Universal Health Services, Inc. v. United States ex rel. Escobar (US 15-7 6/16/16) False Claims Act/Staff Licensing

 

Yarushka Rivera, a teenage beneficiary of Massachusetts’ Medicaid program, received counseling services for several years at Arbour Counseling Services, a satellite mental health facility owned and op­erated by a subsidiary of petitioner Universal Health Services, Inc. She had an adverse reaction to a medication that a purported doctor at Arbour prescribed after diagnosing her with bipolar disorder. Her condition worsened, and she eventually died of a seizure. Respond­ents, her mother and stepfather, later discovered that few Arbour employees were actually licensed to provide mental health counseling or authorized to prescribe medications or offer counseling services without supervision.

 

Respondents filed a qui tam suit, alleging that Universal Health had violated the False Claims Act (FCA). That Act imposes signifi­cant penalties on anyone who “knowingly presents . . . a false or fraudulent claim for payment or approval” to the Federal Govern­ment, 31 U. S. C. §3729(a)(1)(A). Respondents sought to hold Univer­sal Health liable under what is commonly referred to as an “implied false certification theory of liability,” which treats a payment request as a claimant’s implied certification of compliance with relevant stat­utes, regulations, or contract requirements that are material condi­tions of payment and treats a failure to disclose a violation as a mis­representation that renders the claim “false or fraudulent.” Specifically, respondents alleged, Universal Health (acting through Arbour) defrauded the Medicaid program by submitting reimburse­ment claims that made representations about the specific services provided by specific types of professionals, but that failed to disclose serious violations of Massachusetts Medicaid regulations pertaining to staff qualifications and licensing requirements for these services. Universal Health thus allegedly defrauded the program because Uni­versal Health knowingly misrepresented its compliance with mental health facility requirements that are so central to the provision of mental health counseling that the Medicaid program would have re­fused to pay these claims had it known of these violations.

 

The District Court granted Universal Health’s motion to dismiss. It held that respondents had failed to state a claim under the “im­plied false certification” theory of liability because none of the regula­tions violated by Arbour was a condition of payment. The First Cir­cuit reversed in relevant part, holding that every submission of a claim implicitly represents compliance with relevant regulations, and that any undisclosed violation of a precondition of payment (whether or not expressly identified as such) renders a claim “false or fraudu­lent.” The First Circuit further held that the regulations themselves provided conclusive evidence that compliance was a material condi­tion of payment because the regulations expressly required facilities to adequately supervise staff as a condition of payment.

 

Held:

 

1. The implied false certification theory can be a basis for FCA lia­bility when a defendant submitting a claim makes specific represen­tations about the goods or services provided, but fails to disclose non­compliance with material statutory, regulatory, or contractual requirements that make those representations misleading with re­spect to those goods or services. Pp. 8–11.

 

(a) The FCA does not define a “false” or “fraudulent” claim, so the Court turns to the principle that “absent other indication, ‘Congress intends to incorporate the well-settled meaning of the common-law terms it uses,’ ” Sekhar v. United States, 570 U. S. ___, ___. Under the common-law definition of “fraud,” the parties agree, certain mis­representations by omission can give rise to FCA liability. Respond­ents and the Government contend that every claim for payment im­plicitly represents that the claimant is legally entitled to payment, and that failing to disclose violations of material legal requirements renders the claim misleading. Universal Health, on the other hand, argues that submitting a claim involves no representations and that the nondisclosure of legal violations is not actionable absent a special duty of reasonable care to disclose such matters. Today’s decision holds that the claims at issue may be actionable because they do more than merely demand payment; they fall squarely within the rule that representations that state the truth only so far as it goes, while omitting critical qualifying information, can be actionable mis­representations. Pp. 8–10.

 

(b) By submitting claims for payment using payment codes corresponding ­ to specific counseling services, Universal Health represent­ed that it had provided specific types of treatment. And Arbour staff allegedly made further representations by using National Provider Identification numbers corresponding to specific job titles. By con­veying this information without disclosing Arbour’s many violations of basic staff and licensing requirements for mental health facilities, Universal Health’s claims constituted misrepresentations. Pp. 10–11.

 

2. Contrary to Universal Health’s contentions, FCA liability for failing to disclose violations of legal requirements does not turn upon whether those requirements were expressly designated as conditions of payment. Pp. 11–17.

 

(a) Section 3729(a)(1)(A), which imposes liability on those pre­senting “false or fraudulent claim[s],” does not limit claims to misrep­resentations about express conditions of payment. Nothing in the text supports such a restriction. And under the Act’s materiality re­quirement, statutory, regulatory, and contractual requirements are not automatically material, even if they are labeled conditions of payment. Nor is the restriction supported by the Act’s scienter re­quirement. A defendant can have “actual knowledge” that a condi­tion is material even if the Government does not expressly call it a condition of payment. What matters is not the label that the Gov­ernment attaches to a requirement, but whether the defendant know­ingly violated a requirement that the defendant knows is material to the Government’s payment decision. Universal Health’s policy ar­guments are unavailing, and are amply addressed through strict en­forcement of the FCA’s stringent materiality and scienter provisions. Pp. 12–14.

 

(b) A misrepresentation about compliance with a statutory, regu­latory, or contractual requirement must be material to the Govern­ment’s payment decision in order to be actionable under the FCA. The FCA’s materiality requirement is demanding. An undisclosed fact is material if, for instance, “[n]o one can say with reason that the plaintiff would have signed this contract if informed of the likelihood” of the undisclosed fact. Junius Constr. Co. v.Cohen, 257 N. Y. 393, 400, 178 N. E. 672, 674. When evaluating the FCA’s materiality re­quirement, the Government’s decision to expressly identify a provi­sion as a condition of payment is relevant, but not automatically dis-positive. A misrepresentation cannot be deemed material merely because the Government designates compliance with a particular re­quirement as a condition of payment. Nor is the Government’s option to decline to pay if it knew of the defendant’s noncompliance suffi­cient for a finding of materiality. Materiality also cannot be found where noncompliance is minor or insubstantial. Moreover, if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material. The FCA thus does not support the Government’s and First Circuit’s expansive view that any statutory, regulatory, or contractual violation is mate­rial so long as the defendant knows that the Government would been titled to refuse payment were it aware of the violation. Pp. 14–17.

