Alcantar v. Hobart Service: Ninth Circuit Addresses Claims that Employer Must Pay Service Technicians for Time Spent Commuting in Company Vehicles

Alcantar v. Hobart Service, ___ F.3d ___ (9th Cir. 9/3/15), discusses class certification under Federal Rule of Civil Procedure (FRCP) section 23, issues of compensable commute time, and the notice requirement of the Labor Code Private Attorneys general Act (PAGA). The opinion gives a good summary of the facts, so let's start there:

ITW, [defendant] Hobart’s parent company, designs and manufactures commercial food equipment. Hobart provides after-sale maintenance and repair services to ITW’s customers. [Plaintiff] Alcantar works for Hobart as a service technician. 

Alcantar and other service technicians provide most services on-site. They drive to and from customer locations in vehicles Hobart provides, carrying the tools and replacement parts necessary to make repairs. Although they spend most of their time at customer locations, each technician is assigned to one of Hobart’s thirteen California branch offices.  

As hourly employees, the technicians are compensated for the time they spend fixing equipment and the time they spend driving to and from different assignments. If they commute in the service vehicles, they are also compensated for the time spent driving from their homes to their first assignments and from their last assignments back home, but only to the extent it falls outside their "normal commute" [the time employees normally spend commuting from their homes to their assigned branch offices].

Alcantar sued, alleging that employees commuting in Hobart vehicles were subject to Hobart's control and should be paid overtime compensation for all commute time. Alcantar also alleged that Hobart failed to provide the required meal and rest periods.

The district court denied Alcantar's motion for class certification of the overtime claim. It held that Alcantar had not shown that Hobart had a uniform policy requiring technicians to commute in its vehicles and that this precluded a finding of commonality under FRCP 23(a)(2). 

The district court also denied certification of the meal and rest period claims, holding that individual questions as to why employees missed their meal and rest periods would predominate, and that the plaintiff could not meet the predominance requirement of FRCP 23(b)(3).

On a separate motion for summary judgment, the court held that Hobart did not owe the plaintiff for the commute time, but held that Alcantar had raised triable issues of fact as to the meal and rest period claims.

On a second motion for summary judgment, the court held that Alcantar had not complied with PAGA's notice requirement.

The Ninth Circuit affirmed in part and reversed in part, holding as follows:

The district court erred in denying certification of the overtime claim. First, "there is a question of fact as to whether Hobart requires technicians to use its vehicles for their commute." Second, Alcantar raised a common issue as to whether Hobart exercised control over its employees while driving company vehicles, such that their commute time should be compensated. Third, the district court erred in considering the merits of this common question. Whether the plaintiff would prevail on the merits or not does not impact the commonality analysis under FRCP 23(a)(2).

The district court did not err in denying certification of the meal and rest period claims. Common questions did not predominate under FRCP 23(b)(3). Instead, individual questions as to why employees missed their meal and rest periods would predominate.

The district court erred in granting summary judgment for Hobart on the commuting time claim. Although Hobart argued that technicians could choose not to use Hobart's vehicles, Alcantar argued that the choice was illusory because the branch offices did not have secured parking available for the vehicles, and the technicians were responsible for the tools and parts inside the vehicles. Alcantar thus raised a question of fact as to whether Hobart required its technicians to use its vehicles for their commute.

The district court did not err in granting summary judgment for Hobart on Alcantar's PAGA claims. Alcantar's notice to the Labor and Workforce Development Agency contained only a series of legal conclusions, rather than the facts and theories supporting the claim. 

Plaintiff’s letter—a string of legal conclusions with no factual allegations or theories of liability to support them—is insufficient to allow the Labor and Workforce Development Agency to intelligently assess the seriousness of the alleged violations. Neither does it provide sufficient information to permit the employer to determine what policies or practices are being complained of so as to know whether to fold or fight. 

The opinion is available here. 

Nigro v. Sears: District Court Erred in Disregarding Plaintiff's Self-Serving Testimony on Summary Judgment

In Nigro v. Sears, Roebuck & Co., ___F.3d ___ (9th Cir. 2/25/15), the plaintiff sued the defendant, Sears, for disability discrimination under the FEHA and wrongful termination. The district court granted Sears's motion for summary judgment, and Nigro appealed.

The Ninth Circuit reversed, holding that Nigro's deposition and declaration testimony, while self-serving, stated more than mere conclusions, and the district court should not have disregarded them.

Here, Nigro's declaration and deposition testimony, albeit uncorroborated and self-serving, were sufficient to establish a genuine dispute of material fact on Sears's discriminatory animus. He related statements made to him both in person and over the telephone. His testimony was based on personal knowledge, legally relevant, and internally consistent. We conclude that the district court erred in disregarding Nigro's testimony in granting Sears's motion for summary judgment.

