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Wednesday, October 31, 2012

Nesson v. Northern Inyo County Hospital: Physician's FEHA Action Based On Revocation of Privileges Properly Dismissed on Anti-SLAPP Motion

In Nesson v. Northern Inyo County Hospital (2/10/12) 204 Cal.App.4th 65, a physician sued a hospital after its medical executive committee (MEC) summarily suspended his medical staff privileges, and the hospital terminated his contract to provide medical services. The physician, Nesson, brought causes of action for discrimination and retaliation, among others.

The trial court granted the hospital's special anti-SLAPP motion to strike, finding that the MEC's decision to terminate Nesson's privileges was protected activity, that the hospital's decision to terminate his contract to provide medical services was "inextricably intertwined" with the MEC's decision and thus also was protected, and that Nesson could not establish a probability of prevailing on the merits. Id. at 75-76. Nesson appealed, and the Court of Appeal affirmed.

First, the Court noted that the anti-SLAPP statute protects hospital peer review proceedings regarding staff physicians as "official proceeding authorized by law":
Even though the proceedings are conducted by private parties, the peer review procedure is required by law (Bus. & Prof. Code, § 805 et seq.), the proceedings are subject to judicial review (by administrative mandamus) and the proceedings involve "matters of public significance" (§ 425.16, subd. (a)) (quality of hospital care). 
Id. at 77-78.
Regarding Nesson's discrimination claims in particular, the Court held: 
Nesson's retaliation and discrimination claims are also founded on his contention that he could not be terminated based on the summary suspension. With regard to the FEHA and Unruh causes of action, Nesson maintains the Hospital terminated him for a perceived disability and refused to offer him accommodations. But the anti-SLAPP statute applies to claims made in connection with the protected activity, regardless of the defendant's motive, or the motive the plaintiff may be ascribing to the defendant's conduct.
Id. at 83. The Court noted that Nesson failed to introduce any evidence of discrimination or retaliation that was not connected to the suspension of his privileges. Id. at 84. 

Having held that the hospital properly showed that it had engaged in protected activity, the Court turned to the second prong of the anti-SLAPP analysis: whether Nesson could show a probability of success on the merits. A physician whose suit arises from peer review action cannot sue for damages unless he exhausts his administrative and judicial remedies.  This includes obtaining a writ of mandamus to overturn the negative disciplinary action taken against him. 
Id. at 84-86. A plaintiff who fails to do so cannot demonstrate a probability of prevailing on the merits. Ibid. 

With regard to Nesson's discrimination claims in particular, the Court held: 
[T]he FEHA requires the Hospital to know or be aware of Nesson's alleged disability. Without such knowledge, the Hospital had no way of knowing if Nesson was, indeed, disabled, or whether it could accommodate Nesson. In this case, the Hospital initiated an investigation, but Nesson refused to cooperate, so whether or not a disability or reasonable accommodation existed could not be determined. The MEC had decided a failure to suspend Nesson summarily "may result in an imminent danger to patients" based on "recent incidents of substandard and dangerous patient care and on an observed abrupt change in [his] behavior characterized by volatile and erratic actions." At the time the Agreement was terminated, the evaluations had been requested to determine whether Nesson could perform his job. The MEC had initiated an investigation to learn whether corrective action was warranted but Nesson refused to comply.
Id. at 88.  

The opinion is available here

Tuesday, October 30, 2012

Aryeh v. Canon Business Solutions: Supreme Court to Resolve Statute of Limitations Questions in Unfair Competition Class Action

In Aryeh v. Canon Business Solutions (2010) 185 Cal.App.4th 1159, the Court of Appeal affirmed a judgment of dismissal in a consumer class action under the Unfair Competition Law, holding that the action was barred by the statute of limitations. The Court of Appeal's opinion is here. The Supreme Court granted the plaintiff's petition for review in October, 2010. The issues stated are as follows:
  1. May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code section 17200 et seq.)? 
  2. May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action? 
  3. May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action? 
The Supreme Court's web page for Aryeh (Case No. S184929) is here. It has been fully briefed since last November, but oral argument has not been scheduled.  

I have added Aryeh to our Watch List of pending cases because it could have implications for employment actions.  

Monday, October 29, 2012

Peabody v. Time Warner Cable: California Supreme Court Accepts Review of Commission Sales Exemption Question

In Peabody v. Time Warner Cable (discussed here), the Ninth Circuit Court of Appeals asked the California Supreme Court to decide whether an employer can average an employee’s commission payments over certain pay periods to satisfy the compensation requirements of California commission sales exemption.

Last week, the Supreme Court granted the Ninth Circuit's request. The Court has restated the issue on review as follows:
May an employer, consistent with California's compensation requirements, allocate an employee's commission payments to the pay periods for which they were earned?
Here are the facts: Susan Peabody worked for Time Warner Cable (TWC) as an account executive, working an average of 45 hours per week and earning salary plus commissions based on her monthly sales. TWC paid Ms. Peabody her salary biweekly and paid commissions monthly. In those pay periods that included a commission payment, TWC paid Ms. Peabody more than one and one-half times the minimum wage, so that she qualified for the commission sales exemption. In those pay periods that did not include a commission payment, TWC paid Ms. Peabody less than one and one-half times the minimum wage, so that she did not qualify for the commission sales exemption.

The Court's web page for Peabody (Case No. S204804) is here. I have added Peabody to our Watch List of pending cases. 

