Advanced Mediation Conference: Practical Skills for Experienced Employment Litigators

Even seasoned litigators sometimes feel lost in mediation, with questions such as where to open or how to move forward without giving too much away. And even seasoned litigators sometimes leave mediation feeling frustrated because a client left money on the table, or paid too much, or a case that should have settled did not.

With a faculty of leading mediators and attorneys, I've designed a unique, full-day course to address these issues and teach attorneys how to achieve better results in mediation. Instead, using individual and paired exercises, small group discussions, and panel discussions, we'll present concrete tools to resolve more cases, more quickly, with better bottom-line outcomes and greater client satisfaction.

The conference is presented by the State Bar's Labor and Employment Law Section on December 2 in Los Angeles. Please see below for more information and registration.

I hope you can join us.

Steve

REGISTER VIEW BROCHURE MORE INFORMATION Advanced Mediation Conference Practical Skills for Experienced Employment Litigators Attend this conference for an interactive day of practical lessons that you can apply to your next mediation. An affordable registration fee includes training, 6.5 Hours MCLE credit, comprehensive materials and morning refreshments and lunch. This unique, full-day course will teach attorneys how to achieve better results, allowing them to resolve cases more efficiently and with greater client satisfaction. Using individual and paired exercises, small group discussions, and panel discussions, our faculty will give lawyers the concrete tools to resolve more cases, more quickly, with better bottom-line outcomes. Registration is limited so sign up early.  Labor and Employment Law Section Members: $275 Non-Section Members: $370 (includes 2017 Section membership)  Register Online Now

Alvarado v. Dart Container Corp.: Cal. Supremes Grant Review to Decide Overtime Rate of Pay Issue

In Alvarado v. Dart Container Corporation of California (Cal.App. 1/14/16) (discussed here), the California Court of Appeal held: (1) California law does not provide a method of calculating overtime rates of pay where the employer pays its employees an hourly rate of pay, plus a flat sum daily attendance bonus; (2) the employer here properly followed the formula set forth in the Code of Federal Regulations for paying overtime.

The Supreme Court granted review on May 11. Alvarado is case no. S232607, and the Court's web page for it is here. 

Chen v. Allstate: Depositing Money into Escrow Account Does Not Moot Putative Class Action; Plaintiff Must Have "Fair Opportunity" to Move for Certification

In Campbell-Ewald Co. v. Gomez (SCOTUS 1/21/16) (discussed here), the Supreme Court of the United States held that an unaccepted offer to satisfy the named plaintiff ’s individual claim does not render a putative class action moot. The Court did not decide the following issue: 

We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount. That question is appropriately reserved for a case in which it is not hypothetical.

Chen v. Allstate Insurance Company (9th Cir. 4/12/16) is that case. Two plaintiff filed a putative class action against Allstate for violation of the Telephone Consumer Protection Act (TCPA). Before the plaintiffs moved for class certification, Allstate made a Rule 68 offer of judgment to satisfy their individual monetary and non-monetary demands. One plaintiff accepted the offer, but the other, Pacleb, rejected. Allstate moved to dismiss the case, arguing that it was now moot, the district court denied the motion, and the Ninth Circuit gave Allstate permission to appeal. 

While the appeal was pending and shortly after the Supreme Court issued its decision in Campbell-Ewald, Allstate deposited $20,000 into an escrow account pending entry of an order or judgment granting full monetary and injunctive relief to Pacleb. Allstate then added this as a basis to reverse the district court's order. The Ninth Circuit declined to do so, holding as follows: 

The judgment that Allstate offered would afford Pacleb complete relief on his individual claims for damages and injunctive relief. Pacleb did not seek an admission of liability or declaratory relief, and an admission of liability is not required to afford him complete relief. And although Allstate's offer would not necessarily preclude Pacleb from obtaining nation-wide injunctive relief, Pacleb failed to show that injunctive relief limited to him personally would be inadequate. 

Regardless, "Even if, as Allstate proposes, the district court were to enter judgment providing complete relief on Pacleb's individual claims for damages and injunctive relief before class certification, fully satisfying those individual claims, Pacleb still would be entitled to seek certification." 

Pitts v. Terrible Herbst, 653 F.3d 1081 (2011) (discussed here), in which the Ninth Circuit held that an unaccepted offer in full satisfaction of a plaintiff's claims does not moot a putative class action, remains good law after Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013) (discussed here), in which the Supreme Court held that when a named plaintiff's individual claims are moot in a collective action under the Fair Labor Standards Act (FLSA), the action was no longer justiciable based solely on the collective action allegations made in the complaint. Genesis Healthcare is limited to FLSA collective actions, rather than Rule 23 class actions. 

Allstate did not afford any "actual relief" to Pacleb by placing $20,000 in an escrow account. Pacleb did not actually receive the money, and a court still could award him "effectual relief." Allstate did not deposit the money with the court or relinquish all interest in it. 

Assuming, without deciding, that "a court has authority in an appropriate case to enter judgment for complete relief on a plaintiff’s individual claims over the plaintiff’s objection," a court should not do so until the plaintiff has "a fair opportunity to show that certification is warranted." 

In conclusion:

We hold the judgment Allstate has consented to would afford Pacleb complete relief on his individual claims for damages and injunctive relief. To date, however, Pacleb has not actually received complete relief on those claims. Those claims, therefore, are not now moot. In addition, because “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted,” id., we will not, as Allstate urges, direct the district court to enter judgment on Pacleb’s individual claims before Pacleb has had a fair opportunity to move for class certification. Finally, even if Pacleb’s individual claims were otherwise fully satisfied, he could continue to seek class certification under Pitts.

The opinion is available here. 

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing: Cal. Supreme Court Grants Review in Attorney Fee Arbitration Battle

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc. (2016) 244 Cal.App.4th 590 is not an employment law case, but it raises an interesting arbitration issue that may end up having an impact on employment law practice. The California Supreme Court granted review on April 27, and the issues presented are listed as follows:

(1) May a court rely on non-legislative expressions of public policy to overturn an arbitration award on illegality grounds?  

(2) Can a sophisticated consumer of legal services, represented by counsel, give its informed consent to an advance waiver of conflicts of interest?  

(3) Does a conflict of interest that undisputedly caused no damage to the client and did not affect the value or quality of an attorney’s work automatically (i) require the attorney to disgorge all previously paid fees, and (ii) preclude the attorney from recovering the reasonable value of the unpaid work?

The first issue obviously is of greatest interest for our purposes. Sheppard Mullin is case number S232946, and the Court's web page for it is here.

Espejo v. Southern California Permanente Med. Group: Defendants Properly Authenticated Electronically Signed Arbitration Agreement

In Espejo v. Southern California Permanente Medical Group (Cal.App. 4/22/16), Jay Espejo, M.D., sued Southern California Permanente Medical Group (SCPMG) and others for wrongful termination and whistleblower retaliation. The trial court denied defendants' motion to compel arbitration based on an electronically signed arbitration agreement. The Court of Appeal reversed, holding as follows: 

Defendants were not required to authenticate the arbitration agreement until Espejo challenged it. A party petitioning to compel arbitration must make a prima facie showing that an agreement exists, but not that it is enforceable. Only after the party opposing the petition challenges the agreement's authenticity does the petitioner bear the burden of proving it. As a result, the trial court erred in striking a supplemental declaration - not filed with the moving papers - that defendants used to authenticate the arbitration agreement. 