 

780 F. 3d 504, vacated and remanded.

 

THOMAS, J., delivered the opinion for a unanimous Court.

Link to decision: http://www.supremecourt.gov/opinions/15pdf/15-7_a074.pdf

Ruiz v. Snohomish City Public Utility District No. 1 (9th Cir. 14-35030 6/8/16) Sex Discrimination/Res Judicata

 

The panel affirmed in part and reversed in part the district court’s dismissal, on res judicata grounds, of an action brought under 42 U.S.C. § 1983 and state law, alleging sex discrimination.

 

Plaintiff sued her former employer in 2011, alleging sex discrimination for acts that occurred in 2008. The district court dismissed that action “with prejudice” on two grounds: lack of personal jurisdiction and untimeliness. In 2013, plaintiff brought the present action, alleging sex discrimination claims, under state and federal law, stemming in part from her termination in 2010. The district court held that the earlier dismissal was res judicata and that, accordingly, it barred the present action.

 

The panel held that – consistent with the Restatement (Second) of Judgments and at least three sister circuits – an earlier dismissal on alternative grounds, where one ground is a lack of jurisdiction, is not res judicata. The panel therefore held that res judicata did not bar this action. The panel determined, however, that dismissal of some of plaintiff’s claims was proper on other grounds, and therefore the panel affirmed in part, reversed in part and remanded for further

proceedings.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/06/08/14-35030.pdf

 

Vaquero v. Ashley Furniture (9th Cir. 13-56606 6/8/16) Wage & Hour/Class Certification

 

The panel affirmed the district court’s order granting class certification under Fed. R. Civ. P. 23 to a plaintiff representing a class of former and current sales associates of Stoneledge Furniture, LLC, alleging violations of California’s minimum wage and hour laws.

 

The panel held that plaintiff established commonality, as required by Fed. R. Civ. P. 23(a), and the district court permissibly concluded that plaintiff pleaded a common injury capable of class-wide resolution. The panel also held that plaintiff established the predominance of class claims, as required by Fed. R. Civ. P. 23(b)(3); and the district court permissibly ruled that individual claims did not predominate in this case. Finally, the panel held that class certification did not alter the parties’ substantive rights, and the district court did not violate the Rules Enabling Act in certifying the class.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/06/08/13-56606.pdf

Mendoza v. The Roman Catholic Archbishop of Los Angeles (9th Cir. 14-55651 per curiam 6/7/16) ADA Disparate Treatment/Reasonable Accommodation

 

The panel withdrew its opinion filed April 14, 2016, and filed a new opinion affirming the district court’s summary judgment in favor of defendant in plaintiff’s action alleging that defendant violated the Americans with Disabilities Act when it failed to return her to a full time position following her medical leave.

 

The panel affirmed the district court’s summary judgment on claims of disability discrimination and disparate treatment.  The panel stated that the Ninth Circuit’s ADA cases, requiring a plaintiff who alleges disparate treatment to show either that a discriminatory animus is the sole reason for the challenged action or that discrimination is one of two or more reasons for the challenged decision, at least one of which may be legitimate, remain good law following EEOC v. Abercrombie & Fitch Stores, Inc., 135 S. Ct. 2028 (2015), a Title VII case. The panel also affirmed the district court’s summary judgment on plaintiff’s reasonable accommodation claim.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/06/07/14-55651.pdf

United Educators of S.F. v. Cal. Unemp. Ins. App. Bd. (CA1/1 A142858 6/6/16)Unemployment Benefits

 

Plaintiff United Educators of San Francisco AFT/CFT, AFL-CIO, NEA/CTA (UESF) petitioned the superior court for a writ of administrative mandate on behalf of certain of its members who were employed by the San Francisco Unified School District (District).  UESF contended that these members—all of whom had been provided reasonable assurance of continued employment in the fall of 2011—were improperly denied unemployment benefits during the summer of 2011.  The petition was successfully opposed below by the District.  In a companion appeal, the California Unemployment Insurance Appeals Board (CUIAB) challenges a separate ruling in favor of the District invalidating a precedent benefit decision that would have permitted public school employees to receive unemployment benefits during summer months provided certain conditions are met.  We affirm the lower court as to both rulings. 

 

http://www.courts.ca.gov/opinions/documents/A142858.PDF

Flores v. City of San Gabriel (9th Cir. 14-56421, 14-56514 6/2/16) FLSA Willful Violation/Unused Benefits and Overtime Pay Calculation

 

On an appeal and a cross-appeal, the panel affirmed in part and reversed in part the district court’s summary judgment partially in favor of the plaintiffs in an action under the Fair Labor Standards Act, alleging that the City of San Gabriel failed to include payments of unused portions of police officers’ benefits allowances when calculating their regular rate of pay, resulting in a lower overtime rate and a consequent underpayment of overtime compensation.

 

The district court agreed with the plaintiffs that the City’s cash-in-lieu of benefits payments were not properly excluded from its calculation of the regular rate of pay, except to the extent that the City made payments to trustees or third parties. The district court held that the plaintiffs were restricted to a two-year statute of limitations because the City’s violation was not willful. The district court also found that the City qualified for a partial overtime exemption, limiting its liability for overtime to hours worked in excess of 86 in a 14-day work period.

