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Benaroya v. Willis (CA2/4 B281761 5/17/18) Arbitration Ruling Vacated for Including Nonsignatory to Award
Benaroya Pictures (Benaroya) contracted with Westside Corporation (Westside) to pay the well-known actor Bruce Willis, the president of Westside, to perform in a movie to be produced by Benaroya. After a dispute arose regarding Willis’ payment, Willis and Westside (collectively respondents) commenced arbitration proceedings against Benaroya, pursuant to the arbitration clause in the agreement. While in arbitration, respondents moved to amend their arbitration demand to name appellant Michael Benaroya individually, even though he was not a party to the agreement, on the ground that he was the alter ego of Benaroya. The arbitrator granted the request, found appellant to be Benaroya’s alter ego, and awarded damages to respondents for which both Benaroya and appellant, as Benaroya’s alter ego, were liable. The trial court denied appellant and Benaroya’s petition to vacate the award as to appellant, and granted respondents’ petition to confirm the award. In this appeal from the confirmation of the award, appellant contends the trial court erred because he was a nonsignatory to the arbitration agreement, and only the court, not the arbitrator, had authority to determine whether he was compelled to arbitrate as the alter ego of Benaroya. We agree and therefore reverse the judgment. We remand the case to the trial court with directions to: (1) set aside its rulings denying appellant and Benaroya’s petition to vacate the award and granting respondent’s petition to confirm; and (2) enter new orders granting appellant and Benaroya’s petition to vacate the award as to appellant, and granting respondents’ petition to confirm the award only as to Benaroya.
Bill Signed by Governor
SB 785 by Senator Scott Wiener (D-San Francisco) – Evidence: immigration status.
Dowdy v. Metropolitan Life Ins. Co. (9th Cir. 16-15824 5/16/18) ERISA
The panel reversed the district court’s judgment in favor of the defendant in an ERISA action challenging the denial of accidental dismemberment benefits under an employee welfare benefit plan.
The plaintiff suffered a serious injury to his left leg as the result of an automobile accident, and his leg was eventually amputated below the knee. The defendant denied coverage because the plaintiff’s injury was complicated by his diabetes.
The panel held that the district court did not abuse its discretion in excluding evidence outside the administrative record, and any error on this issue was harmless because the external evidence did not support the plaintiff’s claim.
Under the ERISA plan, the plaintiff was entitled to coverage if his car accident was the “direct and sole cause” of the loss, and if amputation “was a direct result of the accidental injury, independent of other causes.” The panel held that, even under the more demanding “substantial contribution” standard used when the applicable plan language is conspicuous, the plaintiff was entitled to recovery because the record did not support a finding that the preexisting condition of diabetes substantially contributed to his loss.
The panel remanded the case to the district court for further proceedings.
Castillo v. Glenair, Inc. (CA2/2 B278239, filed 4/16/18, mod. 5/15/18) Joint Employer Settlement/Res Judicata
It is ordered that the opinion filed herein on April 16, 2018, be modified as follows:
1. On page 1, the appearance for appellants is modified to read as follows:
Matern Law Group, Matthew J. Matern, Andrew Sokolowski, Tagore Subramaniam, Debra J. Tauger; Altshuler Berzon, Stacey Leyton, Eve H. Cervantez and Rebecca C. Lee for Plaintiffs and Appellants.
2. On page 2, first sentence of the last paragraph, which continues on page 3, an apostrophe is added to the name “Castillos” so the sentence reads:
The Castillos’ present claims against Glenair involve the same wage and hour claims, for the same work done, covering the same time period as the claims asserted in Gomez.
3. On page 35, the following new subheading 7 and four paragraphs shall be added after part 6 of the Discussion, before the Disposition:
7. Petition for Rehearing
Appellants filed a petition for rehearing, in which they make a number of arguments that mischaracterize our opinion or were never before made. We briefly address some here.
First, appellants present an overbroad description and summary of DKN Holdings, supra, 61 Cal.4th 813. As discussed above, DKN Holdings does not preclude our conclusion here. Again, assuming Glenair and GCA are jointly and severally liable, we do not read DKN Holdings as creating an absolute bar against finding privity amongst parties who are also jointly and severally liable on a contract or as tortfeasors. Moreover, unlike DKN Holdings, this case does not involve a joint obligation on a contract, nor does it involve joint tortfeasors.