Defendants met their burden of authenticating Espejo's electronic signature on the arbitration agreement. 

[Defendants' declarant] detailed SCPMG’s security precautions regarding transmission and use of an applicant’s unique user name and password, as well as the steps an applicant would have to take to place his or her name on the signature line of the employment agreement and the [arbitration agreement]. Based on this procedure, she concluded that the “name Jay Baniaga Espejo could have only been placed on the signature pages of the employment agreement and the [arbitration agreement] by someone using Dr. Espejo’s unique user name and password. . . . [¶] Given this process for signing documents and protecting the privacy of the information with unique and private user names and passwords, the electronic signature was made by Dr. Espejo” on the employment agreement and the [arbitration agreement] at the date, time, and IP address listed on the documents.

The opinion is available here. 

Ling v. P.F. Chang's: Court Rules on Attorney Fee Award in Overtime and Meal Period Arbitration

In Ling v. P.F. Chang's China Bistro, Inc. (Cal.App. 3/25/16), Cynthia Ling sued P.F. Chang's for unpaid overtime and missed meal and rest periods, alleging that Chang's improperly classified her as an exempt employee while working as a floor manager. An arbitrator found that Ling was exempt as a floor manager, but also found that Chang's failed to provide her with meal periods during a brief training period. The arbitrator awarded Ling approximately $8,500 for missed meal periods and Labor Code section 203 waiting time penalties. Finding that Chang's was the prevailing party, the arbitrator awarded it $29,000 in costs under Code of Civil Procedure section 1032 and over $200,000 in attorney fees under Labor Code section 218.5.

The trial court corrected the award, holding that Ling was the prevailing party on her meal period claim and remanding to the arbitrator to award her fees, exclusive of those incurred solely in pursuing her unsuccessful overtime claim.

On remand, the arbitrator rejected Ling's fee request, relying on Kirby v. Immoos Fire Protection, Inc. (4/30/12) 53 Cal.4th 1244 (discussed here), but awarded Ling her costs as the prevailing party under CCP 1032(a)(4). The trial court confirmed the award, and both parties appealed. The Court of Appeal affirmed, holding as follows:

The trial court properly corrected the arbitrator's initial award because the arbitrator exceeded his powers by issuing an award that "contravened an explicit legislative expression of public policy."

Because plaintiff's missed meal periods claim (as it related to her service as a floor manager) and overtime claim required identical proof, the attorney's fees award for defending the 'factually inextricably intertwined' meal periods claim was effectively a fee award for defeating plaintiff's overtime claim, prohibited by section 1194.

The Court rejected Chang's argument that the Federal Arbitration Act (FAA) prohibited the trial court from remanding the attorney fee issue. Similar to the California Arbitration Act (CAA), the FAA provides for vacatur where an arbitrator exceeds his or her powers.

The Court rejected Ling's argument that the trial court should have vacated the initial award in its entirety, rather than merely correcting it. The trial court had no authority to vacate the award in its entirety and thus upset the arbitrator's ruling on the misclassification issue. 

The arbitrator did not exceed his authority in issuing his second award. 

The arbitrator was bound to follow Kirby and properly denied Ling attorney fees on her meal period claim. 

The arbitrator's denial of fees on the section 203 waiting time penalty claim did not deprive Ling of any unwaivable statutory right. An action for waiting time penalties based on failure to pay for missed meal periods is not an "action brought for the non-payment of wages" under section 218.5. 

Following Kirby, section 226.7 cannot support a section 203 penalty because section 203, subdivision (b) tethers the waiting time penalty to a separate action for wages. Because a section 203 claim is purely derivative of 'an action for the wages from which the penalties arise,' it cannot be the basis of a fee award when the underlying claim is not an action for wages.

The trial court erred in awarding Ling fees she incurred on her petition to vacate the first arbitration award. Neither the parties' agreement nor any statutory provision authorized any such award.

The opinion is available here. 

Kilby v. CVS Pharmacy: Cal. Supreme Court Issues Suitable Seating Opinion

In Kilby v. CVS Pharmacy, Inc. (Cal. 4/4/16), the California Supreme Court addressed a number of questions that arise under the "suitable seating" section of the Wage Orders, which provides: 

(A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.  

(B) When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties. 

Wage Orders 14 (agricultural occupations) and 16 (certain on-site occupations in the construction, drilling, logging, and mining industries) include a variant of subsection (A) above. Wage Order 17 (miscellaneous employees) does not include a suitable seating requirement. 

The opinion arises from two related appeals pending in the Ninth Circuit: Kilby v. CVS, in which the named plaintiff's duties included operating a cash register, straightening and stocking shelves, organizing products in front of and behind the sales counter, cleaning the register, vacuuming, gathering shopping baskets, and removing trash; and Henderson v. JPMorgan Chase Bank, in which the named plaintiff's duties included teller duties such as accepting deposits, cashing checks, handling withdrawals and other duties, such as escorting customers to safety deposit boxes, working at the drive-up teller window, and making sure that automatic teller machines were working properly. 

In an opinion by Justice Corrigan, a unanimous Court held as follows:

(1) The “nature of the work” refers to an employee's tasks performed at a given location for which a right to a suitable seat is claimed, rather than a “holistic” consideration of the entire range of an employee's duties anywhere on the jobsite during a complete shift. If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, a seat is called for. 

The Court rejected the defendants' argument that seating is required only where an employee's "sitting" duties outweigh her "standing" duties, such that the position would be classified as a "sitting" position. Such a test could deny a seat to an employee who spends a "substantial part of his workday at a single location performing tasks that could reasonably be done while seated, merely because his job duties include other tasks that must be done standing." It also could lead to different results for employees performing similar tasks because of other duties that they perform. 

The Court also rejected the plaintiffs' argument that seating is required any time that a single task, examined in isolation, "may reasonably be performed seated." This standard would ignore the reasonableness standard and the flexibility it is intended to provide to employers. 

Instead, courts must look at the tasks actually performed or reasonably expected to be performed at each location and determine whether it is feasible for an employee to perform those tasks while seated. 

The requirements of sections 14(A) and 14(B) are not mutually exclusive. Although they may not apply at the same time, they may apply at various times during a single shift.

(2) Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances. An employer's business judgment and the physical layout of the workplace are relevant but not dispositive factors. The inquiry focuses on the nature of the work, not an individual employee's characteristics. 

The Court rejected any bright-line rule, holding instead that courts should examine "all relevant factors," including "whether providing a seat would unduly interfere with other standing tasks, whether the frequency of transition from sitting to standing may interfere with the work, or whether seated work would impact the quality and effectiveness of overall job performance." The Court reiterated that the analysis must focus on the characteristics of each work location, rather than focusing on all of the tasks performed in a shift by a given employee. 

An employer's business judgment "largely determines" the employee's duties and tasks. "However, 'business judgment' in this sense does not encompass an employer's mere preference that particular tasks be performed while standing. The standard is an objective one." 

The physical layout of the workspace is a relevant factor in the totality of the circumstances inquiry. However, "an employer may not unreasonably design a workspace to further a preference for standing or to deny a seat that might otherwise be reasonably suited for the contemplated tasks." Reasonableness "remains the ultimate touchstone." 

