Augustus v. ABM Security Services: Supreme Court Grants Review of Rest Period Class Action

I've talked a couple of times about Augustus v. ABM Security Services, Inc., the rest period action on behalf of a class of security guards. The Superior Court granted summary judgment for the class and entered judgment for $90 million (discussed here). Earlier this year, the Court of Appeal reversed that judgment (discussed here). 

Yesterday, the California Supreme Court voted to review the Court of Appeal's decision. The Supreme Court's docket page for the case is here. 

Richey v. AutoNation: Cal. Supreme Court Does Not Address Honest Belief Defense in CFRA Leave Case

Many believed that the California Supreme Court would use Richey v. AutoNation (2/29/15) --- Cal.4th ---, address whether the "honest belief" defense applies to actions under California Family Rights Act (CFRA) (Gov. Code, §§ 12945.1, 12945.2). The Court has issued its opinion in Richey, but it did not decide the issue. 

Plaintiff Avery Richey worked as a sales manager at Power Toyota of Cerritos. Power terminated Richey while he was on medical leave under CFRA because it believed he was misusing his leave by working part time in a restaurant he owned. Richey sued a number of defendants (collectively "AutoNation"), alleging, inter alia, that they had violated his rights under the CFRA.

The trial court compelled arbitration, and the arbitrator denied Richey's CFRA claim based on what is known as the honest belief or honest suspicion defense. The trial court denied Richey's motion to vacate the arbitrator's decision and granted AutoNation's petition to confirm the award. Richey appealed, and the Court of Appeal reversed, holding: (1) the honest belief defense is incompatible with California law and "deprived Richey of his unwaivable statutory right to reinstatement" under the CFRA and (2) the arbitrator's "clear legal error" in adopting the defense abridged Richey's statutory rights under the CFRA.

The California Supreme Court reversed the Court of Appeal's decision, holding that even if the arbitrator committed legal error by adopting the honest belief defense, and even if such error could serve as the basis for reversing the arbitrator's award, Richey failed to show that the error was prejudicial. 

Here, the arbitrator found plaintiff was fired because he violated Power Toyota's employment policy against outside work while on approved CFRA medical leave, not because he was on approved leave. The evidence to support that finding, as reflected in the arbitrator's factual findings, was overwhelming. Power Toyota explicitly warned plaintiff that its policy prohibited any outside employment, including self-employment, while on leave. Plaintiff knowingly ignored the warnings. Power Toyota invited plaintiff to communicate regarding his outside employment, and he deliberately avoided any such communication.  

Even if Power Toyota's employment manual could have more clearly stated the rule about outside employment, the award indicates plaintiff blatantly ignored his superiors' clear instructions not to work at the restaurant while on CFRA leave. To ignore this fact and to hold that Power Toyota could not have fired plaintiff under any circumstances for violating company policy while on leave would ignore the rule that plaintiff had "no greater right to reinstatement or to other benefits and conditions of employment than if [he] had been continuously employed" during the statutory leave period. (29 C.F.R. § 825.216(a).) The arbitrator found plaintiff's firing was based on a clear violation of company policy — a legally sound basis for upholding the arbitrator's award — and would likely have made that finding regardless of the evidence or findings as to the employer's honest belief plaintiff was misrepresenting his medical condition. Thus, even if the arbitrator was mistaken in relying on an honest belief defense, plaintiff was not prejudiced thereby and the arbitrator's award in defendants' favor will stand. 

The opinion is available here.

Nealy v. City of Santa Monica: Court of Appeal Affirms Summary Judgment in Disability Discrimination Case

In Nealy v. City of Santa Monica (1/1/15) --- Cal.App.4th ---, the plaintiff, Tony Nealy, worked for the City of Santa Monica as a "solid waste equipment operator" in the City's recycling facility. Nealy injured his right knee on the job in 2003. He underwent two knee surgeries and did not return to work until May, 2005. In July, 2005, Nealy met with the City's accommodations committee and was assigned to work as a groundskeeper. 

Nealy suffered additional on-the-job injuries in August, 2006. Two weeks later, his doctor cleared him to perform "light duty, semi-sedentary office work," but stated that if no such work was available, Nealy should be considered temporarily totally disabled. The City had no such position available, and Nealy did not return to work. 

Nealy met with the City's accommodations committee in 2008 and again in 2010 and asked to be moved back to his old job of solid waste equipment operator. The City declined, stating that Nealy could not perform the essential functions of the position, with or without accommodation. 

The City told Nealy that it would consider him for any vacant position for which he was qualified that was not a promotion. It told him of three such positions and told him how to find additional open positions. Nealy applied for one such position, but did not qualify. Later in 2010, the City told Nealy that it could not provide him with an accommodation into an alternative position because he was not qualified for the only available position that would not be a promotion. 

Nealy filed his complaint with the DFEH and obtained his right-to-sue notice in January, 2011. He filed suit in February, 2011, alleging disability discrimination, failure to provide reasonable accommodation, failure to engage in the interactive process, and retaliation. The Superior Court granted the City's motion for summary judgment, and the Court of Appeal affirmed, holding as follows: 

The trial court properly held that the statute of limitations prevented Nealy from recovering for acts prior to January, 2010, and Nealy failed to show that the continuing violation doctrine applied:

He makes no attempt to show how the City's acts from August 2006 to 2010 were "sufficiently similar in kind," that they "occurred with reasonable frequency," or that the pre-2010 acts did not "acquire[] a degree of permanence" before 2010.

