowder, finding that the local controversy exception did not apply because Bridewell-Sledge was a similar action and was filed in the three years prior to Crowder.

The Ninth Circuit reversed, holding that the district court should not have treated Bridewell-Sledge and Crowder as separate actions for CAFA purposes. By consolidating the two actions, the state court "destroy[ed] the identity of each suit and merge[d] them into one."

Under California law, when two actions are consolidated “for all purposes,” “the two actions are merged into a single proceeding under one case number and result in only one verdict or set of findings and one judgment.”

CAFA's legislative history supports this result. The purpose of the local controversy exception was “to ensure that state courts can continue to adjudicate truly local controversies in which some of the defendants are out-of-state corporations.” Remanding the consolidated cases to state court would accomplish this purpose.

The opinion is available here. 

Sakkab v. Luxottica: Ninth Circuit Holds that Federal Arbitration Act Does Not Preempt Iskanian Holding that PAGA Representative Action Waivers Are Unenforceable

In Sakkab v. Luxottica Retail North America, Inc. (9th Cir. 9/28/15) ___ F.3d ___, the Ninth Circuit has held that the Federal Arbitration Act (FAA) does not preempt the holding of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) that agreements to waive representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) are not enforceable.

Plaintiff Shukri Sakkab filed a class and PAGA representative action against Luxottica, accusing it of misclassifying supervisors in its Lenscrafters stores as exempt employees. The district court granted Luxottica's motion to compel arbitration of all claims and dismissed Sakkab's complaint. Sakkab appealed, arguing that the waiver of his PAGA claims was not enforceable. The Ninth Circuit reversed, holding as follows:

The FAA provides that an agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." The FAA preempts state law "to the extent that it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" However, under its "savings clause," the FAA does not preempt "generally applicable contract defenses, such as fraud, duress, or unconscionability."

The FAA does not preempt Iskanian, which held that that pre-dispute agreements to waive PAGA claims are unenforceable. First, the Iskanian rule is a "generally applicable contract defense" that bars any waiver of PAGA claims, "regardless of whether the waiver appears in an arbitration agreement or a non-arbitration agreement."

Second, the rule does not conflict with the FAA's purposes: overcoming judicial hostility toward arbitration, and ensuring enforcement of the terms of arbitration agreements. 

Iskanian does not evidence judicial hostility toward arbitration. It does not prohibit arbitration of PAGA claims. "It provides only that representative PAGA claims may not be waived outright." 

Iskanian does not conflict with the FAA's goal of ensuring enforcement of the terms of arbitration agreements. In AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 321, the Supreme Court considered California's Discover Bank rule, which invalidated agreements to waive class claims in certain consumer cases. Concepcion held that the alternative to such a waiver, class arbitration, would sacrifice the principal advantages of arbitration: informality, speed, and efficiency. The Court thus held that the Discover Bank rule interfered with the parties' selection of the arbitral forum.

In contrast, because class actions and representative PAGA actions differ fundamentally, the Iskanian rule prohibiting waiver of representative PAGA claims "does not diminish parties’ freedom to select informal arbitration procedures."

Because a PAGA action is a statutory action for penalties brought as a proxy for the state, rather than a procedure for resolving the claims of other employees, there is no need to protect absent employees’ due process rights in PAGA arbitrations.... Because representative PAGA claims do not require any special procedures, prohibiting waiver of such claims does not diminish parties’ freedom to select the arbitration procedures that best suit their needs. Nothing prevents parties from agreeing to use informal procedures to arbitrate representative PAGA claims.

Finally, the Court's conclusion that the FAA does not preempt the Iskanian rule is bolstered by the fact that PAGA is part of California's legislative scheme for enforcing its labor laws, and such legislation falls within California's police powers. A PAGA action is a form of qui tam action, and the FAA was not intended to preclude states from authorizing qui tam actions. 

Given the Court's holding that the PAGA waiver is invalid, the Court remanded to the district court to determine whether the PAGA claims should be arbitrated or litigated in court. 

The opinion is available here.

