Court of Appeal Affirms Denial of Class Certification

The court of appeal decided in a retail exemption case that the trial court ruled within its discretion to de-certify or preclude class action status.  The  case involved Sears automotive center managers and a dispute over whether they were correctly classified as exempt. The trial court issued a brief order denying certification, which the plaintiff appealed.

The appellate court's analysis focused on a few issues of interest. First, the trial court has discretion to credit one party's evidence over the other party's conflicting evidence. Second, the appellate court defers to the trial court's discretion by inquiring only whether there is substantial evidence supporting the trial court's ruling.  It does not matter if the other side also offered enough evidence to support a contrary ruling. 

Third, the court emphasized that an employer's uniform policy or classification of a group of employees as exempt is not going to suffice as a "predominating" common issue to warrant class action treatment. Rather, the trial court is supposed to determine whether the actual work performed by the potential class members is susceptible to common questions and answers.

And that brings us to the important part of the opinion. The court rejected the plaintiff's attempt to offer a statistician's opinion that one could "sample" a small group of managers to predict whether all class members were exempt or non-exempt.

To obtain class certification, Dailey was required to demonstrate the predominance of common questions of law or fact. . . . We have found no case, and Dailey has cited none, where a court has deemed a mere proposal for statistical sampling to be an adequate evidentiary substitute or demonstrating the requisite commonality, or suggested that statistical sampling may be used to manufacture predominate common issues where the factual record indicates none exist. If the commonality requirement could be satisfied merely on the basis of a sampling methodology proposal such as the one before us, it is hard to imagine that any proposed class action would not be certified.
***
[C]ourts have held that when the class action proponent fails to satisfy the threshold requirement of commonality, as occurred here, the trial court does not err in rejecting the use of statistical sampling or other methodologies to establish liability as to the whole proposed class. (See, e.g., Mora, supra, 194 Cal.App.4th at pp. 501, 509-510 [rejecting argument that trial court erred in failing to consider survey methodology proposed by plaintiffs' expert to measure the amount of time employees spent on exempt versus nonexempt tasks, in light of that court's reasonable conclusion that common questions of fact or law did not predominate over individual ones]; Dunbar v. Albertson's Inc. (2006) 141 Cal.App.4th 1422, 1432 (Dunbar) [no error in court's conclusion — and in its implicit rejection of the use of surveys and exemplar evidence — that the "findings as to one grocery manager could not reasonably be extrapolated to others given the variation in their work"].)

 The court of appeal also rejected the notion that the absence of a formal policy regarding meals and breaks for exempt employees supports class certification:

Dailey also is not helped by evidence that Sears does not have formal written policies regarding rest breaks and meal periods for salaried managers, does not ensure that breaks are taken, and does not keep records of breaks these employees take. First, such evidence is consistent with Sears's contention that Managers and Assistant Managers are exempt employees. Second, to the extent this evidence relates to whether Managers and Assistant Managers actually take uninterrupted breaks, or to whether Sears enforces meal and rest periods, that evidence is not directly relevant after Brinker. (Brinker, supra, 53 Cal.4th at pp. 1034, 1040-1041.) Finally, the absence of a formal written policy explaining salaried managers' rights to meal and rest periods does not necessarily imply the existence of a uniform policy or widespread practice of either depriving these employees of meal and rest periods or requiring them to work during those periods. Sears presented substantial evidence that no one prevents Managers and Assistant Managers from taking meal and rest breaks, and they are free to do so as they deem appropriate. As explained previously, the trial court was entitled to credit this testimony over contrary inferences suggested by Dailey's evidence. (See, e.g., Sav-On, supra, 34 Cal.4th at p. 331.)

The case is Dailey v. Sears, Roebuck & Co. and the opinion is here.

Ninth Circuit: Class Action Erroneously Certified Given Wal-Mart v. Dukes

Back in 2004, employees of the Chinese Daily News started a class action, claiming mis-classification, unpaid overtime and denied meals and breaks.  The trial court eventually certified a class, and the employees won summary judgment on whether reporters for the newspaper qualified under the professional exemption.  The employees won millions of dollars after trial, which the Ninth Circuit affirmed.

Not so fast, said the Supreme Court.  Following the Supreme Court's Wal-Mart Stores v. Dukes decision (discussed here), the Supreme Court vacated the Ninth Circuit's decision in this case.  The Ninth Circuit decided that Wal-Mart requires reconsideration of the decision and sent it back to the district court.

Why? The trial court did not apply the proper analysis (after Wal-Mart) to determine whether there is sufficient commonality to certify the class.  As explained by the Court:

On remand, the district court must determine whether the  claims of the proposed class “depend upon a common contention . . . of such a nature that it is capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart, 131 S. Ct. at 2551.

So, it's not enough that there are "common questions" in the abstract, because, as the Ninth Circuit stated (quoting Wal-Mart and its own later decision in Ellis v. Costco):

"any competently crafted class complaint literally raises common questions.” Wang [sic], 131 S. Ct. at 2551 (alteration and internal quotation marks omitted). “What matters to class certification is not the raising of common questions — even in droves — but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.” Id. (alteration and internal quotation marks omitted). Dissimilarities within the proposed class may “impede the generation of common answers.” Id. “If there is no evidence that the entire class was subject to the same allegedly
discriminatory practice, there is no question common to the class.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983 (9th Cir. 2011).

