U.S. Supreme Court: Plaintiffs Must Prove "But-For" Causation in Federal Age Discrimination Claims

So, the federal Age Discrimination in Employment Act does not permit "mixed motive" jury instructions. That is because the plaintiff's burden of proof is to always show that age was THE cause of a challenged adverse action. Unlike Title VII and California's FEHA, the ADEA does not permit the plaintiff to merely prove that a discriminatory motive was just one of many. Big case under the ADEA, but it will have no real effect on California age discrimination litigation under FEHA.

Here are the facts from the opinion:

Jack Gross began working for respondent FBL Financial Group, Inc. (FBL), in 1971. As of 2001, Gross held the position of claims administration director. But in 2003, when he was 54 years old, Gross was reassigned to the position of claims project coordinator. At that same time, FBL transferred many of Gross’ job responsibilities to a newly created position—claims administration manager. That position was given to Lisa Kneeskern, who had previously been supervised by Gross and who was then in her early forties. Although Gross (in his new position) and Kneeskern received the same compensation, Gross considered the reassignment a demotion because of FBL’s reallocation of his former job responsibilities to Kneeskern.

Gross filed suit . . . alleging that his reassignment to the position of claims project coordinator violated the ADEA, which makes it unlawful for an employer to take adverse action against an employee "because of such individual’s age." 29 U. S. C. §623(a). The case proceeded to trial, where Gross introduced evidence suggesting that his reassignment was based at least in part on his age. FBL defended its decision on the grounds that Gross’ reassignment was part of a corporate restructuring and that Gross’ new position was better suited to his skills. . . .

The courts below wrestled with the proper standard of proof, assuming that Title VII's frameworks and analyses equally applied to the ADEA. The Supreme Court, which accepted review of the case to determine the proper time to give a "mixed motive" instruction in an ADEA case, answered: Never.

The Court's 5-4 majority reasoned that the ADEA statute is worded differently from Title VII, and that Congress passed a law amending Title VII to allow "mixed motive" cases, but did not simultaneously amend the ADEA. So, to sum up:

We hold that a plaintiff bringing a disparate-treatment claim pursuant to the ADEA must prove, by a preponderance of the evidence, that age was the "but-for" cause of the challenged adverse employment action. The burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age, even when a plaintiff has produced some evidence that age was one motivating factor in that decision.

The dissent argued strenuously that the Court should not have reached the question that it decided because it was not presented for review. Then the dissenters, in two opinions, would have held that the language in the ADEA did not require "but-for" causation, and that courts had used Title VII precedent to interpret the ADEA's causation standards.

Congress can overturn this decision by simply incorporating Title VII's causation standards into the ADEA, or by simply adding "age" to Title VII and ending the separate statutory schemes. The majority pointed out Congress has taken up Title VII and ADEA amendments before without harmonizing the causation standards. I guess we'll find out soon enough if Congress omitted that amendment intentionally.

The case is Gross v. FBL Fin. Servs. and the opinion is here.

HAPPY 3D BIRTHDAY TO US!

Yep, it's that time of year when we issue a self-congratulatory Happy Birthday! As the venerable and respected advocates for less fortunate wine coolers, Bartles & Jaymes (LLP) once said, "Thanks for your support. "

And this means that next week will be the third anniversary of this blog! (Unsubscribe now -before the obligatory "Happy Anniversary to WNIEL" post).

Oh, and if that weren't enough, we just won a 3 year old trade secrets case! If you haven't sent us an appropriately lavish gift by now...

Thanks again everybody. Oh and I'll be posting on cases and employment law and stuff this weekend.

Greg

California Supreme Court LOVES litigation

The California Supreme Court continued its streak of pro-litigation decisions today. What am I talking about? The recent "Tobacco Cases," - expanding the availability of unfair business practice class actions, the anti-arbitration decisions, the pro-class action certification opinions, the Court's common theme lately seems to be - lawsuits good! Too bad the courts are struggling for funds to hear all these cases, there are few disincentives to bring frivolous litigation, and businesses already on shaky financial ground can't afford to be in court. OK, down off the soapbox.

Anyway, in this most recent installment, the California high court considered certified questions from the Ninth Circuit Court of Appeals, including whether proof of intentional discrimination is a required element of claims brought under the Unruh Civil Rights Act. The Unruh Act is the civil rights law that protects the public from discrimination in places of public accommodation. It's the principal state law used in disability access cases. Money damages are available for violations, making the Unruh Act more interesting than laws permitting only injunctions.

This is not an employment law case per se. But many employers operate businesses that are subject to the Unruh Act (retail, restaurants hospitals, etc.) . So, I thought I would mention this case.