Nealy could not prevail on his cause of action for failure to provide reasonable accommodation because the undisputed evidence showed that he could not perform all of the essential functions of a solid waste equipment operator, with or without reasonable accommodation. Even if Nealy were correct that one of the essential functions identified by the City was not in fact "essential," he did not show that he could perform a number of other essential functions, with or without accommodation.

Nealy could not request that the City accommodate his disability by removing one or more of these essential functions from his responsibility. Removing an essential function from a position would not be a reasonable accommodation.

While Nealy could have requested that the City move him to a comparable position as a reasonable accommodation, Nealy presented no evidence that the City had any comparable positions for which he was qualified during the statutory time period at issue. Further, the City had no duty to provide Nealy with an indefinite leave of absence until such a position became available.

Because Nealy could not perform the essential functions of the operator position, he was not a qualified individual and could not prevail on his disability discrimination cause of action.

Nealy could not prevail on his cause of action for failure to engage in the interactive process because he failed to identify any reasonable accommodation that would have allowed him to do his job. His argument that the City should have retrained him failed because he did not detail what type of retraining would have allowed him to perform the essential functions of his job or a comparable available position. 

Finally, Nealy could not prevail on his retaliation cause of action because requesting reasonable accommodation does not constitute protected activity under the FEHA, and Nealy did not show that he engaged in any other protected activity. 

The opinion is available here.

Augustus v. ABM Security: Court of Appeal Addresses On Call Rest Periods

In Augustus v. ABM Security Services, Inc., --- Cal.App.4th --- (1/29/2015), the plaintiff, Augustus, worked as a security guard for the defendant, ABM. Augustus filed a putative class action, alleging that ABM failed to authorize and permit rest periods by requiring the its security guard employees to be on call during rest periods. The trial court certified the class, granted summary judgment for the class, and entered judgment for more than $90 million. The Court of Appeal affirmed the order granting class certification, but reversed the judgment for the class.

On class certification, the Court found that Augustus presented evidence of "a uniform policy requiring employees to remain on call during rest breaks." The Court noted that ABM did not deny in the trial court that it had such a policy, then held that whether such a policy is permissible is an issue "eminently suited for class treatment."

On the merits, the Court held that the Wage Order does not define the nature of a rest period, but Labor Code section 226.7 states that an employer shall not "require any employee to work during a meal, rest, or recovery period." The question then became whether being on call requires an employee "to work" during his or her rest period.

The Court then held that "to work" means to exert one's self physically or mentally. Merely being on call does not require an employee to exert himself or herself. "In other words, [section 226.7] prohibits only working during a rest break, not remaining available to work."

The Court contrasted section 12 of the Wage Order (rest periods) to section 11 (meal periods), which requires an employer to relieve its employees of all duty during their meal periods. The Court held that this means that an employer need not relieve employees of all duty during their rest periods. "If the IWC had wanted to relieve an employee of all duty during a rest period, including the duty to remain on call, it knew how to do so."

The Court rejected arguments that Brinker v. Superior Court (discussed here), Faulkinbury v. Boyd and Associates (discussed here), Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, or a 2002 DLSE opinion letter changed this result. None of these authorities, the Court held, addressed the issue before the Court here: whether the law allows an on-duty rest period. 

The opinion is available here. 

Mendiola v. CPS: Supreme Court Addresses Compensable Time for Resident Security Guards

In Mendiola v. CPS (2015) 60 Cal.4th 833, a security guard contracted with his employer to reside at a work site to provide 24 hour security services. The employer paid him hourly wages for eight on duty hours per day, paid him for actual time spent investigating disturbances for eight hours of on call time per day, and did not pay him for eight hours of sleep time per day. The plaintiff filed a class action.

The trial court certified the class and granted summary judgment for the guards, finding that their on call time was compensable "hours worked." The Court of Appeal affirmed in part and reversed in part. The Supreme Court granted review, holding that both the guards' on call time and sleep time constituted compensable "hours worked."

First, the Court looked to a multi-factor test to determine whether the guards remained subject to the employer's control during on call time:

The guards here were required to "reside" in their trailers as a condition of employment and spend on-call hours in their trailers or elsewhere at the worksite. They were obliged to respond, immediately and in uniform, if they were contacted by a dispatcher or became aware of suspicious activity. Guards could not easily trade on-call responsibilities. They could only request relief from a dispatcher and wait to see if a reliever was available. If no relief could be secured, as happened on occasion, guards could not leave the worksite. CPS exerted control in a variety of other ways. Even if relieved, guards had to report where they were going, were subject to recall, and could be no more than 30 minutes away from the site. Restrictions were placed on nonemployee visitors, pets, and alcohol use... Additionally, the Court of Appeal correctly determined that the guards' on-call time was spent primarily for the benefit of CPS.

Citing its decision in Morillion v. Royal Packing Co. (2010) 22 Cal.4th 575, the Court rejected the argument that on call time was not compensable because the guards could engage in personal activities during that time. The Court also declined to incorporate a federal regulation, 29 CFR 785.23, into Wage Order 4. The Court noted that federal law sets the floor for employee wage and hour protection, but California is free to adopt broader protections, and Wage Order 4 itself does not indicate an intent to incorporate this regulation.

The Court then held that California law does not permit employers to exclude sleep time from hours worked, except in limited circumstances set forth in the Wage Orders. In so doing, the Court limited to its facts Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16, a case involving ambulance drivers working 24-hour shifts and disapproved Seymore v. Metson Marine, Inc. (2011) 194 Cal.App.4th 361, a case involving off shore oil rig employees. The Court disregarded what it called "vacillating and contradictory" positions taken on the issue by the DLSE.

The opinion is available here.