Second, appellants make sweeping and inaccurate statements as to the scope of our opinion. For example, appellants mistakenly claim our opinion would bar Gomez class members from bringing causes of action under “entirely different wage and hour statutes not raised in the Gomez complaint.” To the contrary, however, our opinion states Glenair is in privity with GCA for specified purposes only and does not purport to bar entirely new causes of action based on violations of different wage and hour statutes. Similarly, appellants incorrectly state our opinion is “dangerously overbroad” because it creates privity “whenever two or more persons engage in joint wrongdoing.” Again, however, this greatly oversimplifies our opinion, which requires more than “joint wrongdoing” for a finding of privity. Appellants also incorrectly claim our opinion would transform all service contracts into agency relationships. Appellants overlook the requirement, which is satisfied here, that an agent represents the principal in dealings with third persons. (Civ. Code, § 2295.)
Finally, appellants make new arguments in their petition for rehearing. For example, appellants contend for the first time that their claims against Glenair are not the same as those asserted in Gomez, but instead “rest on entirely different facts concerning independently wrongful actions of Glenair and GCA.” Prior to their petition for rehearing, appellants had not disputed Glenair’s repeated assertion that the claims at issue here were the same as the claims at issue in Gomez. Our opinion is based in part on the claims here being the same as those released in Gomez. We decline to address an entirely new theory of the case supported by new allegations on a petition for rehearing. (Cornelius v. Los Angeles County etc. Authority (1996) 49 Cal.App.4th 1761, 1777–1778, fn. 7.) Appellants also make a new due process argument. Specifically, appellants argue the named plaintiffs in Gomez could not have been constitutionally adequate representatives of appellants’ claims against Glenair. Again, because appellants did not previously raise this argument, we decline to address it for the first time on a petition for rehearing. (Ibid.)
There is no change in the judgment.
On May 1, 2018, with newly added counsel, appellants Andrew and David Castillo filed a petition for rehearing and a request for judicial notice. At our request, Glenair filed an answer to the petition for rehearing and a response to the request for judicial notice. Subsequently, we granted appellants’ request for leave to file a reply in support of their petition for rehearing. The petition for rehearing and the request for judicial notice are denied.
Fierro v. Landry's Restaurant Inc. (CA1/4 D071904, filed 4/26/18, pub. ord. 5/14/18) Wage & Hour/Tolling Class Claims
Plaintiff Jorge Fierro filed the underlying action against defendant Landry's Restaurant Inc., seeking remedies for what Fierro alleges to be Landry's' violations of specified California labor laws and wage orders. Fierro asserts claims on behalf of himself and on behalf of a class of individuals that he alleges is similarly situated. Landry's demurred to the complaint on the basis that each of the causes of action was barred by the applicable statute of limitations.
As to Fierro's individual claims, the trial court overruled the demurrer, concluding that the statute of limitations defense did not appear affirmatively on the face of the complaint. As to the class claims, the trial court sustained the demurrer without leave to amend on the basis that a prior class action with identical class claims against Landry's had been dismissed for failure to bring the case to trial in five years as required by Code of Civil Procedure sections 583.310 and 583.360. Under the "death knell" doctrine, Fierro appeals from that portion of the order sustaining without leave to amend the demurrer to the class claims.
The trial court erred. As we explain, from the record presented, we do not know the basis of the dismissal of the prior action; and, in any event, because the dismissal of the prior action is not final for purposes of res judicata or collateral estoppel, it cannot form the basis of a defense to the class claims in the present action. As we further explain, because we agree with the trial court that the statute of limitations defense does not appear affirmatively on the face of the complaint, there is no alternative basis on which to affirm the dismissal of the class claims. Accordingly, we will reverse and remand with instructions to enter an order overruling Landry's' demurrer in its entirety.
Taswell v. The Regents of the Univ. of Cal. (CA4/3 G053960 5/14/18) Retaliation/California Whistleblower Protection Act
Plaintiff Carl Taswell, M.D., who is certified in nuclear medicine, filed a complaint against the Regents of the University of California (the Regents). Taswell alleged he was retaliated against for his whistleblowing activities regarding patient safety at the brain imaging center during his employment by the University of California, Irvine (the University). Taswell appealed from the judgment entered after the trial court granted the Regents’ motion for summary judgment and summary adjudication. We reverse.