The Ninth Circuit also decided that the district court would have to reconsider whether certification is appropriate under Federal Rule of Civil Procedure 23(b)(3).  That rule permits monetary recovery in class action cases when

the court finds that the questions of law or fact  common to class members predominate over any questions affecting only individual  members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

First, the district court over-relied on the employer's policies applicable to all employees, but without considering whether issues pertaining to individual claims and defenses would "predominate" over the common policy.  Second, the district court did not have the California Supreme Court's Brinker decision (you've heard of it, right?) to assess whether certification of a meal / rest claim was appropriate. 

Of note, the Ninth Circuit also wrote this, which will likely be of interest to class action litigators:

In Wal-Mart, the Supreme Court disapproved what it called “Trial by Formula,” wherein damages are determined for a sample set of class members and then applied by extrapolation to the rest of the class “without further individualized proceedings.” Wal-Mart, 131 S. Ct. at 2561. Employers are “entitled to individualized determinations of each employee’s eligibility” for monetary relief. Id. at 2560.
Employers are also entitled to litigate any individual affirmative defenses they may have to class members’ claims. Id. at 2561. 

The case is Wang v. Chinese Daily News and the opinion is here.

California Supremes Expanding Employment Law Docket

The California Supreme Court is taking up several cases for review that will have significant effects on California employment law.  Once the Supreme Court grants review, the lower court opinion is not precedent and cannot be cited in briefs or relied upon unless the Court says otherwise.

Here are two recent "grants," courtesy of the California bar's employment law section email blast (and thank you, Phyllis Cheng as always):

In this case, the court of appeal expanded appellate review of arbitration decisions beyond what was previously the law.  One of the reasons parties turn to arbitration is finality - no appeals unless there are very specific circumstances.  This case carved a huge loophole.  This case also rejected the employer's argument that it had an "honest belief" that an employee was faking the need for medical leave, justifying discharge.

Richey v. Autonation, Inc. (2012) 149 Cal.Rptr.3d 280 (SC S207536/B234711review granted 2/13/13) CFRA/honest belief defense Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code, §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Review granted/brief due.

This one is a "grant and hold" that likely will depend on the outcome of the pending Iskanian decision, which addresses overlapping issues.  The Court is going to decide whether class action waivers are lawful in California after the U.S. Supreme Court's decision in ATT Mobility v. Concepcion.

Franco v. Arakelian Enterprises, Inc. (2012) 149 Cal.Rptr.3d 530 (SC S207760/B232583 review granted 2/13/13) Class Action Waiver Petition for review after the Court of Appeal affirmed an order denying a petition to compel arbitration in a civil action. The court ordered briefing deferred pending decision in Iskanian v. CLS Transportation Los Angeles, LLC, S204032 (#12-97), which includes the following issue: Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S.Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights?  Review granted/briefing deferred. The High Court of course has a number of other significant employment law cases pending. f you want to review all of the cases the California Supreme Court has on its docket (employment law and otherwise), the Court keeps a list here.

Court of Appeal: Statutory PDL Maximum Isn't

In California, employees disabled by pregnancy are entitled to up to four months of job-protected leave during any period in which they are disabled.  The leave has not length of service requirement.  There is no employer job-site requirement either.  And those employees eligible for California Family Rights Act leave may have up to 12 weeks of that for baby bonding.   The California Family Rights Act does not include pregnancy disability as a "serious health condition."   So, time under that law does not run during pregnancy disability.  Get it?  If not, don't feel like you're the Lone Ranger. It's one of California's most confusing sets of laws.

So, what happens when an employee is disabled by pregnancy and uses up all four months of PDL before delivering the baby, or before  she is able to return to work?  We know the 12 weeeks of FMLA leave (if employee is eligible) are exhausted, because FMLA does run during pregnancy disability.  The CFRA time did not start to run yet unless the employer and employee agree, because pregnancy disability is not a covered condition under CFRA.  Can it be that a worker in California could run out of medical leave and be denied reinstatement?

Nah. The PDL statute's four months of leave, and the potential for seven months of combined PDL/CFRA, are not the last word on leaves for those with long periods of pregnancy disability.  How can this be?

Swissport gave its employee, Ana Sanchez, nineteen weeks of leave. That's all the four months of PDL and then tacked on her unused vacation time.  But Fuentes had not yet given birth.  She was due in October. But, her leave exhausted in July, Swissport terminated her employment. Sanchez sued, claiming, among other things, that Swissport owed her more leave as a form of "reasonable accommodation" under California's anti-disability discrimination provisions contained in the Fair Employment and Housing Act.  The trial court dismissed her case because Swissport had provided her with all statutory leave to which she was entitled.

Leave in excess of statute, however, can be a form of "reasonable accommodation" under disability discrimination law.  Under California law it has to be reasonably definite in duration and effective, meaning that it is likely that at the end of a reasonably definite leave, the employee will be able to perform her essential job functions, with or without accommodation.

