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AHMC Healthcare, Inc. v. Superior Court (CA2/4 B285655 6/25/18) Wage & Hour/Rounding Time


State law requires employers to pay their employees for all time the employees are at work and subject to the employers’ control.  (Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 839.)  The issue in this case is whether an employer’s use of a payroll system that automatically rounds employee time up or down to the nearest quarter hour, and thus provides a less than exact measure of employee work time, violates California law.  In the underlying matter, both employers and employees moved for summary adjudication on the issue, and the trial court denied both motions.  Petitioners AHMC Healthcare, Inc., AHMC, Inc., AHMC Anaheim Regional Medical Center, L.P. (Anaheim), and AHMC San Gabriel Valley Medical Center, L.P. (San Gabriel) sought a writ of mandate directing the trial court to grant its motion, contending they had established as a matter of undisputed fact that their system was neutral on its face and as applied.  We agree the undisputed facts established that petitioners’ system was in compliance with California law.  Accordingly, we grant the writ.


Vogel v. Harbor Plaza Center (9th Cir. 16-55229 6/25/18) Default Judgment/ADA Attorneys’ Fees


In this action brought under the Americans with Disabilities Act of 1990 (“ADA”), Plaintiff Martin Vogel timely appeals the district court’s award of $600 in attorney’s fees following the entry of a default judgment. Defendant Harbor Plaza Center, LLC, originally filed an answer and took other actions but, before trial, failed to appear. The district court eventually struck the answer, entered a default judgment against Defendant, and awarded fees pursuant to a local rule. By eschewing the ordinary considerations that apply when calculating fees in ADA cases, the district court abused its discretion. Accordingly, we vacate the award of fees and remand for reconsideration.


Wassmann v. South Orange County Community College Dist. (CA4/3 G053411, filed 6/12/18, pub. ord. 6/21/18) FEHA/Res Judicata, Collateral Estoppel, Failure to Exhaust Administrative Remedies


The South Orange County Community College District (the District) dismissed Carol E. Wassmann from employment as a tenured librarian at Irvine Valley College (IVC) in April 2011.  Several years later, Wassmann obtained a right to sue notice from the California Department of Fair Employment and Housing (DFEH) and brought this lawsuit against the District, Karima Feldhus, Robert Brumucci, Glenn Roquemore, Lewis Long, and Katherine Schmeidler.  Wassmann, who is African‑American, alleged causes of action for racial discrimination, age discrimination, and harassment in violation of the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.), intentional infliction of emotional distress, and two other causes of action not relevant here. 


The trial court granted two motions for summary judgment, one brought by the District Defendants and the other brought by Long and Schmeidler, on the ground the FEHA claims were barred by res judicata, collateral estoppel, or failure to exhaust administrative remedies, and the intentional infliction of emotional distress cause of action was barred by res judicata, collateral estoppel, or the statute of limitations.


We affirm.  After Wassmann was dismissed from employment and before she brought this lawsuit, a five‑day‑long administrative hearing was conducted in accordance with Education Code section 87660 et seq., which sets out a comprehensive scheme governing “the evaluation of, the dismissal of, and the imposition of penalties on, community college faculty.”  (Ed. Code, § 87660.)  After hearing testimony, receiving documentary evidence, and reviewing written arguments, the administrative law judge issued a 20‑page decision upholding the District’s decision and determining there was cause for dismissing Wassmann.  The trial court upheld the administrative law judge’s decision by denying Wassmann’s petition for writ of mandate.


The administrative law judge’s decision and the trial court judgment upholding it are significant because, under principles of res judicata and exhaustion of judicial remedies, they are binding on the issue of cause for dismissal and therefore dispositive of Wassmann’s FEHA causes of action arising out of dismissal from employment.  To the extent Wassmann’s FEHA claims sought recovery for injuries other than loss of employment, those claims are barred for failure to exhaust administrative remedies; that is, Wassmann did not file a complaint with the DFEH within one year of the date on which the alleged unlawful acts were undertaken.  Wassmann’s cause of action for intentional infliction of emotional distress, a common law claim for which Wassmann was not required to obtain a right to sue notice from the DFEH, was barred by the two‑year statute of limitations of Code of Civil Procedure section 335.1.


Meeks v. AutoZone, Inc. (CA4/2 E061775 6/21/18) FEHA/Retaliation


Plaintiff and appellant Natasha Meeks contends that she suffered sexual harassment on the job.  She brought suit against her employer, defendant and appellant AutoZone, Inc. (AutoZone), and the alleged harasser, defendant and appellant Juan Fajardo, pursuing claims of sexual harassment, failure to prevent sexual harassment, and retaliation in violation of the Fair Employment and Housing Act (FEHA), Government Code section 12940 et seq.  The trial court granted summary adjudication in favor of AutoZone on Meeks’s retaliation claim.  A jury returned defense verdicts on her remaining claims.