We hold that, following an administrative hearing, Taswell was not required to exhaust his judicial remedies (by seeking a writ of mandamus) to challenge the University’s rejection of his claims of retaliation. We also hold that, after exhausting his administrative remedies, Taswell was statutorily authorized to file this civil action and seek damages based on his statutory whistleblower retaliation claims; the administrative decision has no res judicata or collateral estoppel effect on this action.
Also, a triable issue of material fact exists as to whether the University’s decisions to place Taswell on an investigatory leave of absence and to not renew his contract had a causal connection to Taswell’s whistleblowing activities. Therefore, summary judgment and/or summary adjudication should not have been granted on the theory that no triable issue of fact existed.
U.S. Chamber of Commerce v. City of Seattle (9th Cir. 17-35640 5/11/18) Riding Haling Ordinance/Sherman Act Preemption
The panel affirmed in part and reversed in part the district court’s dismissal of an action challenging, on federal antitrust and labor law grounds, a Seattle ordinance authorizing a collective-bargaining process between “driver coordinators”—like Uber Technologies; Lyft, Inc.; and Eastside for Hire, Inc. —and independent contractors who work as for-hire drivers.
The ordinance permits independent-contractor drivers, represented by an entity denominated an “exclusive driver representative,” and driver coordinators to agree on the “nature and amount of payments to be made by, or withheld from, the driver coordinator to or by the drivers.”
The panel reversed the district court’s dismissal of claims that the ordinance violates, and is preempted by, § 1 of the Sherman Antitrust Act because the ordinance sanctions price-fixing of ride-referral service fees by private cartels of independent-contractor drivers.
The panel held that the state-action immunity doctrine did not exempt the ordinance from preemption by the Sherman Act because the State of Washington had not clearly articulated and affirmatively expressed a state policy authorizing private parties to price-fix the fees that for-hire drivers pay to companies like Uber or Lyft in exchange for ride-referral services. In addition, the active-supervision requirement for state-action immunity applied, and was not met.
The panel affirmed the district court’s dismissal of claims that the ordinance was preempted by the National Labor Relations Act under either Machinists or Garmon preemption. The panel remanded the case for further proceedings.
Snapp v. BNSF Railway (9th Cir. 15-35410 5/11/18) ADA Interactive Process/Reasonable Accommodation
The panel affirmed the district court’s judgment, after a jury trial, in favor of Burlington Northern Santa Fe Railway Co., the defendant in an action alleging a failure to accommodate under the Americans with Disabilities Act.
The panel held that the ADA treats the failure to provide a reasonable accommodation for a disability as an act of discrimination if the employee is a “qualified individual,” the employer receives adequate notice, and a reasonable accommodation is available that would not place an undue hardship on the operation of the employer’s business. Notifying an employer of a need for an accommodation triggers a duty to engage in an “interactive process.” If an employer receives notice and fails to engage in the interactive process, the employer will face liability if a reasonable accommodation would have been possible. If an employer fails to engage in good faith in the interactive process, the burden at the summary-judgment phase shifts to the employer to prove the unavailability of a reasonable accommodation.
In an earlier appeal, a prior panel reversed the district court’s summary judgment in favor of BNSF and stated: “there is a genuine dispute over whether BNSF engaged in good faith in a required interactive process, and failure to do so would constitute discrimination under the ADA.”
The panel concluded that this statement was not law of the case, but rather a less-than-complete statement of law. The panel held that at trial, unlike at the summary judgment phase, the burden of proof does not shift, and the plaintiff bears the burden of proving that the employer could have made a reasonable accommodation that would have enabled the plaintiff to perform the essential functions of the job. The panel rejected the argument that the plaintiff has only a burden of production, rather than a burden of proof. Accordingly, the district court’s jury instructions were correct.
Affirming the district court’s denial of the plaintiff’s motion for judgment as a matter of law, and agreeing with the Tenth Circuit, the panel held that BNSF was not bound by admissions made in a deposition of a corporate designee for BNSF pursuant to Fed. R. Civ. P. 30(b)(6), such that the jury should not have been allowed to consider other evidence.