Alcantar v. Hobart Service: Ninth Circuit Addresses Claims that Employer Must Pay Service Technicians for Time Spent Commuting in Company Vehicles

Alcantar v. Hobart Service, ___ F.3d ___ (9th Cir. 9/3/15), discusses class certification under Federal Rule of Civil Procedure (FRCP) section 23, issues of compensable commute time, and the notice requirement of the Labor Code Private Attorneys general Act (PAGA). The opinion gives a good summary of the facts, so let's start there:

ITW, [defendant] Hobart’s parent company, designs and manufactures commercial food equipment. Hobart provides after-sale maintenance and repair services to ITW’s customers. [Plaintiff] Alcantar works for Hobart as a service technician. 

Alcantar and other service technicians provide most services on-site. They drive to and from customer locations in vehicles Hobart provides, carrying the tools and replacement parts necessary to make repairs. Although they spend most of their time at customer locations, each technician is assigned to one of Hobart’s thirteen California branch offices.  

As hourly employees, the technicians are compensated for the time they spend fixing equipment and the time they spend driving to and from different assignments. If they commute in the service vehicles, they are also compensated for the time spent driving from their homes to their first assignments and from their last assignments back home, but only to the extent it falls outside their "normal commute" [the time employees normally spend commuting from their homes to their assigned branch offices].

Alcantar sued, alleging that employees commuting in Hobart vehicles were subject to Hobart's control and should be paid overtime compensation for all commute time. Alcantar also alleged that Hobart failed to provide the required meal and rest periods.

The district court denied Alcantar's motion for class certification of the overtime claim. It held that Alcantar had not shown that Hobart had a uniform policy requiring technicians to commute in its vehicles and that this precluded a finding of commonality under FRCP 23(a)(2). 

The district court also denied certification of the meal and rest period claims, holding that individual questions as to why employees missed their meal and rest periods would predominate, and that the plaintiff could not meet the predominance requirement of FRCP 23(b)(3).

On a separate motion for summary judgment, the court held that Hobart did not owe the plaintiff for the commute time, but held that Alcantar had raised triable issues of fact as to the meal and rest period claims.

On a second motion for summary judgment, the court held that Alcantar had not complied with PAGA's notice requirement.

The Ninth Circuit affirmed in part and reversed in part, holding as follows:

The district court erred in denying certification of the overtime claim. First, "there is a question of fact as to whether Hobart requires technicians to use its vehicles for their commute." Second, Alcantar raised a common issue as to whether Hobart exercised control over its employees while driving company vehicles, such that their commute time should be compensated. Third, the district court erred in considering the merits of this common question. Whether the plaintiff would prevail on the merits or not does not impact the commonality analysis under FRCP 23(a)(2).

The district court did not err in denying certification of the meal and rest period claims. Common questions did not predominate under FRCP 23(b)(3). Instead, individual questions as to why employees missed their meal and rest periods would predominate.

The district court erred in granting summary judgment for Hobart on the commuting time claim. Although Hobart argued that technicians could choose not to use Hobart's vehicles, Alcantar argued that the choice was illusory because the branch offices did not have secured parking available for the vehicles, and the technicians were responsible for the tools and parts inside the vehicles. Alcantar thus raised a question of fact as to whether Hobart required its technicians to use its vehicles for their commute.

The district court did not err in granting summary judgment for Hobart on Alcantar's PAGA claims. Alcantar's notice to the Labor and Workforce Development Agency contained only a series of legal conclusions, rather than the facts and theories supporting the claim. 

Plaintiff’s letter—a string of legal conclusions with no factual allegations or theories of liability to support them—is insufficient to allow the Labor and Workforce Development Agency to intelligently assess the seriousness of the alleged violations. Neither does it provide sufficient information to permit the employer to determine what policies or practices are being complained of so as to know whether to fold or fight. 

The opinion is available here. 

