U.S. Supreme Court Holds Settlement Offer Thwarted FLSA Collective Action

Laura Symczyk, a nurse, challenged her employer's policy of "auto-deducting" a half hour for meal breaks, claiming that she and others "similarly situated" worked "off the clock."  She brought a "collective action" under the federal Fair Labor Standards Act, which is essentially an "opt-in" class action. That is, the other employees are given a chance to "opt in" to the action. In a class action, once certified, the unnamed class members are given a chance to "opt out" or they are bound by the judgment or settlement.

The courts never reached the auto-deduct issue.  The employer answered the complaint and simultaneously made an "offer of judgment" under Federal Rule of Civil Procedure 68. The offer was for $7500 plus attorneys fees and costs as determined by the court.  (Because it was the very beginning of the case, the employer must have figured the attorney's fees would be low).

The plaintiff ignored the Rule 68 offer.  The employer then brought a motion to dismiss the case, arguing that the Rule 68 offer completely compensated the plaintiff for her claims, and rendered it "moot" because she no longer had a stake in the case.  Therefore, she had no basis for leading the collective action against the employer.

The lower courts agreed that the settlement offer would have given the plaintiff complete relief. The district court dismissed the claim, but the Third Circuit Court of Appeals held the class action could proceed because the employer was trying to "pick off" the name plaintiff.

The Supreme Court assumed without deciding that an unaccepted Rule 68 offer would "moot" a claim if it offered complete relief. The Court did so because the plaintiff conceded that point in the courts below.

Based on that assumption and the plaintiff's concession, the Court decided that the claim could not proceed:  Justice Thomas, writing for 5 justices, wrote:

In the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action. While the FLSA authorizes an aggrieved employee to bring an action on behalf ofhimself and “other employees similarly situated,” 29 U. S. C. §216(b), the mere presence of collective-action allegations in the complaint cannot save the suit frommootness once the individual claim is satisfied
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[W]e conclude that respondent has no personal interest inrepresenting putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness. Respondent’s suit was, therefore, appropriatelydismissed for lack of subject-matter jurisdiction.

Justice Kagan wrote for 4 dissenters.  She in essence argues that an unaccepted offer does not moot the case, which the majority did not decide because the plaintiff conceded the point and the lower courts so held.  Justice Kagan in essence "yelled" at the lower courts that this approach was "wrong, wrong, and wrong again."  (We'll see if those who criticize Justice Scalia when he gets sassy objects to her rather caustic opinion, which I enjoyed reading a lot by the way).

To me, the plaintiff should be able to reject an offer and continue litigating, hoping to do better than the offer of judgment.  The issue here is that the plaintiff agreed she could not have obtained a more favorable result on her individual claim.  Plaintiffs in future cases may not make that concession which, as Justice Kagan predicts, will render this case inapplicable to most future claims.

Anyway, it remains to be seen how this case will affect future FLSA collective actions.  California law regarding offers to compromise is governed by Code of Civil Procedure Section 998, so state-law cases are not directly affected.  But we will have to stay tuned to see whether California courts follow the federal approach.

The opinion is Genesis Healthcare Corp. v. Symczyk and you can read it (and the dissent) here.

Catching Up - Friday Pot Pourri

Here are a few of the cases I should have mentioned, but missed:

In Lui v. City and County of San Francisco (opinion here), a police officer suffered a serious heart attack. He had a number of physical ailments and sought a job that did not involve the physical requirements of a police officer.  Under  a new directive, San Francisco police officers, even those assigned to administrative duties, had to perform certain functions. Upholding the trial court, the court of appeal decided that the officer could not succeed on claims for disability discrimination, failure to accommodate, or failure to engage in the interactive process.  The officer could not perform several essential job functions. Although this case arises in the special context of police officers, the court's analysis of what is essential is important.

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The Ninth Circuit held that Jennifer Westendorf did not make out a case of sexual harassment sufficient to get by summary judgment (!)  The comments and incidents she described, even though sexual in nature, and  though some were pretty darn risque I tell ya, were not severe or pervasive enough.  However, the court did allow the retaliation to go forward. The case is Westendorf v. West Coast Contractors (opinion here).

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The Court of Appeal decided that Bingham McCutchen's arbitration agreement was unenforceable.  Interestingly, the arbitration agreement had a Massachusetts choice of law clause.  Unlike in most employment law-related cases, the court enforced the choice of law clause, over Bingham's objection. Why?   Glad you asked: Mass. law precluded agreements to arbitrate discrimination claims unless they were specifically addressed in detail in the arbitration agreement.  Too bad a non-compete was not involved. The court probably would not have recited how much California law loves choice of law clauses.  Anyway, the Court decided that the Massachusetts court rulings were not preempted by the Federal Arbitration Act and, therefore, the arbitration agreement was unenforceable. Be careful of choice of law clauses, they may well be enforced!  This case is Harris v. Bingham McCutchen et al. and the opinion is here.

Court of Appeal: CA Employer Violates Minimum Wage By Averaging Total Compensation Over Hours Worked

An auto dealership compensated its mechanics based on a "piece rate" system. For repairs, the company would pay the employees based on a standard period of time allowed for a repair (flag hours).  The pay rate was significantly higher than minimum wage.  So, if the job took longer than standard hours, there was enough wages to ensure the mechanic earned more than minimum wage.

But the mechanics spent significant time at work NOT performing repairs, such as in training, cleaning, etc.  The dealership would calculate the total hours worked vs. the compensation it would pay for flag hours.  If the pay rate fell below minimum wage, the dealership would make up the difference.  The dealership did not pay a separate hourly rate for non-repair time that would not have been covered under the piece rate.

