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Port Medical Wellness v. Conn. Gen. Life Ins. Co. (CA2/3 B275874, filed 5/10/18, pub. ord. 6/1/18) ERISA

 

Port Medical Wellness, Inc. (Port Medical) sued the International Longshore & Warehouse Union—Pacific Maritime Association Welfare Plan (Plan), its Board of Trustees (Board), and its former claims administrator, Connecticut General Life Insurance Company (Connecticut General), seeking payment for health care services provided to persons eligible for benefits under the Plan. The trial court granted summary judgment in favor of all defendants.

 

State law causes of action seeking to recover unpaid benefits under a welfare benefit plan regulated under the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.) are generally conflict preempted. We conclude that Port Medical’s claims for breach of implied-in-fact contract, intentional misrepresentation and quantum meruit—each of which seeks payment for services covered under the Plan—are conflict preempted under section 514 of ERISA. Port Medical’s two remaining claims—unfair competition (Bus. & Prof. Code, § 17200 et seq.) and intentional interference with prospective economic advantage—are not preempted because they are predicated on the theory that the Plan and Connecticut General conspired to force Port Medical out of business in order to benefit a competitor, rather than strictly on a claim for benefits under the Plan. Nevertheless, we conclude Port Medical failed to demonstrate there is a dispute of material fact with respect to those claims. Accordingly, we affirm the judgment in its entirety.

 

http://www.courts.ca.gov/opinions/documents/B275874.PDF

 

Heavenly Hana v. Hotel Union & Hotel Industry (9th Cir. 16-15481 6/1/18) Multiemployer Pension Plan Amendment Act

 

The panel reversed the district court’s judgment, after a bench trial, in favor of the plaintiffs in an action under the Multiemployer Pension Plan Amendment Act.

 

The panel held that the plaintiffs were required to assume the unpaid withdrawal liability of their predecessor to a multiemployer pension plan. The panel held that a constructive notice standard applied, and the plaintiffs were on constructive notice of potential withdrawal liability because a reasonable purchaser would have discovered their predecessor’s withdrawal liability.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/06/01/16-15481.pdf

 

Jensen v. The Home Depot, Inc. (CA4/2 E067002 5/31/18) Disability Discrimination/Sustained Demurrer and Severance

 

In a first amended complaint, Rosa Jensen and Linda Kerr sued their former employer, The Home Depot, Inc., (Home Depot), and their former managers at Home Depot for disability discrimination, wrongful termination, and eight other related claims.  Home Depot and the managers (collectively, defendants) demurred to the first amended complaint arguing misjoinder of Jensen and Kerr (collectively, plaintiffs).  (Code Civ. Proc. § 430.10, subd. (d).)  The trial court sustained the demurrer without leave to amend, and dismissed plaintiffs’ lawsuit with prejudice.  Jensen contends the trial court erred by dismissing her lawsuit because the court could have ordered severance (§ 379.5).  We reverse the judgment of dismissal with directions.

 

http://www.courts.ca.gov/opinions/documents/E067002.PDF

 

Canales v. Wells Fargo Bank, N.A. (CA2/5 B276127 5/30/18) Wage Statement/OverTimePay-Override

 

Plaintiffs Fabio Canales and Andy Cortes, on behalf of themselves and class members, appeal from a summary judgment.  Plaintiffs were former or current non-exempt employees of defendant Wells Fargo Bank, N.A.  Plaintiffs alleged that their wage statements failed to include information required under Labor Code section 226, subdivision (a)(9).  Specifically, plaintiffs argued that a line on the wage statement, “OverTimePay-Override,” should, but did not, include hourly rates and hours worked.  Plaintiffs also alleged defendant violated section 226 by failing to provide a wage statement concurrently with the terminated employees’ final wages paid in-store.  Plaintiffs moved for summary adjudication on the section 226 cause of action.   

           

Defendant in its summary judgment motion argued that OverTimePay-Override reflected additional overtime pay that was owed for work performed on a previous pay period, but could not be calculated because it was based on a nondiscretionary bonus not yet earned.  Under subdivision (a)(9), defendant contended OverTimePay-Override did not have corresponding hourly rates or hours worked for the current pay period.  As to plaintiffs’ second theory, defendant asserted it complied with the statute by furnishing the wage statement by mail.  The trial court found in favor of defendant and against plaintiffs.   

           

Plaintiffs contend the trial court erred by denying their summary adjudication motion and by granting defendant’s motion.  We affirm.

 

http://www.courts.ca.gov/opinions/documents/B276127.PDF

 

Gerawan Farming, Inc. v. Agricultural Labor Relations Bd. (CA5 F073720 5/30/18) ALRA Representation & Unfair Labor Practices

 

This case involves the intersection of two of the fundamental purposes of the Agricultural Labor Relations Act (Labor Code, § 1140 et seq.; the ALRA):  one is the policy to provide agricultural workers with the right to choose in questions of labor representation through a secret ballot election process (§§ 1140.2, 1152, 1156-1156.7; see J.R. Norton Co. v. Agricultural Labor Relations Bd. (1979) 26 Cal.3d 1, 8, 34); the other is the policy to prevent and remedy unfair labor practices committed by employers.  (§§ 1160-1160.9.)  Both of these important statutory goals were directly at stake—and to some extent at odds—in the proceedings below before the Agricultural Labor Relations Board (the Board).  An election to decide whether to decertify an incumbent union (the United Farm Workers of America or the UFW) had been ordered by the Board based on an employee petition, and a vote was actually taken, but from the Board’s perspective there were lingering issues of whether alleged misconduct by the employer, Gerawan Farming, Inc. (Gerawan), may have tainted the employees’ decertification effort.  The ballots were impounded and administrative proceedings conducted.  In the end, as reported in its decision in Gerawan Farming, Inc. (2016) 42 ALRB No. 1, the Board nullified the employees’ election as a remedy for Gerawan’s purported unfair labor practices.  By petition for review under section 1160.8, Gerawan challenges not only the Board’s findings of unfair labor practices, but also the remedy imposed of setting aside the election.  As more fully explained herein, we conclude the Board erred in several of its findings of unfair labor practices as well as in the legal standard applied in reaching its remedial conclusions.  Accordingly, we set aside 42 ALRB No. 1, in part, and remand the matter to the Board to reconsider its election decision in a manner consistent with the views set forth in this opinion. 

