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Wednesday, July 29, 2015

New Law: Requesting Accommodation Constitutes Protected Activity Under Fair Employment and Housing Act

In Rope v. Auto-Clor System of Washington, Inc. (2013) 220 Cal.App.4th 635 (discussed here), the plaintiff sued his former employer, alleging that it violated the Fair Employment and Housing Act (FEHA) by terminating him after he requested leave from work so that he could donate a kidney to his sister. The Court of Appeal held, among other things, that he could not state a retaliation cause of action under the FEHA because his request for leave did not constitute protected activity. 

On July 15, Governor Brown signed AB 987, reversing this holding. AB 987 adds sub-sections (l)(4) and (m)(2) to Government Code sections 12940, providing that a request for reasonable accommodation on the basis of religion or disability constitutes protected activity, regardless of whether the request was granted. 

AB 987 leaves the remainder of Rope intact.

The text of AB 987 is available here

Monday, July 27, 2015

New Law: Cheerleaders for Californai-Based Professional Sports Teams To Be Employees

Signed by Governor Brown on July 15, AB 202 adds Section 2754 to the Labor Code, providing that cheerleaders for California-based professional sports teams are employees, rather than independent contractors. The statute applies "for purposes of all of the provisions of state law that govern employment, including the Labor Code, the Unemployment Insurance Code, and the California Fair Employment and Housing Act." The new law goes into effect on January 1, 2016.

The text of the bill is available here.

Friday, July 24, 2015

Baker v. Microsoft: Ninth Circuit Addresses Effect of Prior Order Denying Class Certification in Related Matter

I didn't see this case when it came down in March, but the Court modified it a couple of weeks ago, so I'll discuss it now.

In 2007, purchasers of Microsoft Xbox 360 game consoles brought a putative class action, alleging design defects. Scratched Disc Litigation, 2009 WL 10219350. The judge in that case denied certification, finding that common issues did not predominate because most Xbox owners had not experienced the purported defect.

In Baker v. Microsoft Corporation, ___ F.3d ___ (9th Cir. 3/18/15, mod. 7/20/15), another group of Xbox owners brought another putative class action alleging the same design defects. The district court struck the plaintiffs' class allegations, finding that comity required deferral to the 2009 order denying certification. The Ninth Circuit denied the plaintiffs' petition for an interlocutory appeal, the parties stipulated to dismiss the case with prejudice, the district court approved the stipulation, and the plaintiffs appealed.

The Ninth Circuit reversed, holding as follows:

The Court had jurisdiction to hear the appeal, even though the parties stipulated to the dismissal. Absent a settlement, a stipulated dismissal "does not destroy the adversity in that judgment necessary to support an appeal."

The district court erred in striking the class allegations. In Wolin v. Jaguar Land Rover N. Am. LLC, 617 F.3d 1168 (9th Cir. 2010) (discussed here -- it's funny to look back at my old posts and see how bad they were!) the Court rejected "the notion that individual manifestations of a defect precluded resolution of the claims on a class-wide basis." As in Wolin, which controls the current case, questions regarding the Xbox's design and any breaches of warranty are common questions that are "susceptible to proof by generalized evidence and do not require proof of individual causation." The fact that individual class members may have suffered different damages would not affect class certification. Defendant's arguments on the merits are not relevant at the class certification stage. The Court did not hold that the class should be certified; it held only that the district court erred in striking the class allegations.

The opinion is here

Thursday, July 9, 2015

Henson v. C. Overaa & Company: Court Issues Decision Regarding Apprentices under Prevailing Wage Law

A quick one for the prevailing wage folks out there.