On appeal, Meeks argues that certain evidentiary rulings at trial constitute prejudicial error, requiring reversal.  She also asserts that the trial court’s grant of summary adjudication to AutoZone on her retaliation claim was erroneous.  We affirm the trial court’s grant of summary adjudication on the retaliation claim.  We find, however, that several erroneous evidentiary rulings require reversal of the judgment and remand for new trial on the remaining claims.


Metropolitan Water District etc. v. Winograd (CA2/2 B276898, filed 5/23/18, pub. ord. 6/21/18) MOU Grievance Procedure


American Federation of State, County, & Municipal Employees, Local 1902, AFL/CIO (AFSCME), real party in interest and appellant, appeals from a trial court decision granting a writ of administrative mandamus filed by respondent Metropolitan Water District of Southern California (the District).  The District filed the petition under Code of Civil Procedure section 1094.5 to challenge the decision of a hearing officer on an AFSCME grievance.  The trial court set aside the hearing officer’s decision on the grounds that the hearing officer’s decision (1) granted relief on an issue that was not ripe; and (2) exceeded the scope of the issue before him.


We agree that the matter did not present a ripe controversy.  We further agree that the hearing officer exceeded the scope of the issue before him.  Finally, under the circumstances of this case, we conclude the hearing officer exceeded his authority pursuant to the Memorandum of Understanding between the parties (MOU).  Therefore, we affirm the judgment of the trial court.


Wisconsin Central Ltd. v. United States (US 17-530 6/21/18) Employee stock options not taxable “compensation” under Railroad Retirement Tax Act 


As the Great Depression took its toll, struggling railroad pension funds reached the brink of insolvency. During that time before the rise of the modern interstate highway system, privately owned railroads employed large numbers of Americans and provided services vital to the nation’s commerce. To address the emergency, Congress adopted the Railroad Retirement Tax Act of 1937. That legislation federalized private railroad pension plans and it remains in force even today. Under the law’s terms, private railroads and their employees pay a tax based on employees’ incomes. In return, the federal government provides employees a pension often more generous than the social security system supplies employees in other industries.


This case arises from a peculiar feature of the statute and its history. At the time of the Act’s adoption, railroads compensated employees not just with money but also with food, lodging, railroad tickets, and the like. Because railroads typically didn’t count these in-kind benefits when calculating an employee’s pension on retirement, neither did Congress in its new statutory pension scheme. Nor did Congress seek to tax these in-kind benefits. Instead, it limited its levies to employee “compensation,” and defined that term to capture only “any form of money remuneration.”


It’s this limitation that poses today’s question. To encourage employee performance and to align employee and corporate goals, some railroads have (like employers in many fields) adopted employee stock option plans. The government argues that these stock options qualify as a form of “compensation” subject to taxation under the Act. In its view, stock options can easily be converted into money and so qualify as “money remuneration.” The railroads and their employees reply that stock options aren’t “money remuneration” and remind the Court that when Congress passed the Act it sought to mimic existing industry pension practices that generally took no notice of in-kind benefits. Who has the better of it?


Held: Employee stock options are not taxable “compensation” under the Railroad Retirement Tax Act because they are not “money remuneration.”


When Congress adopted the Act in 1937, “money” was understood as currency “issued by [a] recognized authority as a medium of exchange.” Pretty obviously, stock options do not fall within that definition. While stock can be bought or sold for money, it isn’t usually considered a medium of exchange. Few people value goods and services in terms of stock, or buy groceries and pay rent with stock. Adding the word “remuneration” also does not alter the meaning of the phrase. When the statute speaks of taxing “any form of money remuneration,” it indicates Congress wanted to tax monetary compensation in any of the many forms an employer might choose. It does not prove that Congress wanted to tax things, like stock, that are not money at all.


The broader statutory context points to this conclusion. For example, the 1939 Internal Revenue Code, adopted just two years later, also treated “money” and “stock” as different things. See, e.g., §27(d). And a companion statute enacted by the same Congress, the Federal Insurance Contributions Act, taxes “all remuneration,” including benefits “paid in any medium other than cash.” §3121(a). The Congress that enacted both of these pension schemes knew well the difference between “money” and “all” forms of remuneration and its choice to use the narrower term in the context of railroad pensions alone requires respect, not disregard.


Even the IRS (then the Bureau of Internal Revenue) seems to have understood all this back in 1938. Shortly after the Railroad Retirement Tax Act’s enactment, the IRS issued a regulation explaining that the Act taxes “all remuneration in money, or in something which may be used in lieu of money (scrip and merchandise orders, for example).” The regulation said the Act covered things like “[s]alaries, wages, commissions, fees, [and] bonuses.” But the regulation nowhere suggested that stock was taxable.


In light of these textual and structural clues and others, the Court thinks it’s clear enough that the term “money” unambiguously excludes “stock.”


Pp. 2–8. 856 F. 3d 490, reversed and remanded.


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


Nu Image v. IATSE (9th Cir. 16-55451 6/20/18) LMRA/Declaratory Relief on CBA


The panel affirmed the district court’s dismissal for lack of subject matter jurisdiction of an action brought under the Labor Management Relations Act.


An employer alleged that a union engaged in intentional and negligent misrepresentation to induce it to enter into a collective bargaining agreement. The employer sought a declaratory judgment that part of the CBA was invalid.