 

http://www.courts.ca.gov/opinions/documents/F073720.PDF

 

Shine v. Williams-Sonoma (CA2/4 B277513 5/29/18) Reporting-Time Pay/Res Judicata

 

In this putative [wage and hour] class action against defendants and respondents Williams-Sonoma, Inc., and Williams-Sonoma Stores, Inc. (jointly, Williams-Sonoma), plaintiff and appellant Harley Shine appeals from an order of dismissal following the sustaining of a demurrer without leave to amend.  Concluding the demurrer was properly sustained on res judicata grounds, we affirm. 

 

http://www.courts.ca.gov/opinions/documents/B277513.PDF

 

CalPERS v. Santa Clara Valley Transp. etc. (CA3 C083355 5/29/18) California Public Employees’ Pension Reform Act

 

California’s Public Employees’ Retirement System (CalPERS) (Gov. Code, § 20002), as opposed to the board that administers the system (§ 9353), filed a complaint seeking declaratory relief regarding the proper interpretation of the effect of section 7522.02, subdivision (a)(3) (hereafter section 7522.02(a)(3)) on the pension benefits of transit workers.  The CalPERS executive office had announced its own interpretation, which resulted in over 400 pending administrative appeals.  As representative parties, the CalPERS executive office named as defendants a transit agency (the Santa Clara Valley Transportation Authority (Santa Clara Transit)) and an employee representative for a different Bay Area transit agency (the Amalgamated Transit Union Local 1555 (Local 1555)), which had been supporting the arguments of their employees and members, and had filed administrative appeals of their own.

           

Santa Clara Transit filed a demurrer, which the trial court sustained, entering judgment in its behalf.  Local 1555 then filed a motion for judgment on the pleadings, which the trial court granted, entering a separate judgment in its behalf.  In each ruling, the trial court concluded that the CalPERS executive office was subject to the procedural prerequisite of the exhaustion of administrative remedies, as the issue was pending in the appeals before the CalPERS board, and the CalPERS executive office had not established any exception to exhaustion in its allegations.  The CalPERS executive office separately appealed from each judgment.  We have consolidated the appeals for purposes of consideration and argument. 

           

The CalPERS executive office continues to assert it may bypass the process in CalPERS regulations for administrative appeals to the CalPERS board and proceed directly to the trial court to obtain a declaratory judgment on its interpretation of section 7522.02(a)(3).  In its response to supplemental briefing that we requested, it also contends that it is not subject to the general rule that an action for declaratory relief is not appropriate for the review of administrative decisions in lieu of a petition for a writ of mandate.  (City of Pasadena v. Cohen (2014) 228 Cal.App.4th 1461, 1466-1467 (City of Pasadena).)  Neither position is tenable.  We shall affirm the judgments.

 

http://www.courts.ca.gov/opinions/documents/C083355.PDF

 

Diaz v. Grill Concepts Services, Inc. (CA2/2 B280846 5/24/18) Wage & Hour/Waiting Time Penalties

 

An employer that does not pay its employees the wage required by law when they quit or are fired is liable for both the underpayment of wages and, if the failure to pay is “willful,” a “waiting time” penalty of up to 30 days’ wages.  (Lab. Code, §§ 203, subd. (a), 1194, subd. (a).)  This appeal presents two questions regarding these “waiting time” penalties:  (1) Is an employer’s failure to pay “willful” when the employer (a) suspects the required wage has gone up but continues paying the old wage after halfheartedly investigating its suspicions, and (b) later makes an unreasonable argument that the wage law is unconstitutionally vague; and (2) Does a trial court have the discretion, on equitable grounds, to relieve an employer from having to pay waiting time penalties?  We conclude that the answer to the first question is “yes,” and the answer to the second question is “no.”  Accordingly, we affirm the trial court’s order finding the employer liable for waiting time penalties in this case.

 

http://www.courts.ca.gov/opinions/documents/B280846.PDF

 

Abed v. Western Dental Services, Inc. (CA1/1 A150933 5/23/18) FEHA Pregnancy Discrimination/False Statement Job Not Available

 

This case asks whether a potential employer can be held liable under the California Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.) for thwarting a pregnant woman from applying for a job by falsely telling her that no position is available.  In the published portion of our decision, we conclude it can.

           

Plaintiff Ada Abed sued Western Dental Services, Inc. (Western Dental), alleging two claims, including one for being denied a job on account of pregnancy in violation of the FEHA.  Western Dental moved for summary adjudication of the claim, and the trial court ruled in the company’s favor on the basis that it was undisputed that Abed had not submitted an application.  After resolving the other claim in Western Dental’s favor, the court entered a final judgment dismissing the case.

           

On appeal, Abed contends that the trial court wrongly dismissed her FEHA claim.  We agree.  Even though Abed never applied for a job, she raised triable issues of material fact as to whether Western Dental intentionally discriminated against her by falsely telling her that no position was available.  Accordingly, we reverse in part and reinstate the FEHA claim.

 

http://www.courts.ca.gov/opinions/documents/A150933.PDF

 

Huff v. Securitas Security Services USA, Inc. (CA6  H042852 5/23/18) PAGA/Pursuit of Representative and Individual Penalties

 

This case presents the question of whether a plaintiff who brings a representative action under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698, et seq.) may seek penalties not only for the Labor Code violation that affected him or her, but also for different violations that affected other employees.  The trial court granted plaintiff Forrest Huff a new trial, reasoning that Huff’s failure to prove he was personally affected by one of the multiple Labor Code violations alleged in his complaint did not preclude his action under PAGA.  As we will explain, we conclude that PAGA allows an “aggrieved employee” ––a person affected by at least one Labor Code violation committed by an employer––to pursue penalties for all the Labor Code violations committed by that employer.  We will therefore affirm the order granting a new trial.