Palm v. LADWP (9th Cir. 16-55691 5/10/18) Termination of Probationary Employment/14th Amendment Due Process
The panel affirmed the district court’s order (1) granting defendants’ motion to dismiss; (2) denying plaintiff leave to amend his third amended complaint; and (3) denying plaintiff’s motion for reconsideration in his 42 U.S.C. § 1983 action alleging that the Los Angeles Department of Water and Power terminated his employment in a probationary promotional position without due process of law in violation of the Fourteenth Amendment.
The panel held that based on the plain language of the Los Angeles Charter, the Los Angeles Civil Service Rules, and Circuit precedent, plaintiff lacked a protected property interest in his probationary employment as Steam Plant Maintenance Supervisor. He therefore could not maintain a claim under the Fourteenth Amendment based on his termination from that position and his return to his permanent position as Steam Plant Assistant.
Blue v. Cal. Office of the Inspector General (CA3 C083175 5/10/18) Public Safety Officers Procedural Bill of Rights/Anti-SLAPP
This appeal challenges the trial court’s partial denial of a special motion to strike pursuant to Code of Civil Procedure section 425.16, the anti-SLAPP statute, directed at causes of action arising out of the manner in which defendants, the Office of the Inspector General (OIG) and Robert A. Barton, in his capacity as Inspector General, conducted interviews with five correctional officers who previously worked at High Desert State Prison. The interviews were conducted as part of an investigation into that institution’s “practices . . . with respect to (1) excessive use of force against inmates, (2) internal reviews of incidents involving the excessive use of force against inmates, and (3) protection of inmates from assault and harm by others.” As relevant to this appeal, these individual correctional officers and the California Correctional Peace Officers Association (CCPOA) alleged in their first and second causes of action that defendants violated Penal Code section 6126.5 and Government Code section 3300 et seq. (the Public Safety Officers Procedural Bill of Rights or the Act) by refusing the officers’ requests to be represented during the interviews. The trial court denied the anti-SLAPP motion as to these causes of action, concluding (1) defendants carried their threshold burden of demonstrating the gravamen of these causes of action arose from protected activity, but (2) plaintiffs established a probability of prevailing on the merits of these claims.
We agree defendants carried their burden on the threshold issue, but conclude plaintiffs failed to establish a probability of prevailing on the merits of these causes of action. We therefore reverse the portion of the trial court’s order denying the anti-SLAPP motion with respect to the first and second causes of action and remand the matter to the trial court with directions to enter a new order granting the motion in its entirety and dismissing the complaint.
Strategic Concepts, LLC v. Beverly Hills Unified School Dist. (CA2/6 B264478 5/10/18) Independent Contractor/Public Contracts
A school district employee persuaded the district to convert her position from employee to independent contractor. She formed a limited liability company (LLC). The result: she was no longer an employee to whom the district paid $113,000 per year; she was now the sole owner of an LLC to which the district paid more than $1.3 million a year. Later she persuaded the district to award her LLC a $16 million no-bid contract. The district later declared the contracts void in violation of Government Code section 1090, prohibiting conflicts of interest in the making of public contracts, and section 4525 et seq., requiring competitive bidding for certain public contracts.
The LLC sued the district for breach of contract and the district cross-complained to recover money paid under the alleged void contracts.
The trial court instructed the jury that the LLC’s contracts did not violate section 1090 on the theory the statute does not apply to independent contractors. The court did not instruct on the competitive bidding statutes. It also concluded that a “termination for convenience” clause in the contract did not limit damages. The jury awarded millions in damages to the LLC.
We reverse. Section 1090 applies to independent contractors. The trial court misinterpreted section 1090 and erred in not instructing on the competitive bidding statutes. The contract also limits the LLC’s damages.
Oman v. Delta Air Lines (9th Cir. 17-15124 5/9/18) Wage Payments & Statements/Minimum Wage for Out-of-State Employers/Averaging
The panel certified the following questions of state law to the Supreme Court of California:
Do California Labor Code §§ 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?
Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? See Cal. Labor Code §§ 1182.12, 1194; 8 C.C.R. § 11090(4).
Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? See Gonzalez v. Downtown LA Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct. App. 2013); Armenta v. Osmose, Inc., 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005)?
