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Goldstein v. Cal. Unemployment Ins. Appeals Bd. (CA6 H043742 4/30/19) Unemployment Insurance
Steven M. Goldstein appeals following the denial of his petition for writ of administrative mandate to compel the California Unemployment Insurance Appeals Board (the Board) to set aside its decision denying unemployment insurance benefits. We agree with Goldstein that the Board misapplied the governing law, thereby committing an abuse of discretion. However, because Goldstein fails to show that the error was prejudicial, we nevertheless affirm.
Weil v. Citizens Telecom Servs. Co. (9th Cir. 16-35813 4/29/19) Employment Discrimination/Hearsay
The panel affirmed in part and reversed in part the district court’s summary judgment in favor of defendant employers in an employment discrimination action under Title VII, 42 U.S.C. § 1981, and the Washington Law Against Discrimination.
Reversing the district court’s summary judgment on a failure-to-promote claim, the panel held that the district court erred in excluding on hearsay grounds a statement proffered by the plaintiff. The panel held that, under Federal Rule of Evidence 801(d)(2)(D), hearsay does not include statements offered against a party, made by that party’s employee on a matter within the scope of that employee’s employment, so long as the statement was made while the employee was still employed by that employer. There is no requirement that the declarant still be in the same position that resulted in the matter being within the scope of the employment relationship. The panel held that, properly considering the statement as admissible evidence of pretext, the plaintiff met his burden on summary judgment.
Affirming the district court’s summary judgment on plaintiff’s termination claim, the panel held that plaintiff failed to raise a genuine dispute of material fact as to that claim because he did not present evidence that he was performing satisfactorily or that defendants treated a similarly
situated employee who was not a member of plaintiff’s protected class differently.
Dissenting in part, Judge Bybee wrote that the district court properly excluded the proffered statement because it was not within the scope of the declarant’s employment when she made it after having been relieved of her hiring and promoting duties. Judge Bybee concurred in the majority opinion insofar as it affirmed summary judgment on the termination claim.
Symmonds v. Mahoney (2019) 31 Cal.App.5th 1096 (SC S254646/B283529 review granted 4/24/19) Age and Disability Discrimination/Anti-SLAPP
The petition for review is granted. Further action in this matter is deferred pending consideration and disposition of related issues in Wilson v. Cable News Network, Inc., S239686 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520, is deferred pending further order of the court. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/holding for lead case.
Melendez v. S.F. Baseball Associates LLC (SC S245607 4/25/19) “Discharge”/CBA & Labor Code section 201
Under California’s labor laws, “[i]f an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.” (Lab. Code, § 201, subd. (a).) Plaintiffs, security guards at what used to be named AT&T Park in San Francisco and is now named Oracle Park (the park), are suing San Francisco Baseball Associates LLC (the Giants) for allegedly violating this provision. They claim they are discharged after every Giants homestand, at the end of the baseball season, and after other events at the park, and they are entitled under Labor Code section 201 to receive their unpaid wages immediately after each such discharge. The Giants deny that the security guards are discharged on those occasions. They contend that Labor Code section 204, which generally requires semimonthly payment of employees’ wages, applies to the guards.
The merits of this action are not now before us. Rather, we must consider the Giants’ contention that this lawsuit requires interpretation of the collective bargaining agreement (hereafter sometimes CBA) that the guards’ union has entered into with the Giants. If so, this lawsuit is preempted under federal law and must be submitted to arbitration. (See, e.g., Livadas v. Bradshaw (1994) 512 U.S. 107 (Livadas).)
We conclude that, although the agreement between the union and the Giants may be relevant to this lawsuit and may need to be consulted to resolve it, the parties’ dispute turns on an interpretation of state law — namely, the meaning of “discharge” under Labor Code section 201 — rather than an interpretation of the agreement itself. Because no party has identified any provision of the agreement whose meaning is uncertain and that must be interpreted to resolve plaintiffs’ claim, this lawsuit is not preempted and state courts may decide it on the merits. We reverse the judgment of the Court of Appeal, which concluded otherwise.
Lamps Plus, et al. v. Varela (US 17–988 4/24/19) Class Arbitration
In 2016, a hacker tricked an employee of petitioner Lamps Plus, Inc., into disclosing tax information of about 1,300 company employees. After a fraudulent federal income tax return was filed in the name of respondent Frank Varela, a Lamps Plus employee, Varela filed a putative class action against Lamps Plus in Federal District Court on behalf of employees whose information had been compromised. Relying on the arbitration agreement in Varela’s employment contract, Lamps Plus sought to compel arbitration—on an individual rather than a classwide basis—and to dismiss the suit. The District Court rejected the individual arbitration request, but authorized class arbitration and dismissed Varela’s claims. Lamps Plus appealed, arguing that the District Court erred by compelling class arbitration, but the Ninth Circuit affirmed. This Court had held in Stolt-Nielsen S. A. v. Animal Feeds Int’l Corp., 559 U. S. 662, that a court may not compel classwide arbitration when an agreement is silent on the availability of such arbitration. The Ninth Circuit ruled that Stolt-Nielsen was not controlling because the agreement in this case was ambiguous rather than silent on the issue of class arbitration.
1. This Court has jurisdiction. An order that both compels arbitration and dismisses the underlying claims qualifies as “a final decision with respect to an arbitration” within the meaning of 9 U. S. C. §16(a)(3), the jurisdictional provision on which Lamps Plus relies. See Green Tree Financial Corp.-Ala. v. Randolph, 531 U. S. 79, 89. Varela attempts to distinguish Randolph on the ground that the appeal here was taken by the party who had already secured the relief it requested, i.e., Lamps Plus had already obtained an order dismissing the claim and compelling arbitration. But Lamps Plus did not secure the relief it requested, since it sought individual rather than class arbitration. The shift from individual to class arbitration is a “fundamental” change, Stolt-Nielsen, 559 U. S., at 686, that “sacrifices the principal advantage of arbitration” and “greatly increases risks to defendants,” AT&T Mobility LLC v. Concepcion, 563 U. S. 333, 348, 350. Avoiding these consequences gives Lamps Plus the “necessary personal stake” to appeal. Camreta v. Greene, 563 U. S. 692, 702. Pp. 3–5.
