California Supreme Court Limits Employer Liability to IC's Employees

Typically, when an organization hires a vendor / independent contractor, the hiring organization is not liable to the vendor's employees when something goes wrong. The vendor/contractor is the "employer" responsible to its own employees.

As explained by the California  Supreme Court:

Defendant US Airways uses a conveyor to move luggage at San Francisco International Airport. The airport is the actual owner of the conveyor, but US Airways uses it under a permit and has responsibility for its maintenance. US Airways hired independent contractor Lloyd W. Aubry Co. to maintain and repair the conveyor; the airline neither directed nor had its employees participate in Aubry‘s work.

The conveyor lacked certain safety guards required by applicable regulations. Anthony Verdon Lujan, who goes by the name Verdon, was inspecting the conveyor as an employee of Aubry, and his arm got caught in its moving parts.

Plaintiff SeaBright Insurance Company, Aubry‘s workers‘ compensation insurer, paid Verdon benefits based on the injury and then sued defendant US Airways, claiming the airline caused Verdon‘s injury and seeking to recover what it paid in benefits. Verdon intervened as a plaintiff in the action, alleging causes of action for negligence and premises liability.

Of special relevance to this case, the insurance company argued that US Airways was liable because of its obligations under CalOSHA to provide a "safe workplace." The issue was whether US Airways could delegate the duty to provide a safe workplace to its contractor, with respect to the safety of the contractor's employees.

Was US Airways liable for the injury to Verdon, even though Aubry was Verdon's employer and Verdon was covered by Workers' Compensation Insurance?  Hmmm?  Heck I don't know, I was asking you.

Oh, right the California Supreme Court knows. And the Court said:

plaintiffs here cannot recover in tort from defendant US Airways on a theory that employee Verdon‘s workplace injury resulted from defendant‘s breach of what plaintiffs describe as a nondelegable duty under Cal-OSHA regulations to provide safety guards on the conveyor. Hence, the Court of Appeal erred in reversing the trial court‘s grant of summary judgment for defendant.

The court emphasized that US Airways owed its own employees a non-delegable duty to provide a safe workplace. But Verdon, an employee of Aubry, could not look to US Airways for relief.

The decision is Seabright Ins. Co. v. US Airways and the opinion is here.

NLRB Soon to Require Poster!

Effective this November, Non-union employers will have to post a new poster explaining to employees their rights under the National Labor Relations Act.  For a simple posting regulation, there sure are a lot of rules.

- Multiple languages if more than 20% of employers speak a language other than English
- posting on intranets
- size of the poster, placement, etc.

The poster's content basically is a short seminar on the National Labor Relations Act, the right to unionize, what unfair labor practices are, how to file a charge, etc.  Handy!

The good news is that the NLRB will let you download the poster free from its website, or you can order paper copies gratis from the Agency. So, printing costs will be minimal.

The regulations are at the bottom of this long long website page, which includes the "comments" to the final proposed rules and the NLRB's response to them.
DGV

Court of Appeal: No Reinstatement after 12 weeks of CFRA Leave

After taking 19 weeks of leave, the first 12 of which was covered under the California Family Rights Act, LA County reinstated Katrina Rogers, but then transferred her to a new job as a business decision. Rogers did not take the transfer well and sued under various causes of action, including the CFRA.  A jury awarded her damages and the county appealed.

The court first rejected Rogers' argument that the transfer amounted to "interference" with her rights under the CFRA:

Here, the following is undisputed—the County accorded Rogers the full 12 workweeks of leave to which she was entitled under the CFRA; Rogers did not return to work at the end of this period, but instead remained on leave for 19 weeks; and the decision to transfer her was made within the 12-week leave period, but never communicated to Rogers during her leave. Rogers nevertheless argues that she suffered interference with her CFRA rights because the transfer decision was made during her protected CFRA leave. But she cites no authority to support her position, which we therefore disregard. (Perez v. Grajales (2008) 169 Cal.App.4th 580, 591–592.) Based on the foregoing, we conclude that Rogers’s right to reinstatement expired when the 12-week protected CFRA leave expired. Her CFRA interference claim therefore fails as a matter of law, and should never have been submitted to the jury.

 
Then the court turned to Rogers' claim that the transfer was "retaliation" for her exercising her rights. The court could not find any evidence that the county took its action because Rogers took leave, other than the fact that she took it and the transfer occurred thereafter:

In short, Rogers “failed to establish the requisite causal connection between her protected actions in taking a CFRA medical leave” and the decision to transfer her to another position. (Neisendorf, supra, 143 Cal.App.4th at p. 519.) “The unchallenged finding that [the County] had a legitimate, nondiscriminatory reason to [transfer Rogers], which had nothing to do with her CFRA leave, bars [Rogers] from articulating a cognizable cause of action for the jury’s consideration based on [the County’s] alleged refusal to honor the CFRA’s right to reinstatement.” (Id. at p. 520.) The Neisendorf court cited to several federal courts interpreting the FMLA that endorse this principle. (See e.g. Throneberry v. McGehee Desha County Hosp. (8th Cir. 2005) 403 F.3d 972, 979 [“‘As long as an employer can show a lawful reason, i.e., a reason unrelated to an employee’s exercise of FMLA rights, for not restoring an employee on FMLA leave to her position, the employer will be justified to interfere with an employee’s FMLA leave rights’”].) Like the Neisendorf court, we conclude that because the County’s “legitimate, nondiscriminatory reason” for the decision to transfer Rogers eliminated any obligation the County might have had to reinstate her, Rogers “could not state a valid claim under the CFRA.” (Neisendorf, supra, at p. 520.)

