State Building & Construction Trades Council v. City of Vista: Supreme Court to Hear Prevailing Wage Case on April 4

On April 4, 2012, the California Supreme Court will hear oral argument in Los Angeles in State Building & Construction Trades Council v. City of Vista, in which the Court will decide whether California's prevailing wage law (Lab. Code 1720 et seq.) applies to a charter city when it contracts to construct public works projects with municipal funds. As discussed here, both the trial court and the Court of Appeal held that the city need not comply with the prevailing wage law.

The Court's docket is here.  

Pickett v. Superior Court (99¢ Only Stores): Plaintiff in Related Action Retains Right to Challenge Judge under CCP 170.6

I previously posted about the decision in Bright v. 99¢ Only Stores (2010) 189 Cal.App.4th 1472, in which the Court of Appeal reversed a trial court order (Los Angeles Superior Court, Judge Luis Lavin) sustaining an employer's demurrer to a PAGA complaint. The Court of Appeal held that employees may file PAGA actions for alleged violations of the Wage Orders (in this case, the Wage Order's requirement that employers provide seating to certain employees). See the post here. On remand, the plaintiffs challenged the judge who had sustained the demurrer and were reassigned to a second judge (Los Angeles Superior Court, Judge William H. Fahey).

A second plaintiff, represented by different attorneys, then filed a similar action, which was deemed related to the first action, but not consolidated with it. The plaintiff in the second action then filed a CCP 170.6 peremptory challenge to Judge Fahey. The court struck the challenge as improper, holding that the second action was merely a continuation of the first, and that the plaintiff in the first action had already used the one peremptory challenge.

In Pickett v. Superior Court (99¢ Only Stores) (February 22, 2012) --- Cal.App.4th ----, 2012 WL 556314, the Court of Appeal issued a writ of mandate reversing this decision.  It held that the second action was not a continuation of the first:

The named plaintiffs in both, even though representatives, are different. Pickett seeks injunctive relief, while Bright did not do so. Each named plaintiff who establishes a violation of the Labor Code is entitled to a penalty and her reasonable attorney fees. (Lab. Code, § 2699, subd. (3)(g)(1).) Although a judgment in a PAGA case collaterally estops employees not parties to that case—at least as to civil penalties (Arias, supra, 46 Cal.4th at p. 985), here no such judgment has been entered.

Slip op. at 9.


The Court held further that the first and second plaintiffs were not on the same side in "one action," and therefore the peremptory challenge should have been accepted.

The opinion is available here.

Brinker: Supreme Court Allows Further Briefing, Likely Will Delay Decision Again

In December, the California Supreme Court accepted additional briefing in Brinker on retroactivity and deemed the case re-submitted, which pushed the deadline for its decision out from February to April.

Last week, the defense filed an application to allow post-hearing supplemental briefing on the impact of the Court of Appeal's recent decision in Duran v. U.S. Bank, which I discussed here. The Court granted the application and gave the plaintiffs until February 27 to respond. Assuming that the Court again deems the matter re-submitted, that would push the deadline out to May 29.

Does all of this mean that the Court has some interest in granting review in Duran? Or does it mean that the Court will use the Court of Appeal's reasoning in Duran to affirm the result in Brinker? Hopefully it won't be too much longer before we find out.

The Court's Brinker docket is here. 

Transitions: Welcome to the California Employment Law Blog

I started this blog in January, 2009, because my favorite blogger stopped posting, and I realized that the only way I was going to get my daily fix was if I did it myself. In January, 2010, I started my Mediation and Negotiation Blog to write about my mediation practice and the books and articles I was reading on negotiation.

Between the two blogs, I've published 349 posts over the last three years (this is number 350) and I've had almost 115,000 page views -- almost 100,000 of them on this blog alone. I've spent a tremendous amount of time writing, frequently as a way of avoiding the real work piled up on my desk, and the blog has become part of who I am, rather than just something I do.

So it feels a little strange to be re-naming the blog today. But the fact is that my mediation practice is more broad than my litigation practice was. I am mediating all types of employment law cases. In the last month, I've mediated discrimination, retaliation, and wrongful termination cases, along with wage and hour cases -- both individual cases and class actions. It's only fitting that I would broaden the scope of the blog and -- because it's no longer focused so closely on wage and hour, class action, and arbitration issues -- to call it what it now is: The California Employment Law Blog.

A note to anyone who may be concerned that they will lose a great place to read about wage and hour developments: Don't worry. I'm going to continue posting on wage and hour, class actions, and arbitration. It's just that I'm also going to be putting more focus on FEHA, Title VII, retaliation, whistle-blowers, employee trade secret claims, and the other employment law claims that my mediation clients are interested in.