2. Under the Federal Arbitration Act, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. Pp. 5–12.
(a) “Arbitration is strictly a matter of consent,” Granite Rock Co. v. Teamsters, 561 U. S. 287, 299 (internal quotation marks omitted), and the task for courts and arbitrators is “to give effect to the intent of the parties,” Stolt-Nielsen, 559 U. S., 684. In carrying out that responsibility, it is important to recognize the “fundamental” difference between class arbitration and the individualized form of arbitration envisioned by the FAA. Class arbitration “sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.” Concepcion, 563 U. S., at 348. Because of such “crucial differences,” Stolt-Nielsen, 559 U. S., at 687, this Court has held that courts may not infer consent to participate in class arbitration absent an affirmative “contractual basis for concluding that the party agreed to do so,” id., at 684. Silence is not enough. Id., at 687. That reasoning controls here. Like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to “sacrifice[ ] the principal advantage of arbitration.” Concepcion, 563 U. S., at 348. This conclusion aligns with the Court’s refusal to infer consent when it comes to other fundamental arbitration questions. See, e.g., First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 945. Pp. 6–9.
(b) The Ninth Circuit’s contrary conclusion was based on the state law contra proferentem doctrine, which counsels that contractual ambiguities should be construed against the drafter. That default rule is based on public policy considerations and seeks ends other than the intent of the parties. Such an approach is flatly inconsistent with “the foundational FAA principle that arbitration is a matter of consent.” Stolt-Nielsen, 559 U. S., at 684. Varela claims that the rule is nondiscriminatory and gives equal treatment to arbitration agreements and other contracts alike, but an equal treatment principle cannot save from preemption general rules “that target arbitration either by name or by more subtle methods, such as by ‘interfer[ing] with fundamental attributes of arbitration,’ ” Epic Systems Corp. v. Lewis, 584 U. S. ___, ___. This conclusion is consistent with the Court’s precedents holding that the FAA provides the default rule for resolving certain ambiguities in arbitration agreements. See, e.g.,Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 626. Pp. 9–12.
701 Fed. Appx. 670, reversed and remanded.
ROBERTS, C. J., delivered the opinion of the Court, in which THOMAS, ALITO, GORSUCH, and KAVANAUGH, JJ., joined. THOMAS, J., filed a concurring opinion. GINSBURG, J., filed a dissenting opinion, in which BREYER and SOTOMAYOR, JJ., joined. BREYER, J., and SOTOMAYOR, J., filed dissenting opinions. KAGAN, J., filed a dissenting opinion, inwhich GINSBURG and BREYER, JJ., joined, and in which SOTOMAYOR, J., joined as to Part II.
Acosta v. City Nat’l Corp. (9th Cir. 17-55421 4/23/19) ERISA
The panel (1) affirmed the district court’s order granting partial summary judgment in favor of the Secretary of Labor and holding City National Corporation and other defendants liable for self-dealing under ERISA; and (2) affirmed in part and reversed in part the district court’s order granting summary judgment as to damages.
City National Corporation maintained a defined contribution 401(k) employee profit-sharing plan and served as the Plan’s sponsor, administrator, and one of its fiduciaries. City National Bank, a subsidiary of City National Corporation, was the Plan’s trustee and recordkeeper as well as another of its trustees. For its services as recordkeeper, City National Bank was compensated by sharing a portion of mutual funds’ fees charged to the Plan, and it did not maintain a system for tracking how much time its employees spent servicing the Plan.
Affirming as to liability, the panel held that City National Corporation engaged in prohibited self-dealing under ERISA § 406(b) by setting and approving its own fees from Plan assets for serving as its own recordkeeper. The panel held that this conduct was not exempted under ERISA § 408(c)(2) as “reasonable compensation” for services provided by a fiduciary such as recordkeeping services. The panel held that the “reasonable compensation” exemption does not apply to prohibited self-dealing, including where a self-dealing fiduciary seeks the exemption for actual and legitimate services rendered.
Affirming in part as to damages, the panel held that the loss associated with a prohibited transaction is at least the entire cost of the prohibited transaction. Where the fiduciary has engaged in self-dealing, the entire cost is the total amount of the illegal compensation that the fiduciary paid itself. The district court allowed certain offsets, but City National Corporation contended that additional offsets should have been deducted from the damages award because they were based on estimates of certain direct expenses such as employee compensation and third-party expenses. The panel held that City National Corporation did not meet its burden of proof because the additional offsets were effectively based on unreliable and insufficient evidence.
Reversing the district court’s award of prejudgment interest, the panel held that the district court abused its discretion by awarding interest on amounts that the Plan never lost. The panel remanded for a recalculation of the prejudgment interest portion of damages.
Fort Bend County, Texas v. Davis (US 18-525 oral argument transcript 4/22/19) Title VII Exhaustion of Administrative Remedies
Whether Title VII’s administrative-exhaustion requirement is a jurisdictional prerequisite to suit, as three circuits have held, or a waivable claim-processing rule, as eight circuits have held.