 

http://www.courts.ca.gov/opinions/documents/H042852.PDF

 

Raines v. Coastal Pacific Food Distributors (CA3 C083117 5/22/18) PAGA/Proof of Injury or Knowing/Intentional Violation

 

After defendant Coastal Pacific Food Distributors, Inc. (Coastal Pacific) terminated plaintiff Terri Raines from her employment there, Raines sued Coastal Pacific for age and disability discrimination and other related claims.  In addition, she sought recovery, both individually and in a representative capacity under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.), for Coastal Pacific’s failure to provide and maintain accurate wage statements as required by section 226, subdivision (a) (section 226(a) and its provisions).  Raines appeals from a judgment in favor of Coastal Pacific after the trial court reversed its original ruling denying Coastal Pacific’s motion for summary adjudication and instead granted the motion as trial was about to begin.

 

Raines contends triable issues of fact remain on her individual claim for statutory penalties under section 226, subdivision (e) (section 226(e) and its provisions).  Section 226(e) authorizes an “employee suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a)” to recover damages or statutory penalties.  Raines contends there are triable factual issues as to whether she sustained an injury and whether Coastal Pacific’s failure to provide accurate wage statements was knowing and intentional.  She next contends the trial court erred in granting summary adjudication on her PAGA claim by improperly finding injury was required.  Finally, she contends the trial court committed procedural error in reversing its original order denying summary adjudication.

 

We find merit only in the second contention.  As we explain, a representative PAGA claim for civil penalties for a violation of section 226(a) does not require proof of injury or a knowing and intentional violation.  This is true even though these two elements are required to be proven when bringing an individual claim for damages or statutory penalties under section 226(e).  Because the trial court erroneously required proof of injury on the PAGA claim, the grant of summary adjudication was improper and we therefore reverse the judgment as to that claim.

 

http://www.courts.ca.gov/opinions/documents/C083117.PDF

Epic Systems Corp. v. Lewis (US 16-285 5/21/18) Arbitration/Class Action Waivers

 

In each of these cases, an employer and employee entered into a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties. Each employee nonetheless sought to litigate Fair Labor Standards Act and related state law claims through class or collective actions in federal court. Although the Federal Arbitration Act generally requires courts to enforce arbitration agreements as written, the employees argued that its “saving clause” removes this obligation if an arbitration agreement violates some other federal law and that, by requiring individualized proceedings, the agreements here violated the National Labor Relations Act. The employers countered that the Arbitration Act protects agreements requiring arbitration from judicial interference and that neither the saving clause nor the NLRA demands a different conclusion. Until recently, courts as well as the National Labor Relations Board’s general counsel agreed that such arbitration agreements are enforceable. In 2012, however, the Board ruled that the NLRA effectively nullifies the Arbitration Act in cases like these, and since then other courts have either agreed with or deferred to the Board’s position.

 

Held: Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise. Pp. 5–25.

 

(a) The Arbitration Act requires courts to enforce agreements to arbitrate, including the terms of arbitration the parties select. See 9 U. S. C. §§2, 3, 4. These emphatic directions would seem to resolve any argument here. The Act’s saving clause—which allows courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract,” §2—recognizes only “ ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ ” AT&T Mobility LLC v. Concepcion, 563 U. S. 333, 339, not defenses targeting arbitration either by name or by more subtle methods, such as by “interfer[ing] with fundamental attributes of arbitration,” id., at 344. By challenging the agreements precisely because they require individualized arbitration instead of class or collective proceedings, the employees seek to interfere with one of these fundamental attributes. Pp. 5–9. (b)

 

(b) The employees also mistakenly claim that, even if the Arbitration Act normally requires enforcement of arbitration agreements like theirs, the NLRA overrides that guidance and renders their agreements unlawful yet. When confronted with two Acts allegedly touching on the same topic, this Court must strive “to give effect to both.” Morton v. Mancari, 417 U. S. 535, 551. To prevail, the employees must show a “ ‘clear and manifest’ ” congressional intention to displace one Act with another. Ibid. There is a “stron[g] presum[ption]” that disfavors repeals by implication and that “Congress will specifically address” preexisting law before suspending the law’s normal operations in a later statute. United States v. Fausto, 484 U. S. 439, 452, 453.

 

The employees ask the Court to infer that class and collective actions are “concerted activities” protected by §7 of the NLRA, which guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . , and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” 29 U. S. C. §157. But §7 focuses on the right to organize unions and bargain collectively. It does not mention class or collective action procedures or even hint at a clear and manifest wish to displace the Arbitration Act. It is unlikely that Congress wished to confer a right to class or collective actions in §7, since those procedures were hardly known when the NLRA was adopted in 1935. Because the catchall term “other concerted activities for the purpose of . . . other mutual aid or protection” appears at the end of a detailed list of activities, it should be understood to protect the same kind of things, i.e., things employees do for themselves in the course of exercising their right to free association in the workplace.

 

The NLRA’s structure points to the same conclusion. After speaking of various “concerted activities” in §7, the statute establishes a detailed regulatory regime applicable to each item on the list, but gives no hint about what rules should govern the adjudication of class or collective actions in court or arbitration. Nor is it at all obvious what rules should govern on such essential issues as opt-out and opt-in procedures, notice to class members, and class certification standards. Telling too is the fact that Congress has shown that it knows exactly how to specify certain dispute resolution procedures, cf., e.g., 29 U. S. C. §§216(b), 626, or to override the Arbitration Act, see, e.g., 15 U. S. C. §1226(a)(2), but Congress has done nothing like that in the NLRA.