Saturday, October 27, 2012

Harris v. Superior Court (Liberty Mutual): California Supreme Court Denies Review of Administrative Exemption Decision, Grants Depublication

In Harris v. Superior Court (Liberty Mutual Ins. Co.) (2011) 53 Cal.4th 170 (discussed here), a unanimous California Supreme Court held that that the “administrative/production worker dichotomy” is not dispositive of the administrative exemption defense.

On remand (discussed here), the Court of Appeal held once again that the trial court erred in granting the defendants' motion to decertify the class and in denying the plaintiffs' motion for summary judgment on the administrative exemption defense.

Thank you to Kim Kralowec for pointing out on her blog that on Wednesday, the California Supreme Court denied the employer's petition for review of the most recent decision, but granted a depublication request filed by the California Employment Law Council.  

Friday, October 26, 2012

Caron v. Mercedes-Benz Financial Services: Supreme Court Grants Review in CLRA Class Action Waiver Case, Defers Briefing Pending Iskanian

In Caron v. Mercedes-Benz Financial Services USA LLC (7/30/12) (discussed here), the Court of Appeal reversed an order denying a petition to compel arbitration in a civil action, holding that the Federal Arbitration Act (FAA) preempts the Consumer Legal Remedies Act (CLRA) prohibition on class action waivers.

On Wednesday, the California Supreme Court granted review in Caron and deferred briefing pending its decision in Iskanian v. CLS Transportation Los Angeles, LLC (discussed here), which includes the following issue:

Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S. Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights?
The Supreme Court's web page for Caron (Case No. S205263) is here. I generally do not add grant-and-hold cases to our Watch List because the Court typically does not issue separate opinions in those cases. 

Thursday, October 25, 2012

Shelley v. Geren: Ninth Circuit Applies McDonnell Douglas Burden Shifting, Reverses Grant of Summary Judgment in Age Discrimination Case

I recently attended an employment law update presented by Patrice Goldman and Andrew Friedman, and they noted several cases that I missed over the course of the last year. I will be discussing those cases over the next few weeks.

In Shelly v. Geren, 666 F.3d 599 (9th Cir. 2012), the plaintiff sued the Secretary of the Army and the United States Army Corps of Engineers (the Corps) for violating the Age Discrimination in Employment Act (ADEA) by failing to interview him and rejecting his applications for two promotions. The district court granted the Corps' motion for summary judgment:

The court declined to analyze the motion in accordance with McDonnell Douglas Corporation v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), finding it inapplicable to ADEA cases after the Supreme Court's decision in Gross v. FBL Financial Services, Inc., 557 U.S. 167, 129 S.Ct. 2343, 174 L.Ed.2d 119 (2009). Relying on Gross, the district court held that Shelley put forth insufficient facts that his age was the "but-for" cause of his non-selection for the 120-day position and for an interview for and promotion to the permanent position.
Id. at 604. The Ninth Circuit reversed. First, the Court found that Shelly exhausted his administrative remedies by timely filing with the EEOC. Id. at 605-606. Next, the Court held that the district court inappropriately applied Gross, which concerned instructions at trial, rather than the parties' burdens on summary judgment. Id. at 607. The Court explained that McDonnell Douglas remains good law on summary judgment: 

Thus, to survive summary judgment on his claim for a violation of the ADEA under the disparate treatment theory of liability, Shelley must first establish a prima facie case of age discrimination. If he is successful, the burden of production shifts to the Corps to articulate a legitimate non-discriminatory reason for its adverse employment action. It is then Shelley's task to demonstrate that there is a material genuine issue of fact as to whether the employer's purported reason is pretext for age discrimination. At trial, he must carry the burden to prove that age was the "but-for" cause of his non-selection.
Id. at 608. 

The Court held that Shelly presented a prima facie case of age discrimination and that the Corps presented a non-discriminatory reason for its decisions, shifting the burden back to Shelly to raise a genuine factual question as to whether the Corps' proffered reason was pretextual. Id. at 608-609. The Court concluded that Shelly presented both direct and indirect evidence of pretext, meeting his burden on summary judgment. Id. at 609-612.

The opinion is available here.  

Wednesday, October 24, 2012

Harbor Regional Center v. Office of Administrative Hearings: OAH Has Jurisdiction To Order Higher Wages For Disabled Child's In-Home Care Provider

Just a quick note on this case, Harbor Regional Center v. Office of Administrative Hearings (Hannah G.) (10/12/12):
Harbor Regional Center (Harbor) appeals from the judgment in this administrative mandate action, contending that the trial court erred by determining that an Administrative Law Judge (ALJ) from the state’s Office of Administrative Hearings (OAH) had jurisdiction under the Lanterman Developmental Disabilities Services Act (Lanterman Act or Act; Welf. & Inst. Code, § 4500 et seq.) to order the center to pay a higher wage to the in-home care provider of a severely disabled girl. We conclude that under the circumstances of this case, jurisdiction to hear such disputes rests with the OAH, and therefore affirm the judgment. 
Slip op. at 2. The Court explained: 
After several years of acquiescing to administrative law orders to fund salaries above the established rate to the caregivers of a profoundly disabled girl receiving services under the Lanterman Act, Harbor chose to dispute a temporary pay increase of approximately $1,650 for a substitute caregiver. At issue over this small sum are the rights of developmentally disabled children to contest decisions by service agencies such as Harbor to refuse funding for pay increases above the state-approved general rate. We hold that such increases may be required by unique circumstances in order to fulfill the Lanterman Act’s mandate to take all steps possible to keep such children at home with their families.