As always, I hope you find the blog helpful.  

Ajamian v. CantorCO2e: Court, Not Arbitrator, Properly Ruled on Unconscionability of Arbitration Agreement

I started what's likely to be my last jury trial this morning -- I am now a full-time mediator, which I enjoy more than trial work -- and don't have much time to discuss this case, but it did catch my eye. 

In Ajamian v. CantorCO2e (2/16/12), an employer and its CEO appealed an order (San Francisco Superior Court, Judge Peter J. Busch) denying their petition to compel arbitration of respondent‟s claims under the Federal Arbitration Act. (9 U.S.C. §§ 1-16.) They contended:

(1) the arbitration panel, rather than the court, should have decided whether the arbitration provision in respondent's employment agreement was unconscionable; (2) respondent failed to establish that the arbitration provision was unconscionable, and any unconscionable portion of the provision should have been severed to permit the arbitration to proceed; and (3) alternatively, arbitration should have been compelled under the terms of an employee handbook.

The Court of Appeal affirmed the order.

Although the arbitration provision was broadly worded and indicated that arbitration might be conducted under the rules of an arbitration service that gives arbitrators the power to decide the validity of arbitration agreements, it did not provide clear and unmistakable evidence that the parties intended to delegate authority to the arbitrator, rather than to the court, to decide the threshold issue of whether the arbitration provision itself was unconscionable. The unconscionability issue was therefore for the court to decide. Furthermore, the provision was procedurally unconscionable and substantively unconscionable in more than one respect, such that the court did not abuse its discretion in concluding that the provision could not be saved by severing the offending terms. In addition, appellants failed to establish that arbitration should have been compelled under the employee handbook.

To me, the decision on unconscionability is less interesting than the decision to allow the court to make the call. See Rent-A-Center, West, Inc. v. Jackson (blogged here).

The Ajamian opinion is available here.

Ruiz v. Affinity Logistics: District Court Erroneously Applied Georgia Law to California Independent Contractor Dispute

In Ruiz v. Affinity Logistics Corporation (9th Cir. 2/8/12) --- F.3d ----, 2012 WL 388171, Ruiz worked as a furniture delivery person. He entered into an agreement with Affinity stating that he was an independent contractor and that any dispute with Affinity would be governed by Georgia law. Ruiz filed a putative class action alleging violations of federal and California wage and hour laws. After a three-day bench trial, the district court (S.D.Cal., Judge Janis L. Sammartino) found that Ruiz was an independent contractor under Georgia law, which applies a presumption of independent contractor status.

The Ninth Circuit reversed. Although the district court properly found that the chosen state, Georgia, had a substantial relationship to the parties because Affinity was incorporated there, it should have continued the analysis to determine (1) whether applying Georgia’s law “is contrary to a fundamental policy of California,” and then (2) “whether California has a materially greater interest than [Georgia] in resolution of the issue." Slip op. at 7-8.

On the first point, the Court held that Georgia law "is contrary to a fundamental policy of California law" because it applies a presumption of independent contractor status, rather than employee status.

[U]nder California law, once a plaintiff comes forward with evidence that he provided services for an employer, the employee has established a prima facie case that the relationship was one of employer/employee.” Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010) (citing Robinson v. George, 16 Cal.2d 238, 243-44 (1940)). “Once the employee establishes a prima facie case, the burden shifts to the employer, which may prove, if it can, that the presumed employee was an independent contractor.” Id.

Slip op. at 8-9.

On the second point, the Court held that California also has a "materially greater interest" than Georgia in the outcome of this case. Slip op. at 10.

Here, the drivers entered into the contract with Affinity in California. The drivers completed the work for Affinity in California. The subject matter of the contract deals with completing deliveries in California. Finally, the domicile of the drivers is California. The only connection with Georgia is that Georgia is where Affinity is incorporated. Accordingly, California has a materially greater interest than Georgia in determining whether the drivers are independent contractors or employees of Affinity.

Ibid. Further, Affinity did not explain "how Georgia would suffer" if the court applied California law. Ibid.

The Court remanded the case to the district court to determine Ruiz's status under California, rather than Georgia, law.

The opinion is available here.

Duran v. U.S. Bank: Court of Appeal Reverses Judgment after Class Action Trial, Orders Decertification

In Duran v. U.S. Bank (blogged here), 260 current and former business banking officers employed by U.S. Bank filed suit, alleging that USB misclassified them as outside sales personnel. After a bench trial (Alameda County Superior, Judge Robert B. Freedman) the Court awarded $15 million to the class members and an additional $18 million in attorney fees.