Barker v. Fox & Associates: In Defamation Action, Court Reverses Order Denying Defendants' Anti-SLAPP Motion, Holding that Plaintiff Failed to Show Reasonable Probability of Success on the Merits

In Barker v. Fox & Associates (9/10/15) --- Cal.App.4th ---, the plaintiff worked as a caregiver for an elderly woman, first as a volunteer, and then as a paid employee. His employer stated in an email to a number of people that he had failed to follow instructions and placed him on probation. The plaintiff quit and filed suit for defamation, intentional infliction of emotional distress, and negligent infliction of emotional distress. The defendants filed an anti-SLAPP motion (Cal. Code Civ. Proc. section 425.16), which the trial court denied. The defendants appealed, and the Court of Appeal reversed, holding as follows:

To prevail on an anti-SLAPP motion, the moving party first must show that the cause of action arises from protected activity, i.e., "an act in furtherance of the right of free speech or petition." If the moving party makes this prima facie showing, the opposing party must show that it has a reasonable probability of success on the merits.

The defendants argued on appeal that the communications at issue were protected, and the plaintiff did not contest the point. The Court considered the matter resolved in favor of the defendants.

Turning its attention to the second prong of the test, the Court held that the plaintiff failed to show a reasonable probability of success on the merits. The allegedly defamatory statements did not constitute libel or slander per se. They were not defamatory on their face -- without the necessity of explanatory matter -- because they did not "suggest a lack of honesty, incompetence, or any reprehensible trait" on the plaintiff's part.

Because the alleged statements were not defamatory on their face, the plaintiff would have to prove actual damages in order to prevail. He failed to do so.

In addition, the allegedly defamatory statements were subject to the "common interest" privilege. The privilege extends to statements made:

without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information. 

The plaintiff failed to show malice in that he failed to show that the statements were motivated by hatred or ill will toward him or that the defendant lacked grounds to believe that the statements were true.

The plaintiff's intentional infliction of emotional distress claim failed because he failed to show that the conduct at issue was "so extreme as to exceed all bounds of that usually tolerated in a civilized community" or "beyond mere insults, indignities, threats, hurt feelings or bad manners that a reasonable person is expected to endure." Further, the plaintiff failed to show that the conduct was "intended to inflict injury or engaged in with the realization that injury will result" or that he suffered severe emotional distress.

The plaintiff's negligent infliction of emotional distress claim failed because negligent infliction of emotional distress does not exist separate from the tort of negligence.

The opinion is available here.

Wabakken v. California Department of Corrections & Rehabilitation: State Personnel Board's Findings Do Not Bar Relitigation of Whistleblower Claims in Court

Just a quick word on Wabakken v. California Department of Corrections & Rehabilitation (9th Cir. 9/14/15). In Wabakken, the plaintiff was terminated after receiving three warnings for misconduct. He appealed the three adverse actions to the California State Personnel Board, which found that some of the accusations of misconduct were justified but overturned the termination decision. Wabakken then sued in district court for violations of 29 U.S.C. section 1983, California Government Code § 8547 ("California Whistleblower Protection Act") and intentional infliction of emotional distress. The district court granted the defendants’ motion for summary judgment, holding that the State Personnel Board findings collaterally estopped Wabakken from relitigating the whistleblower retaliation issue. The Ninth Circuit reversed, holding as follows:

Under State Board of Chiropractic Examiners v. Superior Court, 45 Cal. 4th 963 (2009), "the State Personnel Board’s decision does not have preclusive effect under theories of res judicata and collateral estoppel and thus does not prevent Wabakken from litigating his whistleblower retaliation damages claim in the district court."

The California Supreme Court held that § 8547.8(c) “means what it says: An employee complaining of whistleblower retaliation may bring an action for damages in superior court, but only after the employee files a complaint with the State Personnel Board and the board ‘has issued, or failed to issue, findings.’” Id.(quoting § 8547.8(c)) (emphasis omitted). Thus, once the State Personnel Board has issued findings, or failed to do so, “the employee may proceed with a damages action in superior court regardless of whether the [State Personnel Board’s] findings are favorable or unfavorable to the employee.”

The opinion is available here.