The Unruh Act says that a violation of Title III of the ADA (prohibiting discriminating in public accommodations by failure to make facilities accessible) is also a violation of the Unruh Act. The Court decided that because the ADA does not require intentional discrimination in access cases, neither did the Unruh Act. (The rest of the Unruh Act, prohibiting discrimination on a variety of bases, does require intentional discrimination, though, which is why the Supreme Court had to decide the case).

So, disability access litigation is alive and well! The case is Munson v. Del Taco, and the opinion is here.

Court of Appeal: No Post Termination Commissions for You

Here are the facts as stated by the court:

Defendant hired plaintiff as a sales representative on October 4, 1999. On that date, the parties entered a written employment agreement, which provided (among other things) that: (1) plaintiff was responsible for web-hosting sales; (2) plaintiff‟s starting salary was $24,000 per year, plus commissions of 4 percent "on all direct initial sales"; (3) defendant "will be eligible for commission pay as set forth in this [document], so long as [plaintiff] remains employed with the Company as a Sales Representative"; and (4) the employment agreement "may be amended only by a written agreement executed by each of the parties hereto."

In April 2001, defendant promoted plaintiff to "Channel Manager." The parties entered a new oral agreement that provided (among other things) that: (1) plaintiff‟s salary was increased to $75,000 per year, and (2) plaintiff would receive commissions of "„20% of the up front costs‟ revenues on all accounts brought in by [plaintiff] or through [plaintiff‟s] contacts or efforts."

So, the plaintiff was later fired and sought commissions for a transaction that occurred after he left, but which was (at least according to him) was "through plaintiff's contacts or efforts."

The court made short work of the plaintiff's argument that he was entitled to post-termination commissions. On plaintiff's breach of contract claim, the court held:


We agree with defendant that, on its face, the italicized language is reasonably susceptible to only one interpretation—that once plaintiff ceased to be employed by defendant, he would no longer be eligible for commission pay. While plaintiff could have relied on extrinsic evidence (if there were such evidence) to suggest an alternative meaning of this provision, he did not do so. (Compare Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1358 ["[T]his extrinsic evidence of trade usage exposed a latent ambiguity in the contract language and presented an alter[n]-ative interpretation to which the term „gross receipts‟ was reasonably susceptible in the circumstances."].) Accordingly, we conclude as a matter of law that the written employment agreement precludes plaintiff from collecting additional commissions post-termination.

On the plaintiff's claim under the Labor Code, the court said that although commissions are wages:

for purposes of enforcing the provisions of the Labor Code, "[t]he right of a salesperson or any other person to a commission depends on the terms of the contract for compensation." (Koehl v. Verio, Inc. (2006) 142 Cal.App.4th 1313, 1330; see also Steinhebel, at p. 705 ["contractual terms must be met before an employee is entitled to a commission"].) Accordingly, plaintiff‟s right to commissions "must be governed by the provisions of the [employment agreement]." (Steinhebel, at p. 705.) We have already concluded that, pursuant to the plain language of the written employment agreement, plaintiff was not entitled to any further commissions after he was terminated. Accordingly, defendant‟s failure to pay such commissions cannot constitute a violation of the Labor Code.

The court did not consider whether the commission contract was "unconscionable" because it was not pleaded. So, that door remains open in commission cases. However, the court also did not consider the question of whether commissions were "earned" before termination and therefore should have been paid. Presumably, that issue was not argued by the plaintiff. If your plaintiff makes this argument, this case could be distinguishable.

Finally, there is the argument that the employer fired the employee to avoid paying unpaid commissions. But the plaintiff waived that argument too. So, because this case was not as vigorously litigated as it might have been, be careful before you rely on it too heavily. On the other hand, the courts will enforce straightforward commission plans that contain contingencies on the right to payment, such as continued employment.

The case is Nein v. Hostpro, Inc. and the opinion is here.

DGV

Court of Appeal: Labor Code Provisions Don't Apply to Public Entities Unless They Expressly Are Made Applicable

The court of appeal held that Labor Code sections 510 (overtime) and 512 (meal periods) do not apply to government entities because the Legislature did not expressly say they were applicable. AB 60, the bill codified in the 500's of the Lab. Code, has a provision applying some of its provisions to a narrow class of government entities. But not these provisions, and not against this agency. Therefore, the Arvin-Edison Water Storage District's demurrer to a wage and hour class action was upheld on appeal.

The most interesting argument was that Wage Order 17, applicable to "Miscellaneous" employees, brought a water district within the scope of the wage orders, daily overtime, and meal periods. Nope. The intent of Wage Order 17, the court reasoned, was to include employees within some new industry or occupation not contemplated before. But water districts have been around for a long time.

The court also held that sections 201-203, addressing timing of final pay and waiting time penalties, did not apply to a water district. That's because section 220 exempts government entities, including "other municipal corporations." Water districts are "other municipal corporations" under prior case law.