The opinion is available here. 

Serri v. Santa Clara University: Court of Appeal Affirms Summary Judgment in Discrimination, Wrongful Termination Action

In Serri v. Santa Clara University (5/28/14) --- Cal.App.4th ---, Conchita Franco Serri sued Santa Clara University and a number of individuals for discrimination, retaliation, wrongful termination in violation of public policy, and other employment-related claims. The trial court granted the defendants' motions for summary judgment, and Serri appealed. 

The primary issue on appeal was whether Serri raised a triable issue of material fact as to whether the University had a legitimate, nondiscriminatory reason to terminate her employment or whether its reasons for doing so were untrue or pretextual. The Court framed the issue and its holding as follows: 

We are asked to determine whether an employee who is terminated for failing to perform an important job function can avoid summary judgment by arguing, based on expert evidence obtained for the purpose of opposing a motion for summary judgment or summary adjudication, years after the employee’s termination, that the failure to perform did not and would not result in any adverse consequences to the employer. We hold that after-acquired expert evidence that there were no adverse consequences from an employee’s failure to perform does not create a triable issue of fact on the question whether the employee failed to perform his or her job duties and thus has limited relevance, if any, to the question of discrimination. 

In this case, expert evidence that the failure of performance did not harm the University, acquired years after Serri was terminated, did not create a triable issue of material fact on the question whether the University’s stated reasons for terminating Serri were untrue or pretextual such that a reasonable trier of fact could conclude that the employer engaged in discrimination. Before she was terminated, Serri told the University her failure to prepare an Affirmative Action Plan could have adverse consequences, including the loss of federal grants. That the University ultimately suffered no adverse consequences did not create a triable issue on the questions whether the University had a legitimate, nondiscriminatory reason to terminate her employment or whether its reasons for doing so were untrue or pretextual. 

Slip op. at 2.  

The opinion is available here. 

Jong v. Kaiser: Plaintiff in Off-the-Clock Overtime Action Failed to Raise Triable Issues on Summary Judgment

In Jong v. Kaiser Foundation Health Plan, Inc. (5/20/14) --- Cal.App.4th ---, Henry Jong worked as an outpatient pharmacy manager” (OPM) for Kaiser. After his separation, Jong sued Kaiser for unpaid off-the-clock overtime work. The trial court granted summary judgment for Kaiser, holding that Jong failed to raise a triable issue as to whether Kaiser knew or should have known that he was working overtime hours. The Court of Appeal affirmed, holding as follows: 

The parties assumed that Jong must show that Kaiser knew or should have known that he was working off the clock, and the Court found "no reason to question this basic premise." Slip op. at 4-5. 

Jong raised a triable issue as to whether he worked off-the-clock hours, but he failed to raise a triable issue as to whether Kaiser knew or should have known of that work. Declarations and deposition testimony of other OPMs that they worked off-the-clock hours did not raise such a triable issue. Slip op. at 5-10. 

The Court noted in particular that: 

Jong knew of Kaiser’s written policy that OPMs should be clocked in whenever they were working; 

Kaiser always paid him for time he recorded on Kaiser’s recording system, including overtime hours; 

Kaiser instructed him that he was eligible to work and be paid for overtime hours; 

There was never an occasion when he requested approval to work overtime that was denied and there were occasions when he worked and was paid overtime even though he did not seek pre-approval; 

He was not told by any of his managers or supervisors or any other Kaiser management personnel that he should perform work before he clocked in or after he clocked out or otherwise work off-the-clock; 

And he signed the attestation form and understood it was an attestation that he would not work off-the clock. 

Slip op. at 7-8. 

Jong v. Kaiser is available here. 

Monarrez v. Automobile Club of Southern California: Supreme Court Issues Grant-and-Hold Order in Independent Contractor Action

In Monarrez v. Automobile Club of Southern California (12/12/12) (discussed here) the Court of Appeal reversed a trial court order granting summary judgment to a defendant in a third party liability case alleging that a tow truck driver was an Automobile Club employee, rather than an independent contractor. 

On February 13, 2013, the California Supreme Court granted review and held briefing pending its decision in Patterson v. Domino's Pizza (6/27/12) (discussed here).  In Patterson, the plaintiff sued a Domino's Pizza franchisee and the franchisor, alleging that both were responsible for sexual harassment by her supervisor.  The Court of Appeal reversed a trial court order granting summary judgment for the franchisor, holding that evidence of control by the franchisor raised "reasonable inferences" supporting the plaintiff's claim that the franchisee was not merely an independent contractor, and that this was sufficient to defeat summary judgment. 

The Supreme Court granted review, limited to the question of "whether the defendant franchisor is entitled to summary judgment on plaintiff's claim that it is vicariously liable for tortious conduct by a supervising employee of a franchisee." 