Parker Drilling Management Services, Ltd. v. Newton (US 18-389 oral argument transcript 4/16/19) Preemption/Wage & Hour/Drilling Platforms/Outer Continental Shelf Lands Act
Whether, under the Outer Continental Shelf Lands Act, state law is borrowed as the applicable federal law only when there is a gap in the coverage of federal law, as the U.S. Court of Appeals for the 5th Circuit has held, or whenever state [California wage and hour] law pertains to the subject matter of a lawsuit and is not pre-empted by inconsistent federal law, as the U.S. Court of Appeals for the 9th Circuit has held.
Grimm v. Vortex Marine Construction (9th Cir. 18-15104 4/16/19) Longshore and Harbor Workers’ Compensation Act/Medicare Secondary Payer Act
The panel affirmed the district court’s dismissal of an action seeking enforcement of a Department of Labor order requiring payment of a worker’s future medical expenses under the Longshore and Harbor Workers’ Compensation Act.
A Department of Labor administrative law judge ordered the worker’s employer to pay for medical expenses arising from his work-related injuries and to provide treatment going forward. The worker alleged that the employer refused to pay for required medical treatment and he was therefore forced to rely on Medicare to pay his expenses. He sought enforcement of the ALJ’s order and also asserted a claim under the Medicare Secondary Payer Act, seeking double damages for the amounts Medicare paid for the services.
The panel held that the district court lacked subject matter jurisdiction to enforce the ALJ’s order because the order was not final, as required by 33 U.S.C. § 921(d). Joining other circuits, the panel held that to be “final” for purposes of § 921(d), an order must at a minimum specify the amount of compensation due or provide a means of calculating the correct amount without resort to extra-record facts.
The panel affirmed the district court’s conclusion that the worker’s claim under the Medicare Secondary Payer Act was premature.
Concurring, Judge Watford agreed that the district court lacked jurisdiction to hear the Longshore Act claim. He wrote that 33 U.S.C. § 921(d) limits the jurisdiction of the district court to enforcing “compensation orders,” and the portion of the ALJ’s order directing the employer to pay future medical expenses was not a compensation order within the meaning of the Longshore Act.
Castro v. Tri Marine Fish Company LLC (9th Cir. 17-35703 4/15/19) Foreign Employment Arbitral Award
Central to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517 (“New York Convention”), and related federal law is the principle insulating foreign arbitral awards from second-guessing by courts. But this appeal involves an even more fundamental question— whether we are presented with a foreign arbitral award at all. In the mine run of cases, the answer is uncontroversial: when it looks, swims, and quacks like an arbitral award, it typically is. Yet, in this unusual appeal, we have an arbitral award in name only. There was no dispute to arbitrate, as the parties had fully settled their claims before approaching an arbitrator; the purported arbitration consisted of an impromptu meeting in a building lobby; and the “proceedings” disregarded the terms of three arbitration agreements between the parties and the issuing forum’s arbitral rules. We conclude that the resulting order is not an arbitral award entitled to enforcement under the Convention.
Subcontracting Concepts (CT), LLC v. De Melo (CA1/2 A152205 4/10/19) Arbitration/Administrative Wage Claim
Subcontracting Concepts CT, LLC (SCI); Jesus Fernando Gonzalez; and Pedro Luesch (collectively appellants) appeal from the trial court’s order denying their petition to compel arbitration and stay proceedings, brought against Chafie Gabriel Pereira Moreira De Melo (respondent) in this matter arising from respondent’s administrative wage claim, filed with the California Labor Commissioner, against appellants. On appeal, appellants challenge the trial court’s findings that the arbitration agreement between SCI and respondent was (1) procedurally and substantively unconscionable, and (2) so permeated with unconscionability that severance of the unconscionable terms was not possible. We shall affirm the court’s order.
Diaz v. Sohnen Enterprises (CA2/7 B283077 4/10/19) Arbitration
Sohnen Enterprises appeals from the denial of its motion to compel arbitration of claims brought by its employee, Erika Diaz. The record before this court demonstrates there was no evidence to support the denial; accordingly, we reverse with directions.
Savea v. YRC Inc. (CA1/3 A152379 4/10/19) Wage Statements
Plaintiff Vaiula Savea (Savea), employee of defendant YRC Inc. (YRC), filed a complaint against YRC alleging YRC failed to provide the correct employer name and address on its wage statements as required by Labor Code section 226, subdivision (a)(8). The trial court sustained YRC’s demurrer to the complaint without leave to amend, and Savea appeals. He contends the court erred by: (1) determining that the wage statements—which listed YRC’s fictitious business name as the employer name and listed an employer address that did not contain a mail stop code or ZIP+4 Code—did not violate section 226, subdivision (a)(8); and (2) considering evidence that YRC presented in a supplemental request for judicial notice. We conclude YRC did not violate section 226, subdivision (a)(8) by providing its fictitious business name as the employer name on its wage statements or by providing an employer address that did not contain a mail stop code or ZIP+4 Code. We also conclude the court did not err in considering the additional evidence. Accordingly, we shall affirm the judgment.
Martinez v. Public Employees' Retirement System (CA1/2 A153679 4/4/19) Public Employees Retirement Law/Disability Retirement
Government Code section 21156, part of the Public Employees Retirement Law, has always equated disability with a state employee being “incapacitated physically or mentally for the performance of his or her duties.” And ordinarily, a governmental employee loses the right to claim disability benefits if terminated for cause. A pair of decisions from the Third Appellate District carved out three exceptions to this general rule. First, under Haywood v. American River Protection Dist. (1998) 67 Cal.App.4th 1292 (Haywood), a terminated-for-cause employee can still qualify for disability retirement when the conduct which prompted the termination was the result of the employee’s disability. Second, under Smith v. City of Napa (2004) 120 Cal.App.4th 194 (Smith), a terminated employee may qualify for disability retirement if he or she had a “matured right” to a disability retirement prior to the conduct which prompted the termination. Third, Smith further recognized that there might be instances where “a court, applying principles of equity, will deem an employee’s right to a disability retirement to be matured and thus survive a dismissal for cause.” (Id. at pp. 206–207.)