Ward v. United Airlines (9th Cir. 16-16415 5/9/18) Wage Statements and Railroad Labor Act/Wage Statements Out-of-State Employer & Employees Residing in California
The panel certified the following questions of state law to the Supreme Court of California:
Wage Order 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement (CBA) in accordance with the Railway Labor Act (RLA). See 8 C.C.R. § 11090(1)(E). Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code § 226 by an employee who is covered by a CBA?
Does California Labor Code § 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?
Contractors' State License Bd. v. Superior Court (CA1/1 A153684, filed 4/26/18, pub. ord. 5/9/18) Licensing Board Disciplinary Proceeding/Apex Deposition
The Contractors’ State License Board (the Board) seeks a writ of mandate and a stay to prevent the “apex deposition” of David R. Fogt. Fogt is the Board’s Registrar of Contractors, a position which makes him the Board’s secretary and chief executive officer. After real party in interest, Black Diamond Electric, Inc. (BDE), noticed Fogt’s deposition in a declaratory judgment action BDE had brought against the Board, Fogt sought a protective order to prevent the deposition. Respondent court denied the motion for a protective order, and the Board now seeks writ review.
We conclude that under well-established California law, the head of a government agency, such as Fogt, generally is not subject to deposition. “An exception to the rule exists only when the official has direct personal factual information pertaining to material issues in the action and the deposing party shows the information to be gained from the deposition is not available through any other source.” (Westly v. Superior Court (2004) 125 Cal.App.4th 907, 911 (Westly).) We hold that this exception does not apply in this case. We therefore grant the Board’s petition and issue a peremptory writ in the first instance, as we previously informed the parties was possible. (See Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 177–180 (Palma).)
Arnaudo Brothers v. ALRB (CA5 F072420B 5/4/18) Agricultural Labor Relations Board/Unfair Labor Practice
This writ proceeding addresses decisions by the Agricultural Labor Relations Board (Board) that an agricultural employer committed unfair labor practices by refusing to bargain with, and provide information to, the United Farm Workers of America (Union). The employer’s defense was that in the early 1980’s, the Union expressly disclaimed any interest in representing the bargaining unit—a disclaimer reinforced by the Union’s 30 years of inactivity. The Board rejected the employer’s disclaimer defense to the failure to bargain charge, finding the purported disclaimer was not clear and unequivocal. The Board awarded make whole-relief based on the determination that the employer’s litigation of the disclaimer issue did not further the policies and purpose of the Agricultural Labor Relations Act of 1975 (Lab. Code, §§ 1140-1166.3). The employer contends the Board erred in rejecting its disclaimer defense and in awarding make-whole relief.
In August 2017, we issued a decision concluding the Board properly rejected the employer’s disclaimer defense to the charge that employer failed to bargain with the Union, but erred in determining make-whole relief was “appropriate” for purposes of section 1160.3. The California Supreme Court granted review pending its decisions in Gerawan Farming, Inc. v. Agricultural Labor Relations Bd. (2017) 3 Cal.5th 1118 (Gerawan) and Tri-Fanucchi Farms v. Agricultural Labor Relations Bd. (2017) 3 Cal.5th 1161 (Tri-Fanucchi). In March 2018, the Supreme Court directed us to vacate our decision and reconsider the matter in light of Tri-Fanucchi, which reinstated an award of make-whole relief that this court had vacated.
Having received supplemental briefs and replies to the supplemental briefs, we conclude the Board did not err when it (1) identified and applied the rules that define when a certified union has made a disclaimer of interest in representing the bargaining unit; (2) determined the statement by the Union representative that “we’re through with you” (if made) was not a clear and unequivocal disclaimer of interest; and (3) concluded the Union’s subsequent conduct consistent with a disclaimer could not render the equivocal disclaimer effective. On the question of make-whole relief, the principles set forth in Tri-Fanucchi compel the conclusion that the Board properly exercised its broad discretionary authority when it awarded make-whole relief in this case.
We therefore affirm the Board’s decisions.
Sali v. Corona Regional Med. Ctr. (9th Cir. 15-56460 5/3/18) Wage and Hour/Class Certification
The panel reversed the district court’s denial of class certification in a putative class action alleging employment claims against Corona Medical Center and UHS of Delaware, Inc; and remanded.