The decision is important regarding CFRA/FMLA leave, but it does not address reasonable accommodation obligations under the ADA/Fair Employment and Housing Act.  So, employers still need to consider reinstatement following extended leave when an employee has a covered disability and takes more leave than allowed under CFRA / FMLA.

The case is Rogers v. County of LA and the opinion is here.

Pre-Bar Admission Law Grads Can Be Exempt

Matthew Zelasko-Barrett graduated law school and obtained a job with Brayton-Purcell, a large, Marin County firm. Before passing the bar and becoming a licensed lawyer, he was designated a Law Clerk II; after admission he became an associate.  After quitting, he decided to sue Brayton-Purcell, claiming he was "mis-classified" as exempt during his time as a Law Clerk II.

Although licensed, salaried lawyers qualify as exempt, so do "learned" professionals.  The associate's principal argument was that because licensed professionals qualify as exempt under one part of the definition, unlicensed lawyers cannot.  The court of appeal rejected that argument.

It bears noting that the Law Clerk II's duties practically mirrored  a licensed associate's, with the exception of signing documents as a lawyer, court appearances, etc.  Had the Law Clerk II's duties been more clerical, this case might have come out another way.

The court here also heavily relied on a 9th Circuit decision, in which the Court of Appeals held that certain accountants were exempt, even though they were not licensed as CPAs.  CPA is another category of licensed professional. See Campbell v. Pricewaterhouse Coopers, LLP (E.D.CA 2009) 602 F.Supp.2d 1163, 1172, revd. (2011) 642 F. 3d 820.  The district court held that the accountants were non-exempt, but the court of appeals reversed and held they were. 

That means this case has more applicability than just to law firms.  The other licensed professionals are: "medicine, dentistry, optometry, architecture, engineering, teaching, or accounting."  Again, unlicensed professionals will have to pass the duties test of the exemption and receive the required salary.

The case is Zelasko-Barrett v. Brayton-Purcell LLP and the opinion is here.

Court of Appeal: "Me Too" Evidence of Harassment Admissible to Prove "Intent"

So, a plaintiff in a sexual harassment case attempts to introduce evidence that the harasser harassed other employees, but not in the plaintiff's presence, and that the conduct was not directed to the plaintiff. 
Can the plaintiff use that information to prove she was harassed?  Basically, the plaintiff wants to say, "the defendant is a bad person because he mistreated others; therefore, it is more likely that he harassed me even though he denied doing so."  That's what's called "character evidence," and it's usually inadmissible.

Except when it's admissible. The Evidence Code allows for admission of "character" evidence if used to prove intent, motivation, common plan, and other things. 

Thomas Anton was a lawyer. Lorraine Pantoja was a member of the staff. Pantoja alleged Anton touched her inappropriately, used slurs and profanity, and engaged in other conduct amounting to sexual harassment. Anton denied engaging in those behaviors.

Pantoja's lawyers attempted to introduce other female employees' testimony that Anton engaged in similar conduct towards them.  Anton successfully had that conduct excluded as character evidence. But Pantoja's lawyers argued that evidence was necessary to prove Anton's intent.  A jury decided in favor of Anton. Pantoja appealed.

The court of appeal reversed the defense verdict and judgment. The court decided that the trial court erroneously did not permit "me too" evidence to prove Anton's anti-female intent. The evidence also was admissible to impeach Anton's denials. A significant issue was whether Anton used profanity "at the situation" or directed towards females.

This case is significant for a few reasons:

1.  The appellate court's discussion of intent suggests that the plaintiff must prove intent to win in a sexual harassment case. I think the court meant that the harassment must be "based on" the plaintiff's sex, race, etc.  But intent to harm or to discriminate actually is not an element of a harassment case.  If conduct has the "effect" of creating an objectively hostile work environment in the eyes of a reasonable victim, that's supposed to be enough.

2.. The court did not mention whether a defendant would be entitled to a special jury instruction explaining that the purpose of the testimony is not to establish the plaintiff's claim of a hostile environment or damages. Defendants certainly should request such an instruction, or the jury may be confused into thinking that the plaintiff can prove her own work environment was hostile because of the way others were treated, even outside of her presence.

3.  The court does not take into account the possibility that if a bunch of people testify about the defendant, the jury will find in the plaintiff's favor just to punish the defendant, even if the evidence of conduct against the plaintiff is thin.  The court did not draw the line at all - allowing evidence by employees who did not even work at the same time as the plaintiff.