The Court of Appeal has reversed the judgment and ordered the class decertified. I have not had a chance to read this decision (it's 75 pages long), but here's the introduction from the opinion:

Following a bifurcated bench trial, defendant U.S. Bank National Association (USB) has appealed the resulting $15 million judgment in this wage and hour class action brought under Business and Professions Code section 17200 (section 17200). The plaintiffs in the class action are 260 current and former business banking officers (BBO‘s) who claimed they were misclassified by USB as outside sales personnel exempt from California‘s overtime laws, and were thus unlawfully denied overtime pay. In addition to arguing the case should not have been certified as a class action, USB contends the trial court‘s trial management plan deprived it of its constitutional due process rights in that the plan prevented it from defending against the individual claims for over 90 percent of the class. We agree the trial management plan was fatally flawed and reverse the judgment. We also conclude the case must be decertified, and reverse an order awarding certain expert witness fees to plaintiffs. We remand the two named plaintiffs‘ meal and rest break period violation claims for reconsideration in light of the California Supreme Court‘s ruling in Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25, review granted October 22, 2008 (S166350). 

 I will write more once I have a chance to digest this. The opinion is available here.

An update on Duran.  The employees filed their petition for review in the Supreme Court on March 19.  The employer filed its response on April 25.  The Supreme Court's docket is here.

Steven G. Pearl to Speak at Los Angeles County Bar Labor and Employment Law Symposium

Steven G. Pearl will speak at the Thirty Second Annual Los Angeles County Bar Association (LACBA) Labor and Employment Law Symposium on March 7, 2012.

Mr. Pearl will moderate a panel on “Hot Button Issues in Wage and Hour Law." Speaking on the panel are defense attorneys Nancy Bertrando and Richard Simmons and plaintiffs' attorney Eric Kingsley. The panel will address issues such as collateral estoppel and repeat class actions, class action waivers, white collar exemptions, attorney fees, and the upcoming Brinker decision.

Mr. Pearl serves on the Executive Committee of LACBA's Labor and Employment Law Section, and this is the third time that he has spoken at the Symposium.

More information is available on LACBA's web site. 

Steven G. Pearl to Present Mediation Seminar to Association of Corporate Counsel

On February 15, 2012, Steven G. Pearl will present "Achieving Your Goals Through Mediation" to the Association of Corporate Counsel, Southern California Chapter.

Mr. Pearl will address selecting your mediator, who to bring -- and who not to bring -- to mediation, pre-mediation communications with the mediator, and other areas that parties need to consider when preparing for mediation.

Mr. Pearl will speak at 7:30 am at the corporate offices of Guitar Center in Westlake Village and at 11:30 am at the offices of Resources Global in Los Angeles. More information is available from the Association of Corporate Counsel.  

Joaquin v. City of Los Angeles: Court of Appeal Issues Retaliation Decision

Joaquin v. City of Los Angeles (1/23/12) --- Cal.App.4th ----, 2012 WL 171723, concerns a difficult area of discrimination, harassment, and retaliation law: Balancing the rights of employees who have suffered harassment, discrimination, or other unlawful conduct, against the rights of those who are subjected to false allegations of such conduct, and the rights of employers who may have to decide who's telling the truth.

Richard Joaquin was a police officer who complained of sexual harassment by a superior officer, Sands. The Department investigated and found Joaquin's complaint unfounded. After a seven day hearing, a Board of Rights found Joaquin guilty of retaliating against Sands by filing a false complaint of harassment. The Board recommended Joaquin be terminated, and the Department accepted the recommendation.

Joaquin filed a petition for writ of mandate. The Superior Court concluded that the Board of Rights' findings were not supported by the weight of the evidence, granted the petition, and ordered Joaquin reinstated. Interestingly, the court found:

The uncontradicted evidence is that some or all of the events reported by Joaquin actually occurred. Joaquin provided a detailed and consistent account of conduct which made him feel uncomfortable or offended. In the face of these allegations, Sands did not completely deny the shooting range [fn. omitted] or weight room incidents, or calling the front desk. He had a different explanation for the field impound location and Olympics incidents, but again did not deny that they occurred. He was contradicted on the basketball game incident, for he contended he was a member of the team long before Joaquin when Joaquin started the team and had always been one of the two coaches.

Slip op. at 5.