 

The panel held that the City’s payment of unused benefits must be included in the regular rate of pay and thus in the calculation of the overtime rate for its police officers. The panel held that the City’s violation of the Act was willful because it took no affirmative steps to ensure that its initial designation of its benefits payments complied with the Act and failed to establish that it acted in good faith. Accordingly, the plaintiffs were entitled to a three-year statute of limitations and liquidated damages for the City’s violations. The panel also concluded, however, that the City had demonstrated that it qualified for the partial overtime exemption under § 207(k) of the Act, limiting its damages for the overtime violations.

 

Judge Owens, joined by Judge Trott, wrote that he concurred fully in the majority’s opinion but believes that the court’s willfulness caselaw is off track.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/06/02/14-56421.pdf

Seibert v. City of San Jose (CA6 H040268 5/31/16) Civil Service Misconduct

 

Plaintiff Grant Seibert petitioned the superior court for a writ of administrative mandamus to set aside a decision by the Civil Service Commission of the City of San Jose (Commission) denying his appeal from a decision by the San Jose Fire Department (Department) to terminate his employment as a firefighter and paramedic.  The dismissal was based upon five charges of misconduct, two of which stemmed from his exchange of salacious e-mails during work hours with a 16-year old girl who had visited the station, and three of which stemmed from allegedly improper conduct toward a female coworker.  The trial court set aside the Commission’s decision on all but one of the charges, and found that charge insufficient to sustain the level of discipline imposed.  Both parties have appealed.  We hold that (1) the Commission was not deprived of jurisdiction by the belated filing of the notice of discipline on which the challenged dismissal was based; (2) the trial court properly concluded that the e-mail exchange as alleged in one charge, which made no reference to the recipient’s age, could not be found to violate any applicable rule or policy; (3) the court permissibly found, on conflicting evidence, that Seibert lacked actual or constructive knowledge of the recipient’s age; (4) the court erred by refusing to consider the contents of interview transcripts which constituted the chief evidence of misconduct toward a female coworker; and (5) the court should have directed that any further administrative proceedings be heard and determined by an administrative law judge.  We will reverse the judgment for further proceedings consistent with our opinion.

 

http://www.courts.ca.gov/opinions/documents/H040268.PDF

Rich v. Shrader (9th Cir. 14-55484 5/24/16) ERISA/Stock Plan

 

The panel affirmed the district court’s judgment in favor of the defendants on claims under ERISA and California state law, arising from an employment dispute.

 

Affirming the district court’s summary judgment, the panel held that a claim for breach of an employment contract was barred by the four-year statute of limitations, Cal. Civ. Proc. Code § 337. The district court did not abuse its discretion in denying the plaintiff a third opportunity to amend his complaint.

 

Affirming the dismissal of ERISA claims, and agreeing with other circuits, the panel held that the employer’s stock rights plan did not qualify as an employee pension benefit plan subject to ERISA under 29 U.S.C. § 1002(2)(A) because its primary purpose was not to provide deferred compensation or other retirement benefits.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/05/24/14-55484.pdf

 

Farkas v. Williams (9th Cir. 14-55756 5/24/16) Workplace Investigation/Civil Service Employee

 

The panel affirmed the district court’s summary judgment and dismissal of an action brought by a civil-service employee under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971).

 

Plaintiff, an employee at a naval base, was placed on administrative leave and directed to participate in an on-base interview with a naval investigator concerning a budgetary investigation. After he was cleared of the charges, he brought a Bivens action against base administrators for employment related due-process and First Amendment violations, and against the investigator for Fourth Amendment violations.

 

The panel first held that the Civil Service Reform Act of 1978 precludes employment-relatedBivens claims by Non-Appropriated Fund Instrumentality Program employees like plaintiff, for whom Congress has provided other safeguards.

 

The panel further held that plaintiff did not suffer an unconstitutional Fourth Amendment seizure when he was asked to place his belongings in a lockbox per protocol during his on-base interview with the naval investigator. The panel concluded that plaintiff impliedly consented to the storage of his belongings by voluntarily passing through an internal checkpoint in a passage-restricted military installation.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/05/24/14-55756.pdf

 

Dept. of Corrections & Rehab. v. State Personnel Bd. (CA3 C073865 5/24/16) Safety Officers Procedural Bill of Rights Act/Statutory Tolling

 

California Department of Corrections and Rehabilitation (CDCR) gave notice it intended to discipline its employee, parole agent Shiekh Iqbal (real party in interest), for unauthorized use of government resources to access criminal history information concerning a third party.  The State Personnel Board (SPB) revoked the discipline on statute of limitations grounds under the Public Safety Officers Procedural Bill of Rights Act (POBRA), Government Code section 3304.  (Unless otherwise set forth, statutory references that follow are to the Government Code.)  SPB ruled that statutory tolling of the limitations period for “criminal investigation” of misconduct did not apply because CDCR conducted the criminal investigation itself, rather than have it done by an independent agency.  (§ 3304.) 

 

Section 3304, subdivision (d) provides “(1) . . . [N]o punitive action . . . shall be undertaken for any act, omission, or other allegation of misconduct if the investigation of the allegation is not completed within one year of the public agency’s discovery by a person authorized to initiate an investigation of the allegation of an act, omission, or other misconduct. . . .  In the event that the public agency determines that discipline may be taken, it shall complete its investigation and notify the public safety officer of its proposed discipline by a Letter of Intent or Notice of Adverse Action articulating the discipline that year, except as provided in paragraph (2).  The public agency shall not be required to impose the discipline within that one-year period.

 

“(2)(A)  If the act, omission, or other allegation of misconduct is also the subject of a criminal investigation or criminal prosecution, the time during which the criminal investigation or criminal prosecution is pending shall toll the one-year time period.  [¶]  . . . ” 

 

CDCR and its (former) Secretary Matthew Cate petitioned for administrative mandamus.  (Code Civ. Proc., § 1094.5.)  The trial court granted the petition, ruling the discipline was timely because the limitations period was tolled during CDCR’s internal criminal investigation of the misconduct.  Iqbal appeals, arguing we should defer to SPB’s interpretation of the statute.  SPB has elected not to file a brief in this appeal.