4.  This case makes it highly dangerous to retain an employee who has previously been found to violate an anti-harassment policy. If all evidence of harassment conduct against other employees is admissible, even offered by employees who did not work at the same time as the plaintiff, then it will be a big risk to permit an employee previously identified as a  "harasser" to stay employed..

The case is Pantoja v. Anton and the opinion is here.

Court of Appeal: False Social Security Number = Unclean Hands = No Case

Vicente Salas worked for Sierra Chemical Company. He was seasonal, and was repeatedly laid off and re-hired.  Along the way, he injured himself.  The company allegedly denied him re-hire after he did not produce a release from his doctor. Salas claimed he was told he had to be 100% healed, which is one of those ADA no-nos.  He sued for a variety of employment based claims, including disability discrimination, failure to provide reasonable accommodation, etc.

But Sierra found out that Salas used a false social security number and obtained summary judgment because of the "unclean hands" / after acquired evidence defenses.  (The trial court actually denied the motion, but the court of appeal issued an order to show cause in response to a petition for a writ, resulting in the trial court's changing its mind.)

Salas's use of another person's Social Security number to obtain employment with Sierra Chemical went to the heart of the employment relationship and related directly to his claims that Sierra Chemical wrongfully failed to hire him following his seasonal lay off and discriminated against him by failing to provide a reasonable accommodation for his back injury. Because Salas was not lawfully qualified for the job, he cannot be heard to complain that he was not hired. This is so even though he alleges that one reason for the failure to hire was Sierra Chemical's unwillingness to accommodate his disability.

In light of the nature of the misrepresentation, the fact that it exposed Sierra Chemical to penalties for submitting false statements to several federal agencies, and the fact that Salas was disqualified from employment by means of governmental requirements, we conclude that Salas‟s claims are also barred by the doctrine of unclean hands.

The court also rejected Salas' claim that the Legislature foreclosed the unclean hands/ after acquired evidence defense by passing SB 1818, which provides in pertinent part:

"The Legislature finds and declares the following: [¶] (a) All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state. [¶]

(b) For purposes of enforcing state labor, employment, civil rights and employee housing laws, a person‟s immigration status is irrelevant to the issue of liability...

The court noted that SB 1818 was intended to be "declarative of existing law," and so it did not abrogate existing defenses to employment law actions.

The upshot is that this case denies relief to employees who falsify their employment credentials, resulting in a violation of law if the employer continues to employ the employee.  The employer will have to show as well that the employer's settled policy is to discharge / refuse to hire employees who commit the type of violation at issue.

The case is Salas v. Sierra Chemical Co. and the opinion is here.

DGV

Court of Appeal Raps Employee Appellant

This one is mainly for the practitioners.


Richard Foust lost at court trial, in which he sued his former employer, San Jose Construction Company, for breach of contract.  He appealed from the judgment. The court of appeal not only affirmed, but also held the appeal was frivolous and imposed sanctions. Foust apparently failed to provide an adequate record, made arguments for the first time in his reply, and generally made it impossible for the appellate court to adequately consider his appeal.

The court sanctioned Foust $6000, payable to the court, for the frivolous appeal, and awarded sanctions to San Jose in the amount of $8743. 

The obvious takeaway - If you're going to appeal, it's best to designate an adequate record or the appellate court may make losing more expensive.

The opinion is Foust v. San Jose Construction Company, Inc. and the opinion is here.

Court of Appeal: What's a Vacation?

Some companies give paid "sabbaticals" to long term employees. I am jealous of people who work for those companies.

Eric Paton worked for Advanced Micro Devices for seven years before he resigned.  He then sued AMD, claiming the sabbatical that he had not yet earned had "vested" during his entire employment, like vacation.  Therefore, he claimed, he was entitled to a proportional amount of sabbatical pay upon his termination of employment.  His lawsuit is a class action, brought on behalf of some 1400 former employees who had earned portions of their sabbaticals.

Preposterous, you say? Not so fast, said the court of appeal.

To figure out whether the sabbatical is vested vacation, which must be paid out upon termination under Labor Code Section 227.3, the court came up with a definition of "vacation:"

It is paid time off that accrues in proportion to the length of the employee's service, is not conditioned upon the occurrence of any event or condition, and usually does not impose conditions upon the employee's use of the time away from work.

Thus, consistent with the employment lawyer's understanding of vacation, holidays and sick days are not vacation because they are "conditioned upon the occurrence" of sickness or holidays.  Paid days off that do not require a condition to occur (like PTO and floating holidays) tend to fit within this definition.

The court then considered what is a true sabbatical.  The court borrowed from a test the state Division of Labor Standards Enforcement developed, and added an additional criterion:

First, leave that is granted infrequently tends to support the assertion that the leave is intended to retain experienced employees who have devoted a significant period of service to the employer. Every seven years is the traditional frequency and it seems an appropriate starting point for assessing corporate sabbaticals, as well. In many cases, an interval of seven years would be long enough for an employee to gain experience and demonstrate expertise that an employer might want to retain. Greater or lesser frequency could be appropriate depending upon the industry or particular company involved.