 

The employees suggest that the NLRA does not discuss class and collective action procedures because it means to confer a right to use existing procedures provided by statute or rule, but the NLRA does not say even that much. And if employees do take existing rules as they find them, they must take them subject to those rules’ inherent limitations, including the principle that parties may depart from them in favor of individualized arbitration.

 

In another contextual clue, the employees’ underlying causes of action arise not under the NLRA but under the Fair Labor Standards Act, which permits the sort of collective action the employees wish to pursue here. Yet they do not suggest that the FLSA displaces the Arbitration Act, presumably because the Court has held that an identical collective action scheme does not prohibit individualized arbitration proceedings, see Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 32. The employees’ theory also runs afoul of the rule that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions,” Whitman v. American Trucking Assns., Inc., 531 U. S. 457, 468, as it would allow a catchall term in the NLRA to dictate the particulars of dispute resolution procedures in Article III courts or arbitration proceedings—matters that are usually left to, e.g., the Federal Rules of Civil Procedure, the Arbitration Act, and the FLSA. Nor does the employees’ invocation of the Norris-LaGuardia Act, a predecessor of the NLRA, help their argument. That statute declares unenforceable contracts in conflict with its policy of protecting workers’ “concerted activities for the purpose of collective bargaining or other mutual aid or protection,” 29 U. S. C. §102, and just as under the NLRA, that policy does not conflict with Congress’s directions favoring arbitration.

 

Precedent confirms the Court’s reading. The Court has rejected many efforts to manufacture conflicts between the Arbitration Act and other federal statutes, see, e.g. American Express Co. v. Italian Colors Restaurant, 570 U. S. 228; and its §7 cases have generally involved efforts related to organizing and collective bargaining in the workplace, not the treatment of class or collective action procedures in court or arbitration, see, e.g., NLRB v. Washington Aluminum Co., 370 U. S. 9.

 

Finally, the employees cannot expect deference under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, because Chevron’s essential premises are missing. The Board sought not to interpret just the NLRA, “which it administers,” id., at 842, but to interpret that statute in a way that limits the work of the Arbitration Act, which the agency does not administer. The Board and the Solicitor General also dispute the NLRA’s meaning, articulating no single position on which the Executive Branch might be held “accountable to the people.” Id., at 865. And after “employing traditional tools of statutory construction,” id., at 843, n. 9, including the canon against reading conflicts into statutes, there is no unresolved ambiguity for the Board to address. Pp. 9–21.

 

No. 16–285, 823 F. 3d 1147, and No. 16–300, 834 F. 3d 975, reversed and remanded; No. 16–307, 808 F. 3d 1013, affirmed.

 

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

 

https://www.supremecourt.gov/opinions/17pdf/16-285_q8l1.pdf

 

Curry v. Equilon Enterprises, LLC (CA4/2 E065764, filed 4/26/18, mod. 5/18/18) Wage and Hour/”Employer”

 

The petition for rehearing filed by appellant on May 8, 2018, is denied.  The opinion filed in this matter on April 26, 2018, is modified as follows:

            The “DISCUSSION,” section D starting on page 20 through “DISCUSSION” section F, which ends on page 39, is deleted and is replaced with the following:

            (“)D.      DEFINITION NO. 2:  ENGAGE

            We examine whether there is a triable issue of fact concerning Shell being Curry’s employer under the “to engage” definition of employer.

                        1.         LAW

            “ ‘[T]o engage’ has no other apparent meaning in the present context than its plain, ordinary sense of ‘to employ,’ that is, to create a common law employment relationship.”  (Martinez, supra, 49 Cal.4th at p. 64, fn. omitted.)  The common law test focuses on the issue of whether a worker is an employee or an independent contractor.  (Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 11.)

            The essence of the common law employment test “is the ‘control of details’—that is, whether the principal has the right to control the manner and means by which the worker accomplishes the work—but there are a number of additional factors in the modern equation, including (1) whether the worker is engaged in a distinct occupation or business, (2) whether, considering the kind of occupation and locality, the work is usually done under the principal’s direction or by a specialist without supervision, (3) the skill required, (4) whether the principal or worker supplies the instrumentalities, tools, and place of work, (5) the length of time for which the services are to be performed, (6) the method of payment, whether by time or by job, (7) whether the work is part of the principal’s regular business, and (8) whether the parties believe they are creating an employer-employee relationship.  [Citations.]  The parties’ label is not dispositive and will be ignored if their actual conduct establishes a different relationship.”  (Estrada v. FedEx Ground Package System, Inc., supra, 154 Cal.App.4th at p. 10.)

                        2.         DISTINCT OCCUPATION OR BUSINESS

            The first factor is whether Curry engaged in a distinct occupation or business.  Curry worked at two gas stations, one at Via Rancho and another at Carmel Mountain.  The undisputed facts reflect, “As an ARS station manager, Curry supervised approximately five to seven ARS cashiers.”  Thus, Curry was engaged in the distinct occupation of an ARS station manager. 

                        3.         SUPERVISED OR UNSUPERVISED

            The second factor is whether considering the kind of occupation and locality, the work is usually done under the principal’s direction or by a specialist without supervision.  “While employed by ARS, Curry reported to and took direction from ARS employees . . . and, at times, from the manager of the ARS HR department.”  From this evidence it can be inferred that Curry’s job was performed under the principal’s direction.  In this case, the principal was ARS.  In regard to Shell providing direction to Curry, Shell required various tasks be performed by ARS; however, there is nothing indicating that Shell required Curry be the person to perform those tasks.  It was ARS that required Curry to perform certain tasks. 

                        4.         SKILLS

            The third factor is the skill required for the work.  Curry worked directly for Shell from May 2001 to March 2003.  From March to July 2003, Curry worked “at a gas station.”  “In July, 2003, Curry was contacted [by an ARS employee] for the purpose of recruiting Curry to become the manager of the Via Rancho Station.”  It can be inferred from this evidence that skills are needed for managing a gas station.  The evidence that Curry was recruited by ARS indicates a particular skill set was desired—ARS wanted a person with experience in the field. 