The opinion is available here

Tuesday, October 23, 2012

Ayala v. Antelope Valley Newspapers, Inc.: Court Reverses (In Part) Order Denying Certification In Independent Contractor Action

In Ayala v. Antelope Valley Newspapers, Inc. (9/19/12, pub. 10/17/12), the plaintiffs "sought to certify a class of newspaper home delivery carriers in a lawsuit against defendant Antelope Valley Newspapers, Inc. (AVP), alleging that AVP improperly classified the carriers as independent contractors rather than employees and violated California labor laws. The trial court found there were numerous variations in how the carriers performed their jobs, and therefore common issues did not predominate." Slip op. at 2. The Court of Appeal reversed, holding:
[V]ariations [in how individuals perform their work] do not present individual issues that preclude class certification. Instead, because all of the carriers perform the same job under virtually identical contracts, those variations simply constitute common evidence that tends to show AVP's lack of control over certain aspects of the carriers' work. Similarly, the so-called “secondary factors” that must be considered when determining the primary issue in this case -- whether AVP improperly classified the carriers as independent contractors rather than employees -- also may be established for the most part through common proof, since almost all of those factors relate to the type of work involved, which is common to the class. Therefore, we hold the trial court erred in finding that the independent contractor-employee issue is not amenable to class treatment.  
Our holding that the independent contractor-employee issue may be determined on a class wide basis through common proof does not entirely resolve the class certification question as to all of the causes of action plaintiffs allege.  The trial court also found that plaintiffs' claims of overtime and meal/rest period violations (Lab. Code, §§ 1194, 226.7, 512) were not amenable to class treatment because of wide variation in the amount of time each carrier spent performing the required work, and their varied use of helpers or substitutes.  Therefore, the trial court found that individual inquiries would have to be made to determine AVP's liability as to each carrier (assuming, of course, the carriers were found to be employees).  We agree, and affirm the trial court's denial of class certification as to the first, second, and third causes of action.  We reverse the order denying certification as to the remaining causes of action because the court's denial as to those claims was based solely upon its determination that the independent contractor-employee issue is not suitable for class treatment.  Unless the trial court determines, on remand, that the remaining causes of action present predominately individual issues as to liability (as opposed to damages), the court shall certify the class for the fourth through eighth causes of action.
Slip op. at 2-3.

The opinion is available here.  

Monday, October 22, 2012

Mize-Kurzman v. Marin Community College District: Erroneous Instructions Require New Trial of Whistleblower Action

Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832, is a case that I did not discuss earlier this year, but it came up in a recent seminar, and I wanted to note it.

The plaintiff alleged that the District retaliated against for complaining about several illegal policies. The case went to trial on three counts alleging violations of Labor Code section 1102.5, subdivisions (a) and (b), and Education Code section 87160 et seq. The jury found against the plaintiff on all three counts.

The plaintiff appealed, arguing that two special jury instructions included a number of improper limitations on what constituted "disclosures" based on federal law. She argued that these limitations did not apply to her California law claims and that, even if federal law provided applicable standards, the instructions given were erroneous interpretations of the federal law. Id. at 844.

The Court of Appeal reversed. First, it noted that the CACI jury instructions do not define "disclosing information" (Lab. Code § 1102.5(b)) or "protected disclosure" (Ed. Code 87162(e)) and that the trial court "could properly conclude that the jury required guidance as to what did and did not constitute "disclosing information" or a "protected disclosure" under the California statutes." Id. at 847-849.

Regarding the specific instructions given, the Court held that the trial court erred in instructing the jury that:
The plaintiff must prove that any disclosure was made in good faith and for the public good and not for personal reasons. Id. at 850-852.  
"Debatable differences of opinion concerning policy matters" were not protected disclosures. Id. at 852-856.  
Information passed along to a supervisor in the normal course of duties is not a protected disclosure. Id. at 856-858. 
However, the trial court did not err in giving instructions that: 
Reporting publicly known facts is not a protected disclosure. Id. at 858-859.  
Efforts to determine if a practice violates the law are not protected disclosures. Id. at 859-860.  
For the plaintiff to prevail, she must prove that the District acted with the intention of retaliating against her. Id. at 860-861. 
On the last point, the Court explained:  
Once an employee has demonstrated by a preponderance of evidence that an activity protected by the statute was a contributing factor in the alleged intentional retaliation, the burden of proof shifts to the employer to demonstrate by clear and convincing evidence that action alleged to be retaliatory would have occurred for legitimate, independent reasons. 
Id. at 861. One way for the district to meet this burden is to show "by clear and convincing evidence that those engaging in the alleged retaliation reasonably believed their conduct was justified on the basis of evidence separate and apart from the fact that the employee made a protected disclosure."  Id. at 862.  

The Court held that these instructional errors were prejudicial and remanded for retrial.  

The opinion is available here.

Saturday, October 20, 2012

Elijahjuan v. Superior Court: Court of Appeal Holds That Narrow Arbitration Clause In Independent Contractor Agreement Does Not Cover Wage and Hour Claims

In Elijahjuan v. Superior Court (Mike Campbell & Associates, Ltd) (10/17/12), the plaintiffs filed a putative class action against the defendant (Campbell) for wage and hour violations, alleging that it misclassified them as independent contractors. The trial court granted Campbell's motion to compel arbitration, the plaintiffs appealed, and the Court of Appeal reversed.

First, the Court noted that the trial court's order, which compelled arbitration of all but the Unfair Competition Law claims (which the court severed and stayed), was not appealable. Slip op. at 4. The death knell doctrine did not apply because the trial court did not dismiss the class claims. Ibid. However, the Court exercised its discretion to treat the appeal as a petition for writ of mandate. Slip op. at 5.