The Court rejected the argument that the entitlement to a seat depends on the physical characteristics of each employee. The Wage Order focuses on the nature of the work, not the nature of the worker.

(3) The nature of the work aside, if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability. 

The Court rejected the argument that "even when 'the plaintiff can establish that the "nature" of her work would reasonably permit the use of a seat, she must still prove that a suitable seat exists but was not provided. The "suitable seat" requirement is an independent element of the regulation.'" If the nature of the work reasonably permits the use of seats, the employer "bears the burden of showing compliance is infeasible because no suitable seating exists." 

The opinion is available here. 

Baughn v. Department of Forestry: Court of Appeal Affirms Denial of Anti-SLAPP Motion

There has been an up-tick over the last year in employment cases raising anti-SLAPP issues. See Park v. Board of Trustees of the California State University (2015) 239 Cal.App.4th 1258 (discussed here), Barker v. Fox & Associates (2015) 240 Cal.App.4th 333 (discussed here), Decambre v. Rady Children's Hospital (2015) 235 Cal.App.4th 1 (discussed here).

Baughn v. Department of Forestry and Fire Protection (Cal.App. 3/11/16, pub. 4/6/16) is another of these cases. The Department of Forestry and Fire Protection (Cal Fire) terminated Corey Baughn after another employee accused him of sexual harassment. Baughn appealed his termination to the State Personnel Board (SPB), and the parties settled the matter. Baughn later obtained temporary employment with the Ukiah Valley Fire District (Ukiah Valley). Concerned that Baughn's employment with Ukiah Valley would result in him being present at Cal Fire facilities with the person who had accused him of harassment, Cal Fire hand delivered a letter to Ukiah Valley demanding that Baughn not be present at Cal Fire's facilities. This led Ukiah Valley to terminate Baughn. 

Baughn and his union sued Cal Fire for breach of the written settlement stipulation that ended the SPB case, breach of the implied covenant of good faith and fair dealing, and intentional and negligent interference with prospective economic advantage. Cal Fire filed an anti-SLAPP motion against the union, arguing that the action arose from protected speech and that the union was not likely to succeed on the merits. The trial court denied the motion, Cal Fire appealed, and the Court of Appeal affirmed, holding as follows: 

To prevail on an anti-SLAPP motion, the defendant must show: (1) that the cause of action arises from an act of defendant in furtherance of its right of petition or free speech in connection with a public issue; and (2) the plaintiff has not made a prima facie showing that he or she will succeed on the merits. Protected conduct includes "any other [1] conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech [2] in connection with a public issue or an issue of public interest." Cal. Code Civ. Proc. 425.16(e)(4). 

Cal Fire failed to meet the first requirement because the decision to write and send the letter were not made “in connection with a public issue or an issue of public interest.” 

The issue raised in the letter did not concern a substantial number of people. It concerned the writer, the recipient, Baughn, and his earlier victim. At the very most, it concerned the defined set of Cal Fire firefighters who would use the same facility that Baughn would use in his employment with Ukiah Valley. This was a relatively small audience. 

The issue raised in the letter also did not concern a "written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law" under section 425.16(e)(2). Even if the letter concerned the SPB proceedings, those proceedings were no longer "under consideration" by the SPB or any other governmental entity. 

The trial court erred in awarding attorney fees to the union. A court may award attorney fees to a prevailing plaintiff only where it finds that the motion is frivolous or brought solely to cause delay. The trial court may no such finding here. The Court remanded for reconsideration of this issue. 

The opinion is available here.

Castro-Ramirez v. Dependable Highway Express: FEHA Requires Reasonable Accommodation of Employee's Need to Adjust Schedule to Care for Disabled Minor Child

In Castro-Ramirez v. Dependable Highway Express, Inc. (Cal.App. 4/4/16), the plaintiff sued his former employer, DHE, alleging disability discrimination, failure to prevent discrimination, retaliation, and wrongful termination in violation of public policy. Plaintiff, a truck driver, alleged as follows: 

Plaintiff’s son requires daily dialysis, and according to the evidence, plaintiff must be the one to administer the dialysis. For several years, plaintiff’s supervisors scheduled him so that he could be home at night for his son’s dialysis. That schedule accommodation changed when a new supervisor took over and ultimately terminated plaintiff for refusing to work a shift that did not permit him to be home in time for his son’s dialysis. The trial court granted defendant’s motion for summary judgment and denied plaintiff’s motion to tax costs.

The Court of Appeal reversed, holding as follows: 

The trial court erred in summarily adjudicating the disability discrimination cause of action. On an issue of first impression, employers have a duty under FEHA to provide reasonable accommodations to an applicant or employee who is associated with a disabled person. Association with a disabled person constitutes a disability under Government Code section 12926(o). Less stringent standards under the Americans with Disabilities Act do not control and should be distinguished. Rope v. Auto-Clor System of Washington, Inc. (2013) 220 Cal.App.4th 635 (discussed here and here) also should be distinguished because it relied on a gender and race discrimination case for its statement of the elements of a FEHA case, rather than a disability discrimination cause of action. 

On standards for discriminatory motive and pretext, Rope again is distinguishable because it relied on authority under the ADA, rather than the FEHA. Under the facts here, a jury could infer reasonably that plaintiff's association with his son was a substantial motivating factor in the decision to terminate and that DHE's reason for termination was pretextual. 

The trial court also erred in summarily adjudicating the disability discrimination cause of action. The law does not require employees to state that an employer's conduct constitutes discrimination or violates the FEHA. Employees need not use any legal terms or buzz words. Evidence that plaintiff complained to his supervisor -- and his supervisor -- about changes to his schedule and his need to give his son dialysis constituted opposition to the denial of a reasonable accommodation, a practice forbidden under the FEHA. 

The evidence also would permit a trier of fact to infer a causal link between plaintiff’s complaints and his termination. The temporal proximity between the two were enough to permit a trier of fact to infer causation. Rope is no longer good authority on this issue under amended section 12940(m)(2) (discussed here). 

The court erred in summarily adjudicating plaintiff's failure to prevent discrimination and wrongful termination causes of action for the reasons stated above. 

Because the trial court should not have granted DHE's motion, it also should not have denied plaintiff's motion to tax costs. 

Plaintiff was entitled to recover his costs on appeal. 

The opinion is available here.  

Davis v. Farmers Insurance Exchange: Same Decision Defense Applies to Common Law Wrongful Termination Claims; Trial Court Erred in Granting Directed Verdict on Illegal Deduction Claims

In Davis v. Farmers Insurance Exchange (Cal.App. 3/28/16, mod. 4/21/16), William Davis sued his former employer, alleging wage and hour violations based on independent contractor misclassification and common law wrongful termination in violation of public policy. The court granted Farmers' motion for directed verdict on the wage claims. On the wrongful termination claim, the court instructed the jury with CACI instructions amended to reflect the holding in Harris v. City of Santa Monica (2013) 56 Cal.4th 203. The jury found that Davis was an employee and that his age was a substantial motivating factor in his termination, but also found that Farmers would have made the same termination decision for legitimate business reasons. Davis appealed, and the Court of Appeal affirmed in part, holding as follows:

The trial court did not err in instructing the jury based on Harris: that Davis must prove that his age was a substantial motivating reason for his termination; that Farmers could use the same decision or mixed motive defense; and that a same decision finding would eliminate reinstatement, back pay, and damage remedies. Wrongful termination claims are analogous to FEHA claims, and the same standards apply in each. 