Second, the length of the leave should be adequate to achieve the employer's purpose. Since we are concerned here with unconditional sabbaticals given for the purpose of reenergizing the employee then, as the Labor Commissioner suggested, the length of the leave should be longer than that “normally” offered as vacation. Since regular vacation time may be used for rest, a sabbatical ought to provide the extended time off work that regular vacation does not.

Third, a legitimate sabbatical will always be granted in addition to regular vacation. . . .Because an employer could offer a minimal vacation plan and reward senior staff with sabbaticals as a way to avoid the financial liability of a more generous vacation plan, the employer's regular vacation policy should be comparable to the average vacation benefit offered in the relevant market.

A fourth factor is one that is implicit in the DLSE test but is not called out specifically. Since a sabbatical is designed to retain valued employees, then a legitimate sabbatical program should incorporate some feature that demonstrates that the employee taking the sabbatical is expected to return to work for the employer after the leave is over.

Applying this test, the court decided that AMD's plan raised a triable issue of fact regarding whether it was a true sabbatical or deferred vacation. The court's central concern was the purpose of establishing the program:  is it just added vacation for long term employees, or is it an incentive for employees to remain employed with AMD and improve their productivity upon return to work (sabbatical).  So, the court remanded the case for trial.

The decision is Paton v. Advanced Micro Devices and the opinion is here.

California Legislature Clarifies Paid Bone Marrow Leave

Governor Brown just signed SB 272, which clarifies last year's paid bone marrow /organ donation leave law.  That law requires employers to grant up to five days' paid leave for bone marrow donation and up to 30 days' paid leave for organ donation.

Key changes: The new bill clarifies a few thing: the time off for bone marrow / organ donation leave is measured in "business days" rather than calendar days.  The employer may require the employee to use up to five days of PTO for bone marrow leave and up to two weeks of PTO for organ donation leave. The 12 month period for measuring entitlement is "rolling" based on the date of the leave request.

The new bill is here.

Court of Appeal: Employee Repudiated Settlement Agreement

So, Thomas Ferguson was a bad policeman, having been picked up in a sting, for soliciting a prostitute.  Facing discharge, he made a deal with his employer, Cathedral City, and settled for a suspension. But part of the settlement depended on the resolution of criminal charges pending, i.e., if he was found guilty, he would resign.  Ferguson's lawyer wrote the city, complaining they were trying to influence the DA in Ferguson's criminal case. He went too far, though, and said the settlement agreement was void.  No settlement agreement, no suspension.  The city fired Ferguson, even though his NEW lawyer tried to take back the repudiation of the settlement.

No dice. Upholding the discharge, the Court of Appeal addressed repudiation of a contract and a settlement agreement in particular:

once Ferguson committed his anticipatory breach on June 23, 2007, the City could then elect its remedies, which in this instance meant the reinstatement of Ferguson‟s discharge. The City was no longer bound by the separation agreement and was excused from further performance: “The real operation of a declaration of intention not to be bound appears to give the promisee the right . . . to act upon the declaration and treat it as a final assertion by the promisor that he is no longer bound by the contract, and as a wrongful renunciation of the contractual relation into which he has entered. If [the promisee] elects to pursue the latter course, it becomes a breach of contract, excusing performanceon his part and giving him an immediate right to recover upon it as such. Upon such election the rights of the parties are to be regarded as then culminating, and the contractual relation ceases to exist, . . . [Emphasis added.]”

In English, the employer has two options: treat the agreement as canceled, relieving the employer of obligations under the settlement agreement (such as a neutral reference, COBRA, unpaid settlement sums), or sue for breach of the agreement to recover the settlement proceeds and any damages occasioned by the breach.

Of note, the court held also that Ferguson's attorney had the power to repudiate Ferguson's agreement.

Although a public sector case, the discussion re breach of settlement agreements is generally applicable.

The case is Ferguson v. City of Cathedral City and the opinion is here.

2011 IRS Mileage Reimbursement Rate Went Up mid-year!

The IRS just increased the standard mileage reimbursement rate.  This is the default rate most companies use to pay employees for using their own cars for business.  The new rate, effective July 1, 2011, is $0.55, which will remain in effect through December 31, 2011.

The IRS's new rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.



The IRS announcement is here. 

DGV

Court of Appeal Steps Around Concepcion

So, you may have heard (over and over again), the U.S. Supreme Court in AT&T Mobility Services v. Concepcion (discussed here, article here)  decided that California cannot hold arbitration agreements unconscionable because they require only individuals to arbitrate and prohibit class actions in arbitration.

The first Court of Appeal to address post-Concepcion arbitration agreements is in Brown v. Ralphs Grocery.   A wage-hour class action, the plaintiffs also sought relief under California's Private Attorney General Act, or PAGA, which allows recovery of penalties on behalf of the named plaintiff and other, unnamed, aggrieved employees.  The penalty money is split 75/25 with the state.  See generally Labor Code Section 2699.

The trial court held that the class action waiver in Ralphs arbitration agreement was unconscionable, following the California Supreme Court's decision in Gentry v. Superior Court.  But the U.S. Supreme Court invalidated Gentry in the Concepcion case.