Applying Haywood and Smith, the Board of Administration of the California Public Employees Retirement System (CalPERS) adopted a precedential decision that, when an employee settles a pending termination for cause and agrees not to seek re-employment, this is “tantamount to a dismissal,” thus precluding a disability retirement. (In the Matter of Application for Disability Retirement of Vandergoot (2013) CalPERS Precedential Dec. No. 12–01 (Vandergoot).)
Linda Martinez, a former state employee, settled the termination for cause action against her, and agreed to resign and not re-apply for employment with the agency she was leaving. Her application for disability retirement was denied by the CalPERS Board of Administration (Board). Joined by her union, the Service Employees International Union, Local 1000 (SEIU), Martinez challenged the soundness and continued validity of Haywood and Smith, particularly as extended in Vandergoot. Her challenge failed during her administrative appeal, and was rejected by the trial court that denied her petition for mandate relief, which concluded that Haywood and Smith “set out the relevant law” and were binding as stare decisis. The trial court further concluded that “Vandergoot is a reasonable extension of Haywood and Smith,” and, moreover, was entitled to “substantial weight” due to “the agency’s area of expertise.” We agree with both of these conclusions, and in doing so we reject the contention of Martinez and SEIU that a 2008 enactment tacitly “superseded” Haywood and Smith.
Ryze Claim Solutions LLC v. Superior Court (CA1/3155842 4/3/19) Employment Agreement/Forum Selection
Petitioner and defendant Ryze Claim Solutions LLC (Ryze) seeks writ relief from an order of the trial court denying its motion to dismiss or stay the lawsuit filed by its former employee Real Party in Interest and plaintiff Jerome Nedd on improper forum grounds. We shall issue the writ.
Bravo v. RADC Enterprises, Inc. (CA2/8 B289506 3/29/19) Arbitration/Choice of Law
This employment case concerns a choice-of-law clause in an arbitration agreement. The trial court interpreted the clause to mean some but not all individual employment claims must be arbitrated. We conclude all of them must be arbitrated.
Walnut Creek Police Officers' Assn. v. City of Walnut Creek (CA1/4 A156477 3/29/19) Peace Officers’ Records
The petitions for writ of supersedeas filed in these consolidated matters are denied. Appellants have not shown that “substantial questions will be raised on appeal.” (Smith v. Selma Community Hospital (2010) 188 Cal.App.4th 1, 18.) The appeals center around amendments enacted this year to Penal Code section 832.7 that expand public access to certain peace officer records maintained by a state or local agency. (See Pen. Code, § 832.7, subd. (b)(1).) Appellants assert that applying the 2019 amendments to compel disclosure of records created prior to 2019 constitutes an improper retroactive application of the new law. For the reasons stated by the trial court, appellants’ argument is without merit. Although the records may have been created prior to 2019, the event necessary to “trigger application” of the new law—a request for records maintained by an agency—necessarily occurs after the law’s effective date. (People v. Grant (1999) 20 Cal.4th 150, 157 [“the critical question for determining retroactivity usually is whether the last act or event necessary to trigger application of the statute occurred before or after the statute's effective date”].) The new law also does not change the legal consequences for peace officer conduct described in pre-2019 records. (See ibid. [application of new law is retroactive “only if it attaches new legal consequences to, or increases a party’s liability for, an event, transaction, or conduct that was completed before the law’s effective date”].) Rather, the new law changes only the public's right to access peace officer records.
The temporary stay issued by this court on February 15, 2019, will expire at 5:00 p.m. on March 19, 2019.
Interveners’ motion for calendar preference and expedited briefing is denied.
Donohue v. AMN Services, LLC (2018) 29 Cal.App.5th 1968 (SC S253677/D071865 review granted 3/27/19)
Petition for review after the Court of Appeal affirmed the judgment in a civil action. This case includes the following issue: Can employers utilize practices upheld in the overtime pay context to round employees’ time to shorten or delay meal periods? The request for an order directing depublication of the opinion denied. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuellar, Kruger and Groban, JJ. Review granted/brief due.
Zakaryan v. The Men's Warehouse, Inc. (CA2/2 B289192 3/28/19) Splitting PAGA Claim/Arbitration
The Labor Code Private Attorneys General Act of 2004 (PAGA) deputizes individual employees to step into the shoes of our state’s labor enforcement agency and sue their employers for underpaid wages and additional, statutorily prescribed amounts on behalf of themselves and their aggrieved coworkers. (Lab. Code, § 2698 et seq.) In Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 382-392 (Iskanian), our Supreme Court held that individual employees cannot contractually agree to arbitrate their potential PAGA claims, but may still contractually agree to arbitrate their “individual damages claims.” If an employee brings a solitary PAGA claim, may a trial court split that claim—that is, may the court send the employee to arbitration (when he has agreed to it) to recover his underpaid wages but retain jurisdiction to award the additional, statutorily prescribed amounts? Our sister courts are divided on the issue: Esparza v. KS Indus., L.P. (2017) 13 Cal.App.5th 1228 (Esparza) has sanctioned such an order, while Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705 (Lawson) has not. Although this issue is pending before our Supreme Court in Lawson (Lawson, review granted Mar. 21, 2018, S246711), we analyze the issue differently than Esparza or Lawson but ultimately conclude that courts may not split a solitary PAGA claim and send it to two different fora. Accordingly, we affirm the trial court’s order denying the motion to compel arbitration in this case.
