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.