Plaintiffs Marlyn Sali and Deborah Spriggs moved for certification of seven classes of Registered Nurses, alleging they were underpaid by Corona as a result of certain employment policies and practices. The district court denied certification under Fed. R. Civ. P. 23 of each of the proposed classes on multiple grounds. The panel held that the district court’s determination, that plaintiffs failed to demonstrate their injuries were typical of the proposed classes, was premised on an error of law.
The panel held that the district court erred by striking a declaration at this preliminary stage, and the district court may not decline to consider evidence solely on the basis that the evidence is inadmissible at trial. The panel agreed with the district court’s conclusion that plaintiff Spriggs was not an adequate class representative because she was not a member of any class she sought to represent.
The panel held, however, that plaintiff Sali was an adequate class representative, and Spriggs’s inadequacy was not a valid basis to deny class certification. The panel held that the district court abused its discretion by concluding that attorneys from the law firm Bisnar Chase could not serve as adequate class counsel. The panel also held that at this early stage of the litigation, the district court’s decision on this issue was premature, but the district court was not precluded from considering counsel’s prior sanctions as evidence of inadequacy if they continue to neglect their duties.
The panel held that the district court erred by denying certification of the proposed rounding-time and wage statement classes on the basis that they failed Rule 23(b)(3)’s predominance requirement. First, the panel held that the district court’s determination that individual questions predominated in the claims of the proposed rounding-time class was based on an error of law. Under California law, the district court erred by interpreting time “actually worked” to mean only time spent engaged in work-related activities because time is compensable when an employee is working or under the control of his or her employer. Second, the panel held that the district court’s determination - that individual questions predominate in the claims of the proposed wage-statement class - was premised on legal error. The district court erred by concluding that damages for members of the wage statement class would require an individualized determination because California Labor Code specifies that a violation of § 226 is a per se injury.
Hernandez v. Rancho Santiago Community College Dist. (CA4/3 G054563 5/3/18) FEHA Interactive Process/Reasonable Accommodation
Plaintiff Marisa Hernandez worked for defendant Rancho Santiago Community College District on and off for a number of years without any complaints about her performance. In 2013, she was hired as an administrative assistant. During her one-year probationary period, her performance was to be evaluated at three months, seven months, and 11 months. At the completion of 12 months of probation, she would be considered a permanent employee. Eight months into her probationary period and with the district’s consent, she went on a temporary disability leave to have surgery to replace a knuckle on a finger she injured while working for the district prior to her most recent hiring. She was scheduled to return to work on, or shortly after, the anniversary of her hiring date. The district, however, terminated her while she was on the approved leave, because her performance had not been reviewed.
Hernandez sued the district under the California Fair Employment and Housing Act (the FEHA) (Gov. Code, § 12940, subds. (m), (n)), contending it failed to make reasonable accommodation for her medical condition and failed to engage in an interactive process. At the conclusion of the court trial, the court found in Hernandez’s favor and awarded her $723,746 in damages. The trial court found the district could have accommodated her by extending her probationary period, by deducting the four months she was on disability leave from her probationary period, or by adding the time away from work to the probationary period, and, contrary to the district’s position, the district would not have been required to make Hernandez a permanent employee on the anniversary of her hiring. The district appeals, contending it had to terminate Hernandez’s probation and employment because if it did not, she would have become a permanent employee without having had her performance evaluated. We affirm the judgment.
Davis v. County of Fresno (CA5 F073151 5/3/18) Public Safety Officers Procedural Bill of Rights
Plaintiff James Davis was dismissed from his employment as a supervising juvenile correctional officer based on findings of insubordination, discourteous treatment of a subordinate, wrongfully assuming supervisorial duties over his wife despite several admonitions to the contrary, exaggerating the hours he worked on multiple time cards, and other misconduct. Davis’s administrative appeal of his dismissal was denied by the Civil Service Commission (Commission) of the County of Fresno (County). Davis filed a petition for a writ of administrative mandamus requesting the superior court to set aside the Commission’s decision. The superior court denied the petition.
On appeal, Davis contends County violated his constitutional due process rights by failing to provide him a copy of all materials upon which the disciplinary action was based prior to his Skelly hearing. Davis also contends County’s failure to produce complete copies of reports and witness interviews conducted during the internal affairs investigation into his alleged misconduct violated the Public Safety Officers Procedural Bill of Rights Act, Government Code section 3300 et seq. (POBRA).