The panel held that § 301(a) of the LMRA grants jurisdiction only for suits that claim a violation of a CBA, which the employer did not do. The panel rejected the argument that the LMRA grants a district court jurisdiction to hear any case in which a party, or third party, has alleged a violation of a CBA. The panel concluded that the court’s holding in Rozay’s Transfer v. Local Freight Drivers, Local 208, Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 850 F.2d 1321 (9th Cir. 1988), that an employer can sue under § 301(a) for declaratory relief to void a provision of a CBA without alleging a contract violation, could not stand following Textron Lycoming Reciprocating Engine Div., Avco Corp. v. United Auto., Aerospace, & Agric. Implement Workers of Am., 523 U.S. 653 (1998). The panel further held that jurisdiction was not authorized under Textron’s holding that, in the course of deciding whether a plaintiff is entitled to relief for the defendant’s alleged violation of a contract, a court may, consistent with § 301, adjudicate an affirmative defense that the contract was invalid.


Dissenting, Judge Bea wrote that he agreed with the majority that Textron abrogated the reasoning underlying Rozay’s Transfer. Diverging from the majority, however, Judge Bea wrote that, under Textron, § 301(a) extends subject matter jurisdiction to actions seeking declaratory relief from alleged violations of a CBA. Because the employer sought relief from its accused violation of the parties’ CBA, its claims should be allowed to proceed in federal court.


ASARCO v. United Steel (9th Cir. 16-16363 6/19/18) Arbitration/Reform of Collective Bargaining Agreement


The panel affirmed the district court’s order affirming an arbitration award in favor of a union, which sought relief concerning a pension provision in the parties’ collective bargaining agreement.


The employer asserted that the arbitrator reformed the collective bargaining agreement in contravention of a no-add provision in the agreement. The district court held that the arbitrator was authorized to reform the agreement, despite the no-add provision, based on a finding of mutual mistake.


The panel held that the employer did not properly preserve its objection to the arbitrator’s jurisdiction because the employer conceded that the union’s grievance was arbitrable and failed to expressly preserve the right to contest jurisdiction in a judicial proceeding. The panel further held that the arbitration award drew its essence from the collective bargaining agreement, and the arbitrator did not exceed his authority in reforming the agreement. In addition, the arbitrator’s award did not violate public policy.


Dissenting, Judge Ikuta wrote that, in light of the no-add provision, the arbitrator exceeded his authority under the collective bargaining agreement.


Hipsher v. Los Angeles County Employees etc. (CA2/4 B276486 6/19/18) Public Pension forfeiture/Due Process


The Public Employees’ Pension Reform Act of 2013 (Gov. Code, § 7522 et seq. [PEPRA] was enacted, in part, to curb abuses in public pensions systems throughout the state.  (Alameda County Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn. (2018) 19 Cal.App.5th 61, 75 (Alameda), review granted Mar. 28, 2018, S247095.)  Section 7522.72 provides a mechanism whereby a public pensioner forfeits a portion of his or her retirement benefits following a conviction of a felony offense that occurred in the performance of his or her official duties.


Shortly after appellant Tod Hipsher retired from the Los Angeles County Fire Department, he was convicted of a federal felony for directing an offshore gambling operation (18 U.S.C. § 1955). Respondent, the Los Angeles County Employees Retirement Association (LACERA), subsequently reduced Hipsher’s vested retirement benefits based on the determination by the County of Los Angeles (County) that his gambling conduct was committed in the scope of his official duties (§ 7522.72).  Hipsher challenged LACERA’s forfeiture determination by a petition for writ of mandate and a complaint seeking declaratory relief.  The trial court entered a mixed judgment.  It issued a peremptory writ of mandate directing the County to afford adequate due process protections before reducing Hipsher’s retirement benefits, while finding in favor of the defendants with respect to Hipsher’s cause of action for declaratory relief. 


Hipsher contends section 7522.72 is unconstitutional as applied to him because it impaired his contractual right to his vested pension, and is an unlawful ex post facto law.  The County disagrees and contends it owes Hipsher no additional due process and is not bound by the trial court judgment because it was not named as a respondent in the peremptory writ.  


We conclude section 7522.72 is constitutionally sound, but that LACERA, not the County, bears the burden to afford Hipsher the requisite due process protections in determining whether his conviction falls within the scope of the statute.  Accordingly, we modify the judgment to require the County to provide the requisite due process, while affirming the remainder of the judgment.


Newland v. County of Los Angeles (CA2/5 B277638 6/18/18) Respondeat Superior/Vehicle Use Exception


An employee driving home from work on a day that he did not have any job duties outside of the office injured a third party.  After a jury trial, the trial court imposed liability on the employer based on evidence that the employee regularly used his personal vehicle for work on other days.  The employer contends there was no substantial evidence to support finding that the employee was driving in the course and scope of his employment at the time of the accident, because he was not required to use a personal vehicle that day. 