So, stautes collide; judges have to sort out the wreckage.  Here, the Court of Appeal decided that the limiting language in the PDL statute does not "supplant" the general obligation to grant reasonable accommodation to an employee with a disability.  That also means that the employee is not entitled to indefinite leave, or additional leave that would cause undue hardship.  In this case, however, the employer discharged the employee for exceeding four months of leave, without any "interactive process" or attempt to accommodate.

The bottom line, then, is that most employees disabled by pregnancy will be entitled to leave until they recover from childbirth, unless the period of leave sought is indefinite, or undue hardship would result.

This case is Sanchez v. Swissport and the opinion is here.

Are you an FMLA geek?

If so, you're going to have lots to read.  If not, pass this along to someone you love who loves FMLA.  Here is a whitepaper covering major FMLA developments courtesy of the ABA's Federal Labor Standards committee and the FMLA Insights blog.   It's long, but well organized.  Enjoy!

California Supremes Rule on "Mixed Motive"

Here is a long awaited and unanimous (6-0 with Baxter recused) ruling from the California Supreme Court:

We hold that under the FEHA, when a jury finds that unlawful discrimination was a substantial factor motivating a termination of employment, and when the employer proves it would have made the same decision absent such discrimination, a court may not award damages, backpay, or an order of reinstatement. But the employer does not escape liability. In light of the FEHA’s express purpose of not only redressing but also preventing and deterring unlawful discrimination in the workplace, the plaintiff in this circumstance could still be awarded, where appropriate, declaratory relief or injunctive relief to stop discriminatory practices. In addition, the plaintiff may be eligible for reasonable attorney’s fees and costs.

Long awaited?  Yes, we published about the court of appeal's pro-employer decision in November 2009, here.  And this case is very important to clarify the burdens of proof in discrimination cases.  So, "long anticipated" too.

The Supreme Court did not go as far as the lower court.  In Harris, the plaintiff was a bus driver for LA County.  She had a series of accidents and unexcused absences, resulting in her termination. She claimed it was due to her pregnancy, in violation of the Fair Employment and Housing Act.  She pointed to some negative comments by a supervisor as evidence.

After trial, a jury awarded Harris a bunch of money.  LA County tried to get the court to instruct the jury that Harris could not prevail if the County proved it would have fired Harris regardless of her pregnancy.  Harris prevailed upon the trial court to instruct only that discriminatory bias must be but one motivating reason for the discharge.  So, she won.

The court of appeal reversed, holding that the County should have been provided the jury instruction.  

The California Supreme Court reasoned that the FEHA prohibits acts that occur "because of" illegal discrimination. That phrase is construed a variety of ways.  The Court sought to effectuate the legislature's intent to prohibit discriminatory practices.  After reviewing cases and engaging in statutory interpretation, the Court came up with the principle above.  An employer who proves it fired the plaintiff even though there was evidence of a discriminatory motive is entitled to prevail on the claim for damages.  But the plaintiff will still win declaratory relief  (like an injunction), attorneys' fees, and costs. 

Here is some additional helpful language for employers:

We are mindful, however, that section 12940(a) does not purport to outlaw discriminatory thoughts, beliefs, or stray remarks that are unconnected to employment decisionmaking. Racist, sexist, or other biased comments in the workplace may give rise to a claim for unlawful harassment under a separate provision of the FEHA. (§ 12940, subd. (j); see Lyle v. Warner Bros. Television Productions (2006) 38 Cal.4th 264, 277–278.) But such comments alone do not support a claim under section 12940(a), nor do bigoted thoughts or beliefs by themselves. Were it otherwise, the causation requirement in section 12940(a) would be eviscerated. Section 12940(a) does not prohibit discrimination “in the air.” It prohibits discrimination that causes an employer “to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” (§ 12940(a).)

No emotional distress damages because:

When an employee is fired, and when discrimination has been shown to be a substantial factor but not a “but for” cause, we believe it is a fair supposition that the primary reason for the discharged employee’s emotional distress is the discharge itself. Such distress is not compensable under the FEHA — indeed, compensation for such distress would be a windfall to the employee — if the employer proves it would have fired the employee anyway for lawful reasons.  But such comments alone do not support a claim under section 12940(a), nor do bigoted thoughts or beliefs by themselves. Were it otherwise, the causation requirement in section 12940(a) would be eviscerated. Section 12940(a) does not prohibit discrimination “in the air.” It prohibits discrimination that causes an employer “to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” (§ 12940(a).)