 

We conclude tolling applies, and the disciplinary action was timely.  We affirm the judgment remanding the case for SPB decision on the merits.

 

http://www.courts.ca.gov/opinions/documents/C073865.PDF

Green v. Brennan (US 14–613 5/23/16) Title VII Constructive Discharge Limitations Period Runs from Resignation

 

After petitioner Marvin Green complained to his employer, the United States Postal Service, that he was denied a promotion because he was black, his supervisors accused him of the crime of intentionally delay­ing the mail. In an agreement signed December 16, 2009, the Postal Service agreed not to pursue criminal charges, and Green agreed ei­ther to retire or to accept another position in a remote location for much less money. Green chose to retire and submitted his resigna­tion paperwork on February 9, 2010, effective March 31. On March 22—41 days after resigning and 96 days after signing the agreement—Green reported an unlawful constructive discharge to an Equal Employment Opportunity counselor, an administrative prerequisite to filing a complaint alleging discrimination or retalia­tion in violation of Title VII of the Civil Rights Act of 1964. See 29 CFR §1614.105(a)(1). Green eventually filed suit in Federal District Court, which dismissed his complaint as untimely because he had not contacted the counselor within 45 days of the “matter alleged to be discriminatory,” ibid. The Tenth Circuit affirmed, holding that the 45-day limitations period began to run on December 16, the date Green signed the agreement.

 

Held:

 

1. Because part of the “matter alleged to be discriminatory” in a constructive-discharge claim is an employee’s resignation, the 45-daylimitations period for such action begins running only after an em­ployee resigns. Pp. 4–15.

 

(a) Where, as here, the regulatory text itself is not unambiguous­ly clear, the Court relies on the standard rule for limitations periods, which provides that a limitations period ordinarily begins to run“ ‘when the plaintiff has a complete and present cause of action,’ ” Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U. S. 409, 418. Applied here, that rule offers three persuasive reasons to include the employee’s resignation in the limi­tations period. Pp. 4–10.

 

(i) First, resignation is part of the “complete and present cause of action” in a constructive-discharge claim, which comprises two basic elements: discriminatory conduct such that a reasonable em­ployee would have felt compelled to resign and actual resignation,Pennsylvania State Police v. Suders, 542 U. S. 129, 148. Until he re­signs, an employee does not have a “complete and present cause of action” for constructive discharge. Under the standard rule, only af­ter the employee has a complete and present cause of action does that trigger the limitations period. In this respect, a constructive-discharge claim is no different from an ordinary wrongful-discharge claim, which accrues only after the employee is fired. Pp. 6–8.

 

(ii) Second, although the standard rule may be subject to ex­ception where clearly indicated by the text creating the limitations period, nothing in Title VII or the regulation suggests such displace­ment. To the contrary, it is natural to read “matter alleged to be dis­criminatory” as including the allegation forming the basis of the claim, which confirms the standard rule’s applicability. Pp. 8–9.

 

(iii) Third, practical considerations also confirm the merit of applying the standard rule. Starting the clock ticking before a plain­tiff can actually file suit does little to further the limitations period’s goals and actively negates Title VII’s remedial structure. A “limita­tions perio[d] should not commence to run so soon that it becomes dif­ficult for a layman to invoke the protection of the civil rights stat­utes.” Delaware State College v. Ricks, 449 U. S. 250, 262, n. 16. Nothing in the regulation suggests a two-step process in which an employee would have to file a complaint after an employer’s discrimi­natory conduct, only to be forced to amend that complaint to allege constructive discharge after resigning. Requiring that a complaint be filed before resignation occurs would also, e.g., ignore that an em­ployee may not be in a position to leave his job immediately. Pp. 9–10.

 

(b) Arguments against applying the standard rule here are re­jected. Suders stands not for the proposition that a constructive dis­charge is tantamount to a formal discharge for remedial purposes on­ly, but for the rule that constructive discharge is a claim distinct from the underlying discriminatory act, 542 U. S., at 149. Nor was Green’s resignation the mere inevitable consequence of the Postal Service’s discriminatory conduct. Ricks, 449 U. S. 250, distinguished. Finally, the important goal of promoting conciliation through early, informal contact with a counselor does not warrant treating a constructive dis­charge different from an actual discharge for purposes of the limita­tions period. Pp. 10–15.

 

2. A constructive-discharge claim accrues—and the limitations pe­riod begins to run—when the employee gives notice of his resigna­tion, not on the effective date thereof. The Tenth Circuit is left to de­termine, in the first instance, the date that Green in fact gave notice.

 

P. 16. 760 F. 3d 1135, vacated and remanded.

 

SOTOMAYOR, J., delivered the opinion of the Court, in which ROBERTS,C. J., and KENNEDY, GINSBURG, BREYER, and KAGAN, JJ., joined. ALITO, J., filed an opinion concurring in the judgment. THOMAS, J., filed a dis­senting opinion.

 

http://www.supremecourt.gov/opinions/15pdf/14-613_l5gm.pdf

Moyle v. Liberty Mut. Ret. Benefit Plan (9th Cir. 13-56330, 13-56412 5/20/16) ERISA Class Action/Past Service Retirement Credit

 

The panel affirmed in part and reversed in part the district court’s summary judgment in favor of the defendants in a class action under the Employee Retirement Income Security Act.

 

Plaintiffs alleged that their new employer, which purchased their former employer, told them that they would receive past service credit, under the new employer’s retirement plan, for the time they worked with the former employer.

 

The panel affirmed the district court’s summary judgment on a claim for benefits under 29 U.S.C. § 1132(a)(1)(B). The panel held that the district court applied the correct abuse of discretion standard of review, and the plaintiffs were not entitled to past service credit under the plain terms of the retirement plan.