This means that water districts, like other government entities, are subject only to the federal FLSA, unless a state wage and hour law expressly applies. Perhaps our state and local governments will save some money defending against these class actions now, and slightly shrink their incredible deficits. ::::Off soapbox::::

This case is Johnson v. Arvin-Edison Water Storage Dist. and the opinion is here.

DGV

Court of Appeal Stiffs Baristas

Remember that time when the Starbucks Baristas won $86,000,000 because the shift supervisors took their tips? That was awesome.

[Sorry, I like Chris Farley. Sue me. I'll SLAPP you.]

Anyway, some time ago, we wrote about that huge Starbucks verdict over this tip pooling issue here. Then came the flood of tip pooling cases this winter and spring, discussed here and here. The Supreme Court is working on at least one of the cases here.

And now, the court of appeal just made real the Starbucks plaintiffs' worst nightmare: they reversed the monster $86,000,000.00-ish judgment quicker than as you can say tall no-whip-mocha with foam. As if I would ever say that.

The court held that the tips were placed in a community box for all service-related employees to share. Therefore, the court reasoned, the tip pooling statute did not even apply and the company was free to share tips with the service leads. The managers and assistant managers did not share in the tips.

So, easy come, easy go. We will see if the Supreme Court agrees to take up this case as well.

The case is Chau v. Starbucks and the opinion is here.

DGV

Small Employers Alert: AB 23 - Cal COBRA Amendment

Small employers - take note! Governor Schwarzenegger signed AB 23, which implements the federal COBRA amendments contained in the "stimulus" bill (ARRA) and applies it to small employers covered by Cal-COBRA. This is an "urgency statute" that took effect on May 12, when it was signed into law.

Is your head spinning? Mine too. We're a small employer, too.

Well, the good news is most small employers rely on their health plans to distribute Cal-COBRA notices. So, just check with your insurers and brokers about this, mmmkay? I hope they will have this covered.

In case they don't - The new law will require notices to be sent to anyone having a qualifying event between 9/1/08 and May 12, 2009 ASAP (May 26, even). The notices explain eligibility for premium discounts under ARRA and give those who did not elect Cal-COBRA a second chance to do so.

The premium discounts offered to Cal-COBRA-eligible employees will result in tax deductions taken by the insurance companies in the case of Cal-COBRA. There will be verification of Cal-COBRA qualifying events to ensure those electing Cal-COBRA and seeking premium discounts are eligible under ARRA.

Incidentally, if you've missed all the hullabaloo about ARRA and the COBRA amendments, you can catch up here.

Court of Appeal: Arbitrate DLSE Wage Claim

So, can an employer require employees to bring wage claims in arbitration instead of at the Division of Labor Standards Enforcement? If the arbitration agreement is otherwise drafted properly, Yes.

As explained by the court,

Frank Moreno is a former employee of Sonic, which owns and operates an automobile dealership. As a condition of his employment with Sonic, Moreno signed a predispute agreement that required both parties to submit their employment disputes to "binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. sec. 1280 et seq. . . .)." By its terms, the arbitration agreement applied to "all disputes that may arise out of the employment context . . . that either [party] may have against the other which would otherwise require or allow resort to any court or other governmental dispute resolution forum[,] . . . whether based on tort, contract, statutory, or equitable law, or otherwise." At some point, Moreno left his position with Sonic. In December 2006, Moreno filed an administrative wage claim with the Labor Commissioner for unpaid
vacation pay pursuant to section 98 et seq. Moreno alleged that he was entitled
to unpaid "[v]acation wages for 63 days earned 7/15/02 to 7/15/06 at the rate of
$441.29 per day."

So, why was the agreement enforceable even against the Labor Commissioner? The court of appeal decided that there was nothing precluding the substitution of the arbitrator for the deputy labor commissioner. The plaintiff argued that arbitration would not include the special stautory provisions regarding the de novo appeal to superior court after the hearing. But the court was unpersuaded. The court also found that the agreement complied with the protections of the California Supreme Court's decision in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. The court did not analyze the agreement's provisions, though. So, we have to assume that this agreement was sufficiently "mutual," provided for the employer to bear the unique costs of arbitration, etc.

The case is Sonic-Calabassas A, Inc. v. Moreno, and the opinion is here.

California Court of Appeal: "Me Too" Declarations Admissible

"Me too" evidence is when a plaintiff attempts to prove discrimination by showing that other employees have suffered discrimination. It can come in the form of live testimony at trial, or declarations in opposition to a motion for summary judgment.

Back in 2008, the Supreme Court of the U.S. held that "me too" evidence was neither categorically admissible nor inadmissible. We posted about that here.