Joaquin then sued the City of Los Angeles, alleging that the City terminated him in retaliation for filing his sexual harassment complaint in violation of the Fair Employment and Housing Act (FEHA). The jury found that Joaquin's complaint of sexual harassment was a motivating reason for the termination and awarded him more than $2 million for lost wages and emotional distress. The City appealed, and the Court reversed, holding that Joaquin "did not present substantial evidence that his termination was motivated by retaliatory animus, a necessary element of his claim." Slip op. at 1.

After a lengthy recitation of the facts, the Court found that Joaquin had established a prima facie case of retaliation, and that the City had articulated a legitimate, nonretaliatory reason for the termination.  Slip op. at 8.  Relying on cases interpreting Title VII and another state's laws, the Court held:  

[I]n appropriate circumstances, an employer may discipline or terminate an employee for making false charges, even where the subject matter of those charges is an allegation of sexual harassment. In such a case, the disciplinary action is subject to the burden-shifting analysis articulated by the United States Supreme Court in McDonnell Douglas Corp. v. Green, supra, 411 U.S. 729, and adopted by our Supreme Court in Yanowitz v. L'Oreal USA, Inc., supra, 36 Cal.4th 1028, 1042, and other cases. Under that analysis, the ultimate question for the fact finder is whether the employer's stated reason for discipline (i.e., that the employee was untruthful during an investigation) was pretextual or whether there is other evidence that, “as a whole supports a reasoned inference that the challenged action was the product of discriminatory or retaliatory animus.”  

Slip op. at 12.  Perhaps more importantly, the Court held that an employer in such a situation need not prove "more than its good faith belief that a false statement was knowingly made..."  Slip op. at 11.  

[The] employer can lawfully act on a level of certainty that might not be enough in a court of law. In the workaday world, not every personnel decision involving a false statement (or a cover-up) has to be treated as something like a trial for perjury. Therefore, an employer, in these situations, is entitled to rely on its good faith belief about falsity, concealment, and so forth.

Ibid.  The Court then held that Joaquin failed to introduce substantial evidence of retaliatory animus.  Slip op. at 12.  Although Joaquin alleged that Sands wanted Joaquin disciplined for having made a sexual harassment complaint, he apparently did not argue the cat's paw theory of liability (see Staub v. Proctor Hospital, 562 U.S. ___, 131 S.Ct. 1186 (2011)), and the Court found that Sands' animus, if any, was irrelevant to the Board's recommendation and the Department's decision.  Slip op. at 12-13.  The Court dealt similarly with the other evidence relied on by Joaquin.  Slip op. at 13-14.  

Finally, the Court held that CACI 2505 fails to set forth the retaliatory animus factor and urged the Judicial Council to revise the instruction and verdict form "to clearly state that retaliatory intent is a necessary element of a retaliation claim under FEHA."  Slip op. at 15.  

Some have expressed concern that Joaquin would allow unscrupulous employers to conduct sham investigations, find that the complaints are false, and fire the complaining employees. Yet California law still protects employees who may good faith, but mistaken complaints of illegal conduct. See, e.g., Barbosa v. IMPCO Technologies, Inc. (2009) 179 Cal.App.4th 1116 (blogged here). Some have suggested that the key distinction between Joaquin and the typical retaliation case is the Board of Rights’ finding that Joaquin intentionally fabricated his complaints, but I do not know that trial courts will apply such a distinction. I assume that Joaquin will petition for review, and others will petition for depublication, but I have little doubt that we will see more cases dealing with these issues.  

The opinion is available here.

Kirby v. Immoos: California Supreme Court Schedules Oral Argument in Attorney Fee Case

The California Supreme Court will hear oral argument in Kirby v. Immoos Fire Protection, Inc. on Tuesday, March 6, 2012, at 9:00 a.m., in San Francisco. No word yet on whether the argument will be broadcast over the internet, as Brinker was. (Or if it will be broadcast in a way that actually allows people to watch live!) Kirby presents the following issues:

1. Does Labor Code section 1194 apply to a cause of action alleging meal and rest period violations (Lab. Code 226.7) or may attorney's fees be awarded under Labor Code section 218.5?
2. Is our analysis affected by whether the claims for meal and rest periods are brought alone or are accompanied by claims for minimum wage and overtime?

The Court's case summary is here. 

Steven G. Pearl Named Super Lawyer in Dispute Resolution and Labor & Employment Law

For the second year in a row, I have been named a Super Lawyer in Alternative Dispute Resolution and Labor and Employment Law by Super Lawyers Magazine. 

Super Lawyers is a rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations, and peer evaluations. Five percent of the total lawyers in the state are selected as Super Lawyers.