Davis did not seek declaratory or injunctive relief relevant to his wrongful termination claim. He did not state a cause of action for declaratory relief, and his request for injunctive relief in connection with his claim under the UCL addressed only his wage claims and was not sufficiently broad to cover his wrongful termination claim. Even if Davis had raised the injunctive relief claim, he did not demonstrate an imminent threat of continued age discrimination against him or any current Farmers employees. 

Davis could not recover his attorney fees. Although a plaintiff who proves that discrimination was a substantial motivating factor for an adverse employment action may recover fees in a FEHA action under Harris, Davis did not bring a FEHA action. 

Davis also could not recover his fees under Code of Civil Procedure section 1021.5, which allows an award of attorney fees when a plaintiff enforces important rights affecting the public interest without private gain. 

The trial court erred in granting a directed verdict on plaintiff's wage claims. Davis alleged that Farmers unlawfully deducted money from his compensation for items such as insurance premiums, operational expenses, loans, and advanced commissions. The jury found that Davis was an employee, rather than an independent contractor, and Davis made out a prima facie case that Farmers' deductions were not "clearly authorized by law."

The Court modified a number of parts of its opinion on April 21, 2016. The modified opinion is available here. The modifications do not change any of the Court's holdings. 

Radcliffe v. Experian: District Court Did Not Err in Rejecting Effort to Disqualify Class Counsel after Court Found Conflict of Interest between Class Representatives and Class Members

In Radcliffe v. Experian Information Solutions Inc., 715 F.3d 1157 (9th Cir. 2013), the Ninth Circuit reversed a district court order approving the $45 million settlement of an action under the Fair Credit Reporting Act where: (a) the class representatives' enhancement awards were conditioned on their support of the settlement, creating a conflict of interest between them and the absent class members; and (b) the conditional incentive awards of $5,000 "significantly exceeded in amount what absent class members could expect to get upon settlement approval." The Court held that the settling class representatives ("Hernandez") and their attorneys ("Hernandez Counsel") did not represent adequately the absent class members in negotiating the settlement. The Court remanded to the district court to determine when the conflict arose, whether it would continue under any future settlement, and the extent to which Hernandez Counsel would be entitled to fees under any future settlement. 

In a new decision, Radcliffe v. Experian Information Solutions Inc. (9th Cir. 3/28/16), the Ninth Circuit revisited the case, holding that the district court did not err in refusing to disqualify Hernandez Counsel on remand. 

In this appeal, as they did in the district court, White Counsel contend that under California law, any conflict of interest in the representation of a class mandates automatic disqualification. Generally, California requires per se disqualification when an attorney has been shown to possess a simultaneous conflict of interest in her representation of multiple clients, regardless of that attorney’s motives or the actual impact of the conflict. The central question is whether this remains true in class actions. For the reasons set forth below, we conclude that California law does not require automatic disqualification in class action cases, and affirm.

The opinion is available here.

Baltazar v. Forever 21: Clause Allowing Parties to Seek Preliminary Injunctive Relief in Court Does Not Render Arbitration Agreement Unconscionable

In Baltazar v. Forever 21, Inc. (12/20/12) 212 Cal.App.4th 221 (discussed here), an individual discrimination, harassment, and constructive discharge action, the trial court denied the defendants' motion to compel arbitration, and the Court of Appeal reversed, holding:

• Unconscionability analysis survives Concepcion. 
• The defendant did not show that the agreement evidenced "a transaction involving commerce," so the California Arbitration Act (CAA) applied, rather than the Federal Arbitration Act (FAA). 
• Because the CAA allows parties to seek provisional remedies in court, an arbitration agreement allowing parties to do so was not substantively unconscionable. 

The California Supreme Court granted review and issued its opinion on Monday. In a unanimous opinion written by Justice Leondra Kruger, the Court affirmed, holding as follows: 

The arbitration agreement was contained within a contract of adhesion, but there was no element of surprise or duress, and the fact that Forever 21 did not give Baltazar a copy of the AAA arbitration rules did not lead to heightened scrutiny of the agreement's substantive terms.

The clause in the arbitration agreement allowing parties to seek preliminary injunctive relief in court is not unconscionable. Even if employers are more likely to seek such relief, the clause merely reiterates a provision of the CAA. Cal. Code Civ. Proc. section 1281.8(b). The Court disapproved Trivedi v. Curexo Technology Corp., 189 Cal.App.4th 387 (discussed here) to the extent it suggests otherwise.

The agreement required both parties to arbitrate all employment-related claims. The fact that it listed as examples the types claims typically brought by employees did not create confusion as to whether the clause required Forever 21 to arbitrate any employment-related claims that it may have against an employee.

The agreement's provision that "all necessary steps will be taken to protect from public disclosure [Forever 21's] trade secrets and proprietary and confidential information" did not render the agreement unconscionable. 

The opinion is available here. 

I believe that this is the first majority opinion written by Justice Kruger in an employment law case. I am very interested to see the impact that she and the Court's other newest member, Justice Mariano-Florentino Cuéllar, will have on the Court's employment law rulings. Both began serving in January, 2015. 

Friedrichs v. California Teachers Association: U.S. Supreme Court Deadlocks on Constitutionality of Public Employee Union "Agency Fees"

Just a quick word on Friedrichs v. California Teachers Association (SCOTUS 3/29/16), in which the U.S. Supreme Court appeared set to hold that forcing a public employee to pay for a union's non-political activities, such as collective bargaining, violates the employee's First Amendment rights. 

The death of Justic Scalia in February changed the calculus, and the Court announced on Monday that it is equally divided on the issue. In that situation, which we undoubtedly will see more of until Justice Scalia is replaced, the decision of the lower court stands. In Friedrichs, the Ninth Circuit held that under existing U.S. Supreme Court precedent, forcing public employees to pay such agency fees does not violate their First Amendment rights. 

The Court's per curiam opinion is here, but I'll save you the trouble of clicking on it. It reads, in its entirety: 

The judgment is affirmed by an equally divided Court.

As the poet said, "Strange days indeed." 

The SCOTUSblog page for Friedrichs is here. 

Tyson Foods v. Bouaphakeo: U.S. Supreme Court Affirms Judgment for Employees in Wage and Hour Class Action

In Tyson Foods, Inc. v. Bouaphakeo (SCOTUS 3/22/16), many, including me, expected the U.S. Supreme Court to place further limits on the use of class actions. Instead, both Justice Kennedy, who authored the opinion, and Chief Justice Roberts joined the Court's four liberals in affirming a district court judgment in favor of a class of employees.

The plaintiffs filed a putative collective action under the Fair Labor Standards Act (FLSA) and class action under Iowa state law, seeking overtime compensation for time spent donning and doffing protective gear. The district court certified both the collective action under the FLSA (29 U.S.C. section 216) and the class action under F.R.C.P. Rule 23.