We agree that an employee must be driving a personal vehicle in the course and scope of his employment at the time of the accident to extend vicarious liability to an employer.  Liability may be imposed on an employer for an employee’s tortious conduct while driving to or from work, if at the time of the accident, the employee’s use of a personal vehicle was required by the employer or otherwise provided a benefit to the employer.  The evidence showed that the employee in this case was driving a routine commute to and from work on the day of the accident.  He was not required to use his personal vehicle for work purposes that day, and his employer did not otherwise benefit from his use of a personal vehicle that day.  The employer is entitled to judgment as a matter of law.  We reverse the judgment with directions.


Krolikowski v. San Diego City Employees' Retirement System (CA4/1 D071119, filed 5/23/18, pub. ord. 6/14/18) Pension Overpayment


Appellants Vincent Krolikowski and Connie Van Putten (collectively appellants) are former employees of the City of San Diego (the City) and members of the San Diego City Employees' Retirement System (SDCERS) who receive monthly pension payments from SDCERS, the administrator of the City's pension plan.  Krolikowski and Van Putten separately filed lawsuits against SDCERS after SDCERS discovered an error in calculating their monthly pension benefits and took action to recoup the past overpayments.  In their now-consolidated lawsuits, Krolikowski and Van Putten assert causes of action for conversion, breach of fiduciary duty, writ of mandate (Code Civ. Proc., § 1085) and declaratory relief, all of which challenge SDCERS's ability to implement a recoupment procedure to collect the overpayments from Krolikowski and Van Putten.  After a bench trial, the trial court entered judgment in favor of SDCERS.


Krolikowski and Van Putten contend that the trial court erred in (1) sustaining SDCERS's demurrer to the conversion and breach of fiduciary duty causes of action; and (2) finding in favor of SDCERS after conducting a bench trial on the remaining causes of action for writ of mandate and declaratory relief.  As we will explain, we conclude that appellants' arguments are without merit, and we accordingly affirm the judgment.


Skidgel v. Cal. Unemployment Ins. Appeals Bd. (CA1/5 A151224 6/14/18) In-Home Supportive Services Recipient is Employer


The In-Home Supportive Services (IHSS) program (Welf. & Inst. Code, § 12300 et seq.) provides in-home services to elderly or disabled persons so that they may avoid institutionalization.  For purposes of the state unemployment insurance system, IHSS service recipients are considered employers of their service providers if the providers are directly paid by the program or the recipient receives IHSS funds to pay their providers (hereafter, Direct Payment Mode).  (Unemp. Ins. Code, § 683.)  Generally, an employee of a close family member (child, parent or spouse) is excluded from unemployment insurance coverage.  (Id., § 631.)  The California Unemployment Insurance Appeals Board (CUIAB) ruled in a precedent decision that, because a close-family-member IHSS service provider under the Direct Payment Mode is employed by the recipient, the provider is subject to the exclusion of Unemployment Insurance Code section 631. (Matter of Caldera (2015) CUIAB Precedent Benefit Dec. No. P-B-507 (Caldera).)


Appellant Tamara Skidgel, an IHSS provider for her daughter, challenged the validity of Caldera, arguing government entities were joint employers with the recipient, thereby qualifying providers for unemployment insurance coverage despite the close-family-member exclusion of Unemployment Insurance Code section 631.  The trial court upheld Caldera’s validity.  We affirm because we conclude the Legislature, in enacting Unemployment Insurance Code section 683, intended to designate the recipient as the IHSS provider’s sole employer for purposes of unemployment insurance coverage.


China Agritech, Inc. v. Resh, et al. (US 17–432 6/11/18) Class Action [may be applicable to employment cases]


American Pipe & Constr. Co. v. Utah, 414 U. S. 538, established that the timely filing of a class action tolls the applicable statute of limitations for all persons encompassed by the class complaint and that members of a class that fails to gain certification can timely intervene as individual plaintiffs in the still-pending action, shorn of its class character. American Pipe’s tolling rule also applies to putative class members who, after denial of class certification, “prefer to bring an individual suit rather than intervene.” Crown, Cork & Seal Co. v. Parker, 462 U. S. 345, 350. The question presented in this case is whether American Pipe tolling applies not only to individual claims, but to successive class actions as well.


This suit is the third class action brought on behalf of purchasers of petitioner China Agritech’s common stock, alleging materially identical violations of the Securities Exchange Act of 1934. The Act has both a two-year statute of limitations and a five-year statute of repose, 28 U. S. C. §1658(b). Here, the accrual date for purposes of the Act’s limitation period is February 3, 2011, and for the repose period, November 12, 2009. Theodore Dean, a China Agritech shareholder, filed the first class-action complaint on February 11, 2011. As required by the Private Securities Litigation Reform Act of 1995 (PSLRA), his counsel posted notice of the action and invited any member of the purported class to move to serve as lead plaintiff. Six shareholders sought lead-plaintiff status. On May 3, 2012, the District Court denied class certification; the action settled in September 2012, and the suit was dismissed. On October 4, Dean’s counsel filed a new complaint (Smyth), still timely, with a new set of plaintiffs. Eight shareholders sought lead-plaintiff appointment in response to the PSLRA notice, but the District Court again denied class certification. Thereafter, the Smyth plaintiffs settled their individual claims and dismissed their suit.


