Palagin v. Paniagua Construction: Undertaking in Labor Commissioner Appeal Is Jurisdictional

Just a quick word on this case.

In Palagin v. Paniagua Construction, Inc. (12/16/13) --- Cal.App.4th ---, the Court of Appeal held that the statutory deadline for an employer to post an undertaking "as a condition to filing an appeal" of a Labor Commissioner award is a jurisdictional deadline that the trial court cannot extend. Under Labor Code section 98.2(b), where the employer fails to post the undertaking within the statutory period, the trial court must dismiss the appeal. Cf. Progressive Concrete, Inc. v. Parker (2006) 136 Cal.App.4th 540, 552-553 (the undertaking requirement in an earlier version of section 98.2(b) was not mandatory and jurisdictional).

Palagin v. Paniagua Construction is available here.

Ayala v. Antelope Valley Newspapers: California Supreme Court Calendars Oral Argument in Independent Contractor Class Action

In Ayala v. Antelope Valley Newspapers, Inc. (9/19/12, pub. 10/17/12) 210 Cal.App.4th 77 (discussed here), the plaintiffs sought to certify a class of newspaper home delivery carriers, alleging that AVP improperly classified them as independent contractors rather than employees. The trial court held that individual issues predominated because of numerous variations in how the carriers performed their jobs. The Court of Appeal reversed in part, holding that such variations did not preclude class certification under S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

The California Supreme Court granted the defendant's petition for review and On June 26, ordered the parties to submit letter briefs: 

discussing the relevance of Martinez v. Combs (2010) 49 Cal.4th 35, 52-57, 73, and IWC wage order No. 1-2001, subdivision 2(D)-(F) (Cal. Code Regs., tit. 8, § 11010, subd. 2(D)-(F)), to the issues in this case. (See also Sotelo v. Medianews Group, Inc. (2012) 207 Cal.App.4th 639, 660-662; Bradley v. Networkers Internat., LLC (2012) 211 Cal.App.4th 1129, 1146-1147.)  

The Court will hear oral argument on April 2, 2014, at 9:00 a.m., in Los Angeles. This is the same day that the Court is hearing Iskanian v. CLS Transportation. The Supreme Court's docket for Ayala is here (Case No. S206874). 

Like Iskanian, Ayala will be covered at the State Bar's Fourth Annual Advanced Wage and Hour Conference on July 30, 2014, in Los Angeles, and the discussion will be broadcast on the internet. As a result, we are not planning to conduct a Watch List webinar on the case. 

Salas v. Sierra Chemical: Court Schedules Oral Argument In Undocumented Worker Case

In Salas v. Sierra Chemical Co. (Supreme Court Case No. S196568, docket here), the California Supreme Court will consider whether an employee's use of a false social security number to obtain employment prevents the employee from later suing his employer for disability discrimination. The issues stated:

Did the trial court err in dismissing plaintiff's claims under the Fair Employment and Housing Act (Gov. Code § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff's use of false documentation to obtain employment in the first instance?  

Did Senate Bill No. 1818 (2001-2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000; Lab. Code § 1171.5.) 

On February 27, the Court asked the parties to address an additional issue:

Does federal immigration law preempt state law and thereby preclude an undocumented worker from obtaining, as a remedy for a violation of "state labor and employment laws" (Lab. Code § 1171.5; Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000), an award of compensatory remedies, including backpay? (See Hoffman Plastic Compounds, Inc. v. NLRB(2002) 535 U.S. 137.)

The Court has scheduled Salas for oral argument on Wednesday, April 2, 2014, at 9:00 a.m., in Los Angeles. The Court's decision will be due 90 days later, or July 1, 2014.

We are working to bring you a Watch List webinar on the decision shortly after it comes down. 

Supreme Court Schedules Oral Argument in Iskanian

The California Supreme Court has scheduled oral argument in Iskanian v. CLS Transportation Los Angeles, LLC (6/4/12) --- Cal.App.4th --- (discussed here). In Iskanian, the Court of Appeal issued a broad-ranging decision which held, among other points: 

Concepcion invalidated the holding in Gentry v. Superior Court (2007) 42 Cal.4th 443, that class waivers in arbitration agreements should not be enforced if “class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration.” 

The NLRB incorrectly decided D.R. Horton (discussed here), and nothing in the NLRA or the Norris-La Guardia Act evidences an intent to override the FAA's policies in favor of construing arbitration agreements according to their terms.  

Contrary to the holding in Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489 (discussed here), Concepcion applies to a plaintiff's representative claims under the Labor Code Private Attorneys General Act (PAGA).  