Next, the Court considered whether the plaintiffs' allegations fell within the relatively narrow arbitration agreement:
The crucial issue is whether the arbitration provision – which applies to any dispute that "arises with regard to [the Agreements'] application or interpretation" – includes the alleged misclassification of petitioners as independent contractors. We conclude that the current dispute falls outside the ambit of the arbitration provision. 
Petitioners' lawsuit does not concern the application or interpretation of the Agreements, but instead seeks to enforce rights arising under the Labor Code benefitting employees but not independent contractors. No allegation in the FAC is based on rights afforded petitioners under the terms of the Agreements. The parties' dispute therefore cannot be characterized as regarding the application or interpretation of the Agreements. 
Slip op. at 6, citing Narayan v. EGL, Inc. (9th Cir. 2010) 616 F.3d 895, 899 (discussed here) and Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, review denied 9/12/12 (discussed here). 

The Court noted that its conclusion was supported by the fact that the arbitration agreement gave the arbitrator no power to analyze the plaintiffs' Labor Code claims. Slip. op. at 8-9.

The opinion is available here.  

Friday, October 19, 2012

State Bar of California Labor and Employment Law Section's Annual Meeting

The State Bar's Labor and Employment Law Section is holding its 30th Annual Meeting November 2-3 in Newport Beach.  The information and link to registration are below.  I am not speaking (for a change) but am looking forward to it.  Speakers include California Supreme Court Justice Goodwin Liu and Ninth Circuit Court of Appeals Judge Marsha Berzon.  Should be a great weekend.  See you there!  
The State Bar’s Labor and Employment Law Section is pleased to invite you to a special event, its 30th Annual Meeting, on November 2-3, 2012, at the beautiful Balboa Bay Club & Resort, in Newport Beach, California. If you go to one CLE event or conference this year – make it this one.  
The event features not only our keynote speaker, Justice Goodwin Liu, and our special honoree, 9th Circuit Court of Appeals Judge Marsha Berzon, but: a terrific panel of U.S. District Court, California Court of Appeal, and Superior Court judges; Fair Employment and Housing Act and wage/hour basics panels for lawyers new to the practice area; cutting edge issues in summary judgment, discovery and the National Labor Relations Board; ethics and substance abuse credits; live demonstration panels on deposition techniques; and, our always top-notch case law update. The location is perfect for a family holiday or a getaway.  
Please – don’t delay – sign up now for this program, which costs far less than events sponsored by private CLE providers – only $295 if people register today.  
For more details and online registration, click here.  

Tuesday, October 16, 2012

Supreme Court Grants Review of Holding in Patterson v. Domino’s Pizza That Franchisor May Be Liable in FEHA Action

In Patterson v Domino’s Pizza (6/4/12) (discussed here), the Court of Appeal held that a franchisor may be held liable under the Fair Employment and Housing Act (FEHA) for acts taking place in a franchisee's place of business.  

The Supreme Court last week granted the franchisor's petition for review:  
Petition for review after the Court of Appeal reversed the summary judgment in a civil action. The court limited review to the question discussed in the Court of Appeal's opinion, namely, whether the defendant franchisor is entitled to summary judgment on plaintiff's claim that it is vicariously liable for tortious conduct by a supervising employee of a franchisee. 
Patterson is Case No. S204543.  The Court's case summary page is here.  I have added Patterson to our Watch List of Pending Cases.  

Friday, October 12, 2012

Buzenes v. Nuvell Financial Services: Supreme Court Issues Sanchez v. Valencia Grant-and-Hold

In Buzenes v. Nuvell Financial Services (1/25/12), a car purchaser sued the seller for violation of the Unfair Competition Law (UCL) and other causes of action after the seller repossessed her car. In an unpublished opinion (available here) the Second District Court of Appeal affirmed a trial court's order denying a petition to compel, holding that the arbitration agreement was unconscionable and unenforceable, and that the Federal Arbitration Act (FAA) does not preempt unconscionability analysis of arbitration agreements. The Court found the agreement substantively unconscionable in that it gave the seller the right to pursue repossession remedies outside of arbitration.

On May 5, 2012, the California Supreme Court unanimously granted the seller's petition for review and deferred further action pending the Court's decision in Sanchez v. Valencia Holding Co. (discussed here). The Court granted review in Sanchez to determine the following issue: 

Does the Federal Arbitration Act (9 U.S.C. section 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?
Buzenes is case no. S200376. The Court's case summary page is here

Wednesday, October 10, 2012

Dutra v. Mercy Medical Center: Plaintiff Cannot Rely on Labor Code Section 132a as Basis For Wrongful Termination Claim

In Dutra v. Mercy Medical Center Mount Shasta (9/26/12), the plaintiff sued her former employer for defamation and wrongful termination.  The trial court granted summary adjudication of the defamation claim and dismissed the wrongful termination claim prior to trial.  The plaintiff appealed, and the Court of Appeal affirmed.  

First, the Court held that the trial court did not err in summarily adjudicating the defamation claim because there was no triable issue of fact that the defendant had not acted with malice in disclosing its reasons for terminating the plaintiff in a meeting with her, a union steward, and certain supervisors.  Slip op. at 4-5.