Respondent Michael Resh, who did not seek lead-plaintiff status in the earlier actions, filed the present class action in 2014, a year and a half after the statute of limitations expired. The other respondents moved to intervene in the suit commenced by Resh, seeking lead plaintiff status. The District Court dismissed the class complaint as untimely, holding that the Dean and Smyth actions did not toll the time to initiate class claims. The Ninth Circuit reversed, holding that the reasoning of American Pipe extends to successive class claims.


Held: Upon denial of class certification, a putative class member may not, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations. Pp. 5–15.


(a) American Pipe and Crown, Cork addressed only putative class members who wish to sue individually after a class-certification denial. The “efficiency and economy of litigation” that support tolling of individual claims, American Pipe, 414 U. S., at 553, do not support maintenance of untimely successive class actions such as the one brought by Resh. Economy of litigation favors delaying individual claims until after a class-certification denial. With class claims, on the other hand, efficiency favors early assertion of competing class representative claims. If class treatment is appropriate, and all would-be representatives have come forward, the district court can select the best plaintiff with knowledge of the full array of potential class representatives and class counsel. And if the class mechanism is not a viable option, the decision denying certification will be made at the outset of the case, litigated once for all would-be class representatives.


Federal Rule of Procedure 23 evinces a preference for preclusion of untimely successive class actions by instructing that class certification should be resolved early on. The PSLRA, which governs this litigation, evinces a similar preference, this time embodied in legislation providing for early notice and lead-plaintiff procedures. There is little reason to allow plaintiffs who passed up opportunities to participate in the first (and second) round of class litigation to enter the fray several years after class proceedings first commenced.


Class representatives who commence suit after expiration of the limitation period are unlikely to qualify as diligent in asserting claims and pursuing relief. See, e.g., McQuiggin v. Perkins, 569 U. S. 383, 391. And respondents’ proposed reading would allow extension of the statute of limitations time and again; as each class is denied certification, a new named plaintiff could file a class complaint that resuscitates the litigation. Endless tolling of a statute of limitations is not a result envisioned by American Pipe. Pp. 5–11.


(b) If Resh’s suit meets the requirements of Rule 23(a) and (b), respondents assert, the suit should be permitted to proceed as a class action in keeping with Shady Grove Orthopedic Associates, P. A. v. Allstate Ins. Co., 559 U. S. 393. Shady Grove, however, addressed a case in which a Rule 23 class action could have been maintained absent a state law proscribing class actions, while Resh’s class action would be untimely unless saved by American Pipe’s tolling exception. Rule 23 itself does not address timeliness of claims or tolling and nothing in the Rule calls for the revival of class claims if individual claims are tolled.


The clarification of American Pipe’s reach does not run afoul of the Rules Enabling Act by abridging or modifying a substantive right. Plaintiffs have no substantive right to bring claims outside the statute of limitations. Nor is the clarification likely to cause a substantial increase in the number of protective class-action filings. Several Courts of Appeals have already declined to read American Pipe to permit a successive class action filed outside the limitations period, and there is no showing that these Circuits have experienced a disproportionate number of duplicative, protective class-action filings. Multiple filings, moreover, could aid a district court in determining, early on, whether class treatment is warranted, and if so, who would be the best representative. The Federal Rules provide a range of mechanisms to aid district courts in overseeing complex litigation, but they offer no reason to permit plaintiffs to exhume failed class actions by filing new, untimely class claims. Pp. 11–15.


857 F. 3d 994, reversed and remanded.


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


Bain v. Calif. Teachers Ass’n (9th Cir. 16-55768 6/11/18) Union Fees/Free Speech


The panel dismissed as moot an appeal by public school teacher plaintiffs from the district court’s dismissal of their action alleging that their Unions’ requirement that they pay a fee to support the Unions’ political and ideological activities violated their constitutional right to free speech.


The panel determined that a change in plaintiffs’ professional circumstances during the pendency of this appeal fundamentally altered the posture of this case. Because plaintiffs had disassociated from their respective Unions, they could no longer benefit from the injunctive and declaratory relief they sought, and therefore their appeal was moot. The panel rejected plaintiffs’ attempt to transform their lawsuit from a request for prospective equitable relief into a plea for money damages. The panel noted that plaintiffs had consistently represented throughout the litigation that they were seeking only declaratory and injunctive relief.


The panel further denied plaintiffs’ motion to add an organizational plaintiff, the Association of American Educators, to their suit under Federal Rule of Civil Procedure 21. The panel held that Rule 21 may not be used to rehabilitate a court’s jurisdiction where a case becomes moot on appeal. The panel further held that even if mootness were not an insurmountable barrier to considering a Rule 21 motion, the panel would still deny the motion because Association failed to satisfy the criteria for Rule 21 joinder. The panel dismissed plaintiffs’ appeal and remanded to the district court with instructions to dismiss the case without vacating its judgment.