This is very interesting because, as I noted in my original post on Monarrez, that is a third party tort liability case, while the cases on which the Court of Appeal relied, S.G. Borello & Sons, and Estrada v. FedEx, were cases by putative independent contractors against a putative employer. I have always understood that the tests in these two types of cases differed substantially, and it will be interesting to see whether the Supreme Court draws a distinction. 

Patterson is Case No. S204543, and the Court's case summary page is here.  Monarrez is Case No. S207726, and the Court's case summary page is here. 

If you want to stay current on developments in these cases, you can register for email alerts on the Supreme Court's case summary pages. 

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

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

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

The court declined to analyze the motion in accordance with McDonnell Douglas Corporation v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), finding it inapplicable to ADEA cases after the Supreme Court's decision in Gross v. FBL Financial Services, Inc., 557 U.S. 167, 129 S.Ct. 2343, 174 L.Ed.2d 119 (2009). Relying on Gross, the district court held that Shelley put forth insufficient facts that his age was the "but-for" cause of his non-selection for the 120-day position and for an interview for and promotion to the permanent position.

Id. at 604. The Ninth Circuit reversed. First, the Court found that Shelly exhausted his administrative remedies by timely filing with the EEOC. Id. at 605-606. Next, the Court held that the district court inappropriately applied Gross, which concerned instructions at trial, rather than the parties' burdens on summary judgment. Id. at 607. The Court explained that McDonnell Douglas remains good law on summary judgment: 

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

Id. at 608. 

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

The opinion is available here.  

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

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

The Supreme Court last week granted the franchisor's petition for review:  

Petition for review after the Court of Appeal reversed the summary judgment in a civil action. The court limited review to the question discussed in the Court of Appeal's opinion, namely, whether the defendant franchisor is entitled to summary judgment on plaintiff's claim that it is vicariously liable for tortious conduct by a supervising employee of a franchisee. 

Patterson is Case No. S204543.  The Court's case summary page is here.  I have added Patterson to our Watch List of Pending Cases.  

Batarse v. SEIU: Court of Appeal Affirms Summary Judgment in Race and Gender Discrimination Action

In Batarse v. Service Employees International Union Local 1000 (9/24/12) --- Cal.App.4th ---, the plaintiff, a former attorney who had resigned from the State Bar with charges pending, was employed by the SEIU as a union rep.  After his termination, he filed suit for racial and gender discrimination, retaliation, negligent supervision and retention, and wrongful termination in violation of public policy.  The trial court granted summary judgment on all counts, and the Court of Appeal affirmed. 

First, the trial court was justified in declining to consider the plaintiff's opposition without a separate statement that conformed to the requirements of the Code.  Slip op. at 7-14.  This was not a single-issue case that could be determined without a separate statement, but a complex case involving shifting burdens of proof.  Slip op. at 12.  The plaintiff's separate statement was insufficient in that it "merely disputed a few of SEIU's facts without including additional facts attempting to affirmatively show pretext or otherwise overcome SEIU's asserted reason for termination. Plaintiff's separate statement did not dispute any of the facts showing SEIU had a legitimate reason for terminating his employment; that is, it did not dispute any of the facts regarding plaintiff being disciplined by the state bar or concealing or making misrepresentations about the reasons for his resignation [from the State Bar]."  Slip op. at 13-14.  The defects in the separate statement were not merely procedural.  Plaintiff admitted that SEIU had legitimate business reasons for his termination (i.e., misrepresenting his reasons for resigning from the State Bar when he applied for his job) but failed to show that those reasons were untrue or pretextual.  Ibid.  

Second, even if the trial court erred in refusing to give the plaintiff additional time to correct his separate statement, the error was not prejudicial.  Slip op. at 14-19.  The facts that plaintiff stated in his points and authorities, even if properly stated in the separate statement, would not raise triable issues of fact.  Ibid.  The plaintiff could not "offer substantial evidence that the employer's stated nondiscriminatory reason for the adverse action was untrue or pretextual, or evidence the employer acted with a discriminatory animus, or a combination of the two, such that a reasonable trier of fact could conclude the employer engaged in intentional discrimination."  Slip op. at 15.  