Second, the Court held that the trial court did not have jurisdiction to hear the plaintiff's claim that her employer terminated her in violation of Labor Code section 132a.  Slip op. at 6-10.  Although the California Supreme Court in City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, held that section 132a does not provide the exclusive remedy for disability discrimination and that employees may pursue claims under the Fair Employment and Housing Act (FEHA) and common law wrongful termination, "section 132a does not qualify under case authority as the type of policy that can support a common law action for wrongful termination."  Slip op. at 6.  
Section 132a includes limitations on its scope and remedy that prevent it from being the basis of a common law cause of action.  The statute establishes a specific procedure and forum for addressing a violation.  It also limits the remedies that are available once a violation is established.  Allowing plaintiff to pursue a tort cause of action based on a violation of section 132a would impermissibly give her broader remedies and procedures than that provided by the statute.  Thus, the statute cannot serve as the basis for a tort claim of wrongful termination in violation of public policy, and the trial court correctly granted Mercy's motion to dismiss the action.
Slip op. at 9.  

The Court reiterated that section 132a was not the plaintiff's exclsuive remedy, and that she could have amended her complaint to seek those remedies, but chose not to do so.  Slip op. at 9-10.

The opinion is available here.

Tuesday, October 9, 2012

Tien v. Tenet Healthcare: Court of Appeal Reaffirms Another Pre-Brinker Order Denying Certification

In Tien v. Tenet Healthcare Corp. (2/16/11) 192 Cal.App.4th 1055 (discussed here) the trial court initially certified meal period, waiting time penalty, and check stub claims. After the Court of Appeal issued Brinker v. Superior Court (4/12/12) 53 Cal.4th 1004 (discussed here) and Brinkley v. Public Storage, Inc. (2008) 167 Cal.App.4th 1278, the trial court granted Tenet's motion for reconsideration and denied certification on all issues. The Court of Appeal affirmed, and the California Supreme Court added Tien to its list of Brinker grant-and-holds.

On remand following Brinker, the Court of Appeal has affirmed its earlier decision. 
Tien v. Tenet Healthcare Corp. (10/4/12).  This should not come as much of a surprise, as Tien comes from the same Court of Appeal (Second District, Division Eight) that recently affirmed its earlier decisions in two other Brinker grant-and-holds: Lamps Plus Overtime Cases (8/20/12) (discussed here); and Hernandez v. Chipotle Mexican Grill, Inc. (8/21/12) (discussed here).

In any case, here's what the Court says in Tien:

First, the denial of certification is reviewed on a substantial evidence standard, unless the trial court "has evaluated class certification using improper criteria or an incorrect legal analysis." Slip op. at 8-9.

Second, substantial evidence supported the trial court's decision. Slip op. at 9-12. Substantial evidence supported the trial court's decision that individual issues predominated with regard to the meal period, rest period, and check stub claims. Ibid.

Third, the trial court did not err in refusing to reverse its decision after the Supreme Court granted review in Brinkley. Slip op. at 12-15. "Although Brinkley's depublication meant the trial court could no longer rely on that decision after January 2009, appellants cite no authority that the court's reliance on Brinkley before its depublication violated the rule prohibiting citation of depublished decisions." Slip op. at 13. The Court distinguished Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, and held that the trial court had no obligation to follow it. Slip op. at 13-15.

Fourth, any error that the trial court committed in failing to give the plaintiffs an opportunity to argue Brinkley was harmless, given that the court did give them the opportunity to argue Brinker. Slip op. at 15.

Fifth, the trial court did not err in considering the merits of an employer's obligation to provide meal periods. Slip op. at 16-18.

Finally, the trial court did not err in reversing its tentative decision to grant certification, and the appellants could not use the tentative order to impeach the final order denying certification. Slip op. at 18-20.

The opinion is available here.

Monday, October 8, 2012

Phillips v. Sprint: Court of Appeal Affirms Individual Arbitration on Renewed Motion After Concepcion

A recurring issue over the last year or so has been whether defendants can bring or renew motions to compel arbitration in the wake of the Supreme Court's decision in AT&T Mobility LLC v. Concepcion (discussed here). 

In Phillips v. Sprint PCS (9/26/12), a putative consumer class action, the trial court denied Sprint's motion to compel individual arbitration in 2006.  Sprint renewed its motion in June, 2011, just two months after Concepcion.  The trial court granted the motion, compelling individual arbitration.  The plaintiffs appealed, and the Court of Appeal affirmed.  

First, the Court held that the order compelling individual arbitration was not appealable, but exercised its discretion to consider the appeal as a writ.  Slip op. at 5-7.  The Court held that the death knell doctrine did not apply because the trial court did not rule on Sprint's request to dismiss the class claims before the plaintiff filed his appeal.  Slip op. at 6-7.  Regardless, the Court held that "the unusual circumstances of this case warrant immediate review."  Slip op. at 7.  

Second, the Court held that the trial court did not abuse its discretion in allowing Sprint to renew its motion to compel after Concepcion.  Slip op. at 7-9.  The trial court relied at least in part on its observation that, "despite the great age of this case, plaintiff has done little to advance it to trial."  Slip op. at 9.  

Third, the Court held that the prior order denying the motion to compel was not res judicata.  Slip op. at 9-13.  The Court agreed with Sprint that "the arbitrability issue was raised and renewed by motion in a single ongoing class action lawsuit, making res judicata principles inapplicable because there is no prior judgment."  Slip op. at 10.  

Fourth, the Court held that Sprint did not waive its right to compel arbitration by not appealing the denial of its original motion to compel arbitration.  Slip op. at 13-14.  The Court held that any such appeal would have been futile in the face of Discover Bank.  Ibid.  

Finally, the Court affirmed that trial court's ruling that the arbitrator should decide whether the contract as a whole, rather than just its class action waiver clause, was unconscionable and unenforceable.  Slip op. at 14-15.  The plaintiff challenged provisions -- a shortened statute of limitations and a limitation on damages -- that lay outside the arbitration clause and that presumably would apply whether the matter proceeded in arbitration or in court.  Ibid.  "[A] challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator." Ibid., citing Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440, 449. "The basis of the challenge must be 'directed specifically to the agreement to arbitrate before the court will intervene.'" Ibid., citing Rent-A-Center, West, Inc. v. Jackson (2010) ___ U.S. ___ (discussed here). 