Campbell v. State of Hawaii Dep’t of Educ. (9th Cir. 15-15939 6/11/18) Employment Discrimination and Harassment/Teacher


The panel affirmed the district court’s grant of summary judgment in favor of the defendants on employment discrimination claims brought by a public high school teacher who was verbally harassed by her students.


Affirming the district court’s grant of summary judgment on the teacher’s Title VII claims of disparate treatment based on her sex and race, the panel held that the teacher failed to establish a prima facie case because she did not show that she was subject to an adverse employment action or that similarly situated individuals outside her protected class were treated more favorably.


The panel also affirmed the district court’s grant of summary judgment on the teacher’s Title VII hostile work environment claim. The panel held that the defendant public school system could be held liable for students’ harassing conduct only to the extent that it failed reasonably to respond to the conduct or ratified or acquiesced in the conduct.


On the teacher’s Title VII retaliation claim, the panel held that she failed to establish that the defendants’ asserted rationale for its actions was mere pretext.


Finally, the panel affirmed the district court’s grant of summary judgment on the teacher’s Title IX claims for intentional discrimination.


NLRB v. Ironworkers (9th Cir. 88-07283, 89-70522, 90-70053, 98-70929 6/8/18) NLRA/Relief from Prior Consent Decree


The panel denied the International Association of Bridge, Structural, Ornamental and Reinforcing Ironworkers Union, Local 43’s motion to modify extant consent decrees arising from a series of disputes between the Union and the National Labor Relations Board regarding the Union’s right to engage in secondary picketing of government facilities under Section 8(b)(4)(ii)(B) of the National Labor Relations Act.


Between 1988 and 1989, the Board issued three orders finding that the Union engaged in impermissible secondary boycotts in violation of the NLRA. The Union entered into a consent decree. Almost twenty years later, the Union filed a motion under Fed. R. Civ. P. 60(b) seeking to modify language contained in 1991 and 1999 consent contempt adjudications prohibiting secondary picketing.


The U.S. Supreme Court upheld a First Amendment challenge to the constitutionality of § 8(b)(4)(ii)(B) in National Labor Relations Bd. v. Retail Store Employees Union, Local 1001 (Safeco), 447 U.S. 607 (1980).


The panel held that the Union failed to meet its burden of showing that Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015), changed the legal landscape in the significant way required to modify a consent decree. Specifically, the panel held that the restrictions on speech addressed by Reed were not implicated by compliance with § 8(b)(4)(ii)(B). In addition, the plain reading of § 8(b)(4)(ii)(B) reflected that the statute regulated conduct rather than content. The panel concluded that the Union could not establish that continuing to apply the consent judgments prospectively would be inequitable, as required for relief under Rule 60(b)(5). Judge Wallace wrote separately because although he agreed with the result, he disagreed with the decision to reach the merits. Judge Wallace would instead dismiss the Union’s petition as nonjusticiable because the constitutional challenge was not ripe for judicial review and not a proper case or controversy.

Camacho v. Target Corp. (CA4/1 D073280 6/8/18) Sexual Orientation Discrimination/Workers’ Compensation Release


Plaintiff Adrian Camacho appeals from a judgment entered after the trial court granted summary judgment in favor of defendant Target Corporation (Target) on Camacho's causes of action for discrimination based on sexual orientation, harassment causing a hostile work environment, failure to prevent harassment and discrimination, retaliation, constructive termination in violation of public policy, intentional infliction of emotional distress, negligent infliction of emotional distress, negligent hiring, supervision, and retention, and a violation of the Bane Act (Civ. Code, § 52.1).  The trial court concluded that language included in an addendum to a preprinted compromise and release form utilized to settle Camacho's workers' compensation action against Target constituted a broad release of any and all potential claims that Camacho may have had against Target, including claims falling outside the workers' compensation system.


After reviewing the relevant language in the addendum and considering that language in the context of the entire settlement agreement, we conclude that the trial court erred in determining that certain language contained in the addendum to the settlement agreement executed by the parties in Camacho's workers' compensation case constitutes a general release of all of Camacho's civil claims.  We therefore reverse the judgment.


Smythe v. Uber Technologies, Inc. (CA1/3 A149891 6/8/18) Arbitration


Uber Technologies, Inc. (Uber) appeals from an order denying its motion to compel arbitration of an action brought by Ryan Smythe in his capacity as a driver for Lyft, Inc. (Lyft).  Smythe also drives for Uber.  The court correctly found the action is beyond the scope of Smythe’s arbitration agreement with Uber, so we affirm.


White v. Square, Inc. (9th Cir. 16-17137 6/7/18) Unruh Civil Rights Act/Web sites 


Certified Question to California Supreme Court


The panel certified the following questions of state law to the Supreme Court of California: Does a plaintiff suffer discriminatory conduct, and thus have statutory standing to bring a claim under the Unruh Act, when the plaintiff visits a business’s website with the intent of using its services, encounters terms and conditions that deny the plaintiff full and equal access to its services, and then departs without entering into an agreement with the service provider? Alternatively, does the plaintiff have to engage in some further interaction with the business and its website before the plaintiff will be deemed to have been denied full and equal treatment by the business?