Although attorneys' fees may be available when the plaintiff wins a mixed-motive case, the plaintiffs' bar should not assume it will be the entire cost of litigating a case to conclusion:

An award of attorney’s fees is discretionary under section 12965, subdivision (b). An award may take into account the scale of the plaintiff’s success, and it must not encourage “unnecessary litigation of claims that serve no public purpose either because they have no broad public impact or because they are factually or legally weak.” (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1173.) Like Congress in enacting Title VII, our Legislature did not “ ‘ enact[] legislation whose benefit inures primarily to lawyers in the form of a substantial fee recovery, even if relief to the plaintiff is otherwise trivial and the lawsuit promotes few public goals.’ ” (Stevens v. Gravette Medical Center Hospital (W.D.Ark. 1998) 998 F.Supp. 1011, 1018.) The touchstone is “reasonable[ness].” (§ 12965, subd. (b).) In sum, we hold that a plaintiff subject to an adverse employment decision in which discrimination was a substantial motivating factor may be eligible for reasonable attorney’s fees and costs expended for the purpose of redressing, preventing, or deterring that discrimination.

Strong mixed motive cases will be thwarted by well timed and realistic offers of compromise under Civil Procedure Code Section 998.

So, a mixed bag on mixed motive.  But a welcome ruling in all for employers, in my opinion.  There is a lot to like in this opinion, even though mixed motive is not a complete defense.   The case is Harris v. City of Santa Monica and the opinion is here. 

California DIR: Friendly Reminder: Post Your Annual Injury and Illness Summary

A message from the California Department of Industrial Relations (online here):

California employers to post annual work-related injury and illness summary

Oakland — The California Department of Industrial Relations’ Division of Occupational Safety and Health (DIR/DOSH), also known as Cal/OSHA, is providing 2013’s notification to all employers to post the annual summary of all work-related injuries and illnesses (Form 300A). The form must be posted at their place of business from February 1 through April 30.

The Form 300A is available for free download on DIR’s website. The form is a required workplace posting so that employees may have the opportunity to review any injury or illness that took place at their worksite in the prior year. Former employees and their representatives have a right to review the form as well. The form must be posted in a visible and easily-accessible area.

“Transparency and accountability are very important aspects of the employer-employee relationship,” said Cal/OSHA Chief Ellen Widess. “This form gives employees, former employees and their representatives access to worksite injury and illness data. Full and accurate reporting of injuries and illnesses is vital to understanding hazards in the workplace. It is also a good tool to determine where additional safety and health measures are needed.”

Employers are required to fill out and post the Form 300A every year, even if no workplace injuries occurred. Information that must be disclosed on the form includes total number of cases with days away from work, total number of days injured or sick employees spent away from work, and the different types of injury or illness suffered.

Employers who would like more information on their posting requirements or who would like more information on how to reduce workplace injuries and illnesses are encouraged to visit the DIR Employer Information page. In addition, if an employer would like to speak with a Cal/OSHA consultant, free assessments are available to California businesses by calling the Cal/OSHA Consultation Program 1-800-963-9424.
Employees with work-related questions or complaints can call the California Workers’ Information Hotline at 1-866-924-9757.

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Court of Appeal: Discharge of Executive Uncooperative in Investigation

is perfectly legal.

Applied Signal fired John McGrory.  One of his reports, Dana Thomas, complained to human resources that McGrory harassed / discriminated against her because of her sex / sexual orientation.  Applied hired an outside investigator.   McGrory did not like the investigator, but she exonerated him of mistreating Thomas.  She did find, though, that McGrory was untruthful and uncooperative during the investigation.  She also found that McGrory violated the company's anti-harassment policy because he made off-color jokes related to sex and national origin.

Applied fired McGrory, not for discrimination or harassment against Thomas, but for his lack of cooperation and deception during the investigation.  He sued Applied Signal, claiming not only wrongful termination, bur also sex discrimination and defamation.  He believed he was disfavored because of his male sex, that even at-will employees are entitled to notice of an investigation, and more.

McGrory argued Allied could not fire him for participating in the investigation, “'The public policy of California is to shield anyone participating in an investigation of discrimination from the possibility of retaliation,' presumably even if the participant is uncooperative and untruthful."

Wrong.  I have come across people who refused to participate in investigations without their lawyer, or simply were uncooperative.  I have heard some people question whether it is OK to fire someone for refusing to cooperate in an investigation.  (They don't read the blog, but maybe they should. Just sayin').

Anyway, the court of appeal has laid that issue to rest:

refusing to participate in or cooperate with an investigation into a discrimination claim is not participation or assistance and is not a protected activity. (Alack v. Beau Rivage Resorts, Inc. (S.D. Miss. 2003) 286 F.Supp.2d 771, 775; Bray v. Tenax Corp. (E.D. N.C. 1995) 905 F.Supp. 324, 328.)

Here's another news flash to those employees who lie during an investigation. They have no protection, either:

The participation immunity does not prohibit an employer from imposing discipline for an employee‟s misbehavior during an internal investigation, such as attempting to deceive the investigator. (Cf. Vasconcelos v. Meese, supra, 907 F.2d 111, 113.) “Lying in an internal investigation is disruptive of workplace discipline.” (Hatmaker, supra, 619 F.3d 741, 746.) “[W]hether to fire an employee for lying to the employer in the course of the business‟s conduct of an important internal investigation is basically a business decision; this decision, as with most business decisions, is not for the courts to second-guess as a kind of super-personnel department.” (Total System Services, supra, 221 F.3d 1171, 1176.)