As direct evidence of intentional discrimination, plaintiff cites the following three facts: (1) “Plaintiff has asserted that he was replaced by a Hispanic individual … no more qualified than Plaintiff for the position.” Plaintiff cites no evidence that his replacement was Hispanic or that the replacement was no more qualified than plaintiff. (2) Sanchez “has shown a refusal to try and get along with the representatives that were assigned to her DLC, who happen to be Caucasian males.” The declaration of Angela Moralez, cited in support, states that Sanchez “has simply refused to attempt to get along with” males she worked with; Moralez identified two Caucasian males, one who resigned two months into his employment and another Sanchez “failed to get along with.” Other unidentified males (of unidentified race and ethnicity) left within months of employment “because of their inability to get along with Ms. Sanchez and Ms. Sanchez's refusal to attempt to [get] along with any of them.” Moralez states her belief that Sanchez used her influence to have plaintiff terminated, but admits she “cannot say for certain[] that it was because of [plaintiff's] race, gender, or in retaliation for his conduct.” The declaration of Tim Chaney, also cited in support of this statement, admits he has not personally heard Sanchez make derogatory remarks about Caucasians, but opines that “she has shown an inability or refusal to get along with Caucasian males.” (3) Within the first couple of weeks of plaintiff's employment, plaintiff's supervisor received a phone call from a member saying the member looked plaintiff up on the state bar website and did not want him to represent the member.

Slip op. at 17.  None of this constituted "direct evidence of discriminatory or retaliatory motive."  Ibid.  

The opinion is available here.

Howard Entertainment v. Lisa Kudrow: Court Erred In Excluding Expert Witness Evidence of Custom and Usage in Personal Management Dispute

In 1991, Scott Howard and actress Lisa Kudrow entered into an oral agreement for Howard to act as Kudrow's personal manager. Kudrow agreed to pay Howard 10% of her earnings. In 1994, Kudrow landed the role of "Phoebe" on the television show "Friends." She earned up to $1 million per episode, plus 1 1/4 % of the show's "backend" earnings. 

Kudrow terminated Howard in 2007, and Howard made a demand for commissions on income Kudrow earned following the termination of their relationship for work she performed during the relationship. Kudrow rejected the demand, and Howard filed suit. On summary judgment, Howard presented the declaration of an expert, who stated that custom and practice in the entertainment industry required clients to pay their personal managers post-termination commissions on the services that they rendered, and on engagements that they entered into, when the personal managers were representing them.

Kudrow objected to the expert's declaration, and Howard sought an extension of time to supplement it. The trial court (Los Angeles Superior Court, Judge Cesar Sarmiento) denied the request for continuance, sustained Kudrow's objections to the expert's declaration, and granted summary judgment. Howard appealed, and the Court of Appeal remanded to the trial court with directions to exercise its discretion to determine if Howard was entitled to a continuance to file a supplemental expert declaration.

On remand, the trial court granted Howard's request to file a supplemental expert witness declaration. The trial court then held that the declaration lacked foundation and again granted summary judgment. Howard again appealed, and the Court of Appeal reversed, holding:

Howard's expert was qualified as an expert witness (slip op. at 15-17); 

The expert's declaration provided adequate foundation for the opinions expressed, despite a "lack of specific details in portions of the ... declaration" (slip op. at 17-23); and 

Because the expert declaration was admissible, Howard raised triable issues of material fact as to the proper interpretation of the parties' agreement, and the trial court erred in granting summary judgment (slip op. at 23).

The opinion is available here.

Aleksick v. 7-Eleven: Franchisor Not Liable for Wage and Hour Violations

In Patterson v. Domino's Pizza (6/27/12) --- Cal.App.4th --- (discussed here), Division Six of the Second District Court of Appeal (Justices Gilbert, Yegan, and Perren) held that a franshisor may be liable for a franchisee's alleged violations of the Fair Employment and Housing Act (FEHA).  

In Aleksick v. 7-Eleven (5/8/12) --- Cal.App.4th ---, Division One of the Fourth Appellate District (Justices McConnell, Huffman, and Nares) held that 7-Eleven is not liable for allegedly shorting its franchisees' employees of earned wages.   

Plaintiff Kimberly Aleksick worked for Michael Tucker, who owned franchises for two 7-Eleven stores.  Tucker's franchise agreement with 7-Eleven required him to use 7-Eleven's payroll services.  After her employment ended, Aleksick sued 7-Eleven, alleging that: 

7-Eleven's practice of converting hours worked from minutes to hundredths of an hour sometimes shorts employees of time and commensurate pay, and thus violates Labor Code wage statutes.  She focuses on the following elementary example:  20 minutes is one-third of an hour, and at an hourly rate of $12, pay should be $4.  When 7-Eleven converts the 20 minutes to 0.33, however, and multiplies that figure by $12, pay is $3.96. 

Slip op. at 1-2.  Aleksick alleged that 7-Eleven violated the unlawful and unfair prongs of the UCL.  The parties stipulated to class certification and made cross-motions for summary judgment / summary adjudication.  

As a side note, 7-Eleven's stipulation to class certification is very interesting.  As a result of that stipulation and the Court's decision, 7-Eleven now has a binding judgment against all class members, not just against Aleksick.  Had 7-Eleven moved for summary judgment against Aleksick alone, absent class members would have been free to bring subsequent actions alleging the same violations.  See Smith v. Bayer Corp., 564 U.S. ---, 131 S.Ct. 2368 (6/16/11) (discussed here); Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034 (discussed here). 