Strategic Concepts, LLC v. Beverly Hills Unified School Dist. (CA2/6 B264478M, filed 5/10/18, mod. 6/6/18) Independent Contractor/Public Contracts




            It is ordered that the opinion filed herein on May 10, 2018, be modified as follows:

            1.  On page 2, after the word (and heading) “FACTS,” insert footnote 2 to read: 

In her petition for rehearing, Christiansen complains that our statement of facts may prejudice her in a possible retrial.  Her brief on appeal did not contain a statement of facts.  The facts we adduce here were derived from the record.  Nevertheless, Christiansen need not be concerned because this is an unqualified reversal.  “The effect of an unqualified reversal (‘the judgment is reversed’) is to vacate the judgment, and to leave the case ‘at large’ for further proceedings as if it had never been tried, and as if no judgment had ever been rendered.”   (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 869, p. 928, and the plethora of cases cited.)  


            2.  On page 8, in the second sentence in the last paragraph, the name “Dennis Wolliver” is changed to “Dannis Woliver Kelley.”


            3.  On page 8, in the third sentence in the last paragraph, the phrase “from Wolliver’s office” is changed to “from Dannis Woliver Kelley’s office.”


            4.  On page 19, the last paragraph is changed to read:  “The judgment is reversed.  Costs are awarded to appellant.”


            There is no change in the judgment.


            Respondent’s petition for rehearing is denied.

Danny P. v. Catholic Health Initiatives (9th Cir. 16-35609 6/6/18) ERISA


The panel reversed the district court’s grant of summary judgment in favor of the defendant in an action challenging an ERISA plan’s denial of a claim for the cost of an inpatient stay at a residential mental health treatment facility.


The panel held that the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act required that the plan’s coverage for stays at licensed inpatient residential treatment facilities had to be no more restrictive than stays at skilled nursing facilities. Thus, the Parity Act precluded the plan from deciding that it would provide room and board reimbursement at licensed skilled nursing facilities for medical and surgical patients, but not at residential treatment facilities for mental health patients. The panel remanded the case to the district court.


Masterpiece Cakeshop, et al. v. Colorado Civil Rights Commission, et al.  (US 16–111 6/4/18) First Amendment Free Exercise of Religion/Sexual Orientation/Public Accommodations


Masterpiece Cakeshop, Ltd., is a Colorado bakery owned and operated by Jack Phillips, an expert baker and devout Christian. In 2012 he told a same-sex couple that he would not create a cake for their wedding celebration because of his religious opposition to same-sex marriages—marriages that Colorado did not then recognize—but that he would sell them other baked goods, e.g., birthday cakes. The couple filed a charge with the Colorado Civil Rights Commission (Commission) pursuant to the Colorado Anti-Discrimination Act (CADA), which prohibits, as relevant here, discrimination based on sexual orientation in a “place of business engaged in any sales to the public and any place offering services . . . to the public.” Under CADA’s administrative review system, the Colorado Civil Rights Division first found probable cause for a violation and referred the case to the Commission. The Commission then referred the case for a formal hearing before a state Administrative Law Judge (ALJ), who ruled in the couple’s favor. In so doing, the ALJ rejected Phillips’ First Amendment claims: that requiring him to create a cake for a same-sex wedding would violate his right to free speech by compelling him to exercise his artistic talents to express a message with which he disagreed and would violate his right to the free exercise of religion. Both the Commission and the Colorado Court of Appeals affirmed.


Held: The Commission’s actions in this case violated the Free Exercise Clause. Pp. 9–18.


(a) The laws and the Constitution can, and in some instances must, protect gay persons and gay couples in the exercise of their civil rights, but religious and philosophical objections to gay marriage are protected views and in some instances protected forms of expression. See Obergefell v. Hodges, 576 U. S. ___, ___. While it is unexceptional that Colorado law can protect gay persons in acquiring products and services on the same terms and conditions as are offered to other members of the public, the law must be applied in a manner that is neutral toward religion. To Phillips, his claim that using his artistic skills to make an expressive statement, a wedding endorsement in his own voice and of his own creation, has a significant FirstAmendment speech component and implicates his deep and sincere religious beliefs. His dilemma was understandable in 2012, which was before Colorado recognized the validity of gay marriages performed in the State and before this Court issued United States v. Windsor, 570 U. S. 744, or Obergefell. Given the State’s position at the time, there is some force to Phillips’ argument that he was not unreasonable in deeming his decision lawful. State law at the time also afforded storekeepers some latitude to decline to create specific messages they considered offensive. Indeed, while the instant enforcement proceedings were pending, the State Civil Rights Division concluded in at least three cases that a baker acted lawfully in declining to create cakes with decorations that demeaned gay persons or gay marriages. Phillips too was entitled to a neutral and respectful consideration of his claims in all the circumstances of the case. Pp. 9–12


(b) That consideration was compromised, however, by the Commission’s treatment of Phillips’ case, which showed elements of a clear and impermissible hostility toward the sincere religious beliefs motivating his objection. As the record shows, some of the commissioners at the Commission’s formal, public hearings endorsed the view that religious beliefs cannot legitimately be carried into the public sphere or commercial domain, disparaged Phillips’ faith as despicable and characterized it as merely rhetorical, and compared his invocation of his sincerely held religious beliefs to defenses of slavery and the Holocaust. No commissioners objected to the comments. Nor were they mentioned in the later state-court ruling or disavowed in the briefs filed here. The comments thus cast doubt on the fairness and impartiality of the Commission’s adjudication of Phillips’ case.