Contrary to the holding in Reyes v. Macy’s Inc. (2011) 202 Cal.App.4th 1119, (discussed here), the plaintiff could pursue individual PAGA claims in arbitration.  

The Court will hear oral argument on Thursday, April 3, 2014, at 9:00 a.m., in Los Angeles. The Supreme Court's docket page for Iskanian is here.

We will address Iskanian at the State Bar Labor and Employment Law Section's Fourth Annual Advanced Wage and Hour Conference on July 30 in Los Angeles, so we will not run a separate Watch List webinar on it. I believe that the Conference will be available for viewing via webcast. More information to follow.

Mississippi ex rel. Hood v. AU Optronics Corp.: Restitution Action By State Is Not Mass Action Under CAFA

A quick word about this case. In Mississippi ex rel. Hood v. AU Optronics Corp., ___ U.S. ___ (1/14/14), the Supreme Court of the United States held that an action by a state, as the sole named plaintiff, to obtain restitution on behalf of itself and its citizens was not a "mass action" for purposes of the Class Action Fairness Act (CAFA). 

It will be interesting to see whether this case has any impact on the question of whether a representative action under the 2004 Labor Code Private Attorneys General Act (PAGA) is considered a class action or mass action for CAFA removal purposes. 

Mississippi ex rel. Hood v. AU Optronics Corp. is available here. 

Vasquez v. Franklin Management: Court Explores Limits of Expense Reimbursement Liability

In Vasquez v. Franklin Management Real Estate Fund, Inc. (12/3/13, pub. 12/31/13) --- Cal.App.4th ---, the plaintiff, a $10-per-hour employee, alleged that his employer required him to use his own vehicle for work, but refused to reimburse him for gas and mileage. He filed suit, alleging constructive wrongful termination in violation of public policy (constructive discharge) and intentional infliction of emotional distress (IIED).

The trial court sustained demurrers without leave to amend, and the plaintiff appealed. The Court of Appeal reversed in part and affirmed in part, holding: 

To establish constructive discharge, an employee must plead and prove that the employer "either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign." Whether conditions were so intolerable as to justify a reasonable employee’s decision to resign is normally a question of fact. 

Although deprivations of salary or other economic benefits generally do not support a constructive discharge claim, the plaintiff here could allege constructive discharge because the expenses incurred were such a large percentage of the plaintiff's earnings and caused him to earn less than the minimum wage. The plaintiff's wage claims implicated fundamental public policies, and the trial court abused its discretion in sustaining the demurrer without leave to amend. 

The trial court did not abuse its discretion in sustaining the demurrer to the IIED claim. Severe emotional distress arising from outrageous conduct in the workplace in the normal course of the employer-employee relationship is "the type of injury that falls within the exclusive province of workers’ compensation." 

The opinion is available here. 

Vranish v. Exxon Mobil Corp.: Parties to Qualifying CBA May Alter Labor Code Definition of "Overtime Hours"

In Vranish v. Exxon Mobil Corporation, --- Cal.App.4th --- (1/27/14), the plaintiffs were Exxon employees covered by a collective bargaining agreement (CBA) who alleged that Exxon owed them overtime compensation. 

Under the CBA, Exxon paid the plaintiffs an overtime premium rate of one and one-half times their regular rate of pay for hours worked over 40 hours in a workweek or over 12 hours in a workday. The CBA provided that overtime would not be paid for hours worked between eight and 12 in a workday, as normally required by Labor Code section 510.

At issue was whether section 510’s definition of “overtime” applies to employees covered by a valid CBA under Labor Code section 514. More specifically, the question was whether the CBA at issue satisfied the fourth requirement of section 514, in that it provided “premium wage rates for all overtime hours worked.”

The Court held that section 510's definition of "overtime" did not apply, and the CBA provided premium wage rates for overtime hours worked, thus satisfying section 514.

Section 514 does not incorporate expressly the definition of "overtime" provided in section 510. "When there is a valid collective bargaining agreement, employees and employers are free to bargain over not only the rate of overtime pay, but also when overtime pay will begin." Slip op. at 8. Parties subject to a qualifying CBA may consider all hours over eight in a day to be overtime, or they may agree to a different model, such as considering only hours over 40 in a week. 

The opinion is available here. 

Sandifer v. U.S. Steel: Supreme Court Clarifies FLSA Donning and Doffing Rules

In Sandifer v. United States Steel Corp., ___ U.S. ___ (1/27/14), the Supreme Court of the United States considered the meaning of the phrase "changing clothes" in the Fair Labor Standards Act (FLSA). 29 U.S.C. section 201 et seq.