At trial, the parties stipulated that Tyson owed the plaintiffs for donning and doffing certain gear, but left other liability and damage questions for the jury. The plaintiffs introduced anecdotal evidence, video recordings of employees donning and doffing, and an expert's testimony regarding his study of the average time spent donning and doffing. A second expert analyzed Tyson's records of time worked and amounts paid and calculated amounts owed.

The jury found for the plaintiffs and awarded $2.9 million of the $6.7 million requested. Tyson appealed, and the Eighth Circuit Court of Appeals affirmed. The Supreme Court also affirmed, holding as follows:

Assuming, without holding, that a section 216 collective action is no more difficult to certify than a Rule 23 class action, certification of both actions can be analyzed under Rule 23 standards.

"Representative evidence," including statistical sampling, may be introduced in class actions, as in other actions, to establish or defend against liability. Admissibility depends not on whether the case is a class action, but on whether the evidence is "reliable in proving or disproving the elements of the relevant cause of action." The representative evidence here filled a gap left by Tyson's failure to keep records of donning and doffing time and was a permissible means of proving each employee's individual damages. Use of such evidence did not deprive Tyson of its ability to litigate individual defenses.

Wal-Mart Stores, Inc. v. Dukes, 564 U. S. 338 (2011), "does not stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability." Certification in Dukes failed because the plaintiffs could not show any common policy of discrimination. The plaintiffs could not use representative evidence to show such a policy in a class action any more than they could have used it to show discrimination in an individual action. In contrast, the representative evidence offered here would be admissible in an individual action to prove liability.

Representative evidence is subject to challenge under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U. S. 579 (1993) as being "statistically inadequate or based on implausible assumptions," but Tyson did not raise such a challenge in the district court.

The Court declined to issue "broad and categorical rules" regarding the use of representative and statistical evidence.

In FLSA actions, inferring the hours an employee has worked from a study such as Mericle’s has been permitted by the Court so long as the study is otherwise admissible. Mt. Clemens, supra, at 687; see also Fed. Rules Evid. 402 and 702. The fairness and utility of statistical methods in contexts other than those presented here will depend on facts and circumstances particular to those cases.

The Court did not address the argument, raised in the petition for certiorari but not briefed, that a class may not be certified if it contains class members who suffered no damages.

The Court also did not address Tyson's alternate argument that the plaintiffs cannot ensure that no damages are paid to class members who were not injured. The question is not yet ripe because the damages have not been disbursed, nor has the district court indicated how they will be disbursed. The Court remanded for the district court to determine this issue. The Court also noted that the plaintiffs requested bifurcation of liability and damages in order to ensure that uninjured class members did not recover, and Tyson "argued against that option and now seeks to profit from the difficulty it caused."

Chief Justice Roberts concurred in the opinion in full and wrote separately, expressing skepticism that the district court can devise a means of disbursing funds only to injured class members. Because the court cannot tell how the jury arrived at the $2.9 million verdict, it cannot determine which class members the jury found to have suffered actual injury. Without such a means, the verdict cannot stand, as Article III would not permit a court to award damages to one who did not suffer an injury. Justice Alito joined in this portion of the concurring opinion.

Justice Alito also joined in the dissenting opinion authored by Justice Thomas. Justice Thomas would have held as follows: 

Before class-action plaintiffs can use representative evidence [as common proof of an otherwise individualized issue], district courts must undertake a rigorous analysis to ensure that such evidence is sufficiently probative of the individual issue to make it susceptible to classwide proof. The District Court did not satisfy that obligation here, and its failure to do so prejudiced defendant Tyson Foods at trial. The majority reaches a contrary conclusion by redefining class-action requirements and devising an unsound special evidentiary rule for cases under the [FLSA].

Whether any particular employee worked more than 40 hours in a given workweek is an individual issue, and the district court erred in failing to analyze whether this individual issue would be susceptible of common proof. Plaintiffs' evidence demonstrated that the donning and doffing for each employee varied, that individual issues predominated, and that class certification was not appropriate. 

The opinion is available here.  

Safeway v. Superior Court: Class Certification Appropriate in Action Alleging that Employer Uniformly Failed to Compensate Employees for Missed Meal Periods "When Required"

In Safeway v. Superior Court (7/22/15) --- Cal.App.4th ---, the plaintiffs alleged that the defendants had a uniform practice of failing to compensate employees for missed meal periods, among other wage and hour violations. The trial court certified a class under the Unfair Competition Law, Business and Professions Code section 17200 (UCL) on the theory that the defendants had a practice of failing to pay for missed meal periods when required. The defendants filed a petition for writ of mandate to reverse the order, and the Court of Appeal denied the petition, holding as follows:

The legal viability of the plaintiffs' theory of recovery is not at issue on the motion for class certification, unless the merits are enmeshed with class action requirements. "Nonetheless, that determination may be proper when the defendants cannot attack the claim by demurrer or summary judgment following certification, or the parties jointly request a merits determination." The defendants did not show that either of these conditions applied.

The plaintiffs' theory of liability -- that the defendants had a system-wide practice of failing to pay meal break premium wages when required -- was capable of common proof. A UCL claim may be predicated on a practice of not paying premium wages for missed, shortened, or delayed meal periods "attributable to the employer’s instructions or undue pressure, and unaccompanied by a suitable employee waiver or agreement." Although an employer's failure to pay accrued meal period premiums, standing alone, does not violate section 226.7, nothing in the law "clearly permits" an employer to fail to pay meal period premiums. A UCL claim for failure to pay meal period premiums when required may stand even in the absence of an underlying claim for failure to provide meal periods.

The plaintiffs demonstrated that they could prove the alleged systemic unlawful practice and the damage caused thereby on a class-wide basis. The plaintiffs "did not seek accrued meal break premium wages owed to individual class members, but rather the loss of the 'compensation guarantee and enhanced enforcement' implemented by section 226.7." 

In our view, real parties demonstrated that the existence of the practice and the fact of damage were matters suitable for class treatment. Real parties’ evidence supports the reasonable inference that in the context of a class action, they could establish that petitioners engaged in the alleged practice, that is, they never paid meal break premium wages, even though a significant number of employees accrued them. Furthermore, in view of real parties’ theory of restitution, those facts would also suffice to demonstrate the fact of damage. Under that theory, the fact of damage does not require a showing that all -- or virtually all -- class members accrued unpaid meal break premium wages, but only that on a system-wide basis, petitioners denied the class members the benefits of the compensation guarantee and enhanced enforcement implemented by section 226.7.

The plaintiffs' proposed method of determining the amount of restitution did not create a barrier to certification. The plaintiffs argued that they could recover the "market value" of the loss of their statutory protections, rather than the value of the meal periods themselves. Although not entirely clear, it appears that the plaintiffs would measure this market value by the amounts that defendant paid when it began paying its employees meal period premiums. This measure did not require litigation of issues unsuitable for class treatment.

The opinion is available here. 

Wallace v. County of Stanislaus: Disability Discrimination Plaintiff Need not Prove Employer's Animus or Ill Will

Wallace v. County of Stanislaus (Cal.App. 2/25/16) considers "how to instruct a jury on the employer’s intent to discriminate against a disabled employee and, more specifically, what role 'animus' plays in defining that intent." 

Sheriff's Deputy Dennis Wallace sued the County of Stanislaus for disability discrimination after it placed him on an unpaid leave of absence based on its belief that he could not safely perform his duties as a bailiff with or without accommodation. 