In Henson v. C. Overaa & Company (6/29/15) --- Cal.App.4th, the plaintiffs filed a class action, alleging that the defendant violated California's prevailing wage law by hiring construction craft laborer (laborer) apprentices instead of pipefitter apprentices to work on public works projects. The plaintiffs alleged that they lost wages and training as a result of this practice. The trial court granted summary judgment for the defendant, finding that the journeymen on the relevant projects were classified as laborers, and the law merely requires employers to hire apprentices who are in the same occupation as the journeymen on their projects. The plaintiffs asserted that the law requires contractors to select apprentices based not on their job title or union affiliation but the work processes on which they have been approved to train. The Court rejected this argument and affirmed the judgment for the employer.

The opinion is available here.

Wednesday, July 8, 2015

Pinela v. Neiman Marcus: Court Invalidates "Delegation Clause" Giving Arbitrator Right to Rule on Enforceability of Arbitration Clause; Finds Arbitration Clause Unconscionable

In Pinela v. Neiman Marcus Group, Inc. (6/29/15) --- Cal.App.4th ---, the plaintiffs brought a class and PAGA representative action alleging a number of wage and hour violations. The trial court granted the defendant's motion to compel arbitration, except as to the PAGA claims. The trial court later reconsidered and denied the motion, holding that the arbitration agreement was illusory. The Court of Appeal affirmed, holding as follows:

Under Code of Civil Procedure section 1008, a trial court may exercise its inherent discretion to reconsider any issue at any time, and the trial court maintained jurisdiction to reconsider the arbitration order, even after entering that order compelling arbitration.

Although the arbitration agreement delegated questions of its enforceability to the arbitrator, this clause did not satisfy the conditions required for a valid delegation clause. First, Peleg v. Neiman Marcus Group,Inc. (2012) 204 Cal.App.4th 1425, (discussed here) found that the same delegation clause did not "clearly and unmistakably delegate enforceability questions to the arbitrator," as required, because a second clause regarding severability provided that the court may decide the same issue. Second, the delegation clause was not irrevocable, as required, because "both the delegation provision and the Agreement as a whole are unconscionable" and therefore revocable.

As to unconscionability, the Court found that the delegation clause was procedurally unconscionable because it was part of a contract of adhesion. In addition, it was substantively unconscionable because it included an element of surprise, in that an unsophisticated person likely would not understand it and because the clause imposed an "unfair burden that is different from the inherent features and consequences of delegation clauses" in that the agreement included a Texas choice-of-law provision that would not allow application of California's unconscionability analysis.

Having found that the delegation clause was unconscionable, the Court next found that the entire agreement was unconscionable, not because it was illusory, but because it included at least three unconscionable terms: the Texas choice-of-law clause; the clause providing for a shortened statute of limitations; and the clause allowing the arbitrator to award fees and costs "to the extent such an award is permitted by applicable law."

The opinion is available here.

Monday, July 6, 2015

Cifuentes v. Costco: Former Employer Properly Withheld Payroll Taxes When Paying Judgment for Lost Wages

In Cifuentes v. Costco Wholesale Corporation (6/26/15) --- Cal.App.4th ---, the plaintiff sued his former employer, Costco, for breach of contract and received a judgment for more than $300,000 in back pay and front pay. Costco paid the judgment, withholding payroll taxes from the portion of the judgment attributed to lost wages. The trial court denied Costco's motion for an acknowledgement of satisfaction of judgment, and Costco appealed. The Court of Appeal reversed, holding that Costco properly withheld employment taxes from the portion of the judgment representing lost earnings:
Under prevailing federal decisional law, an award of back or front pay arises from the employer-employee relationship, and therefore qualifies as wages, even though the plaintiff is no longer employed and the award is not for actual services performed.
Addressing the effect of the plaintiff's obligation to pay his attorneys from his recovery, the Court stated:
Additionally, we reject Cifuentes' assertion the withholding was improper because it did not take into account his obligation to pay his attorney a contingency-based fee. As Costco points out, the entire award of lost wages was taxable as income regardless of whether a portion was used to pay contingent attorney fees. (C.I.R. v. Banks (2005) 543 U.S. 426, 430 ["[T]he litigant's income includes the portion of the recovery paid to the attorney as a contingent fee"].) Nor are we convinced by Cifuentes' reference to the section of the American Jobs Creation Act of 2004 authorizing an "above-the-line" deduction of attorney fees and costs incurred in connection with a claim of discrimination or retaliation. (26 U.S.C. § 62(a)(20), (21).) The award in this case was for breach of contract, not unlawful discrimination or retaliation. (See Banks, at p. 439.) 
The opinion is available here.