The trial court (Imperial County Superior, Judge Jeffrey B. Jones) granted 7-Eleven's motion for summary judgment and denied Aleksick's motion for summary adjudication, holding that 7-Eleven's system was "inherently reasonable."  The Court did not address 7-Eleven's arguments that Aleksick failed to identify a statutory predicate for her UCL claim or that 7-Eleven is not the class members' employer.  Aleksick appealed, and the Court of Appeal affirmed. 

First, the Court held that Aleksick failed to identify a statutory predicate for her UCL claim, thus forfeiting the argument: 

Her complaint does not allege any statutory predicate for the UCL cause of action.  The complaint merely alleges 7-Eleven "has violated both California law and/or its own contractual promise, thereby depriving the class members of money earned by them."  This vague allegation did not notify 7-Eleven that in moving for summary judgment it was required to address Labor Code sections 204, subdivision (a), 223, 510, subdivision (a), 1182.12, and 1194, subdivision (a) [which Aleksick identified for the first time on appeal].  

Slip op. at 9-10.  

Second, the Court held that the "undisputed evidence shows 7-Eleven was not the class members' employer."  Slip op. at 10.  Relying on Martinez v. Combs (2010) 49 Cal.4th 35 (discussed here) and Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419 (discussed here), the Court held: 

7-Eleven exercised no control over Tucker's employees, including their hiring or firing, rate of pay, work hours and conditions; 7-Eleven did not "suffer or permit" the employees to work; and it did not engage them in work. 

Aleksick did not meet her burden of raising a material issue of fact on the employment issue.  Indeed, in supplemental briefing we requested, Aleksick concedes "it is undisputed that 7-Eleven is not the employer of the class members."

Slip op. at 17 (emphasis in original).  

Third, the Court held that Aleksick failed to raise a triable issue of fact on her claim that 7-Eleven violated the UCL's "unfair" prong.  Noting the uncertainty regarding the scope of that prong in consumer cases, the Court followed Gregory v. Albertson's, Inc. (2002) 104 Cal.App.4th 845, 854, which held: 

[Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163]  . . . may signal a narrower interpretation of the prohibition of unfair acts or practices in all unfair competition actions and provides reason for caution in relying on the broad language in earlier decisions that the court found to be 'too amorphous.'  Moreover, where a claim of an unfair act or practice is predicated on public policy, we read Cel-Tech to require that the public policy which is a predicate to the action must be 'tethered' to specific constitutional, statutory or regulatory provisions." 

Slip op. at 20-21.  

Aleksick argued that 7-Eleven had violated the public policy in favor of full and prompt payment of wages, but she cited only to cases in which employees sued their employers.  Because the Court held that7-Eleven could not be liable as the class members' employer, it held that these cases were inapposite, and Aleksick's claim failed.  

The Court did not reach the issue of whether an employer could be liable under the Labor Code wage statutes and the UCL for the conversion of any partial hour worked from minutes to hundredths of an hour. 

The opinion is available here.  

Schechner v. KPIX-TV: Ninth Circuit Issues Disparate Treatment Age Discrimination Decision

In Schechner v. KPIX-TV (9th Cir. 5/29/12) --- F.3d ---, the Ninth Circuit Court of Appeal addresses the use of statistical evidence in disparate treatment age discrimination cases. The Court summarized the case as follows:

Plaintiffs William Schechner and John Lobertini were television news reporters at KPIX-TV, one of the two San Francisco affiliates of CBS Broadcasting, Inc. They were laid off after CBS issued a directive requiring each of its affiliates to reduce its annual budget by ten percent. Schechner and Lobertini were sixty-six and forty-seven years old, respectively, when they lost their jobs. They brought suit alleging that KPIX discriminated against them on the basis of age and gender, in violation of California law. The district court [N.D.Cal., Judge Marilyn Hall Patel] granted KPIX’s motion for summary judgment, dismissing all of Plaintiffs’ claims. We affirm. We write to clarify that a plaintiff can make out a prima facie case of disparate-treatment age discrimination using statistical evidence, even where that evidence does not account for the defendant’s legitimate nondiscriminatory reason for the discharge.

The district court properly applied the McDonnell Douglas burden-shifting analysis, but erred in collapsing the three-step analysis into a single step.  "We clarify that a plaintiff’s statistical evidence need not necessarily account for an employer’s proffered non-discriminatory reason for the adverse employment action to make a prima facie case of discrimination."  