California's Evidence Code is similar to the Federal Rules of Evidence in a number of respects. The Court of Appeal recently decided that co-employees' declarations claiming similar discrimination was admissible to defeat a motion for summary judgment.

Basically, the plaintiff, Dewandra Johnson, claimed discrimination against her because of her pregnancy. The employer, United Cerebral Palsy / Spastic Children's Foundation etc., claimed it fired her because she falsified time records. The Court of Appeal, reversing summary judgment in favor of the employer, found several issues from which the jury could determine that the real reason was discrimination. These evidentiary submissions included declarations from co-workers that claimed the same managers who fired the plaintiff had trumped up reasons for discharging them on the basis of pregnancy. Here's what the court said:

5. Declarations from Other Employees Also Constitute Substantial Evidence That
Requires Reversal of the Summary Judgment
The challenged "me to[o]" declarations that plaintiff included in her opposition to defendant‟s motion for summary judgment constitute substantial evidence requiring reversal of the judgment. Former employees of defendant stated in their declarations that (1) they too were fired by defendant after they became pregnant, (2) they know of someone who was fired by defendant because she was pregnant, (3) they resigned
because Jimenez made their work stressful after they notified her they were trying to become pregnant, or (4) they know of occasions when employees who were
dishonest or cited for dishonesty, were not fired by defendant. These employees
worked at the same facility where plaintiff worked, they were supervised by the
same people that supervised plaintiff (Jimenez and Sandgren), and their supervisors were, in turn, supervised by Jones. This is substantial evidence sufficient to raise a triable issue of material fact as to why defendant fired plaintiff.

The Court of Appeal then surveyed the case law supporting admission of this evidence to show pretext, concluding:

The evidence sets out factual scenarios related by former employees of the defendant that are sufficiently similar to the one presented by the plaintiff
concerning her own discharge by defendant, and the probative value of the
evidence clearly outweighs any prejudice that would be suffered by defendant by
its admission. Dissimilarities between the facts related in the other employees‟ declarations and the facts asserted by plaintiff with regard to her own case go to the weight of the evidence, not its admissibility.

So, the case turns on the similarity between the plaintiff's claims and her co-workers'. Had the co-workers' evidence been less similar, the court might have decided their admissibility a different way.

The case is JOHNSON v. UNITED CEREBRAL PALSY/SPASTIC CHILDREN‟S FOUNDATION OF LOS ANGELES AND VENTURA COUNTIES, and the opinion is here.

DFEH Issues 2008 Annual Report

The California Department of Fair Employment and Housing enforces California's Fair Employment and Housing Act, the anti-discrimination and medical leave law. The agency just issued its annual report for 2008, which you can find here. It's graphic-heavy and mercifully short!

Of note, the DFEH noted discrimination complaints were up nearly 20% over 2007. The agency took in about 20,000 discrimination charges, almost 19,000 of which alleged employment (rather than housing) discrimination.

How does that break down? The most common form of discrimination alleged? Disability (about a third of the charges filed). Retaliation was right behind disability. Race, sexual harassment, and age discrimination constituted about 20% each of the total.

DFEH settled about 960 cases, for about $9.5 million in payments from employers and landlords to complainants.

Finally, the report highlighted the new automated charge filing system, and the new automated right to sue system. They're also working on intake filing by telephone, which should result in a lot more charges.

The best way to avoid a charge is prevention. Besides a solid policy and training, communication with employees and an effective system for complaints are the best way to prevent claims to third parties like the DFEH.

DGV

U.S. Supreme Court: Preganancy Discrimination Act Not Retroactive

AT&T's old pension plan used to provide that employees on pregnancy disability leave did not receive the same service credit as employees on leave for other disabilities. Just before Congress enacted the Preganancy Discrimination Act, in 1978, AT&T modified its service credit calculations prospectively, but still calculated pre-PDA service under its pre-PDA rules. Before the PDA, AT&T's calculations were legal under Supreme Court precedent interpreting Title VII.

Four AT&T employees sued AT&T, claiming that perpetuating the calculation of service credit violated the PDA because their pension benefits were reduced as a result of the pre-PDA calculation. The EEOC joined in, as did the Communication Workers' Union. The district court and Ninth Circuit agreed with the Plaintiffs.

However, the Supreme Court, on a 7-2 vote, reversed. The Court's decision, penned by soon-retiring Justice Souter, turned on a number of reasons, the most significant of which are:
- the prior calculation was a "seniority system" exempt from Title VII (pre-PDA);
- the calculation was considered lawful under Supreme Court precent, General Elec. Co. v. Gilbert, 429 U. S. 125 (1976); therefore, AT&T could not have intentionally discriminated by adopting the old system;
- the PDA was not retroactive;
- the Lilly Ledbetter Fair Pay Act did not save her claim because the underlying pre-PDA decision was not itself discriminatory.