The case went to trial prior to the California Supreme Court's decision in Harris v. City of Santa Monica (2013) 56 Cal.4th 203. The trial court modified the then-current version of California Civil Jury Instruction (CACI) No. 2540 to include a requirement that Wallace prove the County regarded or treated him “as having a disability in order to discriminate.” They jury found as follows: (1) the County treated Wallace as disabled; (2) Wallace was able to perform his essential job functions with or without reasonable accommodation; and (3) the County failed to prove Wallace could not safely perform those functions; but (4) County did not regard or treat Wallace as disabled "in order to discriminate." The trial court entered judgment for the County, and Wallace appealed. 

The Court of Appeal reversed, holding as follows: 

Where there is only circumstantial evidence of an employer's discriminatory motive, proof of motive follows the three-step burden-shifting McDonnell Douglas test. However, disability discrimination cases often involve "direct evidence of the role of the employee’s actual or perceived disability in the employer’s decision to implement an adverse employment action." In disability discrimination cases, courts should not "automatically apply" McDonnell Douglas, but should "determine whether there is direct evidence that the motive for the employer’s conduct was related to the employee’s physical or mental condition." 

Disability cases differ from other discrimination cases because California's definitions of physical disability, mental disability, and medical condition are broad and are intended to protect employees from discrimination based on actual or perceived disability. Further, the law protects employees "erroneously or mistakenly believed" to have a disability. 

Under Harris, an employer discriminates against an employee because of a disability when the disability is a substantial motivating reason for the employer’s decision to subject the employer to an adverse employment action. An employee need not demonstrate that the employer had any discriminatory animus; only that the employee's disability was a substantial motivating factor in the adverse employment action decision. 

A plaintiff who meets the substantial motivating factor test need not show any additional animus. The Court emphasized that the term "animus" is vague and should not be used in disability discrimination cases with "direct evidence that the employer’s motive for taking an adverse employment decision was the plaintiff’s actual or perceived disability." 

The trial court's erroneous instruction prejudiced Wallace. There was no dispute that the County's mistaken perception that Wallace could not perform the essential functions of the job was a substantial motivating factor for its decision to place him on unpaid leave. There also was no dispute that this decision caused Wallace economic harm. 

The Court remanded for a limited trial on the amount of Wallace's economic damages and the existence and amount, if any, of his non-economic damages. 

The opinion is available here. 

Hernandez v. Restoration Hardware: Objecting Class Member Lacks Standing to Appeal Class Action Judgment

Hernandez v. Restoration Hardware, Inc. (Cal.App. 3/15/16), is not an employment law case, but it deals with attorney fees after trial, and people doing class action work should know about it.

In Hernandez, the trial court found Restoration Hardware liable for violating the Song-Beverly Credit Card Act (Civ. Code section 1747.08) and assessed a penalty of $30 per violation, for a maximum total of approximately $36 million. The parties stipulated that this amount would be treated as a common fund, inclusive of fees and costs, and that class members filing claims would receive an amount equal to $30 per violation, less a prorated share of attorney fees and costs.

Plaintiff's counsel then asked for an attorney fee award of 25%, or $9 million, to be paid from the common fund. Francesca Muller, a class member, asked the court to order notice of the attorney fee motion be sent to all absent class members. The court denied the request, granted the attorney fee motion, and entered judgment. The Court of Appeal dismissed Muller's appeal, holding as follows:

Only a "party aggrieved may appeal" from a judgment. Civ. Code section 902. To appeal, Muller must have been both a party of record and aggrieved by the judgment. Although unnamed class members may be deemed parties for the limited purposes of discovery, they do not stand on the same footing as named plaintiffs and are not otherwise considered parties to the litigation. Muller was not a party to the action, took no steps to become a party to the action, and could not maintain her appeal.

The court rejected Muller's contention that she gained standing to appeal by objecting to the judgment below. While cases have held that an objecting class member may be "aggrieved" by an underlying judgment, they did not address whether such a class member was a party to the action.

Muller could have gained standing by intervening and moving to vacate the judgment, but she did not do so.

The opinion is available here. 

Desaulles v. Community Hospital: Plaintiff Who Receives Monetary Settlement Is "Prevailing Party" and May Recover Costs as a Matter of Right

In DeSaulles v. Community Hospital of the Monterey Peninsula (2014) 225 Cal.App.4th 1427, the plaintiff sued for failure to accommodate disability and other causes of action. After the defendant won several motions, the parties settled the case, with the defendant paying the plaintiff $23,500. The trial court found that the defendant had obtained a dismissal, was the prevailing party, and was entitled to recover its costs.

The Court of Appeal reversed, holding that when an employer pays an employee in settlement, the employee obtains a "net monetary recovery" and is the prevailing party under Code of Civil Procedure section 1032(a)(4). As such, where the settlement agreement is silent as to the recovery of costs, the employee is entitled to recover his or her costs as a matter of right. The employer is not entitled to recover its costs, even though it obtained a judgment denying the plaintiff any relief, which ordinarily would make the defendant the prevailing party.

The Supreme Court has affirmed that decision in full:

When a defendant pays money to a plaintiff in order to settle a case, the plaintiff obtains a "net monetary recovery," and a dismissal pursuant to such a settlement is not a dismissal "in [the defendant‘s] favor." (§ 1032(a)(4).) [T]his holding sets forth a default rule; settling parties are free to make their own arrangements regarding costs.

The opinion is available here.

Carbajal v. CWPSC: Arbitration Agreement Unconscionable, Unenforceable

In Carbajal v. CWPSC, Inc. (Cal.App. 2/26/16), the plaintiff filed a putative wage and hour class action against her former employer, CW. Relying on an arbitration agreement with a class action waiver, CW moved to compel the plaintiff to arbitrate her individual claims. The trial court denied the motion, holding the arbitration agreement unconscionable. The Court of Appeal affirmed, holding as follows:

CW failed to meet its burden of demonstrating that the Federal Arbitration Act (FAA) applied. "The party asserting FAA preemption bears the burden to present evidence establishing a contract with the arbitration provision affects" (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce and persons or things in interstate commerce, or (3) those activities having a substantial relation to interstate commerce. CW "presented no evidence to establish any connection to interstate commerce."

CW's arbitration agreement had a moderate level of procedural unconscionability. The agreement was a contract of adhesion. The agreement stated that arbitration would proceed under AAA rules, but it did not state which set of AAA rules would apply. CW did not give the plaintiff a copy of the applicable rules, tell her where to find the rules, offer to explain the arbitration provision, or give her an opportunity to review any rules.

The arbitration agreement also had a moderate level of substantive unconscionability. It required the plaintiff to bring all claims in arbitration, but "broadly authorize[d] CW to seek any type of injunctive relief in court." It waived the requirement that CW post a bond to obtain injunctive relief. The agreement also provided that each party should bear its own fees, which would interfere with the plaintiff's right to recover attorney fees if she prevailed on certain of her wage claims.

A provision giving CW the right to appeal an award granting class-wide relief was not substantively unconscionable.