The employee in an age discrimination case makes a prima facie case of disparate treatment “by demonstrating that he was (1) at least forty years old, (2) performing his job satisfactorily, (3) discharged, and (4) either replaced by substantially younger employees with equal or inferior qualifications or discharged under circumstances otherwise ‘giving rise to an inference of discrimination.’ ”

The plaintiffs' proffered statistical evidence of discrimination satisfied the fourth element of this test, even though it failed to account preemptively for the defendant’s proffered non-discriminatory reasons for discharge:  

Consistent with our precedents, we conclude that a plaintiff who submits statistical evidence that shows a stark pattern of age discrimination establishes a prima facie at step one of the McDonnell Douglas  framework. We hold that statistical evidence does not necessarily fail to establish a prima facie case because it does not address the employer’s proffered non-discriminatory reasons for the discharge. We do not hold that any statistical evidence of disparate treatment, regardless of its strength, will be sufficient to establish a prima facie case.

The Court then held that the defendant had met its burden of showing that it had a legitimate, non-discriminatory reason for its layoffs, and that the plaintiffs had failed to meet their burden of showing that this reason was pretextual.

The opinion is available here. 

Rehmani v. Superior Court: Court Reverses Summary Judgment in National Origin Discrimination Action

In Rehmani v. Superior Court (Ericsson, Inc.) (3/29/12) --- Cal.App.4th ---, plaintiff Mustafa Rehmani filed suit against his former employer, Ericsson, and several co-workers, alleging that he suffered harassment based on his Pakistani national origin and Muslim religious beliefs. The trial court (Santa Clara County Superior, Hon. Kevin McKenney) granted Ericsson's motion for summary adjudication of Rehmani's harassment claims, finding that "Plaintiff was not subjected to unwelcome harassment based on religion and/or national origin, and/or the harassment did not unreasonably interfere with his work performance by creating an intimidating, hostile, or offensive work environment." Rehmani sought a writ of mandate, and the Court of Appeal reversed.

After reviewing the black letter law on FEHA harassment claims, the Court stated the issue as "Whether in this case Rehmani's employer failed to take appropriate steps to curb the verbal abuse he allegedly suffered." Slip op. at 7.

The Court reviewed in detail Rehmani's allegations, which the Court summarized as follows:

Rehmani generally alleged that [his co-workers], all Indian, were frequently rude, dismissive, and hostile toward him because he was a Pakistani and a Muslim. At first the "hostility" of these three took the form of unwillingness to help him with his projects. But it became more severe and "overtly discriminatory" following the November 2008 attacks in Mumbai, India by Pakistani terrorists. Rehmani further alleged that management had disregarded his complaints about this behavior.

Slip op. at 7. Rehmani alleged several specific incidences of alleged harassing behavior, including a co-worker's stating that Pakistan should be blown up because it is full of terrorists, another co-worker asking him if he was going to "blow him up," and other co-workers stating that Rehmani was "celebrating 9/11 and planning terrorist attacks." Rehmani alleged that he complained repeatedly to management, to no avail.

A jury might agree with Ericsson that none of the alleged acts by [his co-workers] was based on Rehmani's national origin or religion, and such a conclusion would refute the assertion of Ericsson's liability in the first two causes of action. Or a jury might determine that Ericsson was not liable for the hostile work environment Rehmani allegedly experienced because Daftari adequately responded to Rehmani's complaints about Ghevaria and others. But considering these employees' conduct in the overall context of Rehmani's allegations of hostility by Indian employees toward non Indians, we cannot determine as a matter of law that the evidence supplied by Ericsson establishes that Rehmani will not be able to convince a trier of fact that he experienced a hostile environment and that his reports of mistreatement were ignored by his supervisor. His claim that he suffered emotional harm, physical illness, and loss of his ability to do his work effectively has not been challenged by Ericsson.

Slip op. at 14.

Rehmani offered evidence of a larger picture than just a few interpersonal squabbles. His declaration, together with testimony from coworkers, suggests rudeness, taunting, and intimidation from Indian engineers toward their non-Indian colleagues. Rehmani's evidence in support of his discrimination claims -- notably Ericsson's favoritism toward Indian engineers in hiring, promotions, salary increases, and work assignments and the managers' practice of assigning non-Indian employees to tasks that help the Indian employees look impressive -- may also be relevant in proving a hostile workplace.

Slip op. at 14-15.

The Court concluded that a trier of fact would have to determine whether Rehmani's claims have merit or not, as Rehmani had presented sufficient evidence to survive summary adjudication.

The opinion is available here. 