Park v. Board of Trustees: On Anti-SLAPP Motion in Discrimination Action, University's Decision to Deny Tenure Arose from Protected Communicative Activity; Court Remands for Determination of Plaintiff's Probability of Success on the Merits

Park v. Board of Trustees of the California State University (8/27/15) --- Cal.App.4th ---, is one of those all-too-rare examples of a clearly written appellate opinion. It begins: 

Plaintiff Sungho Park sued his former employer, defendant Board of Trustees of the California State University (CSU), alleging that CSU discriminated against him based on his national origin when it denied his application for a tenured faculty position and consequently terminated him. Park’s complaint sought damages and an injunction awarding him a tenured position. CSU moved to strike the complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute. The trial court denied the motion, concluding that Park’s claims did not arise from CSU’s communicative conduct related to the tenure review process, but rather from its allegedly discriminatory denial of tenure. Under the circumstances presented here, we conclude the gravamen of the complaint arises from protected activity and therefore reverse and remand with directions to the trial court to determine whether Park demonstrated a reasonable probability of prevailing on the merits of his claims.

The Court explained:

To prevail on an anti-SLAPP motion, the moving party first must show that the cause of action arises from protected activity, i.e., "an act in furtherance of the right of free speech or petition." If the moving party makes this prima facie showing, the opposing party must show that it has a reasonable probability of success on the merits.

CSU made a prima facie showing that its retention, tenure or promotion (RTP) policies qualified as protected activity in that they were "official proceeding authorized by law," and "the reviews and evaluations given to Park during the RTP process are therefore covered as statements or writings 'made in connection with an issue under consideration or review' in the RTP proceedings."

CSU also showed that Park's complaint arose from CSU's protected activity. The Court rejected Park's contention that his causes of action were based on “CSU’s conduct in denying Dr. Park’s tenure based on national origin,” rather then any communicative conduct by CSU. The gravamen of Park's complaint was CSU's refusal to grant him tenure, and was "entirely based on the evaluations of his performance and competency during the RTP proceedings."

Because the trial court found that CSU did not make the required prima facie showing, it did not determine whether Park had shown a reasonable probability of success on the merits. The Court remanded the case to the trial court to determine this issue.

The opinion is available here. 

Balestrieri v. Menlo Park Fire: Time Moving Gear to and from Temporary Assignments Is Not Compensable under the FLSA; Compensation for "Annual Leave Buyback" Need Not Be Included in Employees' Regular Rate of Pay for Overtime Purposes

Just a quick word on Balestrieri v. Menlo Park Fire Protection District, ___ F.3d ___ (9th Cir. 9/4/15), which includes two points of interest.

First, applying Integrity Staffing Solutions, Inc. v. Busk, ___U.S. ___, 135 S.Ct. 513 (12/9/14) (discussed here) the Court held that firefighters are not entitled to compensation for time spent moving their gear to and from temporary work assignments at fire stations other than their home stations. Under the Fair Labor Standards Act (FLSA), firefighters are "engaged in the prevention, control, and extinguishment of fires or response to emergency situations where life, property, or the environment is at risk." Time spent moving their gear from their permanent assignments to temporary assignments was not "integral and indispensable" to these principal activities and therefore was "preliminary" or "postliminary" under the FLSA, as amended by the Portal-to-Portal Act, and such "preliminary" and "postliminary" time is not compensable.

Second, the Court held that the District need not include amounts paid for "annual leave buyback" within its calculation of the employees' regular rates of pay for purposes of determining their overtime rates of pay. This is important because overtime compensation is 1 1/2 the regular rate of pay, so determining the regular rate of pay is critical to determining whether an employer is paying the proper overtime rate. I will not delve into the details of this part of the decision, but note it so that anyone interested can find the case.

The opinion is available here.

Universal Protection Service v. Superior Court (Parnow): Incorporation of AAA Rules into Arbitration Agreement Gives Arbitrator Power to Determine Whether Agreement Authorizes Class Arbitration

Universal Protection Service, LP v. Superior Court (Parnow) (8/18/15) --- Cal.App. 4th --- is another case addressing whether the court or arbitrator has authority to decide the arbitrability of claims.