Justice Stevens joined the majority, but also wrote a concurrence noting he was bound by the pre-PDA Supreme Court opinion, General Elec. Co. v. Gilbert, 429 U. S. 125 (1976), although he dissented in that case.

Justices Ginsburg and Breyer dissented. The dissent traced a history of discrimination against pregnancy in the workplace. Acknowleding that the PDA was not retroactive, the dissent in essence argued that because Gilbert was SO wrongly decided, it should not affect the decision in the present case. Here's the essence of the dissent:

The PDA does not require redress for past discrimination. It does not
oblige employers to make women whole for the compensation denied them when,
prior to the Act,they were placed on pregnancy leave, often while still ready, willing, and able to work, and with no secure right to return to their jobs after childbirth.[fn] But the PDA does protect women, from and after April 1979, when the Act became fully effective, against repetition or continuation of pregnancy-based disadvantageous treatment. Congress interred Gilbert more than 30 years ago, but the Court today allows that wrong decision still to hold sway. The plaintiffs (now respondents) in this action will receive, for the rest of their lives, lower pension benefits than colleagues who worked for AT&T no longer than they did. They will experience this discrimination not simply because of the adverse action to which they were subjected pre-PDA. Rather, they are harmed today because AT&T has refused fully to heed the PDA’s core command: Hereafter, for "all employment-related purposes," disadvantageous treatment "on the basis of pregnancy, childbirth, or related medical conditions" must cease. 42 U. S. C. §2000e(k) (emphasis added). I would hold that AT&T committed a current violation of Title VII when, post-PDA, it did not totally discontinue reliance
upon a pension calculation premised on the notion that pregnancy-based
classifications display no gender bias.

The case is AT&T Corp. v. Hulteen, and the opinion is here.

Court of Appeal: Employee's Obligations re Reasonable Accommodation

Carmine Scotch worked as an instructor for The Art Institute of California - Orange County. He had HIV. The institute's accreditation standards require instructors to have certain certification and education credentials / degrees. They allow some instructors to work towards those credentials after hire.

In 2004, the institute's management prepared for accreditation audits by identifying instructors lacking the education credentials required to maintain accreditation, including Scotch. By the end of 2005, Scotch had still not enrolled in a master's program. The institute even agreed to pay for degrees obtained at a local university.

Scotch received a poor performance review in early 2006. He disputed it, claiming it was retaliation for a leave he took during the previous winter. He also disclosed to HR that he had HIV.

By mid-2006, there was a decline in enrollment. Some instructors were laid off; others were reduced to part-time. Because the institute had more instructors than work, it decided to assign only instructors with masters degrees to upper-level courses. Therefore, Scotch's hours were reduced (along with other instructors'). Ultimately, Scotch resigned.

Scotch sued for refusal to accommodate, disability discrimination, failure to engage in the interactive process and wrongful termination. The Court of Appeal affirmed the Superior Court's grant of summary judgment on all causes of action.

Most of the opinion is not new law. The court found that the course load was reduced for legitimate reasons, and that Scotch did not demonstrate pretext. But this opinion is interesting because of the court's analysis of the accommodation claim. Scotch argued that he should have been assigned a full course load despite his failure to achieve the masters degree as a reasonable accommodation. The court found:

His proposed accommodation is not reasonable under the definition we have adopted because it is not a “modification or adjustment to the workplace” necessary to enable him to perform the essential functions of his position. Unlike the employee in Jensen, Scotch was not requesting assignment from a position he could not manage to one he could. Instead, Scotch explained the limitations created by his disability were that he needed to avoid stress and he could not pursue a master‟s degree while teaching full time and fulfilling other professional development requirements—limitations addressed by AIC‟s accommodation. Scotch‟s request of priority in assignment of lower division courses does not accommodate those limitations and was unnecessary to enable him to perform the essential functions of his position.

The opinion also addresses the "interactive process." The court found that the institute did not initiate a meeting before reducing the hours and that, perhaps, a jury would find that it should have. However, the court also found that the failure to have the meeting did not require a trial. That is because the employee must identify a potential accommodation that would have been effective to recover on the cause of action:

To prevail on a claim under section 12940, subdivision (n) for failure to engage in the interactive process, an employee must identify a reasonable accommodation that would have been available at the time the interactive process should have occurred. An employee cannot necessarily be expected to identify and request all possible accommodations during the interactive process itself because "„"[e]mployees do not have at their disposal the extensive information concerning possible alternative positions or possible accommodations which employers have. . . ."‟" (Wysinger, supra, 157 Cal.App.4th at p. 425.) However . . . once the parties have engaged in the litigation process, to prevail, the employee must be able to identify an available accommodation the interactive process should have produced: "Section 12940[, subdivision ](n), which requires proof of failure to engage in the interactive process, is the appropriate cause of action where the employee is unable to identify a specific, available reasonable accommodation while in the workplace and the employer fails to engage in a good faith interactive process to help identify one, but the employee is
able to identify a specific, available reasonable accommodation through the litigation process." (Nadaf-Rahrov, supra, 166 Cal.App.4th at p. 984.)