We conclude the materials delivered prior to Davis’s Skelly hearing satisfied the requirements of due process applicable before disciplinary action is imposed. In contrast, we conclude County violated Davis’s right under POBRA to receive “any reports or complaints made by investigators or other persons.” (§ 3303, subd. (g).) We interpret the term “any reports” to include the incident reports and interview transcripts attached to a September 2012 memorandum prepared by a special probation investigator who looked into a retaliation complaint made by another officer against Davis. Davis’s alleged discourteous treatment of this officer was one of the grounds for his dismissal.
The issue of the appropriate remedy for a violation of POBRA is committed to the broad discretion of the superior court. Here, the record does not compel this court, as a matter of law, to reinstate Davis with backpay. Furthermore, there exists a wide range of remedies and we make no comment as to the merits of any of the possible remedies the trial court might select. Therefore, we remand this matter to the superior court and direct it to decide in the first instance the appropriate remedy.
We therefore reverse the judgment.
Dynamex Operations West, Inc. v. Superior Court (SC S222732 4/30/18) Wage and Hour/Employee-Independent Contractor Classification
Under both California and federal law, the question whether an individual worker should properly be classified as an employee or, instead, as an independent contractor has considerable significance for workers, businesses, and the public generally. On the one hand, if a worker should properly be classified as an employee, the hiring business bears the responsibility of paying federal Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, providing worker’s compensation insurance, and, most relevant for the present case, complying with numerous state and federal statutes and regulations governing the wages, hours, and working conditions of employees. The worker then obtains the protection of the applicable labor laws and regulations. On the other hand, if a worker should properly be classified as an independent contractor, the business does not bear any of those costs or responsibilities, the worker obtains none of the numerous labor law benefits, and the public may be required under applicable laws to assume additional financial burdens with respect to such workers and their families.
Although in some circumstances classification as an independent contractor may be advantageous to workers as well as to businesses, the risk that workers who should be treated as employees may be improperly misclassified as independent contractors is significant in light of the potentially substantial economic incentives that a business may have in mischaracterizing some workers as independent contractors. Such incentives include the unfair competitive advantage the business may obtain over competitors that properly classify similar workers as employees and that thereby assume the fiscal and other responsibilities and burdens that an employer owes to its employees. In recent years, the relevant regulatory agencies of both the federal and state governments have declared that the misclassification of workers as independent contractors rather than employees is a very serious problem, depriving federal and state governments of billions of dollars in tax revenue and millions of workers of the labor law protections to which they are entitled.
The issue in this case relates to the resolution of the employee or independent contractor question in one specific context. Here we must decide what standard applies, under California law, in determining whether workers should be classified as employees or as independent contractors for purposes of California wage orders, which impose obligations relating to the minimum wages, maximum hours, and a limited number of very basic working conditions (such as minimally required meal and rest breaks) of California employees.
In the underlying lawsuit in this matter, two individual delivery drivers, suing on their own behalf and on behalf of a class of allegedly similarly situated drivers, filed a complaint against Dynamex Operations West, Inc. (Dynamex), a nationwide package and document delivery company, alleging that Dynamex had misclassified its delivery drivers as independent contractors rather than employees. The drivers claimed that Dynamex’s alleged misclassification of its drivers as independent contractors led to Dynamex’s violation of the provisions of Industrial Welfare Commission wage order No. 9, the applicable state wage order governing the transportation industry, as well as various sections of the Labor Code, and, as a result, that Dynamex had engaged in unfair and unlawful business practices under Business and Professions Code section 17200.
Prior to 2004, Dynamex classified as employees drivers who allegedly performed similar pickup and delivery work as the current drivers perform. In 2004, however, Dynamex adopted a new policy and contractual arrangement under which all drivers are considered independent contractors rather than employees. Dynamex maintains that, in light of the current contractual arrangement, the drivers are properly classified as independent contractors.