Kisor v. Wilkie (US 16-1929 oral argument transcript 3/27/19) Agency Deference Doctrine
Auer v. Robbins, 519 U.S. 452 (1997), and Bowles Seminole Rock & Sand Co., 325 U.S. 410 (1945), direct courts to defer to an agency's reasonable interpretation of its own ambiguous regulation. Separately, in Brown v. Gardner, 513 U.S. 115, 118 (1994), the Court held that "interpretive doubt is to be resolved in the veteran's favor.”
Petitioner, a Marine veteran, seeks disability benefits for his service-related posttraumatic stress disorder (PTSD). While the Department of Veterans Affairs (VA) agrees that petitioner suffers from service-related PTSD, it has refused to award him retroactive benefits. The VA's decision turns on the meaning of the term "relevant" as used in 38 C.F.R. § 3.156(c)(l).
Below, the Federal Circuit found that petitioner and the VA both offered reasonable constructions of that term. On that basis alone, the court held that the regulation is ambiguous, and-invoking Auer- deferred to the VA's interpretation of its own ambiguous regulation. The questions presented are:
1. Whether the Court should overrule Auer and Seminole Rock.
2. Alternatively, whether Auer deference should yield to a substantive canon of construction.
Boling v. Public Employment Relations Bd. (CA4/1 D069626A 3/25/19)PERB/Compensatory Remedy
This case arises from a decision by the Public Employment Relations Board (PERB) finding that the City of San Diego (City) violated the Meyers-Milias-Brown Act (Gov. Code, § 3500 et seq.; Act) when the City's mayor made a policy decision to advance a citizens' pension reform initiative (Initiative) without meeting and conferring with the affected employees' unions (Unions). The California Supreme Court upheld PERB's finding that the mayor's actions violated the City's meet and confer obligations. (Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 913, 919 (Boling).) The Supreme Court then remanded the matter to this court to "address the appropriate judicial remedy for the violation." (Id. at p. 920.) We also consider previously unaddressed challenges to PERB's administrative remedies.
As we shall explain, we decline the Unions' request to invalidate the Initiative as a judicial remedy because we conclude the Initiative's validity is more appropriately addressed in a separate quo warranto proceeding. We further conclude we must modify PERB's compensatory and cease-and-desist remedies to prevent the remedies from impermissibly encroaching upon constitutional law, statutory law, and policy matters involving initiatives, elections, and the doctrine of preemption that are unrelated to the Act. (See Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137, 144, 147 [122 S.Ct. 1275, 152 L.Ed.2d 271] (Hoffman Plastic) [a labor relations board's administrative remedies may not encroach upon statutes and policies unrelated to the board's enabling act].)
Specifically, we modify PERB's compensatory remedy to order the City to meet and confer over the effects of the Initiative and to pay the affected current and former employees represented by the Unions the difference, plus seven percent annual interest, between the compensation, including retirement benefits, the employees would have received before the Initiative became effective and the compensation the employees received after the Initiative became effective. The City's obligation to comply with the compensatory remedy extends until completion of the bargaining process, including the exhaustion of impasse procedures, if an impasse occurs. We modify PERB's cease-and-desist remedy to order the City to cease and desist from refusing to meet and confer with the Unions and, instead, to meet and confer with the Unions upon the Unions' request before placing a charter amendment on the ballot that is advanced by the City and affects employee pension benefits and/or other negotiable subjects. As so modified, we affirm PERB's decision.
Salgado v. Carrows Restaurants Inc. (CA2/6 B285756, filed 2/26/19, pub. ord. 3/25/19) Arbitration
Carrows Restaurants Group, Inc. and Catalina Restaurant Group, Inc. (collectively Carrows) appeal an order denying their motion to compel arbitration. We conclude the language of the arbitration agreement is sufficient to apply to the current action. But we remand to determine a factual issue where time is not relative, but relevant. Did Carrows know that at the time plaintiff employee signed an arbitration agreement, plaintiff was represented by counsel? We reverse and remand.
Nieto v. Fresno Beverage Co. (CA5 F074704, filed 3/7/19, pub. ord. 3/22/19) Arbitration/FAA Exemption
Plaintiff Daniel Nieto was employed for many years as a delivery driver for defendant Fresno Beverage Company, Inc., doing business as Valley Wide Beverage Company (VWB). After being terminated from his employment, Nieto filed a class action lawsuit against VWB alleging various wage and hour violations under California labor law. VWB responded by filing a petition to compel arbitration, since Nieto had signed a written arbitration agreement when he was hired. VWB argued that under the Federal Arbitration Act (9 U.S.C. § 1 et seq., the FAA) Nieto must be ordered to arbitrate the dispute in accordance with the terms of the parties’ arbitration agreement. Nieto opposed the petition, primarily arguing that his employment at VWB came within a statutory exemption to the FAA granted to transportation workers engaged in interstate commerce. Nieto reasoned that since the FAA did not apply, a California law allowing court actions on wage claims notwithstanding the existence of an arbitration agreement (i.e., Lab. Code, § 229) was not preempted by the FAA, meaning the lawsuit may proceed in court. The trial court agreed with Nieto’s exemption argument and denied the petition to compel arbitration. VWB appealed from that order. We conclude the trial court correctly found that Nieto’s employment came within the FAA exemption. Accordingly, the trial court’s order denying the petition to compel arbitration is affirmed.
Garcia v. Salvation Army (9th Cir. 16-16827 3/18/19) Title VII Religious Exemption/Interactive Process
The panel affirmed the district court’s summary judgment in favor of the Salvation Army, the defendant in an employment discrimination action under Title VII and the Americans with Disabilities Act.
The panel held that Title VII’s religious organization exemption is not jurisdictional and is subject to procedural forfeiture. Absent prejudice resulting from the Salvation Army’s failure to timely raise the defense, however, the religious organization exemption foreclosed plaintiff’s Title VII claims because the Salvation Army’s purpose and character were primarily religious. The panel held that the exemption does not apply only to hiring and firing decisions, but rather extends to both retaliation and hostile work environment claims.