The case is Scotch v. Art Inst. of Orange Cty. and the opinion is here.

California Supreme Court to Review Section 203 Waiting Time Penalties

The statute of limitations for a penalty is usually one year under California law. But, Labor Code Section 203 says that the statute of limitations for "waiting time penalties" is the same as the limitations period for the underlying wage claim. So, if the underlying wage claim is three years (such as unpaid overtime), then the statute of limitations for late payment of those wages at termination is also three years.

But, what happens if the underlying wages are paid already and an employee just wants to recover penalties in a civil lawsuit? There IS no underlying claim for wages in that case. So, the court of appeal reasoned in Pineda v. Bank of Am., that the one-year statute of limitations should apply in cases where there is no accompanying claim for unpaid wages.

The court in Pineda also clarified that the unfair competition law's four year statute does not apply to waiting time penalties, since the UCL ordinarily only applies to "restitution" of the plaintiff's property, and waiting time penalties are not the employee's property.

The California Supreme Court just accepted review of Pineda on both issues discussed above. The docket is here. We posted about the court of appeal's opinion here.

Ninth Circuit Asks CA Supremes for Guidance on Wage and Hour

The Ninth Circuit has before it three cases involving pharmaceutical sales representatives. These folks visit with doctors and give them information on medications. The Ninth Circuit wants to know if these employees count as "outside salespersons" under California law. So, they asked the California Supreme Court for an opinion:

1. The Industrial Welfare Commission’s Wage Orders 1-2001 and 4-2001 define “outside salesperson” to mean “any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” 8 Cal. Code Regs., tit. 8, §§ 11010, subd. 2(J); 11040, subd. 2(M). Does a pharmaceutical sales representative (PSR) qualify as an “outside salesperson” under this definition, if the PSR spends more than half the working time away from the employer’s place of business and personally interacts with doctors and hospitals on behalf of drug companies for the purpose of increasing individual doctors’ prescriptions of specific drugs?

If the sales representatives don't qualify as outside salespersons, because they don't take orders or actually sell the medications, the court wants to know if they qualify as "administrative" employees:

2. In the alternative, Wage Order 4-2001 defines a person employed in an
administrative capacity as a person whose duties and responsibilities involve (among other things) “[t]he performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his employer’s customers” and “[w]ho customarily and regularly exercises discretion and independent judgment.” Cal. Code Regs., tit. 8 § 11040, subd. 1(A)(2)(a)(I), 1(A)(2)(b). Is a PSR, as described above, involved in duties and responsibilities that meet these requirements

The Ninth Circuit seeks guidance on the administrative test because California case law is sparse on what it means to "exercise discretion and independent judgment" for the administrative exemption, and whether the PSRs are involved in "office or non-manual work directly related ot management policies or general business operations" of Bayer's customers. The court appears to believe that California law on outside salespersons differs from the federal test under the FLSA such that reliance on FLSA cases would be of "limited" assistance.

The Supreme Court does not have to answer the questions. If the Court chooses not to, then the case will return to the Ninth Circuit for a prediction on how the Supreme Court would rule. Otherwise, this case could provide needed guidance in this area of wage and hour law.

The case is D'Este v. Bayer Corporation and the opinion/request for answers is here.

California Supreme Court Takes Tips

(Or at least they accept tip pooling cases for review. ) What's tip pooling? We blogged about it here and wrote an article here. Yeah, we're on it.

Who knew tip pooling was the new meal break? There have been about four recent appellate decisions on tip pools in recent months. The Supreme Court decided to have its say, accepting review in Lu v. Hawaiian Gardens. We'll see if they grant and hold the rest of them or leave one on the books for guidance to the bar while the Lu review is pending.

DGV

Court of Appeal: Release Bars Employee's Class Action

Watkins and Brown sued Wachovia Bank for mis-classification as exempt, as well as for individual wrongful termination and wage claims. There was a lot of litigation over arbitration, discovery and the like.

Brown ultimately settled her claims and signed a release, which covered all claims, including disputed claims for overtime. The trial court granted summary judgment against her, holding she no longer could participate in the class action. On the same day, the court denied the plaintiffs' motion for class certification of the wage claims.

Watkins settled her claims and signed a release as well. However, she purported to reserve the right to press any "class claims," and to receive an enhanced payment if the class claims were successful. She also reserved the right to appeal the denial of class certification.