Futrell v. Payday California: Court of Appeal Affirms Finding that Payroll Processing Company Did Not Employ Plaintiff

Futrell v. Payday California, Inc. (December 16, 2010) --- Cal.Rptr.3d ----, 2010 WL 5117629, is one of the first published appellate cases applying the Supreme Court's recent decision in Martinez v. Combs, which defines employment for California wage law purposes. The Court described the case as follows:

This appeal arises from a class action alleging violations of sections of the Labor Code and the federal Fair Labor Standards Act (FLSA) by a payroll processing company operating in the local television commercial production industry. Plaintiffs' primary claim is that the payroll company violated various Labor Code and FLSA wage statutes, including Labor Code sections 510 and 1194 (authorizing a private right of action), by failing to pay statutorily required overtime compensation rates to Plaintiffs. In the context of a motion for summary adjudication of issues (SAI), the trial court ruled the payroll company had not been Plaintiffs' “employer.” The court thereafter entered judgment in favor of the payroll company, and Plaintiffs filed the appeal that comes before us today.

While Plaintiffs' appeal was pending in our court, the Supreme Court decided Martinez v. Combs (2010) 49 Cal.4th 35 (Martinez), cementing at least three employment principles in place which are relevant to the appeal. First, “no generally applicable rule of law imposes on anyone other than an employer a duty to pay wages.” (Id. at p. 49, italics added.) Second, a wage order adopted by the Industrial Welfare Commission (IWC) for a particular occupation, trade or industry, “and not the common law, properly defines the employment relationship in [an] action under section 1194.” (Id. at p. 62; id. at pp. 52-66.) Third, wage orders issued by the IWC “do not incorporate the federal definition of employment” under the FLSA. (Martinez, at p. 52; id. at pp. 66-68.) Because our review of the trial court's ruling on the motion for SAI is de novo (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 114), we now apply Martinez. Having done so, and having separately considered federal case law interpreting the FLSA, we affirm the judgment in favor of the payroll company.

Slip op. at 1. The evidence on summary adjudication included the following:

Payday's evidence in support of its motion for SAI showed that Payday did not hire or fire Futrell or have the authority to do so. Further, the evidence showed Payday did not control Futrell's work, did not set or negotiate his wages, did not assign or supervise his work, did not determine his hours or conditions of employment, and did not set his work schedule. In addition, Payday presented evidence that it never entered into a written or oral employment contract with Futrell.

***

Futrell's evidence showed he completed timecards, employee information sheets, employment eligibility verifications, and W-4 employee withholding certificates provided by Payday, and that Payday collected the information about the hours he worked from the timecards and placed the information into Payday's computer payroll system to generate Futrell's paychecks. The pay stubs provided with Futrell's paychecks identified Futrell as the “employee” and identified Payday as the “employer of record.” Payday furnished W-2 forms which identified Payday as Futrell's “employer.” Futrell also presented evidence that Payday was considered by the Internal Revenue Service as an employer of record for income tax and unemployment insurance purposes. In addition, the evidence showed that the funds accessed for Futrell's paychecks were drawn on Payday's accounts and that Payday paid premiums for workers' compensation insurance and unemployment insurance covering Futrell. Don McVeigh, an expert in “the insurance industry, including matters involving workers' compensation insurance,” submitted a declaration in which he stated that only an “employer” can purchase workers' compensation insurance. Finally, Futrell showed the general practices at Reactor's television commercial productions included a freelance production supervisor working on site “to liaise” with Payday.

Slip op. at 3. The trial court granted the motion, and the Court of Appeal affirmed, holding:

1. Futrell introduced no evidence to show that Payday controlled his wages, hours, or working conditions (Slip op. at 7);
2. One "exercises control over workers' wages" when it "has the power or authority to negotiate and set an employee's rate of pay, and not [merely when it] is physically involved in the preparation of an employee's paycheck (Slip op. at 7);
3. "There is no evidence in the current case Payday allowed Futrell to suffer work, or permitted him to work, because there is no evidence showing Payday had the power to either cause him to work or prevent him from working" (Slip op. at 8);
4. "Payday did not direct or supervise Futrell at the production sites" or meet any of the secondary indicia of employment (Slip op. at 8-9);
5. Payday did not employ Futrell under the FLSA "economic realities" test (Slip op. at 9-10).
6. Payday was not estopped from denying that it employed Futrell "because, even accepting Futrell's evidence that people affiliated with Payday made statements indicating that he was a Payday employee, there is no substantial evidence showing that Futrell did any act - e.g., worked on the side apart from his police officer position - only because Payday made such statements." (Slip op. at 11).

The opinion is available here.

Parth v. Pomona Valley Revisited: Ninth Circuit Modifies FLSA Alternate Workweek Decision

On December 13, 2010, the Ninth Circuit amended its decision in Parth v. Pomona Valley Hospital Medical Center, --- F.3d ----, 2010 WL 5064380 (9th Cir. December 13, 2010). The amendment did not affect the outcome. Our discussion of the case, which holds that the Fair Labor Standards Act (FLSA) allows an employer to lower its employees' regular of pay to accommodate their desire to work an alternate workweek schedule, is here.