 

The panel reversed the district court’s summary judgment on plaintiffs’ claim for equitable relief under § 1132(a)(3). Agreeing with the Eighth Circuit, the panel held that the plaintiffs were not barred from bringing simultaneous claims under § 1132(a)(1)(B) and § 1132(a)(3). Courts have interpreted Varity Corp. v. Howe, 516 U.S. 489 (1996), to mean that equitable relief under § 1132(a)(3) is not available if § 1132(a)(1)(B) provides an adequate remedy. But under CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), § 1132(a)(3) authorizes equitable relief in the form of plan reformation, even if plaintiffs also claim relief under § 1132(a)(1)(B). The panel concluded that in light of Amara, prior Ninth Circuit case law to the contrary was no longer binding. The panel remanded for determinations of fact and equitable relief in the

form of reformation and surcharge.

 

The panel affirmed the district court’s summary judgment on a claim that the new employer breached its fiduciary duty to disclose information about past service retirement credit in its Summary Plan Description. The panel held that the plaintiffs did not prove harm or detrimental reliance. On defendants’ cross-appeal, the panel held that class certification was proper.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/05/20/13-56330.pdf

SW Reg. Council of Carpenters v. Drywall Dynamics, Inc. (9th Cir. 14-55250 5/19/16)Labor Arbitration

 

The panel reversed the district court’s order vacating an arbitration award in a labor law case.

The arbitrator ruled that an employer was bound by a memorandum of understanding extending the term of a labor agreement. The district court vacated the arbitration award on the grounds that the arbitrator’s interpretation of the parties’ agreement was not plausible and was contrary to public policy.

 

The panel held that the district court’s decision exceeded its narrow authority to determine whether the arbitrator’s award was based on the parties’ contract and whether it violated an explicit, well-defined, and dominant public policy.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2016/05/19/14-55250.pdf

CRST Van Expedited Inc. v. EEOC (US 14–1375 5/19/16) Defendant Need Not Win on Merits to be Prevailing Party

 

Petitioner CRST, a trucking company using a system under which two employees share driving duties on a single truck, requires its drivers to graduate from the company’s training program before becoming a certified driver. In 2005, new driver Monika Starke filed a charge with the Equal Employment Opportunity Commission (Commission),alleging that she was sexually harassed by two male trainers during the road-trip portion of her training. Following the procedures set out in Title VII of the Civil Rights Act of 1964, see 42 U. S. C. §2000e–5(b), the Commission informed CRST about the charge and investigated the allegation, ultimately informing CRST that it had found reasonable cause to believe that CRST subjected Starke and “a class of employees and prospective employees to sexual harassment” and offering to conciliate. In 2007, having determined that concilia­tion had failed, the Commission, in its own name, filed suit against CRST under §706 of Title VII. During discovery, the Commission identified over 250 allegedly aggrieved women. The District Court, however, dismissed all of the claims, including those on behalf of 67 women, which, the court found, were barred on the ground that the Commission had not adequately investigated or attempted to concili­ate its claims on their behalf before filing suit. The District Court then dismissed the suit, held that CRST is a prevailing party, and in­vited CRST to apply for attorney’s fees. CRST filed a motion for at­torney’s fees. The District Court awarded the company over $4 mil­lion in fees. The Eighth Circuit reversed the dismissal of only two claims—on behalf of Starke and one other employee—but that led it to vacate, without prejudice, the attorney’s fees award. On remand, the Commission settled the claim on behalf of Starke and withdrew the other. CRST again sought attorney’s fees, and the District Court again awarded it more than $4 million, finding that CRST had pre­vailed on the claims for over 150 of the allegedly aggrieved women, including the 67 claims dismissed because of the Commission’s fail­ure to satisfy its presuit requirements. The Eighth Circuit reversed and remanded once more. It held that a Title VII defendant can be a “prevailing party” only by obtaining a “ruling on the merits,” and that the District Court’s dismissal of the claims was not a ruling on the merits.

 

Held: A favorable ruling on the merits is not a necessary predicate to find that a defendant is a prevailing party. Pp. 11–16.

 

(a) Common sense undermines the notion that a defendant cannot “prevail” unless the relevant disposition is on the merits. A plaintiff seeks a material alteration in the legal relationship between the par­ties. But a defendant seeks to prevent an alteration in the plaintiff ’s favor, and that objective is fulfilled whenever the plaintiff ’s challenge is rebuffed, irrespective of the precise reason for the court’s decision, i.e., even if the court’s final judgment rejects the plaintiff’s claim for a nonmerits reason. There is no indication that Congress intended that defendants should be eligible to recover attorney’s fees only when courts dispose of claims on the merits. Title VII’s fee-shifting statute allows prevailing defendants to recover whenever the plain­tiff ’s “claim was frivolous, unreasonable, or groundless.” Christians-burg Garment Co. v. EEOC, 434 U. S. 412, 422. Congress thus must have intended that a defendant could recover fees expended in frivo­lous, unreasonable, or groundless litigation when the case is resolved in the defendant’s favor, whether on the merits or not. Christians-burg itself involved a defendant’s request for attorney’s fees in a case where the District Court had rejected the plaintiff ’s claim for a non-merits reason. Various Courts of Appeals likewise have applied the Christiansburg standard when claims were dismissed for nonmerits reasons. Pp. 11–14.

 

(b) The Court declines to decide the argument, raised by the Com­mission for the first time during the merits stage of this case, wheth­er a defendant must obtain a preclusive judgment in order to prevail. The Commission’s failure to articulate its preclusion theory earlier has resulted in inadequate briefing on the issue, and the parties dis­pute whether the District Court’s judgment was in fact preclusive. The Commission also submits that the Court should affirm on the al­ternative ground that, even if CRST is a prevailing party, the Com­mission’s position that it had satisfied its presuit obligations was not frivolous, unreasonable, or groundless. These matters are left for the Eighth Circuit to consider in the first instance. It is not this Court’s usual practice to adjudicate either legal or predicate factual questions in the first instance, see Adarand Constructors, Inc. v. Mineta, 534 U. S. 103, 110, and that is the proper course here, given the extensive record in this case and the Commission’s change of position between the certiorari and merits stages. Pp. 14–16.