            The undisputed evidence reflects (1) “[Shell] never directed ARS to recruit, interview, hire, or promote any specific ARS employee”; and (2) “ARS alone determined what duties Curry should perform.”  Because Shell did not have input on the hiring process or Curry’s job duties, it can be inferred that Shell did not require a particular skill set because Shell did not have input on the tasks performed by a particular employee.

                        5.         INSTRUMENTALITIES, TOOLS, AND PLACE OF WORK

            The fourth factor is whether the principal or worker supplies the instrumentalities, tools, and place of work.  Curry’s job training was provided by ARS.  ARS required Curry attend environmental compliance courses taught by Shell.  ARS paid for Curry’s time at the classes.  Curry was required to wear a shirt and a nametag that were purchased by ARS and given to Curry by ARS.  Thus, ARS provided Curry with the information and uniform necessary to conduct her work. 

            Further, ARS operated the fueling facilities and leased the convenience stores and car wash facilities where Curry worked.  Shell owned the fueling facilities.  Thus, ARS and Shell provided Curry with a place to work—ARS provided the convenience store and car wash, while Shell provided the fueling station, i.e., the fueling islands.  Shell also provided fuel and the fueling equipment, such as the fuel storage tanks.  Curry’s job duties included “many of the tasks set forth in the MSO Site Operations Manual, the CVP . . . Guide, and the [HSE Reference].”  Therefore, it can be inferred that Curry’s job duties involved tasks such as determining the amount of fuel in the storage tanks.  As a result, Shell provided some of the equipment for Curry’s job, in that Curry performed tasks related to Shell’s fueling equipment.

                        6.         LENGTH OF TIME

            The fifth factor is the length of time for which the services are to be performed.  The undisputed facts reflect “ARS alone determined that Curry would be deemed an exempt employee . . . [and] when she would work.”  Thus, ARS determined what shifts Curry would work.  The undisputed facts reflect, “ARS alone made all hiring, disciplinary and promotional decisions with respect to Curry.”  Thus, Curry’s hiring and any possible termination would be decided by ARS.  The undisputed facts reflect, “ARS alone also determined when Curry could take personal time off from work, when she could take vacations and when she could make up work time she missed.”  Thus, ARS decided when Curry could miss work.  In sum, ARS decided the length of time for which Curry’s work was to be performed. 

            Curry asserts Shell was able to determine the length of time Curry worked because Shell had the right to effectively terminate Curry.  The MSO Contract provides, “Operator has the right to select, hire, and discharge such employees, provided, however, Operator shall remove any such employee promptly upon [Shell’s] request for good cause shown.  [Shell] shall not select, hire, discharge, supervise or instruct any of Operator’s employees.” 

            The MSO contract authorizes Shell to have ARS remove an ARS employee from a station, but does not permit Shell to terminate any ARS employee’s employment.  For example, if Shell requested Curry be permanently removed from its stations, then ARS could employ Curry in its offices or assign Curry the off-site task of driving around checking competing station’s gas prices.  The evidence cited by Curry does not create a triable issue of fact as to whether Shell could terminate Curry’s employment because it does not indicate that Shell could terminate Curry’s employment.

                        7.         PAYMENT

            The sixth factor is the method of payment, whether by time or by job.  When ARS offered Curry the position of manager of the Via Rancho Station, it offered an annual salary of $32,000.  Thus, Curry was a salaried employee of ARS; she was not paid per project.  The undisputed facts reflect ARS “maintained exclusive control over all payroll” for Curry.  Thus, Curry was not paid by Shell.

                        8.         REGULAR BUSINESS

            The seventh factor is whether the work is part of the principal’s regular business.  “ARS operated approximately 15 gas stations in San Diego County and employed over 100 people at those stations.”  Given this undisputed fact, it can reasonably be inferred that Curry’s management of two gas stations was part of ARS’s regular business because ARS’s business involved operating gas stations. 

            Shell owned approximately 365 fueling stations in California.  There is nothing indicating Shell employed people at the gas stations.  Thus, Curry’s work at the fueling station was not part of Shell’s business.  In other words, Shell was not in the business of operating fueling stations—it was in the business of owning real estate and fuel.

            Curry contends “Shell was and is in the business of selling its motor fuel at facilities which it owns. . . .  ARS merely provided the station employees and made sure that they performed their tasks in the manner in which Shell dictated.”  Curry’s argument is problematic.  If ARS supplied the employees and supervised the employees’ work, then ARS was in the business of operating the station, and Shell was in the business of owning the station.

            For example, if the owner of an apartment complex hires a property management company, and that property management company hires an on-site manager for the complex, the owner is not engaged in the business of property management.  Rather, the owner is in the business of owning real estate, while the property management company is in the business of managing properties.  Shell’s contract with ARS did not put Shell in the business of operating fuel stations.

                        9.         BELIEFS

            The eighth factor is whether the parties believe they are creating an employer-employee relationship.  The undisputed facts reflect “Curry completed an Application for Employment with ARS” and “received, signed and returned to ARS a writing outlining her conditional offer of employment.”  These undisputed facts support the inference that Curry and ARS believed they were creating an employer-employee relationship. 

            In regard to Shell, when Curry met with the recruiter who recruited her to work at the Via Rancho station, Curry believed the recruiter was a Shell employee.  However, at that recruitment meeting, “Curry completed an Application for Employment with ARS.”  The reasonable inference from these undisputed facts is that Curry initially believed at the recruitment meeting that she was being offered a job by Shell, but came to understand in the recruitment meeting that she was being offered a job by ARS, hence the ARS job application.  Thus, the undisputed facts do not reflect Shell and Curry believed they created an employer-employee relationship.