The opinion is available here

Friday, October 5, 2012

McCall v. Facebook: Court Affirms Settlement Despite Objections As To Cy Pres Beneficiary

In McCall v. Facebook, Inc. (9th Cir. 9/20/12), the Ninth Circuit held that the district court did not abuse its discretion in approving a somewhat unusual $9.5 million settlement in a case involving more than 3.5 million putative class members.

The case arose out of allegations that Facebook's "Beacon" program violated users' privacy. The settlement allocated about $3 million to attorney fees, costs, and class rep enhancements and the remaining $6.5 million to establish and fund a new entity, the Digital Trust Foundation (“DTF”), which would “fund and sponsor programs designed to educate users, regulators[,] and enterprises" regarding online privacy issues. One of DTF's three directors would be a Facebook employee. DTF would have a Board of Legal Advisors, which would consist of counsel for both the plaintiff class and Facebook. Four class members objected, the district court granted final approval, the objectors appealed, and the Ninth Circuit affirmed.

Of greatest interest was the Court's rejection of the objectors' argument that Facebook’s employee serving on DTF’s board of directors created an unacceptable conflict of interest that would prevent DTF from acting in the interests of the class. Slip op. at 11545-11548. Given that direct distribution to the more than 3.5 million class members would be infeasible, the Court held that DTF was an acceptable alternative, even if the objectors did not find it "ideal." Slip op. at 11545. "The cy pres remedy the settling parties here have devised bears a direct and substantial nexus to the interests of absent class members and thus properly provides for the 'next best distribution' to the class." Slip op. at 11546. 

The Court also rejected the objectors' argument that the district court did not sufficiently evaluate the plaintiffs’ claims and compare the value of those claims with the class’s $9.5 million recovery (slip op. at 11548-11554), that the notice of settlement was insufficient because it did not describe the value of the plaintiffs’ claims and “did not accurately describe what the class members would receive in exchange for the release” of those claims (slip op. at 11554-11555).  The Court concluded: 
Ultimately, we find little in Objectors’ opposition to the settlement agreement beyond general dissatisfaction with the outcome. That dissatisfaction may very well be legitimate insofar as Objectors would have acted differently had they assumed the role of class representatives. But while Objectors may vigorously disagree with the class representatives’ decision not to hold out for more than $9.5 million or insist on a particular recipient of  cy pres funds, that disagreement does not require a reviewing court to undo the settling parties’ private agreement. The district court properly limited its substantive review of that agreement as necessary to determine that it was “fair, adequate, and free from collusion.” 
Judge Kleinfield wrote a very strongly worded dissent, which begins as follows:  
This settlement perverts the class action into a device for depriving victims of remedies for wrongs, while enriching both the wrongdoers and the lawyers purporting to represent the class.
Slip op. at 11555.  The opinion is available here.  

Thursday, October 4, 2012

Fillpoint, LLC v. Maas: Court Finds Employee's Non-Competition Agreement Unenforceable

In Fillpoint v. Maas (8/24/12) --- Cal.App.4th ---, an employee who held stock in his employer sold that stock to a company purchasing the employer.  He signed a stock purchase agreement, which contained a three-year covenant not to compete. 

He also signed an employment agreement containing a one-year covenant not to compete, which would become operative when employee's employment with the employer ended.  The employee resigned from the employer three years after its acquisition by the purchaser. About six months later, he began working for a competitor. Fillpoint, which had acquired the employer from the purchaser, sued the employee for breaching his employment agreement, and also sued his new employer for interference with contract. The trial court granted the defendants' nonsuit motion, and the Court of Appeal affirmed.

The Court held that the covenant not to compete executed in connection with the sale of the employee's stock was enforceable under Labor Code section 16601.  Slip op. at 7-9.  

It also held that the employment agreement must be read in conjunction with the stock purchase agreement.  Slip op. at 9-14. The Court explained: 
In this case, both the purchase agreement and the employment agreement contained covenants not to compete, but those covenants were not identical.... The two agreements were between the same parties; although the purchase agreement was between Handleman and Maas, and the employment agreement was between Crave and Maas, Crave was owned by Handleman after the acquisition.  Both agreements referenced each other, and the employment agreement contained an integration clause providing that in the event of any conflicts between the terms of the two agreements, the terms of the purchase agreement would prevail.  Based on these facts, we conclude the purchase agreement and the employment agreement must be read together as an integrated agreement. The trial court erred in concluding the purchase agreement and the employment agreement must be read separately.  
Slip op. at 13-14.  

Regardless, the Court concluded that the non-competition agreement contained in the employment agreement was not enforceable.  Slip op. at 14-16.  

The purchase agreement's covenant was focused on protecting the acquired goodwill for a limited period of time.  The employment agreement's covenant targeted an employee's fundamental right to pursue his or her profession. 
Slip op. at 16.  In addition, the Court held that the non-solicitation terms found in the employment agreement were overly broad and were not enforceable.  Ibid.  

The opinion is available here

Wednesday, October 3, 2012

Reyes v. Liberman Broadcasting: Court of Appeal Reverses Order Denying Motion to Compel Arbitration

In Reyes v. Liberman Broadcasting Inc. (8/31/12) --- Cal.App.4th ---, the plaintiff worked as a security officer for the defendant, LBI. After his employment ended, he filed a putative class action and PAGA representative action alleging wage and hour violations. The trial court denied LBI's petition to compel arbitration on grounds that LBI failed to timely raise the issue. The Court of Appeal reversed.