Employees filed a class action and representative action under the Labor Code Private Attorneys General Act (PAGA) alleging wage claims against their former employer, Universal Protection Services (UPS). UPS cross-complained, seeking a declaration that (1) the trial court, not the arbitrator, should decide whether the parties' arbitration agreement barred class relief and (2) that the arbitration agreement barred class actions. UPS then moved to compel individual arbitration and stay the court proceedings. The trial court denied the petition, ruling that the arbitrator should decide the arbitrability issues. The Court of Appeal affirmed, holding as follows:

The American Arbitration Association (AAA) employment arbitration rules provide: "The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement." In addition, the AAA Supplementary Rules for Class Arbitrations give the arbitrator authority to decide "whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class."

Because the arbitration agreement incorporated the AAA rules, the arbitration agreement "clearly and unmistakably" gave the arbitrator the power to decide whether the agreement authorizes class arbitration.

The opinion is available here.

Brennan v. Opus Bank: Arbitration Agreement Incorporating AAA Rules Gives Arbitrator the Power to Determine Arbitrability of Employment Claims Between Sophisticated Parties

In Brennan v. Opus Bank, ___ F.3d ___ (9th Cir. 8/11/15), an executive-level employee, Brennan, sued his former employer, Opus, alleging that Opus violated his employment agreement. Brennan filed in district court, alleging that his employment agreement's arbitration clause was unconscionable and unenforceable. Opus moved to compel arbitration, arguing that the arbitration clause incorporated the rules of the American Arbitration Association (AAA), which require the arbitrator to determine the arbitrability of Brennan's claims. The district court granted the motion to compel, and the Ninth Circuit affirmed, holding as follows: 

Federal law applied to the arbitrability question because the agreement was a contract "evidencing a transaction involving [interstate] commerce" and thus fell under the Federal Arbitration Act (FAA). Further, the Employment Agreement did not "clearly and unmistakably" indicate that California’s law of arbitrability controlled, even though it provided that the parties would "retain the rights of all discovery provided pursuant to the California Code of Civil Procedure” and that “[a]ll rights, causes of action, remedies and defenses available under California law and equity . . . as though in a court of law.”

While the Employment Agreement is clear that California’s procedural rules, rights, and remedies apply during arbitration, it says nothing about whether California’s law governs the question whether certain disputes are to be submitted to arbitration in the first place.

Under federal arbitrability law, the agreement "clearly and unmistakably" delegated the arbitrability question to the arbitrator by incorporating the AAA rules. Nontheless, the Court limited its holding to situations involving "sophisticated parties" such as Brennan and Opus.

The case involved three separate agreements: (1) the Employment Agreement; (2) the arbitration agreement within the Employment Agreement; and (3) the delegation clause within the arbitration agreement.

[Because] Brennan failed to “make any arguments specific to the delegation provision,” [Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), 74], and instead argued “that the [Arbitration Clause] as a whole is unconscionable under state law,” id. at 75, “we need not consider that claim,” id. at 73, because it is for the arbitrator to decide in light of the parties’ “clear and unmistakable” delegation of that question, as we held above. Accordingly, the district court did not err in dismissing Brennan’s claims in favor of arbitration.

The opinion is available here.

Garcia v. Seacon Logix: Court Affirms Decision that Truck Drivers Were Employees, Not Independent Contractors

In Garcia v. Seacon Logix (7/16/15, pub. 7/30/15) --- Cal.App.4th ---, the plaintiffs were truck drivers who were classified as independent contractors, rather than employees. They filed a class action under Labor Code section 2802, alleging that they should have been classified as employees and that their putative employer, Seacon, should not have deducted truck lease payments or insurance premiums from their paychecks. The court found for the plaintiffs and entered judgment in their favor. Seacon appealed, arguing that the trial court's decision was not supported by substantial evidence and that the damage award was excessive. The Court of Appeal affirmed, holding as follows: 

Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 531 (discussed here) states the test for whether one is an employee or independent contractor. [Note that this issue is before the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court (Lee) (discussed here).]

The plaintiffs' testimony proved that Seacon controlled the manner and means of their work. Seacon told them when to be at work, approved or disapproved absences, determined their delivery assignments, and monitored their delivery progress. The plaintiffs could not decline assignments, work for any other delivery companies, or use their trucks for any other purpose. The agreements signed by the parties gave the plaintiffs control of their work as independent contractors, but the facts contradicted the agreements, and the agreements were not dispositive.