Here, the arbitration provision states, “the arbitrator shall have no authority or jurisdiction to enter an award or otherwise provide relief on a class, collective or representative basis.” If the arbitrator awarded any form of class relief, CW Painting would be entitled to challenge the award in court and have it set aside regardless of whether the Agreement’s arbitration provision included the appeal term Carbajal challenges. The appeal term therefore does not increase the arbitration provision’s substantive unconscionability.

Given the moderate level of both procedural and substantive unconscionability, the agreement was unenforceable.

The presence of three substantively unconscionable provisions supported the conclusion that the agreement was "permeated with unconscionability," and the trial court did not abuse its discretion in refusing to sever the unconscionable terms from the agreement.

The Court did not address the plaintiff's contentions that Labor Code section 229 precludes arbitration of her Labor Code claims, and that CW could not enforce the Agreement because CW never signed it.

The opinion is available here.

Astorga v. Retirement Board: Court Rules on Effective Date of Public Employee's Disability Retirement

Just a quick word on Astorga v. Retirement Board of the Santa Barbara County Employees Retirement System (Cal.App. 2/2/16), which concerns the effective date of a public employee's disability retirement.

Sara Astorga applied for retirement disability. To maintain health insurance pending the decision on her application, she elected to remain on the payroll and receive her accrued sick leave, vacation and holiday pay in small but regular increments.

The Retirement Board of the Santa Barbara County Employees Retirement System (Board) approved Astorga's disability retirement application. Government Code section 317241 states that a disability retirement may not commence until the day following the last day the applicant received "regular compensation." The Board determined the effective date of her retirement was the day after she received her last sick leave, vacation or holiday payment. It rejected her argument that the effective date should be calculated based on the day her sick leave, vacation and holiday pay balances would have been exhausted had she taken them in full rather than in smaller increments.

Astorga petitioned for a writ of mandate. (Code Civ. Proc., § 1094.5.) The trial court denied the petition, concluding that the Board correctly calculated Astorga's effective date of disability retirement. We affirm.

The opinion is available here. 

DFEH Issues FAQ for Employers on Transgender Rights in the Workplace

The California Department of Fair Employment and Housing (DFEH) has issued an "FAQ for Employers" on transgender rights in the workplace. Among other things, the FAQ provides:

Employers should not ask questions designed to detect a person’s sexual orientation or gender identity or questions about an employee's plans to have surgery.

If an employer has a dress code, it should apply it a non-discriminatory manner. For example, an employee who identifies as a female should be held to the same standards as other females.

Employers should allow employees to use restrooms that correspond with their gender identities. Where possible, employers should provide private restrooms for use by any employee who wants greater privacy, including those who do not want to share facilities with transgender coworkers.

The FAQ is available here.

Cardenas v. M. Fanaian, D.D.S.: Supreme Court Dismisses Labor Code Section 1102.5 Retaliation Case

In Cardenas v. M. Fanaian, D.D.S., Inc. (Cal.App. 10/1/15) (discussed here), the Court of Appeal held as follows: a retaliation action under Labor Code section 1102.5 exists independently of, and does not depend upon, an action for wrongful termination in violation of public policy; section 1102.5 does not require the employee to show that the allegedly illegal activity violates a policy that "inures to the benefit of the public at large rather than to a particular employer or employee;" and section 1102.5 also does not require the employee to show that the alleged illegal activity involved wrongdoing by the employer.

The California Supreme Court granted review on December 16 (Case No. S230533). Apparently the parties have settled the case, because they asked the Supreme Court to dismiss it, and the Court, of course, agreed.

I am no appellate specialist, but I understand that the lower court's decision will remain unpublished. I do not know whether the Court of Appeal can republish the decision if it were so inclined. Maybe one of you can fill me in. 

Oregon Restaurant and Lodging Ass'n v. Perez: Ninth Circuit Revisits Tip Pooling

Just a quick word on Oregon Restaurant and Lodging Association v. Perez (9th Cir. 2/23/16). The opinion itself does a good job of stating the holding:

Under the Fair Labor Standards Act of 1938 (“FLSA”), as amended in 1974, an employer may fulfill part of its hourly minimum wage obligation to a tipped employee with the employee’s tips. 29 U.S.C. § 203(m). This practice is known as taking a “tip credit.” Section 203(m) of the FLSA obligates employers who take a tip credit to (1) give notice to its employees, and (2) allow its employees to retain all the tips they receive, unless such employees participate in a valid tip pool. Id. Under section 203(m), a tip pool is valid if it is comprised exclusively of employees who are “customarily and regularly” tipped. Id.

In both cases before this court, Employer-Appellees did not take a tip credit against their minimum wage obligation; they paid their tipped employees at least the federal minimum wage. Employer-Appellees required their employees to participate in tip pools. Unlike the tip pools contemplated by section 203(m), however, these tip pools were comprised of both customarily tipped employees and non-customarily tipped employees.  

In 2010, we held in Cumbie v. Woody Woo, Inc. [discussed here] that this type of tip pooling arrangement does not violate section 203(m) of the FLSA, because section 203(m) was silent as to employers who do not take a tip credit. 596 F.3d 577, 583 (9th Cir. 2010). In 2011, shortly after Cumbie was decided, the Department of Labor (“DOL”) promulgated a formal rule (“the 2011 rule”) that extended the tip pool restrictions of section 203(m) to all employers, not just those who take a tip credit. 76 Fed. Reg. 18,832, 18,841–42 (April 5, 2011).

The United States District Court for the District of Oregon held that Cumbie foreclosed the DOL’s ability to promulgate the 2011 rule and that the 2011 rule was invalid because it was contrary to Congress’s clear intent. Or. Rest. & Lodging v. Solis, 948 F. Supp. 2d 1217, 1218, 1226 (D. Or. 2013). The United States District Court for the District of Nevada followed suit. Cesarz v. Wynn Las Vegas, LLC, No. 2:13-cv-00109-RCJ-CWH, 2014 WL 117579, at *3 (D. Nev. Jan. 10, 2014). For the reasons set forth below, we reverse both district court decisions.

In other words, under the 2011 DOL rule, a tip pool is valid only if it is comprised exclusively of employees who are “customarily and regularly” tipped, whether the employer takes a tip credit or not. The opinion is available here.  

Bains v. DIR: Wage Orders for Agricultural Workers

The introduction to Bains v. Department of Industrial Relations (Cal.App. 2/16/16) includes a terrible pun. See if you can find it:

Prunes are harvested from trees and must be dried to be marketed. Two administrative rules set forth different overtime pay rates for agricultural workers who harvest fruit and for those who process fruit for market; generally speaking, the latter receive more generous overtime pay. This case plumbs the line dividing the workers subject to each respective rule, as applicable to the agricultural practices described herein. 

Plumb and plum, get it? Prunes are dried plums. I'm surprised they didn't say anything about the workers who prune the trees. 

Anyway, the plaintiffs sought a declaration that certain of their workers were subject to Wage Order 14, which provides the less generous overtime rules than Wage Order 13. The trial court ruled against the plaintiffs, and the Court of Appeal affirmed, holding as follows:

The fact that the plaintiffs failed to exhaust their administrative remedies did not deprive the court of jurisdiction over the case. The plaintiffs asked the trial court to decide the issue and rejected the DLSE's position that an administrative hearing should be held first. To the extent that the trial court erred, the plaintiffs invited the error.