Illegal, said the court of appeal. The main issue is whether the applicable Wage Order (Wage Order 4-2001), requires payment of at least minimum wage for each hour worked, or an average of minimum wage for all hours worked in the work week.  The trial court and Court of Appeal, relying on an earlier case, Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314 agreed with the plaintiffs that the former interpretation was correct.

The bottom line is that piece-rate employees must be paid separately for work that does not fall within the scope of the work that is the subject of the piece rate.  The non-related hours must be paid at least at minimum wage.  Employers concerned about increased payroll costs may choose to reduce piece rates prospectively, and upon reasonable notice.  They should check with their lawyers first regarding how to do this.

While you have your lawyer on the phone, another wrinkle may be determining where the piece rate work ends and the non-related work begins.  What, exactly, goes into the calculation of the piece rate repair time?  If the employer over-includes non-related work into the piece rate, it risks liability if the work should have been classified as non-related.

This case is Gonzalez v. Downtown LA Motors and the opinion is here.

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Me Too? Too Far

"Me too" evidence is when the plaintiff attempts to prove discrimination against him or her by offering evidence that others suffered similar discrimination.  The courts admit this evidence as proof of intent or motive, where it otherwise would be excluded as "character" evidence.

The Court of Appeal rejected the attempted use of "me too" evidence in a case where an employee claimed his boss discriminated against him because of his Asian national origin.  But this employee did not seek to admit "me too" evidence to show that the boss discriminated against other Asians.  Rather, the employee tried to admit evidence showing the boss discriminated against anyone who was not "Arab."

The trial court excluded the evidence as more prejudicial than probative under Evidence Code Section 352. The Court of Appeal affirmed:

Here, Hatai alleged he is a person of “Asian or Japanese race or national origin or ancestry,” and that he suffered discrimination, harassment and retaliation on the basis of his national origin and/or race. Thus, the “me-too” doctrine entitled Hatai to present evidence that other employees at Caltrans of east Asian or Japanese descent had been subjected to similar discrimination. However, given the nature of Hatai‟s lawsuit, the “me-too” doctrine did not entitle Hatai to present evidence of discrimination against employees outside of Hatai’s protected class to show discrimination or harassment against Hatai.

 The case is Hatai v. Department of Transportation and the opinion is here.

Court of Appeal Explains Invasion of Privacy Claim in California

Ignat worked for a Yum! Brands restaurant. She had bi-polar disorder.  While on a leave, her supervisor allegedly disclosed her condition to other employees, verbally.  Ignat sued for invasion of privacy, based on the common law claim "public disclosure of private facts."

The court of appeal reversed summary judgment.  The court explained that, contrary to the trial court's ruling, a claim for invasion of privacy based on disclosure of private facts is viable even if the disclosure is verbal as opposed to written:

We conclude that limiting liability for public disclosure of private facts to those recorded in a writing is contrary to the tort‟s purpose, which has been since its inception to allow a person to control the kind of information about himself made available to the public – in essence, to define his public persona. (See Briscoe, supra, 4 Cal.3d at p. 534; The Right to Privacy, supra, 4 Harv. L.Rev. at pp. 198-199.) While this restriction may have made sense in the 1890‟s – when no one dreamed of talk radio or confessional television – it certainly makes no sense now. Private facts can be just as widely disclosed – if not more so – through oral media as through written ones.

Because the trial court found no written dissemination of the plaintiff's condition, it ruled she could not prevail. The appellate court sent the case back to the trial court for re-evaluation.

However, the court also explained that the common law tort is not established based on mere disclosure to a few individuals. The court also distinguished between a claim for invasion of privacy based on the California constitution, and a common law claim.

Our Supreme Court regards the two legal theories as providing separate, albeit related, ways to insure privacy. The constitutional variety focuses on institutional record-keeping and does not require a wide dissemination of private information. (See Hill, supra, 7 Cal.4th at pp. 35-37 [elements of constitutional privacy violation].) Liability for the common-law tort requires publicity; disclosure to a few people in limited circumstances does not violate the right. (Porten v. University of San Francisco (1976) 64 Cal.App.3d 825, 840; Timperley v. Chase Collection Service (1969) 272 Cal.App.2d 697, 700; Schwartz v. Thiele (1966) 242 Cal.App.2d 799, 805.) Moreover, the facts disclosed must be offensive or objectionable to a reasonable person. (See, e.g., Shulman, supra, 18 Cal.4th at p. 214.) If they are not, there is no liability. (See, e.g., Johnson v. Harcourt, Brace, Jovanovich, Inc., supra, 43 Cal.App.3d at p. 892 [facts disclosed not "„so offensive as to shock the community‟s notions of decency.‟ [Citation.]"]; Carlisle v. Fawcett Publications, Inc. (1962) 201 Cal.App.2d 733, 748.) The constitutional right, however, may be violated if any private record that was supposed to be kept confidential is disclosed, for example, a college transcript. (Porten v. University of San Francisco, supra, 64 Cal.App.3d at p. 827.)

Based on the papers filed in the case, Ignat was limited to the common law claim, and therefore will have to prove widespread dissemination.

This case underscores the need to limit communications about the nature of an employee's disability or other sensitive private facts that would be "so offensive as to shock the community" if disclosed.

The case is Ignat v. Yum Brands, Inc. and the opinion is here.

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.
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[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.)