After an earlier round of litigation in which the trial court’s initial order denying class certification was reversed by the Court of Appeal (Lee v. Dynamex, Inc. (2008) 166 Cal.App.4th 1325), the trial court ultimately certified a class action embodying a class of Dynamex drivers who, during a pay period, did not themselves employ other drivers and did not do delivery work for other delivery businesses or for the drivers’ own personal customers. In finding that the relevant common legal and factual issues relating to the proper classification of the drivers as employees or as independent contractors predominated over potential individual issues, the trial court’s certification order relied upon the three alternative definitions of “employ” and “employer” set forth in the applicable wage order as discussed in this court’s then-recently decided opinion in Martinez v. Combs (2010) 49 Cal.4th 35, 64 (Martinez). As described more fully below, Martinez held that “[t]o employ . . . under the [wage order], has three alternative definitions. It means: (a) to exercise control over the wages, hours, or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.” (49 Cal.4th at p. 64.) The trial court rejected Dynamex’s contention that in the wage order context, as in most other contexts, the multifactor standard set forth in this court’s seminal decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello) is the only appropriate standard under California law for distinguishing employees and independent contractors.
In response to the trial court’s denial of Dynamex’s subsequent motion to decertify the class, Dynamex filed the current writ proceeding in the Court of Appeal, maintaining that two of the alternative wage order definitions of “employ” relied upon by the trial court do not apply to the employee or independent contractor issue. Dynamex contended, instead, that those wage order definitions are relevant only to the distinct joint employer question that was directly presented in this court’s decision in Martinez — namely whether, when a worker is an admitted employee of a primary employer, another business or entity that has some relationship with the primary employer should properly be considered a joint employer of the worker and therefore also responsible, along with the primary employer, for the obligations imposed by the wage order.
The Court of Appeal rejected Dynamex’s contention, concluding that neither the provisions of the wage order itself nor this court’s decision in Martinez supported the argument that the wage order’s definitions of “employ” and “employer” are limited to the joint employer context and are not applicable in determining whether a worker is a covered employee, rather than an excluded independent contractor, for purposes of the obligations imposed by the wage order. The Court of Appeal concluded that the wage order definitions discussed in Martinez are applicable to the employee or independent contractor question with respect to obligations arising out of the wage order. The Court of Appeal upheld the trial court’s class certification order with respect to all of plaintiffs’ claims that are based on alleged violations of the wage order.
At the same time, the Court of Appeal concluded that insofar as the causes of action in the complaint seek reimbursement for business expenses such as fuel and tolls that are not governed by the wage order and are obtainable only under section 2802 of the Labor Code, the Borello standard is the applicable standard for determining whether a worker is properly considered an employee or an independent contractor. With respect to plaintiffs’ non-wage-order claim under section 2802, the Court of Appeal remanded the matter to the trial court to reconsider its class certification of that claim pursuant to a proper application of the Borello standard as further explicated in this court’s decision in Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522 (Ayala).
Dynamex filed a petition for review in this court, challenging only the Court of Appeal’s conclusion that the wage order definitions of “employ” and “employer” discussed in Martinez are applicable to the question whether a worker is properly considered an employee or an independent contractor for purposes of the obligations imposed by an applicable wage order. We granted review to consider that issue.
For the reasons discussed below, we agree with the Court of Appeal that the trial court did not err in concluding that the “suffer or permit to work” definition of “employ” contained in the wage order may be relied upon in evaluating whether a worker is an employee or, instead, an independent contractor for purposes of the obligations imposed by the wage order. As explained, in light of its history and purpose, we conclude that the wage order’s suffer or permit to work definition must be interpreted broadly to treat as “employees,” and thereby provide the wage order’s protection to, all workers who would ordinarily be viewed as working in the hiring business. At the same time, we conclude that the suffer or permit to work definition is a term of art that cannot be interpreted literally in a manner that would encompass within the employee category the type of individual workers, like independent plumbers or electricians, who have traditionally been viewed as genuine independent contractors who are working only in their own independent business.
For the reasons explained hereafter, we conclude that in determining whether, under the suffer or permit to work definition, a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to a standard, commonly referred to as the “ABC” test, that is utilized in other jurisdictions in a variety of contexts to distinguish employees from independent contractors. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Although, as we shall see, it appears from the class certification order that the trial court may have interpreted the wage order’s suffer or permit to work standard too literally, we conclude that on the facts disclosed by the record, the trial court’s certification order is nonetheless correct as a matter of law under a proper understanding of the suffer or permit to work standard and should be upheld.
Accordingly, we conclude that the judgment of the Court of Appeal should be affirmed.