 

774 F. 3d 1169, vacated and remanded.

 

KENNEDY, J., delivered the opinion for a unanimous Court. THOMAS, J., filed a concurring opinion.

 

http://www.supremecourt.gov/opinions/15pdf/14-1375_09m1.pdf

Final Overtime Rule Issued by US Department of Labor (5/18/16)

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act

On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.

In 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA's minimum wage and overtime standards. Consistent with the President's goal of ensuring workers are paid a fair day's pay for a hard day's work, the memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA's intended overtime protections are fully implemented.

The Department published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on July 6, 2015 (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015. The Department received over 270,000 comments in response to the NPRM from a variety of interested stakeholders. The feedback the Department received helped shape the Final Rule.

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

1.     Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);

2.     Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and

3.     Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Although the Office of Management and Budget (OMB) has reviewed and approved the Final Rule, the document has not yet been published in the Federal Register. The Final Rule that appears in the Federal Register may contain minor formatting differences in accordance with Office of the Federal Register publication requirements. The OMB-approved version is being provided as a convenience to the public and this website will be updated with the Federal Register’s published version when it becomes available.

Informational Webinars on the Overtime Final Rule   Register Here

Additional Information

       Overtime Overview

       Questions and Answers

       Fact Sheet:

o    Overtime Final Rule (PDF)

o    Final Rule: Non-Profit

o    Final Rule: Higher Education

o    Final Rule: States and Local Governments

       Guidance for Businesses

o    General Guidance

o    Non-Profit Guidance

o    Higher Education Guidance

       Comparison Table: Current Regulations, Proposed Rule, and Final Rule

       Small Business Guide

       DOL Overtime Page

       Overtime NPRM Page

       Non-Enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds

Spokeo, Inc. v. Robins  (US 13-1339 5/16/16) Fair Credit Reporting Act/Class Action/Injury in Fact

 

The Fair Credit Reporting Act of 1970 (FCRA) requires consumer re­porting agencies to “follow reasonable procedures to assure maximum possible accuracy of” consumer reports,15 U. S. C. §1681e(b), and imposes liability on “[a]ny person who willfully fails to comply with any requirement [of the Act] with respect to any” individual, §1681n(a). Petitioner Spokeo, Inc., an alleged consumer reporting agency, op­erates a “people search engine,” which searches a wide spectrum of data bases to gather and provide personal information about individ­uals to a variety of users, including employers wanting to evaluate prospective employees. After respondent Thomas Robins discovered that his Spokeo-generated profile contained inaccurate information, he filed a federal class-action complaint against Spokeo, alleging that the company willfully failed to comply with the FCRA’s require­ments. The District Court dismissed Robins’ complaint, holding that he had not properly pleaded injury in fact as required by Article III. The Ninth Circuit reversed. Based on Robins’ allegation that “Spokeo vio­lated his statutory rights” and the fact that Robins’ “personal inter­ests in the handling of his credit information are individualized,” the court held that Robins had adequately alleged an injury in fact.

 

Held: Because the Ninth Circuit failed to consider both aspects of the injury-in-fact requirement, its Article III standing analysis was in­complete. Pp. 5–11.

 

(a) A plaintiff invoking federal jurisdiction bears the burden of es­tablishing the “irreducible constitutional minimum” of standing by demonstrating (1) an injury in fact, (2) fairly traceable to the chal­lenged conduct of the defendant, and (3) likely to be redressed by a favorable judicial decision. Lujan v. Defenders of Wildlife, 504 U. S. 555, 560–561. Pp. 5–6.

 

(b) As relevant here, the injury-in-fact requirement requires a plaintiff to show that he or she suffered “an invasion of a legally pro­tected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Lujan, supra, at 560. Pp. 7–11.

 

(1) The Ninth Circuit’s injury-in-fact analysis elided the inde­pendent “concreteness” requirement. Both observations it made con­cerned only “particularization,” i.e., the requirement that an injury “affect the plaintiff in a personal and individual way,” Lujan, supra,at 560, n. 1, but an injury in fact must be both concrete and particu­larized, see, e.g., Susan B. Anthony List v. Driehaus, 573 U. S. ___, ___. Concreteness is quite different from particularization and re­quires an injury to be “de facto,” that is, to actually exist. Pp. 7–8.

 

(2) The Ninth Circuit also failed to address whether the alleged procedural violations entail a degree of risk sufficient to meet the concreteness requirement. A “concrete” injury need not be a “tangi­ble” injury. See, e.g., Pleasant Grove City v. Summum, 555 U. S. 460. To determine whether an intangible harm constitutes injury in fact, both history and the judgment of Congress are instructive. Congress is well positioned to identify intangible harms that meet minimum Article III requirements, but a plaintiff does not automatically satisfy the injury-in-fact requirement whenever a statute grants a right and purports to authorize a suit to vindicate it. Article III standing re­quires a concrete injury even in the context of a statutory violation. This does not mean, however, that the risk of real harm cannot satis­fy that requirement. See, e.g., Clapper v. Amnesty Int’l USA, 568 U. S. ____. The violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact; in such a case, a plaintiff need not allege any additional harm beyond the one identified by Congress, see Federal Election Comm’n v. Akins, 524 U. S. 11, 20–25. This Court takes no position on the correctness of the Ninth Circuit’s ultimate conclusion, but these general princi­ples demonstrate two things: that Congress plainly sought to curb the dissemination of false information by adopting procedures de­signed to decrease that risk and that Robins cannot satisfy the de­mands of Article III by alleging a bare procedural violation. Pp. 8–11. 742 F. 3d 409, vacated and remanded.

 

ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, BREYER, and KAGAN, JJ., joined. THOMAS, J., filed a concurring opinion. GINSBURG, J., filed a dissenting opinion, in which SOTOMAYOR, J., joined.