The Court of Appeal neatly side-stepped that little problem. Instead, the court held that the plaintiff failed to establish via "substantial evidence" that the class action waiver was indeed unconscionable under Gentry.

In doing so, the Court established that class action waivers are not automatically unconscionable under Gentry, and that the plaintiff had to produce evidence satisfying Gentry's four-factor test. Of course, this is all moot, because Gentry is not good law.

The Court's second task was to consider whether the PAGA claim-waiver in the arbitration agreement was unconscionable.  Here, the Court decided Concepcion did not apply. That is because, the court reasoned, a PAGA claim is asserted by the individual, not a "class."  Without a class, Concepcion would not apply - directly.   Rather, the plaintiff would go to arbitration and litigate the PAGA claim. If successful, the plaintiff would distribute the "bounty" of the penalties to the state and keep 25% for him or herself. Given there was a waiver of PAGA claims in the arbitration agreement, though, the court said that the agreement prohibiting arbitration of PAGA claims was unconscionable.

The decision may not survive on the books if the Supreme Court (California or US) decides to accept review.  On review, it will be interesting to see if, following Concepcion, the parties to an arbitration agreement may carve-out claims that can and cannot be arbitrated.  In this instance, the question would be who would be authorized to pursue a PAGA claim if every employee signed an arbitration agreement.  If the PAGA waiver is enforceable, the result might be no one. That's something that the courts might find troubling.  

The plaintiff's bar is cheering this Brown decision as an end-run around Concepcion. But everyone should keep the corks in the champagne. There are other legal battles left to fight.  For example, is it ok for the parties to let the arbitrator decide whether an arbitration clause is unconscionable, and avoid some courts' rather anti-arbitration posture regarding employment arbitration agreements. (There, I said it).   The California courts have not yet definitively decided this issue just yet:

We note that in general, the question whether an arbitration agreement is unconscionable or contrary to public policy is for the court, not the arbitrator, to decide. [Citation.] Recently, the Supreme Court held, in a case brought in federal court, that the question of unconscionability of an arbitration agreement may be for the arbitrator to decide when the agreement has clearly and unmistakably delegated that issue to the arbitrator. (Rent-A-Center[, supra,] 561 U.S. , [177 L.Ed.2d 403, 130 S.Ct. 2772, 2778–2779].) Sonic[-Calabasas A, Inc.] has not contended that the arbitration agreement delegates responsibility to the arbitrator to decide questions of the agreement's unconscionability or violation of public policy. We thus have no need to decide whether Rent-A-Center's five-to-four decision applies to actions brought in state court (see Preston [v. Ferrer (2008)] 552 U.S. 346, 363 [169 L.Ed.2d 917, 128 S.Ct. 978] (dis. opn. of Thomas, J.) [reaffirming the view of Justice Thomas that the FAA does not apply to state court proceedings]), nor whether we would adopt a similar rule as a matter of state law.”

Hartley v. Superior Court, 2011 Cal. App. LEXIS 824 (Cal. App. 4th Dist. June 28, 2011) (quoting (Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 688, fn. 12).

The fat lady is not singing, but she is kind of confused. Time will tell!  In the meantime, wait to see if Brown remains good law. If it does, don't include PAGA waivers in your arbitration agreements.  And talk to your lawyer about including clear and unmistakable language in your arbitration agreement concerning whether the court or the arbitrator will decide unconscionability.

The opinion in Brown v. Ralphs Grocery is here.

DGV

Court of Appeal on Discovery of Co-Workers' Files in Discrimination Cases

The appellate courts rarely get involved in discovery issues. It's usually up to the trial courts and parties to fight about what is relevant, what is a privacy issue, etc. So, guidance from the Court of Appeal is a welcome development.

Timothy Joyce sued his former employer, Life Technologies Corporation (LTC), for age discrimination and retaliation. In essence, Life Technologies merged with Joyce's former employer and he was laid off. He alleged that he was on a hit-list of over 40 employees, and that he was set up for termination, among other things.

In litigation, Joyce sought through interrogatories data about co-workers including:

(a) The names of all employees terminated during a two-year period, November 1, 2008 to June 28, 2010. 

(b) The department each worked for when terminated. 

(c) The date of termination. 

(d) The age of each at termination. 

(e) The reason for termination. 

(f) Whether severance benefits were offered.

(g) Whether offered severance benefits were accepted. 

(h) A description of any offered severance benefits. 

(i) A detailed explanation of reasons for any failure to offer severance benefits. 

(j) The identity (including name, address and telephone number) of all former Applied Biosystems employees still employed by LTC after the RIF. 

(k) Whether the terminated employees were former employees of Appelera or Applied Biosystems.

LTC and Joyce became involved in a discovery dispute, which resulted in a trial court order granting access to the information, but requiring the parties to first send a letter to employees notifying them of the proposed disclosure. the information would be disclosed unless the employees at issue filed a motion for protective order.  The court of appeal noted that there was no provision for protection of the information and no "opt-out" other than via a formal motion. 