Affirming the district court’s grant of summary judgment on plaintiff’s ADA claim, the panel held that there was no triable issue whether the Salvation Army failed to engage in an interactive process in good faith with the plaintiff up to the time she was cleared for work after a period of leave. After the clearance for work, the plaintiff could not show that she was disabled.
Synergy Project Management, Inc. v. City and County of S.F. (CA1/1 A151199 3/14/19) Public Works/Subcontracting
The Subletting and Subcontracting Fair Practices Act (Pub. Contract Code, § 4100 et seq.) (Act), which governs public works projects, was enacted to protect the public and subcontractors from bidding practices that “often result in financial difficulties for subcontractors and poor workmanship on public improvements.” (Cal-Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 21 Cal.App.4th 655, 660 (Cal-Air Conditioning).) To this end, section 4107, subdivision (a) (section 4107(a)) requires a prime contractor to obtain the consent of the awarding authority before replacing a subcontractor listed in the original bid, and it limits the awarding authority’s ability to consent to specified circumstances. If the original subcontractor objects to being replaced, section 4107(a) requires the awarding authority to hold a hearing “on the prime contractor’s request for substitution.”
In this case, the City and County of San Francisco (City) entered a contract with prime contractor Ghilotti Bros., Inc. (Ghilotti) for a major renovation of Haight Street. Consistent with its accepted bid, Ghilotti entered a contract with subcontractor Synergy Project Management, Inc. (Synergy) for Synergy to perform excavation and utilities work. After Synergy broke five gas lines and engaged in other unsafe behavior, the City invoked a provision of its contract with Ghilotti to direct Ghilotti to remove Synergy from the project and substitute a new subcontractor. Under protest, Ghilotti terminated Synergy and identified two potential replacement contractors to the City, and Synergy objected to being replaced. A hearing was held under section 4107(a), and the hearing officer determined that Synergy’s poor performance established a statutory ground for substitution.
Synergy and Ghilotti each filed a petition for a writ of administrative mandate in the trial court. Abandoning any challenge to the determination that Synergy’s performance justified substitution, they contended the hearing officer lacked jurisdiction because Ghilotti had not made a “request” for substitution within the meaning of either section 4107(a) or the relevant provision of the City-Ghilotti contract. The court agreed and granted the petitions. On appeal, the City claims the court’s ruling was erroneous, and we agree. Even though the statute contemplates that the prime contractor will normally be the party to seek substitution, the procedure followed here “complied in substance with every reasonable objective of the statute.” (Titan Electric Corp. v. Los Angeles Unified School Dist. (2008) 160 Cal.App.4th 188, 208 (Titan).) Thus, the hearing officer had jurisdiction under the Act to issue a decision, and we need not address whether jurisdiction separately existed under the City-Ghilotti contract. Accordingly, we reverse.
Myers v. Raley's (CA3 C075125, filed 2/13/19, ord. pub. 3/12/19) Class Certification/Wage and Hour
Without the benefit of Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522 (Ayala) and Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th 986 (Jones), and without elucidating its reasons, the trial court denied Raley’s maintenance technicians’ motion for class certification of their wage and hour claims. The technicians allege Raley’s maintains uniform policies and/or practices denying them travel time while they are under Raley’s control, compensation for working during meal time, and reimbursement for personal tools they are required to purchase and replace. These uniform policies and practices, according to the technicians, present common issues of fact and law and their legality are particularly well suited to a class action. In denying class certification, the trial court made the conclusory finding the plaintiffs failed to establish that a well-defined community of interest exists and that the common issues of fact and law predominate.
Our review of the trial court’s denial of class certification is governed by a unique standard of review requiring us to examine the trial court’s reasons, not the propriety of the outcome. Because the trial court’s cursory finding renders our task impossible and because cases decided after the court’s ruling expose the dangers of employing the wrong legal criteria, asking the wrong questions, or inflating the significance of the opposing parties’ evidence, we must remand this case to the trial court for reconsideration in light of Ayala and Jones and for a statement of reasons to ensure the court has not employed improper criteria or relied on erroneous legal assumptions.
Su v. Stephen S. Wise Temple (CA2/3 B275426 3/8/19) Wage and Hour/Ministerial Exception
This case was brought by plaintiff and appellant Labor Commissioner Julie Su (Commissioner) on behalf of preschool teachers employed by defendant and respondent Stephen S. Wise Temple (Temple). The Commissioner alleged that the Temple violated various provisions of the Labor Code by failing to provide its preschool teachers with rest breaks, uninterrupted meal breaks, and overtime pay. The trial court granted summary judgment in favor of the Temple, concluding the Commissioner’s claims were barred by the “ministerial exception”—a constitutional doctrine that provides a complete defense to certain employment claims brought against religious institutions by or on behalf of persons classified as ministerial employees.
Although the Temple’s preschool curriculum has both secular and religious content, its teachers are not required to have any formal Jewish education, to be knowledgeable about Jewish belief and practice, or to adhere to the Temple’s theology. Further, the Temple does not refer to its teachers as “ministers” or the equivalent, nor do the teachers refer to themselves as such. Accordingly, we conclude the teachers are not “ministers” for purposes of the ministerial exception. We therefore reverse the judgment and remand for further proceedings.
Cal Fire Local 2881 v. Cal. Pub. Employees' Retirement System (SC S239958 3/4/19) PEPRA/Public Employee Airtime Purchase Not Protected by Contract Clause
In late 2012, our Legislature enacted the California Public Employees’ Pension Reform Act of 2013 (PEPRA, Stats. 2012, ch. 296, § 15; see Gov. Code, §§ 7222 et seq.), substantially revising the laws governing public employee pensions. This decision addresses the constitutionality of one of the changes effected by PEPRA, the elimination of the opportunity for public employees to purchase additional retirement service credit.