The secondary factors also demonstrated that the plaintiffs were employees. Seacon terminated two of the plaintiffs without notice. Seacon was in the business of transporting cargo, and the plaintiffs were an integral part of that business. The plaintiffs worked under Seacon's supervision. Seacon owned the trucks and controlled their use. Seacon paid the plaintiffs per delivery, which supported independent contractor status, but the court found this factor not dispositive.

Seacon forfeited its argument that the court awarded excessive damages.

The opinion is available here.

New Law: Civil Code sections 52.4 and 52.45 Now Protect Individuals from Violence Based on Gender, Gender Identity, Gender Expression, and Sexual Orientation

Just a quick note on AB 830, which expands the protections for people based on gender identity, gender expression, and sexual orientation. This is not an employment law, but many will find it of interest.

Civil Code section 52.4 allows a person who has been subjected to gender violence to bring a civil action for damages against any responsible party. The law defines gender violence as an act of violence committed "at least in part based on the gender of the victim," or a "physical intrusion or physical invasion of a sexual nature under coercive conditions."

AB 830 amends section 52.4 to provide that "gender" under that section has the same meaning as in the Unruh Civil Rights Act, Cal. Civ. Code 51. The Unruh Act protects people from discrimination in all business establishments on the basis of sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation." "Sex" includes gender, gender identity, and gender expression. Gender expression means a person’s "gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth."

In other words, section 52.4 now protects individuals from violence based on gender, gender identity, and gender expression.

AB 830 also adds Civil Code section 52.45, which allows a person who has been subjected to sexual orientation violence to bring a civil action for damages against any responsible party.

The text of AB 830 is available here.

New Law: New Labor Code Section 2500 Protects Grocery Workers' Jobs on Change of Ownership

Just a quick word regarding AB 359, which provides protections to grocery workers upon a change of ownership of a grocery. With certain exceptions, upon the change of control of a grocery, the successor grocery employer must retain eligible grocery workers for a 90-day period, may not discharge those workers without cause during that period, and, upon the close of that period, must consider offering continued employment to those workers. Cal. Labor Code section 2500 et seq.


The text of AB 359 is here. 

Yocupicio v. PAE Group: Ninth Circuit Addresses CAFA Jurisdiction in Case Raising Both Class and PAGA Claims

In Yocupicio v. PAE Group, LLC, ___ F.3d ___ (9th Cir. 7/30/15), the plaintiff filed a class and PAGA representative action alleging a number of wage and hour violations. The defendants removed the case under the Class Action Fairness Act (CAFA), and the district court denied the plaintiff's motion to remand. The plaintiff appealed, and the Ninth Circuit reversed, holding as follows:

CAFA jurisdiction requires the following: a class of more than 100 members, "minimal diversity" among the parties, and an amount in controversy in excess of $5 million. The court found no question that the class claims would "satisfy CAFA’s numerosity and minimal diversity requirements," but the case did not satisfy the amount in controversy requirement. The value of the class claims alone did not satisfy the $5 million requirement, and the district court erred in adding in the value of the PAGA claims to make up the difference. Only class claims count toward the $5 million requirement, and PAGA claims are not class claims. The Court concluded: 

Where a plaintiff files an action containing class claims as well as non-class claims, and the class claims do not meet the CAFA amount-in-controversy requirement while the nonclass claims, standing alone, do not meet diversity of citizenship jurisdiction requirements, the amount involved in the non-class claims cannot be used to satisfy the CAFA jurisdictional amount, and the CAFA diversity provisions cannot be invoked to give the district court jurisdiction over the non-class claims. 

The opinion is available here. 

Williams v. Superior Court: Cal. Supreme Court Grants Review of Holding that Trial Court May Allow Discovery on Incremental Basis in PAGA Action

In Williams v. Superior Court (Marshalls of CA, LLC) (5/15/15) --- Cal.App.4th --- (discussed here), the Court of Appeal held that in a PAGA action, the trial court may require the plaintiff to proceed with discovery incrementally, rather than receiving the names and contact information of allegedly aggrieved employees at the start of the litigation.