The court first noted that statistical information could be relevant to a disparate impact claim and that the RIF provided for the requisite facially neutral practice.  Joyce also wanted the data for a disparate treatment claim, i.e., intentional discrimination.  The court of appeal pointed out that statistical evidence is far less important in disparate treatment cases:

Statistical evidence may also be utilized in a disparate treatment case. However, because discriminatory intent must be shown in such a case, statistical evidence must meet a more exacting standard. “[T]o create an inference of intentional discrimination, statistics must demonstrate a significant disparity and must eliminate nondiscriminatory reasons for the apparent disparity. Aragon [v. Republic Silver State Disposal Inc. (9th Cir. 2002) 292 F.3d 654, 663 (Aragon) (finding that statistics unsupported by other probative evidence of discrimination was insufficient to show pretext and to demonstrate discrimination); see also Coleman v. Quaker Oats Co. (9th Cir. 2000) 232 F.3d 1271, 1283 (holding that to raise a triable issue of fact regarding pretext based solely on statistical evidence, the statistics „must show a stark pattern of discrimination unexplainable on grounds other than age‟); United States v. Ironworkers Local 86 (9th Cir. 1971) 443 F.2d 544, 551, fn. omitted] . . . (holding that use of statistical evidence „is conditioned by the existence of proper supportive facts and the absence of variables which would undermine the reasonableness of the inference of discrimination which is drawn.‟).” (Gratch v. Nicholson (N.D.Ca. 2005, No. C04-03028 JSW) 2005 WL 2290315, *4.) 

Thus, “[a]lthough use of statistics is permissible [in a disparate treatment case], statistical evidence „rarely suffices to rebut an employer‟s legitimate, nondiscriminatory rationale for its decision to dismiss an individual employee.‟ Aragon[, supra, at p. 663, fn. 6.] . . . [T]his is so because „in disparate treatment cases, the central focus is less on whether a pattern of discrimination existed [at the company] and more how a particular individual was treated and why. As such, statistical evidence of a company‟s general hiring patterns, although relevant, carries less probative weight than it does in a disparate impact case.‟ [Ibid., citing LeBlanc v. Great Amer. Ins. Co. (1st Cir. 1993) 6 F.3d 836, 848-49.]” (Gratch v. Nicholson, supra, at p. *4, fn. 4.)

The court therefore found that at least some of the information sought would be arguably relevant to Joyce's claims. But the court then turned to privacy analysis.  

The court held that Joyce had made no showing that the identities, addresses and other private information of co-workers, particularly those who were not contended to be witnesses to any discriminatory conduct against Joyce, were sufficiently "needed" to overcome the individuals' privacy interests.  The court distinguished the "class action" discovery cases because the identities of class members are really the identities of potential witnesses, and because of the specific issues that arise in class certification proceedings.

Significantly, the court pointed out that there was no reason why statistics could not be developed without disclosure of individuals' personal information, absent a showing that LTC would provide unreliable data without giving out names and addresses, etc.  Joyce also failed to adequately demonstrate the need for the breadth of information he sought. 

The court also criticized the court's order because it placed too high a burden on objecting employees.  The court noted that if the information had been subpoenaed, a simple objection by the third party could stop the disclosure, rather than a formal motion.  Also, the court would have permitted the plaintiff to send out a notice to third parties, thereby requiring disclosure of names and addresses before the employees had a chance to object.

Finally, the trial court did not put any safeguards in place regarding the use or custody of the needed information via a suitable protective order.

Disputes such as these are common in employment law.  Therefore, when "meeting and conferring," lawyers may use this case to limit disclosure of private personnel information absent a sufficient showing of need, and ensure that private information is kept that way during and after litigation.

The opinion is Life Technologies Corporation v. Superior Court and the opinion is here.  

Court of Appeal: That's Not a Split Shift

Under California's Wage Orders - 

“Split shift” means a work schedule, which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods. 
And "when an employee works a split shift, one (1) hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment."

The question is: If you work an over night shift, such that you start at 10:p.m., end your shift at 7:00 a.m., and then return to work later the same day, is that a split shift?  No, said the Court of Appeal in Securitas Security Services, Inc. v. Superior Court (opinion here).

So, DLSE? You don't have to issue that opinion letter I asked you to issue years ago. (!)

DGV

California Supreme Court: Out of State Employers Bound by California Overtime Law...

...when employees work in California for at least a day or a week at a time.

Sullivan v. Oracle is a wage hour class action we addressed here.  If you don't remember, you're forgiven. This was back in 2008.  I had more and darker hair; Lehman Brothers was a functioning company.  You could buy a Pontiac. Remember?

Anyway, so Sullivan and his class were employees who periodically worked in California.  They wanted California wage law to apply during any full day in which they worked in California. The federal court of appeals asked the California Supreme Court to answer "certified questions."

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Here, the Court said "yes." When employees visit California from other states, California overtime laws apply:

To exclude nonresidents from the overtime laws’ protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states.  Nothing in the language or history of the relevant statutes suggests the Legislature ever contemplated such a result.