The Court held that LBI had not waived its right to compel arbitration. Slip op. at 3-23. LBI's failure to invoke the arbitration clause sooner was not inconsistent with asserting the right to arbitrate for a number of reasons:
  1. The arbitration agreement did not authorize class arbitration. Slip op. at 4-6, citing Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. ___, (discussed here); Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506, 510 (discussed here).   
  2. Prior to AT&T Mobility LLC v. Concepcion (2011) __ U.S. __, (discussed here), California law arguably barred enforcement of the arbitration agreement because it did not authorize class arbitration.  Slip op. at 6-8. 
  3. There is a difference of opinion whether Concepcion implicitly overruled Gentry v. Superior Court (2007) 42 Cal.4th 443.  Slip op. at 8-12, citing Iskanian v. CLS Transportation Los Angeles, LLC (2012)  206 Cal.App.4th 949, review granted 9/19/12 (discussed here); but cf. Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 497 (discussed here).  
  4. Given the possibility that California law barred enforcement of the arbitration agreement, LBI did not waive its right to arbitration by not making its motion prior to Concepcion. Slip op. at 12-17; citing Quevedo v. Macy’s, Inc. (C.D.Cal. 2011) 798 F.Supp.2d 1122; In re Cal. Title Ins. Antitrust Litig. (N.D.Cal. June 27, 2011, No. 08-01341); but cf. Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832 (discussed here).  
Further, LBI had not "substantially invoked the litigation machinery," LBI moved to compel arbitration just one month after Concpecion, LBI did not file a counterclaim, and the plaintiff showed no prejudice as a result of the delay.  Slip op. at 17-23.  

Finally, the Court held that the National Labor Relations Act did not apply, finding no "congressional command in the NLRA prohibiting the enforcement of the arbitration agreement according to its terms." Slip op. at 23-25, citing Iskanian, supra.  

Given the grant of review in Iskanian, it will be very interesting to see whether the Supreme Court allows Reyes to stand, or issues a grant-and-hold order.  

The opinion is available here.  

Tuesday, October 2, 2012

Missouri Title Loans v. Brewer: SCOTUS Denies Certiorari in Concepcion Follow-Up

Since the Supreme Court's decision in AT&T Mobility LLC v. Concepcion, 563 U.S. ___ (4/27/11) (discussed here), we have seen differing opinions on whether Concepcion overruled the California Supreme Court's decision in Gentry v. Superior Court (2007) 42 Cal.4th 443.  

As a reminder, Gentry held that the right to class arbitration is -- "at least in some cases" -- a necessary minimum requirement for the arbitration of non-waivable statutory rights because requiring individual arbitration may have an exculpatory effect, undermining the enforcement of those statutory rights.

The Supreme Court of the United States yesterday denied certiorari in a case that could have ended the debate over Concepcion and Gentry. In Brewer v. Missouri Title Loans, Inc., the Supreme Court of Missouri held that a class arbitration waiver in a loan agreement was unconscionable and unenforceable and that the appropriate remedy was to strike the entire arbitration agreement.  The Court reasoned that striking only the class arbitration waiver still would not allow for class arbitration (citing Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. ___  (2010)), and because a plaintiff would not be able to find counsel to represent her in an individual arbitration, she would have "no meaningful avenue of redressing complicated statutory and common law claims."  In other words, individual arbitration would have an exculpatory effect and undermine enforcement of the laws at issue.  

The defendant petitioned for certiorari, framing the issues as follows:  
  1. Whether the Federal Arbitration Act ("FAA") preempts state law finding an arbitration agreement to be unconscionable when the plaintiff cannot vindicate her statutory rights without a class action; and
  2. Whether the Supreme Court of Missouri, on remand from the Supreme Court, contravened the FAA by again refusing to enforce Missouri Title Loans' arbitration agreement, this time based upon alleged evidence submitted by the plaintiff aimed at substantiating the very public policy arguments that were held to be preempted in AT&T Mobility LLC v. Concepcion.  
I will not try to read the tea leaves on that one.  You can find more information, including the underlying decision and the parties' briefs, on SCOTUSblog.  

Governor Brown Acts On Employment Law Bills

As you probably know, Governor Brown has acted on a very large number of bills over the last week, and many of them impact employment law. The following is a list, compiled by DFEH Director Phyllis Cheng.  I will review a few of these bills in detail over the next week or so.
Bills Signed

AB 1203 by Assemblymember Tony Mendoza (D-Artesia) –Public school employee organizations: unelected members: paid leaves of absence.

AB 1565 by Assemblymember Felipe Fuentes (D-Los Angeles) – Public contracts: school districts: bidding requirements.

AB 1598 by Assemblymember Joan Buchanan (D-San Ramon) – Public contracts: public works: installation.

AB 1675 by Assemblymember Susan Bonilla (D-Concord) – Farm labor contractors: licenses: civil penalty.

AB 1744 by Assemblymember Bonnie Lowenthal (D-Long Beach) – Employee compensation: itemized statements.

AB 1794 by Assemblymember Das Williams (D-Santa Barbara) – Unemployment insurance: use of employer reports: reporting and payroll: enforcement. 

AB 1844 by Assemblymember Nora Campos - prohibits employers from requiring that applicants give up their e-mail or social media account passwords.

AB 1855 by Assemblymember Norma Torres (D-Pomona) – Employment: contractors: sufficient funds. 