McGrory also argued that the employer could not lawfully rely on fear of litigation with the accuser as a basis for firing him.  Really?  The Court of Appeal held that fear of liability also is a legitimate, non-discriminatory reason for firing an accused harasser:

Employee also argues that his “relatively innocent behavior” could not justify “a sexual harassment claim.” Employee provides no authority requiring an Employer to retain an at-will employee until his conduct creates civil liability. 

The court also held that the VP of HR's explanation to another employee that McGrory was fired for being uncooperative was privileged and made without malice. No slander for you.

This is a significant case about the meaning of employment at will and the employer's freedom to discipline and discharge those who violate policies.

The opinion is McGrory v. Applied Signal Tech. and the opinion is here.

Ninth Circuit Holds Retail Store Manager Unable to Work Is Not Qualified Individual

The Ninth Circuit held that a retail store manager who was unable to perform her essential job functions  was not a qualified individual, despite her request for a part time schedule and a five month leave.

Montblanc properly asserts that Lawler cannot competently perform her job duties as manager. Here, the essential duties of a boutique manager are undisputed. Lawler testified that a manager is responsible for hiring, training, and supervising sales staff; overseeing and developing customer relations; administrating stocking and inventory; cleaning; creating store displays; and preparing
sales reports. She further stated that the duties of a manager can only be performed in the store.

But but but... she was "on disability" and leave is a type of accommodation.  What happened?

The key is that Lawler did not establish that she ever would be able to perform her essential job duties again.

Lawler, however, offers no factual support showing she can perform any job duty of a boutique manager, regardless of the accommodation. Rather, she admitted that her disability makes it impossible for her to fulfill the duties of her position and that she has been unemployed since October 2009, has not applied for any positions, has made no effort to secure employment, and has exhausted her disability benefits.
Lawler contends that Montblanc “cannot argue that it met its burden of showing that Plaintiff was not able to do the job with or without reasonable accommodation” because it denied her requests for reduced hours and a five-month leave of absence. This argument ignores the holding in Green that “the plaintiff employee bears the burden of proving he or she was able to do the job, with or without reasonable accommodation.”

The court also rejected a harassment claim and a retaliation claim.  But the headline is the rejection of the disability discrimination case.

The opinion in Lawler v. Montblanc is here.

Court of Appeal Upholds SLAPP Against Accused Harasser's Counterclaim

Aber sued Comstock for sexual harassment among other things.  This did not sit well with Comstock, who sued Aber back, claiming defamation among other things.

Aber then filed a motion to strike Comstock's cross-claim. She claimed his lawsuit was a "SLAPP" or a retaliatory action against Aber.  The trial court agreed and the Court of Appeal affirmed.

If someone sues you and you return the favor, your lawsuit may be subject to a motion to strike as a "SLAPP" (strategic lawsuit against public participation).  To overcome the anti-SLAPP motion, you have to prove that you have a good chance of winning your case.   Comstock apparently did not do that, which is why his suit was dismissed.  If you file a lawsuit that is dismissed as a SLAPP, you owe the other side attorney's fees.   So, be careful before filing cross claims. It's probably wise to win your case first and then sue for malicious prosecution.

Anyway, what makes this case even more interesting is that  the Court of Appeal held that the harassment victim's pre-litigation statements made to company HR investigators were covered by the anti-SLAPP statute as protected conduct.  That means, for example, that if an employee participates in a sexual harassment investigation and reports misconduct against another employee, any defamation lawsuit will be examined as a potential SLAPP.  Even witnesses who report to HR likely will be protected from retaliatory defamation lawsuits brought by the accused harasser.  While that is good news for witnesses and victims of discrimination or harassment, it is bad news for those who are wrongly accused of harassment, who will have a tougher time protecting themselves from career-ending accusations.

This case is Aber v. Comstock and the opinion is here.

Federal Appeals Court Put Brakes on NLRB

The National Labor Relations Board was busy in 2012. The Board overturned a number of precedents and began to forge new law applicable to non-union employers.

But three of the five board members were appointed by President Obama on January 4, 2012, when the Senate was supposed to be in "recess."  (The federal Constitution empowers the president to make recess appointments.)

The only thing is, the Senate was not in recess, according to the D.C. Circuit.  A "recess," the court reasoned, requires a lengthy period, not just a day or two, which was the case in early 2012.

If this decision stands, the NLRB's decisions issued in 2012 likely are invalid.  All of 'em.

If you want to read the opinion in Noel Canning v. NLRB, it is here.  Otherwise, just take my word for it, k?

California Court Upholds Arbitration Agreement...(Pinch Me)

Let's start the new year off with a rare bird - a California court upholding an arbitration agreement in an employment case. 

Maribel Baltazar sued her former employer, Forever 21 and three employees, for sexual harassment, wage hour violations, and a variety of other claims.  The defendants moved to compel arbitration.

The court first decided that the California Arbitration Act, rather than the Federal Arbitration Act, applied. The defendants apparently took for granted that Forever 21 was "in interstate commerce" to secure FAA coverage.  The court of appeal ruled that proof is required.   The court also noted that the agreement was silent regarding the FAA's applicability.   So, if you want the pro-arbitration Federal Arbitration Act to apply, it is better to say so in the Agreement.  And counsel must affirmatively establish interstate commerce in the motion to compel.