                        10.       CONCLUSION

            In sum, Shell, along with ARS, provided Curry a place to work and the equipment with which she performed her job.  Providing a portion of Curry’s work location and equipment is insufficient to raise a triable issue of material fact as to Shell being Curry’s employer due to the many other factors reflecting Shell is not Curry’s employer. 

            In other words, one could not reasonably conclude that Shell controlled the manner and means by which Curry accomplished her work because Shell did not supervise Curry, Shell did not have input on Curry’s skills, Shell did not have control over the length of time Curry performed her job, Shell did not pay Curry, Shell was not in the business of operating service stations, and Shell and Curry did not believe they were creating an employer-employee relationship.  Accordingly, we conclude Curry’s causes of action fail under the “to engage” definition of employer.

                        11.       RWJ COS. v. EQUILON ENTERPRISES, LLC

            Curry relies on an unpublished federal trial court case from Indiana to support her position that Shell exercised control over the employees of gas station operators.  (RWJ Cos. v. Equilon Enters., LLC (December 28, 2005, 1:05-cv-1394) [2005 U.S. Dist. LEXIS 38329] (RWJ).)   RWJ operated 36 Shell branded gas stations in the Indianapolis area.  (Id. at p. *1.)  Shell notified RWJ that it intended to terminate RWJ’s contracts and have another company operate the gas stations.  RWJ sued Shell, seeking a preliminary injunction to prevent the termination of its contracts.  RWJ relied upon the Indiana Deceptive Franchise Practices Act.  (Id. at pp. *1-2.)  Ultimately, the trial court denied the request for a preliminary injunction.  (Id. at p. *31.) 

            The trial court examined whether RWJ’s contract with Shell was a franchise agreement.  (RWJ, supra, 2005 U.S. Dist. LEXIS 38329, *5.)  In conducting its analysis, the court wrote, “The evidence in this case shows that Shell retained extensive control over the marketing of fuel and every aspect of the filling station operation, as well as substantial control over the marketing of convenience store products and services.  When reading cases addressing this issue, it is important to recognize that RWJ operates only Shell-branded filling stations and that RWJ’s convenience stores are associated very closely with both the filling station operations and the Shell brand.”  (Id. at p. *14.)

            In RWJ, the control that Shell exercised was over RWJ—not the employees of RWJ.  For example, Shell may have required certain tasks to be performed by RWJ, but it appears RWJ could choose which employees performed those tasks.  The relationship examined in RWJ was the relationship between Shell and RWJ, not Shell and the employees of RWJ.  Accordingly, we find Curry’s reliance on RWJ to be unpersuasive because it is not the same issue presented in the instant case. 

                        12.       CASTANEDA v. THE ENSIGN GROUP, INC.

            Curry relies on Castaneda v. Ensign Group, Inc. (2014) 229 Cal.App.4th 1015 (Castaneda) to support her assertion that Shell exercised control over her as an employee of ARS.  In Castaneda, the named plaintiff, John Castaneda, filed a class action alleging The Ensign Group, Inc. (Ensign) was the alter ego of Cabrillo Rehabilitation and Care Center (Cabrillo).  Ensign had no employees and was the owner of Cabrillo.  Castaneda asserted Ensign was his actual employer and its corporate veil should be pierced.  (Id. at pp. 1017-1018.)

            The appellate court considered what it means to be an employer, and looked to Martinez and its definition concerning the control of different aspects of the employment relationship.  (Castaneda, supra, 229 Cal.App.4th at p. 1019.)  The appellate court noted, “Ensign has more than a contractual relationship with Cabrillo.  Ensign owns Cabrillo.”  (Id. at p. 1020.)  The court explained that Ensign’s ownership of Cabrillo could cause a trier of fact to disbelieve Ensign’s contention that it did not control Cabrillo.  (Ibid.)  Further, a staff person at Ensign’s corporate office recruited employees for Cabrillo to hire, and the director of Cabrillo received his employment orientation training at Ensign.  (Ibid.) 

            Additionally, Ensign’s forms were used at Cabrillo, Ensign instructed Cabrillo employees to increase revenues, Ensign replaced Cabrillo’s computers and timeclocks, Ensign required Cabrillo employees to use the new timecard system, Ensign sent consultants to Cabrillo to advise employees on how to perform their duties, Ensign’s employee handbook notified Cabrillo employees that there was an employee emergency fund for employees who experienced hardship, Cabrillo employees received paychecks from Ensign Facility Services, Cabrillo employees’ e-mail addresses were in the form of name@ensigngroup.net, the Vice President of Ensign set the rate of pay for Cabrillo employees, employment benefits for Cabrillo’s employees were administered through Ensign, and Ensign handled issues related to disciplining Cabrillo employees.  (Castaneda, supra, 229 Cal.App.4th at p. 1021-1024.)  The appellate court concluded there were triable issues of fact concerning Ensign being Castaneda’s employer.  (Id. at p. 1018.)

            Curry relies on Castaneda for the proposition that “[j]oint employer status has been found to exist on far less compelling facts” than the facts presented in the instant case.  Curry, relying on Castaneda, contends that requiring an employee to wear the logo of the alleged secondary employer can support a finding that the alleged secondary employer is a joint employer.  We do not find Castaneda to be illustrative of Curry’s point.  Castaneda has far more compelling facts for joint employment than the instant case, such as (1) Ensign owning Cabrillo; (2) Ensign setting the rate of pay for employees; and (3) Ensign administering employee benefits.  Because Castaneda does not illustrate joint employment being found on weaker facts than those in the instant case, we do not find Curry’s reliance on Castaneda to be persuasive. 