 

http://www.supremecourt.gov/opinions/15pdf/13-1339_f2q3.pdf

 

Zubik v. Burwell (US 14–1418, 14–1453, 14–1505, 15–35, 15–105, 15–119, and 15–191, Per Curium, 5/16/16)  Affordable Care Act’s Birth-Control Mandate

 

PER CURIAM.

 

Petitioners are primarily nonprofit organizations that provide health insurance to their employees. Federal regulations require petitioners to cover certain contracep­tives as part of their health plans, unless petitioners submit a form either to their insurer or to the Federal Government, stating that they object on religious grounds to providing contraceptive coverage. Petitioners allege that submitting this notice substantially burdens the exercise of their religion, in violation of the Religious Freedom Restoration Act of 1993, 107 Stat. 1488, 42 U. S. C. §2000bb et seq.

 

Following oral argument, the Court requested supple­mental briefing from the parties addressing “whether contraceptive coverage could be provided to petitioners’ employees, through petitioners’ insurance companies, without any such notice from petitioners.” Post, p.___. Both petitioners and the Government now confirm that such an option is feasible. Petitioners have clarified that their religious exercise is not infringed where they “need to do nothing more than contract for a plan that does not include coverage for some or all forms of contraception, ”even if their employees receive cost-free contraceptive coverage from the same insurance company. Supple­mental Brief for Petitioners 4. The Government has con­firmed that the challenged procedures “for employers with insured plans could be modified to operate in the manner posited in the Court’s order while still ensuring that the affected women receive contraceptive coverage seamlessly, together with the rest of their health coverage.” Supple­mental Brief for Respondents 14–15.

 

In light of the positions asserted by the parties in their supplemental briefs, the Court vacates the judgments below and remands to the respective United States Courts of Appeals for the Third, Fifth, Tenth, and D. C. Circuits. Given the gravity of the dispute and the substantial clarification and refinement in the positions of the parties, the parties on remand should be afforded an opportunity to arrive at an approach going forward that accommodates petitioners’ religious exercise while at the same time ensuring that women covered by petitioners’ health plans “receive full and equal health coverage, including contra­ceptive coverage.” Id., at 1. We anticipate that the Courts of Appeals will allow the parties sufficient time to resolve any outstanding issues between them.

 

The Court finds the foregoing approach more suitable than addressing the significantly clarified views of the parties in the first instance. Although there may still be areas of disagreement between the parties on issues of implementation, the importance of those areas of potential concern is uncertain, as is the necessity of this Court’s involvement at this point to resolve them. This Court has taken similar action in other cases in the past. See,e.g., Madison County v. Oneida Indian Nation of N. Y., 562 U. S. 42, 43 (2011) (per curiam) (vacating and remanding for the Second Circuit to “address, in the first instance, whether to revisit its ruling on sovereign immunity in light of [a] new factual development, and—if necessary—proceed to address other questions in the case consistent with its sovereign immunity ruling”); Kiyemba v. Obama, 559 U. S. 131, 132 (2010) (per curiam) (vacating and re­manding for the D. C. Circuit to “determine, in the first instance, what further proceedings in that court or in the District Court are necessary and appropriate for the full and prompt disposition of the case in light of the new developments”); Villarreal v. United States, 572 U. S. ___ (2014) (vacating and remanding to the Fifth Circuit “for further consideration in light of the position asserted by the Solicitor General in his brief for the United States”).

 

The Court expresses no view on the merits of the cases. In particular, the Court does not decide whether petition­ers’ religious exercise has been substantially burdened, whether the Government has a compelling interest, or whether the current regulations are the least restrictive means of serving that interest.

 

Nothing in this opinion, or in the opinions or orders of the courts below, is to affect the ability of the Government to ensure that women covered by petitioners’ health plans“ obtain, without cost, the full range of FDA approved contraceptives.” Wheaton College v. Burwell, 573 U. S. ___, ___ (2014) (slip op., at 1). Through this litigation, petitioners have made the Government aware of their view that they meet “the requirements for exemption from the contraceptive coverage requirement on religious grounds.” Id., at ___ (slip op., at 2). Nothing in this opin­ion, or in the opinions or orders of the courts below, “pre­cludes the Government from relying on this notice, to the extent it considers it necessary, to facilitate the provision of full contraceptive coverage” going forward. Ibid. Be­cause the Government may rely on this notice, the Gov­ernment may not impose taxes or penalties on petitioners for failure to provide the relevant notice.

 

The judgments of the Courts of Appeals are vacated, and the cases are remanded for further proceedings consistent with this opinion.

 

It is so ordered.

 

SOTOMAYOR, J., concurring

 

http://www.supremecourt.gov/opinions/15pdf/14-1418_8758.pdf

EEOC Final Regulations under the Americans with Disabilities Act (EEOC 29 CFR Part 1630, RIN 3046-AB01, 5/16/16) Employer Wellness Programs/Incentives and Confidentiality

The U.S. Equal Employment Opportunity Commission (EEOC) today issued final rules that describe how Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses. The two rules provide guidance to both employers and employees about how workplace wellness programs can comply with the ADA and GINA consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act, as amended by the Affordable Care Act (Affordable Care Act).

The rules permit wellness programs to operate consistent with their stated purpose of improving employee health, while including protections for employees against discrimination.  The rules are available in the Federal Register here and here. EEOC also published question-and-answer documents on both rules today, availablehere and here, and two documents for small businesses here and here.

Many employers offer workplace wellness programs intended to encourage healthier lifestyles or prevent disease. These programs sometimes use medical questionnaires or health risk assessments and biometric screenings to determine an employee's health risk factors, such as body weight and cholesterol, blood glucose, and blood pressure levels. Some of these programs offer financial and other incentives for employees to participate or to achieve certain health outcomes.