The amount of a public employee’s pension benefit is typically calculated as a fraction of the employee’s annual compensation near the end of his or her career. The size of the fraction is generally determined by the employee’s years of public employment, known as “service credit,” and his or her age at retirement. The greater the service credit of an employee and the greater his or her age at retirement, the larger the fraction.
Beginning in 2003, many public employees were granted the opportunity to purchase up to five years of service credit by making appropriate payments to their pension fund. This purchased credit, known as additional retirement service (ARS) credit, is treated like ordinary service credit upon an employee’s retirement. Participating employees could therefore receive pension benefits calculated on the basis of up to five years’ more public employment than they actually worked. PEPRA effectively repealed the statute granting public employees the opportunity to purchase ARS credit, although it did not alter the rights of employees who had already purchased such credit.
The parties present two issues for decision. The first is whether the opportunity to purchase ARS credit was a “vested right” — that is, a right protected by the constitutional contract clause. The terms and conditions of public employment are ordinarily considered to be statutory rather than contractual, and they are subject to modification at the discretion of the governing legislative body. Constitutional protection can arise, however, (1) when the statute or ordinance establishing a benefit of employment and the circumstances of its enactment clearly evince an intent by the relevant legislative body to create contractual rights or, (2) when, even in the absence of a manifest legislative intent to create such rights, contractual rights are implied as a result of the nature of the employment benefit, as is the case with pension rights. The second issue, which arises only if we conclude that the opportunity to purchase ARS credit is entitled to constitutional protection, is whether the Legislature’s elimination of that benefit in PEPRA constituted an unconstitutional impairment of public employees’ vested rights.
We conclude that the opportunity to purchase ARS credit was not a right protected by the contract clause. There is no indication in the statute conferring the opportunity to purchase ARS credit that the Legislature intended to create contractual rights. Further, unlike core pension rights, the opportunity to purchase ARS credit was not granted to public employees as deferred compensation for their work, and here we find no other basis for concluding that the opportunity to purchase ARS credit is protected by the contract clause. In the absence of constitutional protection, the opportunity to purchase ARS credit could be altered or eliminated at the discretion of the Legislature. We therefore affirm the decisions of the trial court and the Court of Appeal, which concluded that PEPRA’s elimination of the opportunity to purchase ARS credit did not violate the Constitution.
Because we reach this conclusion, we have no occasion to address the second issue raised by the parties: whether the elimination of the opportunity to purchase ARS credit was an unconstitutional impairment of public employees’ vested rights. The scope of constitutional protection afforded public pension rights by our prior decisions, beginning with Allen v. City of Long Beach (1955) 45 Cal.2d 128 (Allen), has come to be referred to as the “California Rule,” in part because its breadth has not been widely adopted by other jurisdictions. (See, e.g., Monahan, Statutes as Contracts? The “California Rule” and Its Impact on Public Pension Reform (2012) 97 Iowa L.Rev. 1029, 1032, 1071-1074 (Monahan) [referring to our doctrine as the “so-called California Rule” and noting that, of the twelve states to adopt the rule, three have since modified it].) The state and many amici urge us to use this decision as a vehicle to reduce the protection afforded pension rights by modifying or abandoning the California Rule, while plaintiffs and many other amici urge us to leave the California Rule intact. Because we conclude that the opportunity to purchase ARS credit was not a term and condition of public employment protected from impairment by the contract clause, its elimination does not implicate the Constitution. For that reason, we have no occasion in this decision to address, let alone to alter, the continued application of the California Rule.
BNSF Railway Co. v. Loos (US 17–1042 3/4/19) Railroad Retirement Tax Act/Lost Wages Taxable
Respondent Michael Loos sued petitioner BNSF Railway Company under the Federal Employers’ Liability Act (FELA) for injuries he received while working at BNSF’s railyard. A jury awarded him $126,212.78, ascribing $30,000 of that amount to wages lost during the time Loos was unable to work. BNSF asserted that the lost wages constituted “compensation” taxable under the Railroad Retirement Tax Act (RRTA) and asked to withhold $3,765 of the $30,000 to cover Loos’s share of the RRTA taxes. The District Court and the Eighth Circuit rejected the requested offset, holding that an award of damages compensating an injured railroad worker for lost wages is not taxable under the RRTA.
Held: A railroad’s payment to an employee for working time lost due to an on-the-job injury is taxable “compensation” under the RRTA. Pp. 2–14.
(a) In 1937, Congress created a self-sustaining retirement benefits system for railroad workers. The RRTA funds the program by imposing a payroll tax on both railroads and their employees, referring to the railroad’s contribution as an “excise” tax, 26 U. S. C. §3221, and the employee’s share as an “income” tax, §3201. The Railroad Retirement Act (RRA) entitles railroad workers to various benefits. Taxes under the RRTA and benefits under the RRA are meas-ured by the employee’s “compensation,” which both statutes define as “any form of money remuneration paid to an individual for services rendered as an employee.” §3231(e)(1); 45 U. S. C. §231(h)(1).
The statutory foundation of the railroad retirement system mirrors that of the Social Security system. The Federal Insurance Contributions Act (FICA) taxes employers and employees to fund benefits distributed pursuant to the Social Security Act (SSA). Tax and benefit amounts are determined by the worker’s “wages,” the Social Security equivalent to “compensation.” Both the FICA and the SSA define “wages” employing language resembling the RRTA and the RRA definitions of “compensation.” The term “wages” means “all remuneration” for “any service, of whatever nature, performed . . . by an employee.” 26 U. S. C. §3121(a)–(b) (FICA); see 42 U. S. C. §§409(a), 410(a) (SSA). Pp. 2–4.