            E.         DEFINITION NO. 3:  SUFFER OR PERMIT TO WORK

            We examine whether there is a triable issue of fact as to Shell being Curry’s employer due to Shell suffering Curry or permitting Curry to work.  (Cal. Code Regs., tit. 8, § 11070, subd. (2)(D); Martinez, supra, 49 Cal.4th at p. 64.)  The language concerning an employer suffering or permitting a person to work was derived from a desire to prevent evasion from liability by a claim that a person was not employed in a traditional master/servant relationship.  (Martinez, at p. 58.)  The language arose from child labor laws.  For example, children under age 14 were not permitted to work.  Nevertheless, coal miners paid a boy to carry water for them and the boy sustained injuries while working.  The boy was not employed in a traditional sense by the mining company, but the mining company permitted or suffered the boy’s work.  (Id. at p. 58, citing Purtell v. Philadelphia & Reading Coal & Iron Co. (1912) 256 Ill. 110, 111, 117.)  This definition has been interpreted to mean “the employer ‘shall not . . . permit by acquiescence, nor suffer by a failure to hinder.’ ”  (Martinez, at p. 58, italics omitted.)  Put differently, “the basis of liability is the defendant’s knowledge of and failure to prevent the work from occurring.”  (Id. at p. 69, italics omitted.)

            Accordingly, we examine if Shell met its burden of establishing there is no triable issue of fact as to whether Shell permitted or suffered Curry’s work at the station.  The undisputed facts reflect, (1) “The MSO operator was responsible for hiring, firing, disciplining, training, compensating and maintaining payroll records for all employees working at the station”; and (2) “the MSO operator always maintained control over the daily work of its own employees.”  (Italics added.) 

            The undisputed evidence reflects Curry’s hiring, firing, and daily tasks were ARS’s responsibility.  Thus, Shell did not acquiesce to Curry’s employment because Shell was not in a position to terminate Curry or hire a different person to perform the tasks Curry performed.  In other words, Shell had no role to play—it could not hire Curry or terminate Curry’s employment.  Thus, Shell could not acquiesce to Curry’s employment.

            In regard to suffering by a failure to hinder, Shell had the authority to have Curry removed from the station upon “good cause shown.”  There is no evidence indicating what Shell may have cited as good cause for physically removing Curry from the station so as to prevent her from working her regularly scheduled shifts.  Because the “good cause shown” clause was not triggered, Shell could not have Curry physically removed from the station.  Thus, Shell did not have the ability to hinder Curry’s work and, in turn, could not have failed to hinder Curry’s work.  In sum, Shell has met its burden of establishing there is not a triable issue of fact concerning Shell being Curry’s employer based on the definition of suffering or permitting Curry to work.

            We now examine whether Curry has met her burden of establishing there is a triable issue of material fact.  Curry asserts “Shell caused her to suffer the non-payment of overtime by failing to ‘hinder’ ARS.”  Suffering concerns the alleged employer’s failure to hinder the alleged employee’s work by not stopping the alleged employee from working, e.g., not stopping the boy from carrying water to the coalminers.  (Martinez, supra, 49 Cal.4th at pp. 58, 69-70 [“failure to prevent the work from occurring”].)  It does not concern suffering by the employee due to the alleged failure to pay wages owed.  Also it does not concern failing to hinder a third party, e.g., ARS.  Accordingly, we conclude Curry has failed to meet her burden of establishing there is a triable issue of fact as to Shell being Curry’s employer based upon the definition of suffering or permitting Curry to work.

            Thus, we conclude Curry’s causes of action fail under the “suffering or permitting” definition of employer.

            Curry contends this court should apply the “ABC test” definition of the “suffer or permit to work” test recently set forth in Dynamex Operations West, Inc. v. Superior Court (2018) ____ Cal.5th ____ [2018 Cal. LEXIS 3152] (Dynamex)

            In Dynamex, workers, who served as delivery drivers, asserted they had been misclassified as independent contractors, rather than employees.  (Dynamex, supra, 2018 Cal. LEXIS 3152, *5-6.)  The workers argued the trial court should apply the tests from Martinez when analyzing whether there was an employee-employer relationship.  In contrast, Dynamex, the hiring entity, argued the Martinez tests are only applicable when determining if there is a joint employer.  (Dynamex, at p. *20.)  The trial court agreed with the workers.  The trial court concluded Martinez was not limited to joint employment issues.  (Id. at pp. *20-21)

            Procedurally, the issue before the trial court was whether the class of workers/plaintiffs had more common issues than individual issues, i.e., sufficient commonality for class certification.  (Dynamex, supra, 2018 Cal. LEXIS 3152, *21.)  The trial court applied the law from Martinez, concluded common issues predominated, and certified the class.  (Dynamex, at pp. 21-22, 27-28)  Dynamex moved to decertify the class, and the trial court denied the motion.  (Id. at pp. 28-29.)

            Dynamex petitioned for a writ of mandate at the Court of Appeal, challenging the denial of its motion to decertify the class.  Plaintiffs requested the Court of Appeal issue an order to show cause and resolve the issues presented in the writ, in particular whether the trial court erred in using the Martinez definitions of “employ” and “employer” when certifying the class.  (Dynamex, supra, 2018 Cal. LEXIS 3152, *29.)  The appellate court concluded the trial court properly relied upon Martinez.  (Dynamex, at p. *29.) 

            Dynamex filed a petition for review challenging the Court of Appeal’s conclusion that the trial court properly relied on Martinez.  (Dynamex, supra, 2018 Cal. LEXIS 3152, *30.)  The Supreme Court granted review.  The issue before the Supreme Court was whether the tests/definitions of “employ” and “employer” set forth in Martinez were applicable when determining if a worker was misclassified as an independent contractor, rather than an employee.  (Dynamex, at pp. 4-5.)  The high court explained that the “heart of the issue” was the scope of Martinez, i.e., whether Martinez extends beyond the issue of joint employment.  (Dynamex, at p. 49.)

            Martinez provides three alternative definitions/tests for analyzing if an employment relationship exists, including the “suffer or permit to work” test discussed ante.  The high court, in Dynamex, concluded the “suffer or permit to work” test applied when analyzing whether a worker was misclassified as an independent contractor, rather than an employee.  (Dynamex, supra, 2018 Cal. LEXIS 3152, *56-57, 66.)  In other words, the Supreme Court concluded it was proper to rely upon Martinez, in particular, the “suffer or permit to work” test, in context of the of allegedly misclassified independent contractors.  (Dynamex, at p., *66.) 