AB 1865 by Assemblymember Luis Alejo (D-Salinas) – Residential tenancies: eviction: notices.

AB 1908 by Assemblymember Luis Alejo (D-Salinas) – Classified employees: notice of layoff.

AB 1960 by Assemblymember Roger Dickinson (D-Sacramento) – State contracts: reports: lesbian, gay, bisexual, and transgender businesses. 

AB 1964 by Assemblymember Mariko Yamada (D-Davis)- Clarifies that the practice of wearing religious clothing or a religious hairstyle as a belief or observance is covered by protections under the Fair Employment and Housing Act.

AB 2103 by Assemblymember Tom Ammiano (D-San Francisco) – Employment: wages and hours: overtime. 

AB 2140 by Assemblymember Ricardo Lara (D-South Gate) – Public employees' retirement: State Bargaining Unit 5: contribution rates.

AB 2212 by Assemblymember Marty Block (D-San Diego) – Human trafficking: civil penalties.

AB 2298 by Assemblymember Jose Solorio (D-Santa Ana) – Insurance: public safety employees: accidents. 

AB 2396 by the Committee on Arts, Entertainment, Sports, Tourism – Employment of infants: entertainment industry.

AB 2343 by Assemblymember Norma Torres (D-Pomona) – Criminal history information.

AB 2508 by Assemblymember Susan Bonilla (D-Concord) – Public contracts: public health agencies.

AB 2580 by Assemblymember Warren Furutani (D-Long Beach) – Public contracts: job order contracting.

AB 2663 by the Committee on Public Employees, Retirement and Social Security – Teachers' Retirement Law.

AB 2674 by Assemblymember Sandré Swanson (D-Oakland) – Employment records: right to inspect.

AB 2675 by Assemblymember Sandré Swanson (D-Oakland) – Employment contract requirements.

AB 2677 by Assemblymember Sandré Swanson (D-Oakland) – Public works: wages: employer payment contributions.

SB 114 by Senator Leland Yee (D-San Francisco) – Teachers: retirement. 

SB 615 by Senator Ronald Calderon (D-Montebello) – Multiple employer welfare arrangements: benefits.

SB 691 by Senator Ted Lieu (D-Torrance) - Unemployment insurance: use of information.

SB 987 by Senator Gloria Negrete McLeod (D-Chino) – Public employees' retirement.

SB 1255 by Senator Roderick Wright (D- Los Angeles) – Employee compensation: itemized statements. 

SB 1291 by Senator Noreen Evans (D-Santa Rosa) – Unemployment benefits: training: teacher credentialing.

SB 1294 by Senator Tom Berryhill (R-Stanislaus) – Public employee health benefits: Mariposa County. 

SB 1370 by Senator Tom Berryhill (R-Stanislaus) – Prevailing wages: public works: director: code list
Bills Vetoed

AB 889 by Assemblymember Tom Ammiano (D-San Francisco) – Domestic work employees. A veto message can be found here.

AB 1450 by Assemblymember Michael Allen (D-Santa Rosa) – Employment: discrimination: status as unemployed. A veto message can be found here

AB 1852 by Assemblymember Nora Campos (D-San Jose) – Vital records: fees. A veto message can be found here.

AB 1968 by Assemblymember Bob Wieckowski (D-Fremont) – Peace officers. A veto message can be found here.  

AB 2132 by Assemblymember Ricardo Lara (D-South Gate) – Public postsecondary education: tenure policy. A veto message can be found here.

AB 2346 by Assemblymember Betsy Butler (D-Marina Del Rey) – Agricultural employee safety: heat-related illness. A veto message can be found here

AB 2389 by Assemblymember Bonnie Lowenthal (D-Long Beach) – Contractor disclosure requirements. A veto message can be found here.  

AB 2623 by Assemblymember Michael Allen (D-Santa Rosa) –State hospitals: peace officers. A veto message can be found here.

AB 2676 by Assemblymember Charles Calderon (D-Whittier) – Agricultural employee safety. A veto message can be found here

SB 204 by Senator Carol Liu (D-Pasadena) – Local alternative transportation improvement program. A veto message can be found here.

SB 259 by Senator Loni Hancock (D-Berkeley) – Higher education: employees. A veto message can be found here

SB 1233 by Senator Alex Padilla (D-Pacoima) – Ballot measure petitions: translations. A veto message can be found here.

SB 1318 by Senator Lois Wolk (D-Davis) – Health facilities: influenza vaccinations. A veto message can be found here.

SB 1434 by Senator Mark Leno (D-San Francisco) – Location information: warrants. A veto message can be found here.

SB 1476 by Senator Mark Leno (D-San Francisco) – Family law: parentage. A veto message can be found here.

Monday, October 1, 2012

Paratransit v. UIAB: California Supreme Court Grants Review In Employee Misconduct Case

In Paratransit, Inc. v. Unemployment Insurance Appeals Board (Medeiros) (2012) 206 Cal.App.4th 1319, the Court of Appeal held that an employee's refusal to sign a disciplinary memorandum in connection with a prior incident of misconduct constituted work-related misconduct, not a good-faith error in judgment, rendering the employee ineligible for unemployment compensation.

Last week the California Supreme Court voted 7-0 to grant review. The Court's web page states the issue presented as follows:
Did the trial court properly find that employee misconduct within the meaning of Amador v. Unemployment Ins. Appeals Bd. (1984) 35 Cal.3d 671 disqualified a discharged employee from receiving unemployment insurance benefits?
The Court's web page is here. I have added Paratransit to our Watch List of pending cases, which you can find on the lower rights side of our home page.