Anyway, the court of appeal moved to the enforceability of the agreement. The plaintiff argued that the agreement was "unconscionable" under California law.  But the court of appeal disagreed.

The plaintiff first claimed the agreement was not "mutual," meaning that the employer did not have to arbitrate, but the plaintiff did.  The key issue was whether the agreement's permitting either party to go to court to obtain "provisional" relief (such as temporary restraining orders and preliminary injunctions) rendered the agreement one-sided.  The court noted that the California Arbitration Act itself permits parties to an arbitration agreement to seek provisional relief in court.  So, it is permissible for an arbitration agreement to authorized either party to seek provisional remedies (such as injunctions) in court.

The court also held that a provision protecting the employer's confidential information contained in the arbitration agreement did not render the agreement unconscionable. 

Finally, the court held that it was lawful for the agreement to provide for the AAA employment dispute rules, but also to provide that the California Arbitration Act would apply if the rules were held invalid.  The Court did not mention whether the AAA rules were attached to the arbitration agreement.  (Other opinions have held that failure to attach a copy of the rules render the agreement unconscionable.  Silly, IMO). Why silly? As the court of appeal pointed out in this case, many courts have already held that the AAA rules are fair. How can it be "unconscionable" to not attach a copy.

The case is Baltazar v. Forever 21, Inc. et al. and the opinion is here.   Oh - what does an enforceable arbitration agreement look like?   Behold!

AGREEMENT TO ARBITRATE

FOR CALIFORNIA STORES ONLY 

This Agreement to Arbitrate (hereinafter "Agreement‘) is entered into by and between Forever 21, Inc., and its subsidiary and affiliated companies, and each of their officers, directors, agents, benefit plans, insurers, successors, and assigns (hereinafter collectively "the Company‘) and [handwritten name of plaintiff], hereinafter "Employee" located at Warehouse . . . .

It is the desire of the parties to this Agreement that, whenever possible, "Disputes‘ relating to employment matters will be resolved in an expeditious manner. Each of the parties hereto is voluntarily entering into the Agreement in order to gain the benefits of a speedy, impartial dispute-resolution procedure. 

The Company and Employee mutually agree that any dispute or controversy arising out of or in any way related to any "Dispute,‘ as defined herein, shall be resolved exclusively by final and binding arbitration. Such arbitration shall be held in Los Angeles, California pursuant to the Model Rules for Arbitration of Employment Disputes of the American Arbitration Association then in effect. 

For purposes of this Agreement, the term "Disputes‘ means and includes any claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination of Employee. The potential Disputes which the parties agree to arbitrate, pursuant to this Agreement,
include but are not limited to: claims for wages or other compensation due; claims for breach of any employment contract or covenant (express or implied); claims for unlawful discrimination, retaliation or harassment (including, but not limited to, claims based on employment benefits (except where an Employee‘s benefit or pension plan contains a claims procedure which expressly provides for a final and binding arbitration procedure different from this one)), and Disputes arising out of or relating to the termination of the employment relationship between the parties, whether based on common law or statute, regulation, or ordinance.

Each of the parties voluntarily and irrevocably waives any and all rights to have any Dispute heard or resolved in any forum other than through arbitration as provided herein. This waiver specifically includes, but is not limited to, any right to trial by jury. 

This Agreement does not cover claims that Employee my have for worker‘s compensation benefits or unemployment compensation benefits. . . .

Pursuant to California Code of Civil Procedure 1281.8 either party hereto may apply to a California court for any provisional remedy, including a temporary restraining order or preliminary injunction. 

Both parties agree that the Company has valuable trade secrets and proprietary and confidential information. Both parties agree that in the course of any arbitration proceeding all necessary steps will be taken to protect from public disclosure such trade secrets and proprietary and confidential information. [¶] . . . [¶]

The provisions of this Agreement are severable, and if any one or more are determined to be void or otherwise unenforceable, the remaining provisions shall continue to be in full force and effect. If, in any action to enforce this Agreement, a Court of competent jurisdiction rules that the parties agreement to arbitrate under the Model Rules for Arbitration of Employment Disputes of the American Arbitration Association is not enforceable, then the parties agree that such Dispute shall be resolved by final and binding arbitration under the California Arbitration Act, California Code of Civil Procedure Section 1280, et seq.

The promises of the parties herein to arbitrate differences, rather than litigate them before courts or other bodies, provide consideration for each other.‖ (Capital letters, underscoring, and boldface in original.)

California Supreme Court Allows Labor Picketing at Shopping Center

But, the Court also held that the Ralphs Grocery parking lot at the Sacramento area center is NOT a public forum, where speech cannot be prevented.  We posted about the Court of Appeal's decision here, by the way.

The Supreme Court decided that two provisions of California law can protect labor picketing against trespass claims, even though the picketing occurred on private property - a parking lot and entrance to a Ralphs store.   The picketing would be allowed even if non-labor picketing would constitute a trespass.   The way the law allows this is by limiting the grounds under which courts will issue injunctions against picketing to narrow circumstances.  For good measure, the law makes it harder to prove those circumstances than other types of cases.