The amended decision is available here.

Parth v. Pomona Valley Hospital: FLSA Allows Employer to Change Regular Rate of Pay to Accommodate Alternative Workweek Schedule

In Parth v. Pomona Valley Hospital Medical Center, --- F.3d ----, 2010 WL 4643846 (9th Cir. November 18, 2010), the Ninth Circuit held:

When an employer changes its shift schedule to accommodate its employees' scheduling desires, the employer may reduce the employee pay rate to pay its employees the same wages they received under the former schedule, so long as the rate reduction was not designed to circumvent the provisions (including overtime) of the Fair Labor Standards Act (“FLSA”).

Slip op. at 1. Defendant hospital offered its nurse employees the option of working 8-hour or 12-hour days. Defendant paid those who worked 12-hour days a lower regular rate and daily overtime compensation, so that their weekly pay approximated the pay of those who worked 8-hour days.

In 2003, defendant's nurse employees unionized. The CBA incorporated defendant's shift pay differentials. In 2004, plaintiff filed a collective action, alleging that the shift differentials violated the FLSA. The Court (Morrow, C.D.Cal.) conditionally certified a class, then granted summary judgment in favor of the employer. The Ninth Circuit affirmed.

Parth argues that PVHMC violated the FLSA by creating a pay plan that pays nurses working 12-hour shifts a lower base hourly rate than nurses who work 8-hour shifts. In support of her argument, Parth contends that: (A) PVHMC cannot reduce the base pay for nurses working the 12-hour shift, (B) the 12-hour base pay rate is an “artifice” designed to avoid the FLSA's overtime and maximum hours requirements, and (C) PVHMC cannot justify the base hourly pay rate differences between the 8-hour and 12-hour shifts, because nurses working both shifts perform the same job duties.

Slip op. at 3. The Court disagreed. It held that FLSA does not prevent an employer from lowering its employees' regular rate of pay so that their weekly pay when they work an alternative workweek schedule -- including overtime compensation -- approximates their weekly pay when working a regular schedule. See, e.g., Walling v. A.H. Belo Corp., 316 U.S. 624, 628-30 (1942).

Next, the plaintiff argued that the the 12-hour shift pay plan was "essentially an artifice to avoid paying overtime." Again, the Court disagreed. It held:

First, the reduced rate was agreed to by the employees through the collective bargaining agreement, in which there appears no evidence of improper influence or inequality of bargaining position. The plan provides employees more scheduling flexibility, allows them to spend less time commuting to work (because they spend fewer days at work), and ensures that PVHMC does not retain an incentive to ask the nurses to work longer hours. Second, the rate has been in place since 1989 or 1990 (and applied to Parth since 1993). Third, the rate paid nurses working the 12-hour shift far exceeds the Act's minimum wage.

Slip op. at 7.

Finally, plaintiff argued that defendant's pay plan was unlawful "because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates." Slip op. at 8. Again, the Court disagreed.

We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary. We do, however, find ample authority from other circuits that supports PVHMC's argument that workers working different shifts may be paid different rates. As the Supreme Court has noted, employers and employees are generally free to set the pay rates if minimum wages and overtime payments are paid when due.

Ibid.

The opinion is available here.

Court of Appeal Reverses Summary Judgment in FEHA Age and Disability Case

In Sandell v. Taylor-Listug, Inc. (September 7, 2010) --- Cal.App.3d ---, 2010 WL 3470388, the Court of Appeal reversed an order granting summary judgment (SDSC, Halgren) in an age and disability discrimination FEHA action. The Court held:

Approximately six months into his employment at Taylor-Listug, Sandell suffered a stroke after receiving a chiropractic adjustment. Sandell returned to work at Taylor-Listug in late 2004. During the remainder of Sandell's employment at Taylor-Listug, he required a cane to walk, and his speech was noticeably slower than it had been prior to his stroke. Taylor-Listug's chief executive officer terminated Sandell's employment in late 2007, a few days after Sandell's 60th birthday, citing displeasure with Sandell's performance as vice president of sales.

The trial court concluded that there were no triable issues of fact with respect to Sandell's discrimination claims, and granted summary judgment in favor of Taylor-Listug. Having reviewed the record presented on summary judgment, we conclude that Sandell presented evidence sufficient to establish a prima facie case of disability and age discrimination, and in response to Taylor-Listug's proffer of legitimate nondiscriminatory reasons for terminating his employment, Sandell presented sufficient evidence to raise a triable issue of fact as to whether the motivation for his termination was discriminatory. We therefore reverse the judgment of the trial court and remand the matter for further proceedings.

Slip op. at 1. The opinion is available here.