            The high court went on to explain how the “suffer or permit to work” test operates.  The court chose a method of operation known as the “ABC” test.  (Dynamex, supra, 2018 Cal. LEXIS 3152, *88-90.)  Under the “ABC” test, the burden of proof is on the hiring entity to prove, “(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (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.”  (Id. at pp. *89-90.)

            The high court concluded, “It bears emphasis that in order to establish that a worker is an independent contractor under the ABC standard, the hiring entity is required to establish the existence of the three parts of the ABC standard.”  (Dynamex, supra, 2018 Cal. LEXIS 3152, *98.)  If the hiring entity fails to establish one of the three factors, then the worker should be treated as an employee, rather than an independent contractor.  (Ibid.

            The high court explained the policy reasons behind its selection of the “ABC” test, with the burden being on the alleged employer: “[T]he 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.”  (Dynamex, supra, 2018 Cal. LEXIS 3152, *4.) 

            The issue we confront is whether the high court intended the “ABC” test to apply beyond the independent contractor context.  On one hand, the Supreme Court was discussing the test from Martinez, and Martinez is a joint employment case (Martinez, supra, 49 Cal.4th at p. 50).  (Dynamex, supra, 2018 Cal. LEXIS 3152, *49 [heart of the issue is the scope of Martinez].)  Therefore, arguably, the Supreme Court intended for the “ABC” test to extend beyond the independent contractor context to the joint employment context.

            However, the Supreme Court’s policy reasons for selecting the “ABC” test are uniquely relevant to the issue of allegedly misclassified independent contractors.  In the joint employment context, the alleged employee is already considered an employee of the primary employer; the issue is whether the employee is also an employee of the alleged secondary employer.  Therefore, the primary employer is presumably paying taxes and the employee is afforded legal protections due to being an employee of the primary employer.  As a result, the policy purpose for presuming the worker to be an employee and requiring the secondary employer to disprove the worker’s status as an employee is unnecessary in that taxes are being paid and the worker has employment protections.  (See Dynamex, supra, 2018 Cal. LEXIS 3152, *3-4.) 

            In conclusion, the “ABC” test set forth in Dynamex is directed toward the issue of whether employees were misclassified as independent contractors.  Placing the burden on the alleged employer to prove that the worker is not an employee is meant to serve policy goals that are not relevant in the joint employment context.  Therefore, it does not appear that the Supreme Court intended for the “ABC” test to be applied in joint employment cases.

            Nevertheless, out of an abundance of caution, and because much of the analysis has already been completed ante, we will discuss the “ABC” factors.  The “A” factor requires an examination of whether the “worker is free from the control and direction of the hiring entity.”  (See Dynamex, supra, 2018 Cal. LEXIS 3152, *89-90.)  We examined ante, whether Shell met its burden of establishing it did not exercise control over Curry’s wages, hours, or working conditions.  We concluded ante that there is not a triable issue of fact as to Shell having exercised control over Curry’s wages, hours, or working conditions.  Accordingly, we conclude there is not a triable issue of fact under the “A” factor concerning whether Curry was free from Shell’s control and direction.

            The “B” factor requires an examination of whether “the worker performs work that is outside the usual course of the hiring entity’s business.”  (See Dynamex, supra, 2018 Cal. LEXIS 3152, *90.)  For example, if a bakery hires cake decorators to work on a regular basis, then those cake decorators are likely working within the bakery’s “usual business operation,” and thus would be employees.  Whereas an electrician hired to work at a bakery would likely be viewed as not working within the bakery’s usual course of business and therefore would not be viewed as an employee.  (Id. at pp. *92-93.)

            We concluded ante that Curry was engaged in the distinct occupation of an ARS station manager.  We also concluded ante that Curry’s “management of two gas stations was part of ARS’s regular business because ARS’s business involved operating gas stations.”  We explained that “Shell was not in the business of operating fueling stations—it was in the business of owning real estate and fuel.”  Thus, there is not a triable issue of fact as to the “B” factor because managing a fuel station was not the type of business in which Shell was engaged.

            The “C” factor requires evidence “that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”  (See Dynamex, supra, 2018 Cal. LEXIS 3152, *88.)  This factor can be proven with evidence that the worker has “take[n] the usual steps to establish and promote his or her independent business—for example, through incorporation, licensure, advertisements, routine offerings to provide the services of the independent business to the public or to a number of potential customers, and the like.”  (Id. at p. *97.)

            As explained ante, in the policy section of this discussion, the “ABC” test is directed toward the issue of allegedly misclassified independent contractors.  Trying to apply the “C” factor in a joint employment case will lead to an analysis that is a blend of the “A” and “B” factors, e.g., whether Curry was engaged in an occupation independent from the alleged secondary employer.  As explained in the “A” analysis, Shell did not exercise control over Curry.  As explained in the “B” analysis, Curry’s management of the gas stations was distinct from the type of business Shell engages in, which is the ownership of real estate and fuel.  Therefore, under the “C” factor, Curry worked at an independent business and Shell did not exercise control over her.  As a result, Curry was engaged in an independently established occupation.  We conclude there is not a triable issue of fact under the “C” factor.  In sum, there is not a triable issue of fact under the “ABC” test, to the extent it applies in the joint employment context.

            F.         CONCLUSION

            In conclusion, Curry’s three causes of action fail because there is not a triable issue of material fact concerning Shell being Curry’s employer under any of the three legal definitions of employer set forth in Martinez.  The trial court properly granted summary judgment.(”)

            Except for these modifications, the opinion remains unchanged.  The modifications do not effect a change in the judgment.

 

http://www.courts.ca.gov/opinions/documents/E065764M.PDF

CALIFORNIA CASE LAW ALERT 

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