That sounds a lot like a First Amendment violation to me, because the government is picking and choosing what kind of speech is worthy of protection and what is not.  And that is what Justice Chin essentially said in dissent.  But, the Supreme Court majority disagrees with yours truly on that point, and the Court tends to hold more sway than Greggy's blog, no matter how wrong it is. I kid. :)

OK, here comes a long explanation if you can hang in there - 


So, here's what happened as told by the Supreme Court-

When the College Square Foods Co store opened in July 2007, agents of defendant United Food and Commercial Workers Union Local 8 (the Union) began picketing the store, encouraging people not to shop there because the store‘s employees were not represented by a union and did not have a collective bargaining agreement. The Union‘s agents, in numbers varying between four and eight, walked back and forth on the entrance walkway carrying picket signs, speaking to customers, and handing out flyers. These activities generally occurred five days a week (Wednesday through Sunday) for eight hours a day. The Union‘s agents did not impede customer access to the store.

[ I bolded this because if the union did block access to the store, even the union-friendly law under review would permit an injunction]... Anyway, more from the Court's opinion -

In January 2008, Ralphs notified the Union in writing of its regulations for speech at its Foods Co stores, including the one in College Square. Those store regulations prohibit speech activities within 20 feet of the store‘s entrance and prohibit all such activities during specified hours and for a week before certain designated holidays. The store regulations also prohibit physical contact with any person, the distribution of literature, and the display of any sign larger than two feet by three feet. The Union‘s agents did not adhere to Ralphs‘s speech regulations. In particular, they handed out flyers and stood within five feet of the store‘s entrance. Ralphs asked the Sacramento Police Department to remove the Union‘s agents from the College Square Foods Co store, but the police declined to do so without a court order.

OK, so why did the police refuse to get rid of the trespassers on Ralph's private property?   Because they're in a union, too.   They said would only enforce a court order prohibiting the conduct, unless they saw some sort of crime occurring, which was not happening.  So, off Ralphs went to Court for an injunction, where it met the Moscone Act. 

In essence, the Moscone Act (actually two different laws) says that courts cannot enjoin peaceful picketing, gathering, etc. It also imposes a tough evidentiary burden on employers seeking to obtain an injunction, including a requirement of live witness testimony.

The Court of Appeal decided that Ralphs parking area and store entrance were not public forums, so California's broad constitutional right to free speech in public areas would not apply.  Then  the Court of Appeal said that the Moscone Act unconstitutionally permitted some kinds of speech on private property (labor protests), but did not protect others (e.g., anti-abortion protests).  The lower Court reasoned that when the government chooses one type of content for protection, that violates the First Amendment.

On review, the Supreme Court first held that every outdoor shopping plaza is not a public forum, where the First Amendment protects all kinds of speech:

to be a public forum under our state Constitution‘s liberty-of-speech provision, an area within a
shopping center must be designed and furnished in a way that induces shoppers to congregate for purposes of entertainment, relaxation, or conversation, and not merely to walk to or from a parking area, or to walk from one store to another, or to view a store‘s merchandise and advertising displays.

Applying this standard, the Court then decided that the College Station shopping plaza was not a protected public shopping mall where the First Amendment would apply.

So, now, Ralphs has private property and it wants to eject or limit conduct on its property via an injunction against a trespasser.  The Supreme Court had to decide if the Moscone Act's limits on injunctions violated Ralph's constitutional rights.

The Supreme Court decided the Court of Appeal was wrong, and that the Moscone Act can favor union picketing on private property without violating the Constitution.  Here is the Court's explanation of the law itself:

certain activities undertaken during a labor dispute are legal and cannot be enjoined. (Id., §527.3, subd. (b).) Those activities are:

“(1) Giving publicity to, and obtaining or communicating information regarding the existence of, or the facts involved in, any labor dispute, whether by advertising, speaking, patrolling any public street or any place where any person or persons may lawfully be, or by any other method not involving fraud, violence or breach of the peace.

“(2) Peaceful picketing or patrolling involving any labor dispute, whether engaged in singly or in numbers.

“(3) Assembling peaceably to do any of the acts specified in paragraphs (1) and (2) or to promote lawful interests.” (Code Civ. Proc., § 527.3, subd. (b).)

Expressly excluded from the Moscone Act’s protection, however, is “conduct that is unlawful including breach of the peace, disorderly conduct, the unlawful blocking of access or egress to premises where a labor dispute exists, or other similar unlawful activity.” (Code Civ. Proc., § 527.3, subd. (e).)

In addition, the law imposes burdens on courts and businesses seeking injunctions for violations:

Section 1138.1 prohibits a court from issuing an injunction during a labor dispute unless, based upon witness testimony that is given in open court and is subject to cross-examination, the court finds each of these facts:

“(1) That unlawful acts have been threatened and will be committed unless restrained or have been committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat or unlawful act excepting against the person or persons, association, or organization making the threat or committing the unlawful act or actually authoriz[ing] those acts. “(2) That substantial and irreparable injury to complainant’s property will follow.