The ADA and GINA generally prohibit employers from obtaining and using information about employees' own health conditions or about the health conditions of their family members, including spouses. Both laws, however, allow employers to ask health-related questions and conduct medical examinations, such as biometric screenings to determine risk factors, if the employer is providing health or genetic services as part of a voluntary wellness program. Last year, EEOC issued proposed rules that addressed whether offering an incentive for employees or their family members to provide health information as part of a wellness program would render the program involuntary.   

The final ADA rule provides that wellness programs that are part of a group health plan and that ask questions about employees' health or include medical examinations may offer incentives of up to 30 percent of the total cost of self-only coverage. The final GINA rule provides that the value of the maximum incentive attributable to a spouse's participation may not exceed 30 percent of the total cost of self-only coverage, the same incentive allowed for the employee. No incentives are allowed in exchange for the current or past health status information of employees' children or in exchange for specified genetic information (such as family medical history or the results of genetic tests) of an employee, an employee's spouse, and an employee's children. 

The final rules, which will go into effect in 2017, apply to all workplace wellness programs, including those in which employees or their family members may participate without also enrolling in a particular health plan. 

"The EEOC received comments on both rules from a broad array of stakeholders and considered them carefully in developing this final rule," said EEOC Chair Jenny R. Yang. "The Commission worked to harmonize HIPAA's goal of allowing incentives to encourage participation in wellness programs with ADA and GINA provisions that require that participation in certain types of wellness programs is voluntary.  These rules make clear that the ADA and GINA provide important safeguards to employees to protect against discrimination."

Program Design

Both rules also seek to ensure that wellness programs actually promote good health and are not just used to collect or sell sensitive medical information about employees and family members or to impermissibly shift health insurance costs to them.  The ADA and GINA rules require wellness programs to be reasonably designed to promote health and prevent disease.

Protecting Confidentiality

The two rules also make clear that the ADA and GINA provide important protections for safeguarding health information. The ADA and GINA rules state that information from wellness programs may be disclosed to employers only in aggregate terms. 

The ADA rule requires that employers give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared and for what purpose, the limits on disclosure and the way information will be kept confidential. GINA includes statutory notice and consent provisions for health and genetic services provided to employees and their family members. 

Both rules prohibit employers from requiring employees or their family members to agree to the sale, exchange, transfer, or other disclosure of their health information to participate in a wellness program or to receive an incentive. 

The interpretive guidance published along with the final ADA rule and the preamble to the GINA final rule identify some best practices for ensuring confidentiality, such as adopting and communicating clear policies, training employees who handle confidential information, encrypting health information, and providing prompt notification of employees and their family members if breaches occur.

EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its web site at www.eeoc.gov.

https://www.eeoc.gov/eeoc/newsroom/release/5-16-16.cfm

Bills Recently Signed by Governor

 

  • ABX2-7 by Assemblymember Mark Stone (D-Scotts Valley) – Smoking in the workplace.

 

  • AB 908 by Assemblymember Jimmy Gomez (D-Los Angeles) - Paid Family Leave

 

  • SB 3 by Senator Mark Leno (D-San Francisco) - Minimum Wage

 

  • SB 95 by the Committee on Budget and Fiscal Review – State employees: memorandum of understanding.

 

  • SB 269 by Senator Richard D. Roth (D-Riverside) – Disability access.

 

Department of Fair Employment and Housing Regulations regarding Transgender Identity and Expression

 

[Notice published May 13, 2016]

 

NOTICE OF PROPOSED RULEMAKING

 

The Fair Employment and Housing Council (Council) of the Department of Fair Employment and Housing (DFEH) proposes to amend sections 11030, 11031, and 11034 of Title 2 of the California Code of Regulations after considering all comments, objections, and recommendations regarding the proposed action.

 

PUBLIC HEARING

 

The Council will hold a public hearing starting at 10:00 a.m. on June 27, 2016, at the following location:

 

Ronald Regan State Building

Auditorium (First Floor)

300 South Spring Street

Los Angeles, CA 90013

 

At the hearing, any person may present statements or arguments orally or in writingrelevant to the proposed action described in the Informative Digest.  The Council requestsbut does not require that persons who make oral comments at the hearing also submit a written copy of their testimony at the hearing.

 

The hearing room is accessible to individuals with physical disabilities.  Any person with a disability requiring disability-related modifications or accommodations to participate in the meeting, including auxiliary aids or services, please contact Nelson Chan atnelson.chan@dfeh.ca.gov or (916) 585-7111; TTY (800) 700-2320; or videophone for the hearing impaired at (916) 226-5285.  Requests should be made as soon as possible but at least five days prior to the scheduled meeting.

 

WRITTEN COMMENT PERIOD

 

Any interested person, or his or her authorized representative, may submit written comments relevant to the proposed regulatory action to the Council.  The written commentperiod closes at 5:00 p.m. on June 27, 2016.  The Council will consider only commentsreceived by that time.  Written comments can be mailed to: Fair Employment and Housing Council, c/o Brian Sperber, Legislative & Regulatory Counsel, Department of Fair Employment and Housing. 320 West 4th Street, 10th Floor, Los Angeles, CA 90013, Telephone: (213) 337-4495.  Comments may also be submitted by e-mail toFEHCouncil@dfeh.ca.gov

 

See more here.

Attorney General’s Opinion (AG Opn. 14-901 5/6/16) Health & Welfare Benefits to Officers/Employees of Local Agencies

 

Notwithstanding that a school district’s employment contract with its superintendent provides an annual cash allowance in lieu of medical benefits that the superintendent would otherwise receive, the district may not expend an equivalent annual sum for each school board member to purchase an individual whole life insurance policy in lieu of medical benefits that each board member would otherwise receive.

 

https://oag.ca.gov/system/files/opinions/pdfs/14-901_0.pdf

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CALIFORNIA CASE LAW ALERT 

© 2016 by Phyllis W. Cheng. William Morris' 1875 Acanthus wallpaper in public domain.  Created with Wix.com.

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