Another indication of hostility is the different treatment of Phillips’ case and the cases of other bakers with objections to anti-gay messages who prevailed before the Commission. The Commission ruled against Phillips in part on the theory that any message on the requested wedding cake would be attributed to the customer, not to the baker. Yet the Division did not address this point in any of the cases involving requests for cakes depicting anti-gay marriage symbolism. The Division also considered that each bakery was willing to sell other products to the prospective customers, but the Commission found Phillips’ willingness to do the same irrelevant. The State Court of Appeals’ brief discussion of this disparity of treatment does not answer Phillips’ concern that the State’s practice was to disfavor the religious basis of his objection. Pp. 12–16.


(c) For these reasons, the Commission’s treatment of Phillips’ case violated the State’s duty under the First Amendment not to base laws or regulations on hostility to a religion or religious viewpoint. The government, consistent with the Constitution’s guarantee of free exercise, cannot impose regulations that are hostile to the religious beliefs of affected citizens and cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices. Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U. S. 520. Factors relevant to the assessment of governmental neutrality include “the historical background of the decision under challenge, the specific series of events leading to the enactment or official policy in question, and the legislative or administrative history, including contemporaneous statements made by members of the decisionmaking body.” Id., at 540. In view of these factors, the record here demonstrates that the Commission’s consideration of Phillips’ case was neither tolerant nor respectful of his religious beliefs. The Commission gave “every appearance,” id., at 545, of adjudicating his religious objection based on a negative normative “evaluation of the particular justification” for his objection and the religious grounds for it, id., at 537, but government has no role in expressing or even suggesting whether the religious ground for Phillips’ conscience-based objection is legitimate or illegitimate. The inference here is thus that Phillips’ religious objection was not considered with the neutrality required by the Free Exercise Clause. The State’s interest could have been weighed against Phillips’ sincere religious objections in a way consistent with the requisite religious neutrality that must be strictly observed. But the official expressions of hostility to religion in some of the commissioners’ comments were inconsistent with that requirement, and the Commission’s disparate consideration of Phillips’ case compared to the cases of the other bakers suggests the same. Pp. 16–18.


370 P. 3d 272, reversed.


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

Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co., Inc. (SC S236765 6/4/18) Employer's Commercial General Liability Policy


Here we consider a question of California insurance law posed by the United States Court of Appeals for the Ninth Circuit:  When a third party sues an employer for the negligent hiring, retention, and supervision of an employee who intentionally injured that third party, does the suit allege an “occurrence” under the employer’s commercial general liability policy?  (Liberty Surplus Ins. Corp. v. Ledesma & Meyer Constr. Co. (9th Cir. 2016) 834 F.3d 998, 1000.) The answer turns on whether the injury can be considered “accidental.”  We conclude that it can.


Hodson v. Mars, Inc. (9th Cir. 16-15444 6/4/18) Consumer Protection/Disclosure of Labor Practices


The panel affirmed the district court’s dismissal of plaintiff’s consumer protection claims in a putative class action alleging that Mars, Inc., a chocolate manufacturer, had a duty to disclose on its labels the labor practices that may have tainted its supply chain.


Concerning plaintiff’s duty to disclose claims, the panel held that California consumer protection laws did not obligate Mars, Inc. to label its goods as possibly being produced by child or slave labor. The panel further held that in the absence of any affirmative misrepresentations by the manufacturer, the manufacturer did not have a duty to disclose the labor practices in question, even though they were reprehensible, because they were not physical defects that affected the central function of the chocolate products. The panel concluded that, absent a duty to disclose, plaintiff’s Consumers Legal Remedies Act, Unfair Competition Law, and False Advertising Law claims were foreclosed.


The panel held that plaintiff’s claims failed under the unfair prong of the Unfair Competition Law under either the Cel-Tech test, Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 540 (Cal. 1999), or the South Bay test, outlined in S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 85 Cal. Rptr. 2d 301, 316 (Ct. App. 1999).

Bills Signed by Governor (6/1/18)


  • AB 1888 by Assemblymember Rudy Salas (D-Bakersfield) – Peace officers: basic training requirements.

  • AB 2197 by Assemblymember Frank Bigelow (R-O’Neals) – Custodial officers.

  • AB 2349 by Assemblymember Phillip Chen (R-Diamond Bar) – Humane officers: authorization to carry a wooden club or baton.

  • AB 2800 by Assemblymember Kansen Chu (D-San Jose) – High school athletics: California High School Coaching Education and Training Program: heat illness.


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