Wage Order 14 applies generally to employees engaged in planting, tending, and harvesting crops. Those employees receive overtime compensation only if they work more than ten hours in a workday or more than six days in a workweek.

Wage Order 13 applies to those "employed in industries preparing agricultural products for market, on the farm." Like most other California employees, they receive overtime compensation if they work more than eight hours in a workday, more than 40 hours in a workweek, or more than six days in a workweek.

Those employees engaged in shaking plums from trees and collecting them in bins are engaged in harvesting and fall within Wage Order 14. Those engaged in drying the fruit in permanently fixed structures on the farm are engaged in preparing the fruit for market. They fall within Wage Order 13.

The opinion is available here.

Lafitte v. Robert Half International: Cal. Supreme Court Grants Review in Class Action Attorney Fee Dispute

I wanted to note this case, which is pending in the California Supreme Court. In Lafitte v. Robert Half International, Inc. (2014) 231 Cal.App.4th 860, a class member objected to a class settlement of $19 million and the award of $6.3 million in fees to class counsel. Among other things, he objected that the class notice required class members to object before counsel filed their attorney fee motion, the notice stated that class members would not be responsible for counsel's fees when the fees were being deducted from the settlement fund, the settlement agreement's "clear sailing" provision on fees was collusive, and the court improperly calculated fees as a percentage of the settlement fund, with a lodestar cross-check. The trial court overruled the objections and approved the settlement. The objector appealed, and the Court of Appeal affirmed.

The Supreme Court granted review last year, and the Court's web site states the issues on appeal as follows: 

Does Serrano v. Priest (1977) 20 Cal.3d 25 permit a trial court to anchor its calculation of a reasonable attorney's fees award in a class action on a percentage of the common fund recovered?

Lafitte is Case No. S222996, and the Court's web site for it is here. You can sign up for automatic email updates on the case here. 

Department of Labor Issues Joint Employer Guidelines

On January 20, 2016, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued an Administrator’s Interpretation (AI) on joint employment under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The Department uses these Administrator's Interpretations, rather than more narrow opinion letters. The AI distinguishes between two types of joint employment:

Horizontal joint employment exists where the employee has employment relationships with two or more employers and the employers are sufficiently associated or related with respect to the employee such that they jointly employ the employee. The analysis focuses on the relationship of the employers to each other. This AI explains that guidance provided in the FLSA joint employment regulation – which focuses on the relationship between potential joint employers – is useful when analyzing potential horizontal joint employment cases.  

Vertical joint employment exists where the employee has an employment relationship with one employer (typically a staffing agency, subcontractor, labor provider, or other intermediary employer) and the economic realities show that he or she is economically dependent on, and thus employed by, another entity involved in the work. This other employer, who typically contracts with the intermediary employer to receive the benefit of the employee’s labor, would be the potential joint employer. Where there is potential vertical joint employment, the analysis focuses on the economic realities of the working relationship between the employee and the potential joint employer. This AI explains that guidance provided in the MSPA joint employment regulation is useful when analyzing potential vertical joint employment. The structure and nature of the relationship(s) at issue in the case, reflecting potentially horizontal or vertical joint employment or both, should determine how each case is analyzed.

The AI and other WHD materials on joint employment are available here.

Interesting timing here. Dr. David Weil, Administrator of the WHD, is speaking on February 23 at the Los Angeles County Bar Association's Ben Aaron Lecture. His topic is "Mending the Fissured Workplace," and I am sure he will address joint employment, independent contractor status, and other important issues. More information on the program is available here. 

Alvarado v. Dart Container Corp: Where Defendant Paid Employees Daily Flat Sum Bonuses, It Properly Calculated Overtime Rates of Pay in Compliance with Federal Law

Here's one for the wage and hour folks.

In Alvarado v. Dart Container Corporation of California (Cal.App. 1/14/16), the defendant, Dart, paid its employees an "attendance bonus" for working a full Saturday or Sunday shift. The plaintiff filed a class and PAGA representative action, alleging that Dart failed to account properly for this bonus when calculating its employees' overtime rates of pay properly. Dart used the following calculation:

1. Multiply the number of overtime hours worked in a pay period by the straight hourly rate (straight hourly pay for overtime hours). 

2. Add the total amount owed in a pay period for (a) regular non-overtime work, (b) for extra pay such as attendance bonuses, and (c) overtime due from the first step. That total amount is divided by the total hours worked during the pay period. This amount is the employee’s “regular rate.” 

3. Multiply the number of overtime hours worked in a pay period by the employee’s regular rate, which is determined in step 2. This amount is then divided in half to obtain the “overtime premium” amount, which is multiplied by the total number of overtime hours worked in the pay period (overtime premium pay). 

4. Add the amount from step 1 to the amount in step 3 (total overtime pay). This overtime pay is added to the employee’s regular hourly pay and the attendance bonus.

Plaintiff alleged that Dart should use the following calculation instead:

1. Multiply regular hours by the employee’s hourly rate (regular pay); 

2. Multiply overtime hours by the employee’s hourly rate (overtime pay on overtime hours); 

3. Divide flat sum bonus by regular hours (overtime rate), and multiply by 1.5 (overtime pay on bonus); 

4. Add pay for regular hours, bonus, overtime pay on overtime hours, overtime pay on bonus (total pay).

The trial court granted summary judgment for Dart, and the Court of Appeal affirmed, holding as follows:

Federal law requires payment of weekly overtime only and uses a "fluctuating workweek" method of calculating overtime wage rates. Although federal law does not address a daily flat sum bonus such as the one here, it does provide that a weekly bonus should be added to the weekly compensation, which is divided by the number of hours worked to arrive at the regular rate of compensation. 29 CFR 778.209(a). 

California law requires payment of daily overtime and does not follow the fluctuating workweek system. In this respect, California law is more protective of employees than federal law.

Federal law does not preempt more protective state wage and hour laws and would not preempt California law regulating overtime in this situation, if there were such law.

California law does not set forth a method of calculating overtime rates of pay based on daily flat sum bonuses such as the one here.

Skyline Homes v. DIR (1985) 165 Cal.App.3d 239, in which the court held that an employer may not use the fluctuating workweek method to calculate overtime rates for salaried employees, does not apply. Skyline was "confined to salaried employees working a fluctuating workweek, did not address bonuses, and dealt with an employer who failed to pay overtime for work exceeding eight hours in a day."

Sections 49.2.4.2 and 49.2.3 of the Division of Labor Standards Enforcement (DLSE) Enforcement Policies and Interpretations Manual provide a reasonable basis for calculating overtime rates. However, the DLSE Manual was not enacted in accordance with the Administrative Procedures Act, it does not carry the force of law, and it does not control here. 

Marin v. Costco Wholesale Corp. (2008) 169 Cal.App.4th 804 does not require adherence to the method set forth in the DLSE Manual. Marin considered a semi-annual bonus based on years of service and hours worked in the previous six months, rather than a flat sum bonus like the one here. No federal regulation applied in Marin, while 29 CFR section 788.209(a) applies here. Note: The Court here cites to CFR section 788.209(a), but this undoubtedly is a typo, and the Court meant to refer to section 778.209(a), discussed above.

Absent state law requiring use of the formula proposed by plaintiff, defendant properly used the formula stated in section 778.209(a). 

The opinion is available here.