(b) Given the textual similarity between the definitions of “compensation” and “wages,” the decisions on the meaning of “wages” in Social Security Bd. v. Nierotko, 327 U. S. 358, and United States v. Quality Stores, Inc., 572 U. S. 141, inform this Court’s comprehension of the RRTA term “compensation.” In Nierotko, the Court held that “wages” embraced pay for active service as well as pay received for periods of absence from active service, 327 U. S., at 366, and concluded that backpay for time lost due to “the employer’s wrong” counted as “wages,” id., at 364. In Quality Stores, the Court held that severance payments qualified as “wages” taxable under the FICA. 572 U. S., at 146–147. In line with these decisions, the Court holds that “compensation” under the RRTA encompasses not simply pay for active service but also pay for periods of absence from active service—provided that the remuneration in question stems from the “employer-employee relationship.” Nierotko, 327 U. S., at 366.
Damages awarded under the FELA for lost wages fit comfortably within this definition. See BNSF R. Co. v. Tyrrell, 581 U. S. ___, ___. If a railroad negligently fails to maintain a safe railyard and a worker is injured as a result, the FELA requires the railroad to compensate the injured worker for working time lost due to the employer’s wrongdoing. FELA damages for lost wages, like backpay, are “compensation” taxable under the RRTA. Pp. 4–7.
(c) The Eighth Circuit construed “compensation” for RRTA purposes to mean only pay for active service, but this reading cannot be reconciled with Nierotko and Quality Stores. In addition, the RRTA’s pinpointed exclusions for certain types of payments for time lost signal that nonexcluded pay for time lost remains RRTA-taxable “compensation.” Pp. 7–10.
(d) Loos contends that “compensation” does not include payments made to compensate for an injury. This reading, however, is at odds with Nierotko, which held that “wages” included backpay awarded to redress “the loss of wages” occasioned by “the employer’s wrong.” 327 U. S., at 364.
Loos also argues that the exclusion of personal injury damages from “gross income” for federal income tax purposes, see 26 U. S. C. §104(a)(2), should carry over to the RRTA’s tax on the “income” of railroad workers. The RRTA, however, uses the term “income” merely to distinguish the “income” tax on an employee from the matching “excise” tax on a railroad. Further, Congress specified not “gross income” but employee “compensation” as the tax base for RRTA taxes. Congress did not exclude personal injury damages from “compensation.” Pp. 10–14.
865 F. 3d 1106, reversed and remanded.
GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, C. J., and BREYER, ALITO, SOTOMAYOR, KAGAN, and KAVANAUGH, JJ., joined. GORSUCH, J., filed a dissenting opinion, in which THOMAS, J., joined.
Laker v. Bd. of Trustees of the Cal. State Univ. (CA6 H044836 2/28/19) Retaliation & Defamation/Title IX Investigation/Anti-SLAPP
Dr. Jason Laker (Laker) sued the Board of Trustees of the California State University (University) and Mary McVey for defamation and retaliation arising from a series of internal investigations conducted by the University. The defendants filed an anti-SLAPP motion to strike the complaint under Code of Civil Procedure section 425.16, which the trial court denied on the ground that the defendants failed to show that Laker’s defamation and retaliation claims arose from any activity protected by section 425.16. For the reasons explained below, we agree with the University and McVey that the trial court erred in that finding as to Laker’s defamation claim. However, we affirm the trial court’s denial of the University’s motion to strike Laker’s retaliation claim, although we strike one allegation contained in that claim.
Kaanaana v. Barrett Business Services, Inc. (2018) 29 Cal.App.5th 778 (SC S253458/B276420 review granted 2/27/19) Prevailing Wage Law
The petition for review is granted. The issue to be briefed and argued is limited to the following: Whether the phrase "work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type" in Labor Code section 1720, subdivision (a)(2) of California's Prevailing Wage Law (Labor Code §§1720 et. seq.) should be interpreted to cover any type of work regardless of its nature, funding, purpose or function, including belt sorting at recycling facilities. The request for an order directing depublication of the opinion is denied. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/brief due.
Moorer v. Noble LA Events Inc. (CA2/7 B282631, filed 2/11/19, pub. ord. 2/27/19) PAGA/Default Judgment
David Moorer appeals from the March 23, 2017 order denying his request for entry of a default judgment against Noble L.A. Events, Inc. (Noble), and dismissing the case. The trial court denied Moorer’s request because Moorer refused to comply with the court’s order to distribute 25 percent of the penalties to be allocated under the Labor Code Private Attorney General Act of 2004 (Lab. Code, § 2698 et seq. (PAGA)) to the 23 aggrieved employees in a pro rata amount. Instead, Moorer allocated the entire 25 percent to himself. On appeal, Moorer contends a PAGA action is a qui tam action, and therefore, 25 percent of the civil penalties should be distributed to the aggrieved employee who brought the claim. Moorer’s position is contrary to the California Supreme Court’s rulings interpreting PAGA. We affirm.
Castro v. Tri Marine Fish Co. (9th Cir. 17-35703 2/27/19) International Arbitration/Employment Disability
The panel reversed in part and vacated in part the district court’s order treating an order issued by an arbitrator in the Philippines as a foreign arbitral award and confirming the arbitrator’s order under the New York Convention and the Convention Act.
Looking to the essence of the arbitrator’s order, the panel held that the order was not a foreign arbitral award because the parties had already agreed to settle their dispute, and so there was no outstanding dispute to arbitrate when they brought the matter to the arbitrator. In addition, the purported arbitration did not follow the parties’ prior agreements to arbitrate, nor did it follow Philippine arbitral procedure.
The panel remanded for the district court to assess jurisdiction under the Convention Act and—a appropriate—venue and any defenses to enforcement of the settlement.