Friday, July 3, 2015

State Bar Labor and Employment Law Section Annual Meeting and Advanced Wage and Hour Conference Next Week

The State Bar's Labor and Employment Law Section will hold its Annual Meeting and Advanced Wage and Hour Conference on July 9 and 10, at the JW Marriott at L.A. Live in downtown Los Angeles.

The Wage and Hour Conference is Thursday, July 9. Panels include a discussion of how new technology is changing the nature of the continuous workday, an update of new laws and cases, and an updated examination of the employment relationship, plus a judges' panel and a reception at the Grammy Museum.

The Section's Annual Meeting is Friday, July 10. The meeting covers a broad range of employment law topics, including an update on recent cases, a discussion of settlement strategies, an update on ethics issues, discrimination law 101, litigating whistleblower cases, and a discussion of the Private Attorneys General Act (PAGA). The keynote speaker on Friday is Kevin Kish, the new Director of the Department of Fair Employment and Housing.

Registration and other information is available here. Hope to see you there!

Thursday, July 2, 2015

Falk v. Children’s Hospital Los Angeles: Court of Appeal Considers Statute of Limitations Tolling During Class Action

Falk v. Children’s Hospital Los Angeles (6/3/15, pub. 6/24/15) --- Cal.App.4th --- concerns whether the filing of a class action tolls the statute of limitations for claims made in a second class action. A series of wage and hour class actions were filed against Children’s Hospital Los Angeles (CHLA): 
Palazzolo v. CHLA was filed on 5/1/07 and dismissed following summary judgment on 4/7/09. The court did not address class certification. The Court of Appeal affirmed, and remittitur issued on 2/3/11. 
Mays v. CHLA was filed on 1/27/12.  
Falk v. CHLA was filed on 12/3/12. 
CHLA moved for summary judgment in Falk, arguing that Palazzolo and Mays did not toll the statute of limitations, and Falk's claims were not timely because Falk's employment ended on 8/25/06, more than four years before she filed her action. The trial court agreed and entered judgment against Falk. The Court of Appeal affirmed in part and reversed in part, holding as follows:

Under American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 and cases that followed, the statute of limitations on putative class members' claims may be tolled while class litigation proceeds. Tolling does not apply, however, if the court denies certification for a "reason that would be equally applicable to any later suit," for example, if the court denies certification for lack of numerosity, commonality, or manageability.

Tolling also does not apply where the initial class action fails to "provide the defendant with sufficient notice of the substantive claims brought against it as well as the 'number and generic identities of the potential plaintiffs.'" "The claims in the first action need not necessarily be identical to the ones in the subsequent action, but they must be substantively similar, based on the same claims and subject matter and similar evidence."

Tolling applied during the Palazzolo action because the court did not deny certification at all, let alone for a "reason that would be equally applicable to any later suit." While Palazzolo alleged violations "generically," and Mays and Falk pled them more specifically, Palazzolo and Falk raise the same overtime, meal period, and rest period claims.

Tolling began in 2007, when Palazzolo was filed, and it continued through 2011, when the Court of Appeal issued the remittitur in the Palazzolo appeal. "Under the somewhat unique circumstances here, where no certification decision was made before the action was dismissed, tolling until the date the remittitur issued, thereby conclusively ending the case and any opportunity putative class members might have had to intervene in Palazzolo, is equitable."

Tolling applied to Falk's alleged class claims, rather than applying only to her individual claims. "Because there was no ruling in Palazzolo implicating any deficiency in the putative class (as opposed to Palazzolo’s individual claims), Falk may file a successive class action."

The opinion is available here