On appeal, Brown argued that her release did not encompass claims for unpaid wages and that she was free to have signed the general release, but still maintain her wage claim. Relying on the recent decision in Chindarah v. Pick Up Stix, covered here, the court of appeal held that a release may properly include disputed claims for wages.

Then, the court turned to Watkins. The court held that Watkins could not preserve her right to appeal since she had signed a general release. Because parties cannot confer appellate jurisdiction and a court of appeal will not issue an opinion about a moot claim, the court dismissed the appeal. That left no appeal of the denial of class certification and, maybe, some annoyed absent class members?

The court of appeal was careful to distinguish what are called "pick off" cases. In those cases, the defendant pays a class representative all that s/he claims is due and then seeks dismissal of the action against that plaintiff. The plaintiff can stay in the case if s/he has an adequate economic interest in remaining in the case, such as the interest in attorneys' fees. But the court squarely held that a plaintiff accepting a voluntary settlement of all claims is not picked off and, therefore, not entitled to maintain a class action:

We believe that it is illogical to import the law governing "pick off" cases into the context of a voluntary settlement. Often, a plaintiff brings an action as a class action precisely because the attorney‟s fees involved in bringing the action individually would exceed the value of the any judgment the plaintiff could obtain individually. (Roper, supra, 445 U.S. at p. 338, fn. 9.) In such a situation, a "pick off" settlement, which gives the plaintiff only the relatively small amount sought as damages, may be inadequate to cover the substantial attorney‟s fees incurred in pursuing the litigation. Thus, the plaintiff who has been involuntarily picked off has not obtained satisfactory
relief, and is therefore permitted to continue pursuing the class litigation
until complete relief is received. This conclusion is supported by policy considerations which seek to prevent a defendant from avoiding class liability by picking off individual plaintiffs.

This is to be distinguished from the case of a voluntarily settling plaintiff. In such a case, the plaintiff has accepted an amount the plaintiff believes is sufficient to make the plaintiff whole. By voluntarily settling, the plaintiff has agreed to accept the offered sum in full satisfaction of the plaintiff‟s claim against the defendant. There are no public policy interests implicated by a settlement voluntarily accepted.

* * *

Applied to this case, it is apparent that Watkins‟s appeal must be dismissed. She has voluntarily released her wage claim against Wachovia in exchange for a $51,000 payment. While she attempted to reserve her right to pursue her "class claim," her "class claim" is simply a procedural device by which she pursued her substantive claim for overtime wages. Having settled her substantive claim, the class claim disappears, and her appeal of the denial of class certification must be dismissed. Watkins cannot salvage her right to appeal by asserting an economic interest in class certification in terms of a right to shift her attorney‟s fees to the class, if successful. If the class obtains a judgment or settlement, such recovery would belong to the class. Having voluntarily settled, she is, by her own choice, no longer a member of the class and cannot share in any such recovery.

The opinion is Watkins v. Wachovia Corporation and the opinion is here.

Alert the Media! Arbitration Agreement Enforced

As stated by the Court of Appeal,

The arbitration provision, contained in a separate paragraph initialed by Roman, provided, "I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by the company, that all disputes that cannot be resolved by informal internal resolution[1] which might arise out of my employment with the company, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules of the American Arbitration Association. This application contains the entire agreement between the parties with regard to dispute resolution, and there are no other agreements as to dispute resolution, either oral or written."

So, the first thing that jumps to mind is that a court would say it wasn't "mutual," in that it does not say that the Company will submit all disputes to arbitration. Forgive me my cynicism, but the courts seem to find any way possible to deny enforcement of these puppies.

Not this time. The court determined that there was no one-sidedness and that both parties would have to arbitrate all claims. The court had an interesting discussion of canons of construction of contracts contained in the Civil Code supporting enforceability.

The plaintiff also argued that the employer's propounding some paper discovery and even filing a motion to compel the plaintiff's deposition was a waiver. But no:

Although Roman incurred litigation expenses in serving and filing objections to
discovery requests and opposing the demurrer and motion to compel her deposition, those expenses are insufficient, by themselves, to support a finding of waiver: "[W]aiver does not occur by mere participation in litigation"‟ if there has been no judicial litigation of the merits of arbitrable issues" and no prejudice. (Saint Agnes, supra, 31 Cal.4th at p. 1203.) "Because merely participating in litigation, by itself, does not result in a waiver, courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses." (Ibid.; see also Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1197 [expense of responding to motions or other preliminary pleadings is not type of prejudice that bars later petition to compel arbitration].) The trial court did not err in impliedly rejecting Roman‟s waiver argument.

So, there you have it, an enforceable arbitration agreement. Take a picture. The case is Roman v. Superior Court (Flo-Kem), and the opinion is here.