“(3) That as to each item of relief granted greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief.

“(4) That complainant has no adequate remedy at law.

“(5) That the public officers charged with the duty to protect complainant’s property are unable or unwilling to furnish adequate protection.” (§ 1138.1, subd. (a).)

OK, I've bolded what makes the Moscone Act tough on those who seek injunctions even against violent union conduct that is unprotected.  First, in most cases, a court will issue a temporary injunction  on papers.  For labor injunctions, there must be live testimony. Second, the injunction can be issued only against individuals that violate the Act specifically, not against a whole union, absent proof that the whole union is actually authorizing the conduct. Tough to get the names of the folks breaking stuff outside your store, right?
Oh, and you have to put on evidenced that the police cannot or will not help. Easy breezy!  These requirements just do not apply to temporary injunctions in other contexts.

So, the Supreme Court did not see a problem with this. First, the Court surveyed a long line of cases recognizing the rights of unions to conduct peaceful picketing on private walkways outside of businesses.  The Court then did its best to overcome federal decisions holding that laws could not restrict one kind of speech, but not another.  The Supreme Court's rationale was that the Moscone Act does not restrict speech, it merely insulates union speech from legal action.

The Supreme Court apparently does not agree that the general rules permitting injunctions restrict speech on private property.  That is, if you come to my business to picket about some non-labor related issue, I can obtain an injunction more easily because I don't have to follow the Moscone Act. As such, the California Code of Civil Procedure contains a content bias.

Anyway, there are a number of concurring and dissenting opinions, too. The Chief Justice tried to write a concurrence softening the blow of the majority ruling, but Justice Liu essentially called "bull" on the CJ's opinion, arguing that the CJ's interpretation of the majority's opinion was not supported.  As I said earlier, Justice Chin wrote a dissent that I thought was correct, but what do I know?

This may not be the end of this discussion. The Court appears to have opined on federal law, which means that the U.S. Supreme Court likely has jurisdiction to consider whether the First Amendment trumps California law.  We will see what happens next.

I know, long post, but complex issue.  Bottom line - business owners have little power to exclude union picketing, absent (1) fairly egregious conduct (2) money to conduct a mini-trial in court to obtain an injunction and/or (3) business-friendly local politicians / police.  I emphasize that this decision applies to any business located on private property, such as an office park complex.  It's not limited to grocery stores or malls.  The Moscone Act protects picketing from trespass injunctions all over the place.

The opinion is Ralphs Grocery Co. v. UFCW, Local 8 and the opinion is here.

Court of Appeal: Employee May Use Ralph Act in Certain Sexual Harassment Cases

Sylvia Ventura was a custodian, working for American Building Maintenance or ABM.  According to her lawsuit, she suffered serious harassment, including touching, threats, etc.  She sued not under the Fair Employment and Housing Act, but under what is known as the Ralph Act, Civil Code Section 51.7.   That section provides in part:

All persons within the jurisdiction of this state have the right to be free from any violence, or intimidation by threat of violence, committed against their persons or property because of political affiliation, or on account of any characteristic listed or defined in subdivision (b) or (e) of Section 51, or position in a labor dispute, or because another person perceives them to have one or more of those characteristics.

So, one of the characteristics in Section 51(b) or (e) is sex. Therefore, violent acts that would be consistent with "sexual harassment" in employment law fall within this definition. 

But the Ralph Act does not require employees to file an administrative charge, the remedies are different, and the statute of limitations is longer. There also is no requirement that the offending conduct satisfy the "hostile work environment" standard applicable to sexual harassment cases.

Upholding a jury's verdict, the court of appeal decided (2-1) that the Ralph Act applies in employment cases, despite overlap with the FEHA. There is precedent for this conclusion.  But the court also held that the Act covered the conduct alleged, even though there was little to no evidence that the harasser was motivated by negative feelings about the plaintiff's sex, i.e., hate.  Rather, the evidence at trial showed that he was enamored / in love, which caused him to engage in inappropriate conduct. 

As the dissent points out, the majority's decision may expand the Ralph Act to cover more than it was intended to address.  It also potentially creates a major collision with the Fair Employment and Housing Act for the reasons I explained above. 

The rest of the opinion, unfortunately, is an indictment of the defense attorneys' advocacy.  For example, the court of appeal noted that the jury found for the plaintiff on a negligence claim, which should have been barred by Workers' Compensation preemption. The court of appeal held that issue was waived because it was not argued in the trial court.  The court of appeal noted other waivers and alleged errors as well, including the failure to differentiate among the defense entities to identify the employer and exonerate the non-employers.  Reading this opinion, one can't help but conclude that getting this employment law litigation business right is tough. There are a lot of time-sensitive substantive and procedural matters to juggle, especially at trial.

The case is Ventura v. ABM Industries Inc., et al. and the opinion is here.






 

California Employers - Don't Forget your EITC Notice....

EITC? Huh?  The California Legislature requires employers to give annual notices to all employees of their right to claim an Earned Income Tax Credit.  Information and sample notices - here.

Happy holidays!

Greg