The Court ensured its holding was limited to overtime, not necessarily to other wage-hour laws:

the case before us presents no issue concerning the applicability of any provision of California wage law other than the provisions governing overtime compensa­tion.  While we conclude the applicable conflict-of-laws analysis does require us to apply California’s overtime law to full days and weeks of work performed here by nonresidents (see post, at p. 12), one cannot necessarily assume the same result would obtain for any other aspect of wage law.  California, as mentioned, has expressed a strong interest in governing overtime compensation for work performed in California.  In contrast, California’s interest in the content of an out-of-state business’s pay stubs, or the treatment of its employees’ vacation time, for example, may or may not be sufficient to justify choosing California law over the conflicting law of the employer’s home state.  No such question is before us.

The court then turned to the second question:

Second, does [Business and Professions Code section] 17200 apply to the overtime work described in question one?  Third, does [section] 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?”

The Supreme Court noted it already has held that the UCL applies to overtime claims. Therefore, the Court answered "the second certified question as follows:  Business and Professions Code section 17200 does apply to the overtime work described in question one. "

As for the third question, the Supreme Court decided that out of state plaintiffs could not sue a California-based employer for overtime violations occurring outside of California.  Thus, merely because an employer is headquartered in CA, that does not make the employer subject to suit under the UCL for alleged wrongs entirely occurring somewhere else.

The case is Sullivan v. Oracle Corp. and the opinion is here.

Facebook -

No, not the NLRB again. On this fifth anniversary of the blog, we are proud to launch our Facebook page here.  Yeah, we know, we're a few years late to the party.  Please "like" us to pieces anyway. We'll be BFF. TTFN.

DGV

Ninth Circuit En Banc Expands ERISA liability

The Ninth Circuit issued an "en banc" opinion to set the law in the Circuit regarding who is a proper defendant in certain ERISA cases.

Laura Cyr worked for CTI as a  vice president.  CTI offered long term disability benefits through Reliance Insurance.  Reliance ultimately controlled whether benefits would be awarded, but it was not the "plan administrator" under ERISA.  Cyr sued CTI for unequal pay, resulting in a settlement and a retroactive adjustment to her salary.   She was on a "long term disability" at the time, and sought an increase to her benefits. Reliance allegeldy denied that application. So Cyr sued CTI as the plan administrator, CTI's Long Term Disability Plan, and Reliance under different sections of ERISA and the common law.

In the 9th Circuit, beneficiaries were limited to suing the plan and plan administrator for denial of benefits under ERISA plans.  But no more.  The en banc court overruled prior decisions to that effect.

We conclude, therefore, that potential liability under 29  U.S.C. § 1132(a)(1)(B) is not limited to a benefits plan or the  plan administrator. Reliance is a proper defendant in a lawsuit  brought by Cyr under that statute.

As a result, insurance companies will now be sued where they have a role in denying benefits independent of the plan administrator, which apparently was the case here.  It's unclear whether this decision will result in increased premiums and legal costs, not to mention conflicts of interest between insurers and employers. We shall see.

The case is Cyr v. Reliance Standard Life Ins. Co. et al. and the opinion is here.

U.S. Supreme Court on FELA Liability

Most of you don't care about this, but when the U.S. Supremes decide an employment law case, I just have to post.

The Federal Employers’ Liability Act (FELA), 45 U. S. C. §51 et seq. renders railroads liable for employees’ injuries or deaths “resulting in whole or in part from [carrier] negligence.”  This is basically in lieu of workers' compensation benefits for railroad employees covered by the FELA.

Robert McBride, a locomotive engineer, injured his hand while operating a manual brake.  He brought suit against his employer, CSX.

The issue was what is the causation standard under the FELA.  Must the railroad's negligence be the "proximate" cause of the injury (i.e., the harm was the probable consequence of the risk), or does some other standard apply?  

The Court held that a much lower standard applies under FELA than under traditional negligence cases. Surveying years of precedent, the Court upheld the lower courts' jury instruction:  

defendant railroad “caused or contributed to” a railroad worker’s injury “if [the railroad's] negligence played apart—no matter how small—in bringing about the injury.” That, indeed, is the test Congress prescribed for proximate causation in FELA cases. 

Again, this decision is limited to injuries under the FELA. So, it is not applicable to most employers.  

The case is CSX Transportation, Inc.  v.  McBride and the opinion is here. 

Supreme Court Rules on Dukes v. Walmart

The U.S. Supreme Court issues its opinion in Dukes v. Walmart.  Here is the opinion.

Wal-Mart, the country's largest employer, faces the largest employment law class action ever.  We've posted about it a number of times as it made its way through the courts.  The U.S. Supreme Court decided to review the case to see if the Federal Rules of Civil Procedure authorizes a class action under the facts presented.  

The facts that give rise to the discrimination claims are as follows:

Pay and promotion decisions at Wal-Mart are generally committed to local managers’ broad discretion, which is exercised “in a largely subjective manner.” 222 F. R. D. 137, 145 (ND Cal. 2004). Local store managers may increase the wages of hourly employees (within limits) with only limited corporate oversight. As for salaried employees, such as store managers and their deputies, higher corporate authorities have discretion to set their pay within preestablished ranges. 