Court of Appeal: No Privacy on Myspace

Myspace, Facebook, Linkedin, etc. are fertile sources of information about employees and job applicants. The phenomenon of otherwise private individuals airing out their grievances, sharing personal information, etc. continues unabated. The phenomenon of the same individuals' shock and surprise that people actually read their stuff and hold it against them continues as well.

In a non-employment matter, the Court of Appeal addressed whether an essay on myspace was private such that republishing it in a newspaper without the author's permission constituted an invasion of privacy. Umm no.

Moreno was from the small town of Coalinga. After she left town, she wrote an essay about her disdain for her hometown. She neglected to consider that folks who remained in Coalinga might get offended. Her principal forwarded the posting to the local newspaper, which published it as a Letter to the Editor. And of course, although Moreno's last name is not on her myspace page, the principal helpfully supplied it.

Now Moreno also forgot that her family still lived in Coalinga, and operated a small business there. The fans of Coalinga were miffed by Moreno's letter, and drove the family out of business and out of town. She chose to sue the newspaper and principal rather than herself. No word whether her family sued her.

The Court of Appeal, upholding the trial court, held that when you post on myspace, it's not "private." As such there is no invasion of "privacy" when you use the posted information or disclose it to others. Without a private fact, there is no tort of invasion of privacy.

Interestingly, the Court of Appeal also held, albeit in an unpublished portion of the decision, that Ms. Moreno could proceed against the defendants for intentional infliction of emotional distress, possibly because of the fact that the principal intentionally supplied the posting to the newspaper out of spite? No clue. Simply reading the information and relying on it on the job may or may not supply the requisite "outrageous conduct" required for IIED. My bet is" not."

So, at least based on this case, if you put your private information out on the INtRaw3Bs, your employer is not invading your privacy by reading it. The case is Moreno v. Hanford Sentinel and the opinion is here.

DGV

Another I-9 Reminder

All of you well-educated, information-saturated folks know the new I-9 Form is effective 4/3, right? OK, then.

This one has the 6/30/09 expiration date, just like the old one. But it also has the critical 2/2/09 revision date (visible in the lower right-hand corner of the form.) Looks like you'll have to replace these new forms, too. (The expiration date is near! Alert the media!) So, you can look forward to still more newsletters and blogs nagging you about this critical issue facing employers. If you need one of these new forms, find it here.

U.S. Supreme Court: Union May Agree to Arbitration of Age Discrimination Claims

In New York City, there is a multi-employer association of building management that negotiates with a large union over building workers' wages, hours and other terms of employment. The union contract provided for arbitration of discrimination claims as follows:

NO DISCRIMINATION. There shall be no discrimination against any present or
future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to,claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, . . . or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations.Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

So, this is a clear agreement to arbitrate. But can a union agree with an employer that individuals' claims must be arbitrated, even though the individuals have not personally agreed to do so?

Yep. The Court decided, 5-4, that the arbitration clause was fully enforceable. To get there, the majority decided two issues. First, the Court noted that unions and employers have broad discretion to agree on terms to be included in collective bargaining agreements. Unions are the employees' designated bargaining representatives and may bargain away rights (such as to sue in lieu of arbitration) in exchange for other concessions by management.

As a result, the only way the above contractual provision could be invalid was if the ADEA prohibited mandatory arbitration of discrimination claims. But the Court already had decided that the ADEA contains nothing precluding mandatory arbitration. Hence, the Court upheld the language in the CBA:

Examination of the two federal statutes at issue in this case, therefore, yields a straightforward answer to the question presented: The NLRA provided the Union and the RAB with statutory authority to collectively bargain for arbitration of workplace discrimination claims, and Congress did not terminate that authority with respect to federal age-discrimination claims in the ADEA. Accordingly, there is no legal basis for the Court to strike down the arbitration clause in this CBA, which was freely negotiated by the Union and the RAB, and which clearly and unmistakably requires respondents to arbitrate the age discrimination claims at issue in this appeal.

The Court also refused to rule that mandatory arbitration was a waiver of substantive rights without the employees' consent. The Court made clear it does not consider arbitration in lieu of court to be a substantive change, but rather merely a change of forum.

Four justices dissented in two opinions, arguing that prior precedent precluded the majority's result. Justice Souter admitted the majority's conclusion "at least could be considered" if it weren't for precedent that, in the dissent's view, should control the question.

Anyway, this is all very interesting to students of stare decisis and Supreme Court watchers. But for you, gentle reader, all that matters is that Union contracts can require mandatory arbitration of discrimination claims, if the clause in the contract is "clear and unmistakable."

What also matters is that Congress is moving to ban arbitration of employment discrimination lawsuits, this time with a clear Democratic majority and a Democratic president. So, the odds of this case surviving Congressional action are much lower than they were a few years ago.

The opinion is 14 PENN PLAZA LLC v. PYETT and the opinion is here.