The California Supreme Court granted review on August 19, 2015, stating the issues as follows: 

(1) Is the plaintiff in a representative action under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) entitled to discovery of the names and contact information of other “aggrieved employees” at the beginning of the proceeding or is the plaintiff first required to show good cause in order to have access to such information?  

(2) In ruling on such a request for employee contact information, should the trial court first determine whether the employees have a protectable privacy interest and, if so, balance that privacy interest against competing or countervailing interests, or is a protectable privacy interest assumed? (See Hill v. National Collegiate Athletic Association (1994) 7 Cal.4th 1; Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th

Williams v. Superior Court is case no. S227228, and the Court's web page for it is here.

France v. Johnson: Plaintiff Raises Genuine Issue in Age Discrimination Case by Introducing Evidence that Person Involved in Promotion Decision Made Discriminatory Statements and Repeatedly Raised Question of Retirement with Him

In France v. Johnson, ___ F.3d ___ (8/3/15), a border patrol agent sued the Secretary of the Department of Homeland Security (DHS), alleging that DHS violated the Age Discrimination in Employment Act (ADEA) by refusing to promote him because of his age. The district court granted DHS's motion for summary judgment, finding that although France established a prima facie case of age discrimination, he failed to raise a genuine dispute of material fact on the agency's nondiscriminatory reasons for not promoting him. France appealed, and the Ninth Circuit reversed, holding as follows:

Where a plaintiff introduces direct evidence of a discriminatory motive, the McDonnell Douglas burden-shifting analysis does not apply on summary judgment. Although France introduced "some direct evidence and some circumstantial evidence" of discriminatory intent, the Court found it "most appropriate" to use McDonnell Douglas. 

In a failure-to-promote case, a plaintiff may establish a prima facie case of discrimination in violation of the ADEA by producing evidence that he or she was (1) at least forty years old, (2) qualified for the position for which an application was submitted, (3) denied the position, and (4) the promotion was given to a substantially younger person. 

To determine whether the person promoted is "substantially younger" than the plaintiff, an age difference of ten or more years is presumed substantial, and an age difference of less than ten years is presumed insubstantial. A plaintiff can rebut the presumption by showing that the employer considered his or her age to be "significant." Evidence, inter alia, that one of the decisionmakers expressed a preference for younger employees was sufficient to rebut the presumption. France established a prima facie case of discrimination.

DHS established legitimate business reasons for rejecting France, so the Court turned to the final element of the test: the plaintiff's obligation to raise a genuine dispute of material fact as to pretext.

Because "the ultimate question is one that can only be resolved through a searching inquiry—one that is most appropriately conducted by a factfinder, upon a full record," "it should not take much for a plaintiff in a discrimination case to overcome a summary judgment motion." France raised genuine issues sufficient to defeat summary judgment by introducing evidence that one of the decisionmakers - even if not the chief decisionmaker - made discriminatory statements and repeatedly raised the issue of retirement with him. 

The opinion is available here. 

Governor Brown Signs Urgency Legislation Amending Sick Leave Law

Last September, Governor Brown signed California’s new sick leave law, the Healthy Workplaces, Healthy Families Act, or HWHFA. (Quite a name. Rolls right off the tongue.) With limited exceptions, the HWHFA requires employers to provide employees with paid sick leave, which employees can use to care for themselves or their family members. Unfortunately, whether you support the idea of giving employees paid sick leave or not, the law was not very clear. With the law set to kick in on July 15, many employers were still guessing as to how to implement it.

On July 13, with two days to spare, Governor Brown signed legislation to clarify the law. Cal. Labor Code sections 245.5, 246, and 247.5. 

As just one example, the original law provided that employees could accrue sick leave at a rate of not less than one hour of leave for every 30 hours worked, or employers could provide a lump sum of three days or 24 hours at the start of each year. But what about employers whose existing sick leave or paid time off (PTO) policies accrued leave at a different rate? Under the amended law, employers may allow sick leave to accrue a basis other than one hour for each 30 hours worked, as long as (1) the sick leave accrues on a regular basis and (2) the employee will accrue at least 24 hours of sick leave by the 120th calendar day of employment. 

The law amending the statutes, AB 304, was designated as urgency legislation, to go into effect immediately. It is available here.