Promotions work in a similar fashion. Wal-Mart permits store managers to apply their own subjective criteria when selecting candidates as “support managers,” which isthe first step on the path to management. Admission to Wal-Mart’s management training program, however, does require that a candidate meet certain objective criteria,including an above-average performance rating, at least one year’s tenure in the applicant’s current position, and a willingness to relocate. But except for those requirements, regional and district managers have discretion to use their own judgment when selecting candidates for management training. Promotion to higher office—e.g., assistant manager, co-manager, or store manager—is similarly at the discretion of the employee’s superiors after prescribed objective factors are satisfied.

Thus, there is no "corporate wide" policy of intentional or even unintentional discrimination. Rather, the plaintiffs asserted the following theory regarding class-wide discrimination on behalf of hundreds of thousands of store level employees and supervisors:

local managers’ discretion over pay and promotions is exercised disproportionately in favor of men, leading to anunlawful disparate impact on female employees, see 42 U. S. C. §2000e–2(k). And, respondents say, because Wal-Mart is aware of this effect, its refusal to cabin its managers’ authority amounts to disparate treatment, see §2000e–2(a). . . . [T}the discrimination to which they have been subjected is common to all Wal-Mart’s female employees. The basic theory of their case is that a strong and uniform “corporate culture” permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers—thereby making every woman at the company the victim of one common discriminatory practice.

The plaintiffs sought injunctive relief, monetary relief that is considered "equitable" such as back pay, and punitive damages. They did not seek individual compensatory damages for emotional distress or front pay, because doing so would be unauthorized by Federal Rule of Civil Procedure 23.

Federal Rule of Civil Procedure 23,  contains a number of requirements.  The plaintiff must satisfy all of the 23(a) provisions:

“(1) the class is so numerous that joinder of all members is impracticable,“(2) there are questions of law or fact common to the class, “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and “(4) the representative parties will fairly and adequately protect the interests of the class”

The Supreme Court held that there was insufficient common law or fact questions.  5-4, the Court explained what "common questions of law or fact" means:

Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously,the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwideresolution—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.

The  Court, 5-4, squarely rejected that a common policy of decentralized decisions can support a class action where the standard requries proof of common issues of fact:

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters.On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.

To sustain a class action under the federal rules, the plaintiff must establish one of the elements under Rule 23(b).  The plaintiffs in Dukes relied on Rule 23(b)(2):

Rule 23(b)(2) allows class treatment when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” 

Therefore, Dukes did not rely on (b)(3), which is the familiar standard permitting damages when "common issues" predominate.  This is the basis for most class actions seeking money.  Unlike (b)(2), classes under (b)(3) are entitled to "opt out," and must receive adequate notice.  Rule 23(b)(2) is more concerned with injunctive and declaratory relief.

The question was whether the monetary relief that the plaintiffs sought was authorized under  Rule 23(b)(2). The Court (9-0) held that it was not:

Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.

The Supreme Court held that "backpay" was not authorized generally by Rule 23(b)(2), and the only monetary relief available would be when it was intertwined with a particular injunction.  In Dukes' case, the injunction would not be common to each member of the class, anyway, so there could be no common monetary relief either.

So, we'll have an article, and you'll be hearing a lot about this case in the coming days.  I hope this brief summary was helpful.  It will result in less blockbuster class actions in federal court.  However, it does not necessarily mean that smaller class actions will be limited when there is a common practice causing a common injury.

HAPPY 5TH ANNIVERSARY TO SHAW VALENZA

We made it 5 years! So, this is going to be one of those self-promoting / congratulatory posts.... 

We opened our doors 6/19/06. And we started this little blog thing of ours on 6/26/06.  Seems like it was just yesterday. And by "yesterday" I mean Saturday, 20 years ago.  

We've been so fortunate to work with great people and organizations.  We wanted to honor our clients in some way to thank them for our success. But many are not local, and many have anti-gift policies now. So,  rather than throw a party or send gifts, we made a donation to Guide Dogs for the Blind.  Yes, you can call them to make sure.

We have a terrific team of lawyers and non-lawyers in our Sacramento and San Francisco offices.  Since they are local and certainly have no non-gifting policies, we celebrated with a dinner.  We also thank our departed staff and lawyers, who helped us in our formative years.  We hope you had dinner somewhere equally wonderful.

Speaking of offices, we just moved to new space in Sacramento (980 9th St., Ste. 2300, if you are planning on, you know.....visiting.  Or visiting. 

Our "refreshed" website will roll out imminently, as will our new Facebook presence. It seems Facebook and Twitter may have replaced blogging as a medium for timely updates. But we're stubborn and committed, and somewhat retro. So, we will press on here until we are posting to an empty room.  In case you prefer Twitter, go here.  And we're putting the finishing touches on our Facebook page.  So you will be able to "like" us to your heart's content. We are nothing if not accessible.  And wordy.

So, thanks for hanging in there with us for these 5 years, loyal clients, and the other readers (yes, Dad, I mean you. And happy father's day, by the way). 

Jennifer and Greg