Clifton Sandifer sued U.S. Steel under the FLSA for time spent donning and doffing various pieces of protective gear. U.S. Steel argued that the time was not compensable under the parties' collective bargaining agreement (CBA) and under section 203(o) of the FLSA, which allows parties to agree, as part of a CBA, that "time spent in changing clothes . . . at the beginning or end of each workday" is not compensable.

The district court granted summary judgment on those grounds and also on grounds that any time donning and doffing non-clothing protective gear was de minimis. The Seventh Circuit Court of Appeals affirmed, as did the Supreme Court, holding:

The term "clothes" is given its ordinary meaning in the FLSA: "items that are both designed and used to cover the body and are commonly regarded as articles of dress;" and "[c]overing for the human body; dress; vestments; vesture." "Clothes" does not include items such as tools and accessories, which would include necklaces and knapsacks.

The term "changing clothes" is not given the "usual meaning" of substituting certain clothing items for others, but takes on a broader meaning that includes "time spent in altering dress."

As a result, donning and doffing certain items, such as a flame-retardant jacket, pants, and hood; a hardhat; a snood; wristlets; work gloves; leggings; and metatarsal boots constitutes "changing clothes." Donning and doffing other items, such as safety glasses; earplugs; and a respirator, does not.

The court declined to apply the de minimis doctrine to the compensable time spent donning and doffing non-clothing items. Instead, the Court held:

If an employee devotes the vast majority of the time in question to putting on and off equipment or other non-clothes items (perhaps a diver's suit and tank) the entire period would not qualify as "time spent in changing clothes" under §203(o) , even if some clothes items were donned and doffed as well. But if the vast majority of the time is spent in donning and doffing "clothes" as we have defined that term, the entire period qualifies, and the time spent putting on and off other items need not be subtracted. 

Sandifer v. U.S. Steel is available here. 

Hawkins v. Taca Int'l Airlines: Court Dismisses Labor Code Section 2810 Contractor Claim as Too Speculative

Arlette Hawkins filed a class action complaint against her former employer (Sereca) and a number of airlines (the airline defendants), alleging that they violated Labor Code section 2810, which prohibits labor contracts that fail to "include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided."

The airline defendants demurred to the section 2810 cause of action, arguing that the plaintiff failed to state any facts to support the allegation that they knew or should have known that their contracts were underfunded. The plaintiffs argued that they had not been able to obtain the contracts, the terms of which were known to the airline defendants. The trial court sustained the demurrer without leave to amend.

The plaintiff appealed, and the Court of Appeal affirmed, holding:

The record did not demonstrate that the plaintiff had attempted to obtain the contracts from the airline defendants in formal discovery. Had she done so, she would have known whether the contracts complied with section 2810. 

To state a cause of action, the plaintiff had to do more than merely "parrot" the language of the statute. Further, the plaintiff's admission that she had not seen the contracts at issue indicated that her claims were merely speculative. Finally, the complaint alleged that Sereca "had the ability to pay all wages" earned by the class members, contradicting the allegation that the contracts violated section 2810.

Hawkins v. Taca International Airlines, S.A. (1/27/14) --- Cal.App.4th ---, is available here. 

Rea v. Michaels Stores Inc.: Remand of Class Action to State Court Improper Under CAFA

In Rea v. Michaels Stores Inc., ___ F.3d ___ (2/18/14), the plaintiffs filed a wage and hour class action in state court, and the defendant removed to the district court under the Class Action Fairness Act (CAFA). The district court remanded because the plaintiffs disclaimed any recovery over $4,9999,999.99. After the US Supreme Court's decision in Standard Fire Ins. Co. v. Knowles (discussed here), the defendant again removed, and the district court again remanded, holding that the removal was untimely and that the defendant failed to demonstrate that the amount in controversy met the $5 million standard.

The defendant appealed, and the Ninth Circuit reversed, holding: 

First, the fact that the state court had certified a class did not bind the class members to the plaintiffs' earlier stipulation, nor did the fact that the certified class was smaller than the one originally contemplated it make it impossible that the amount in controversy would be under $5 million. 

Second, the defendant's second removal was not untimely. When the defendant removed the first time, the plaintiffs' stipulation re. amount in controversy was valid under Ninth Circuit precedent, and the defendant could not remove. Because the defendant removed the second time within 30 days of the Supreme Court's decision in Standard Fire, which held that such a stipulation was improper, the second removal was timely. 

Finally, because there was substantial, plausible evidence that the $5 million standard was met and no evidence to the contrary, the district court's finding that the standard was not met was clearly erroneous. 

The opinion is available here.