Chronolgical e-mail alerts prepared for he California Lawyers Association (formerly State Bar of California) Labor & Employment Law Section since 2007, covering California, 9th Circuit and US Supreme Court decisions, and new laws signed by Governor. To subscribe, contact LaborLaw@CLA.Legal.

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Bills Signed by Governor (9/19/18)

AB 1565 by Assemblymember Tony Thurmond (D-Richmond) – Labor-related liabilities: direct contractor.
AB 1654 by Assemblymember Blanca Rubio (D-Baldwin Park) – Labor Code Private Attorneys General Act of 2004: construction industry.
AB 2031 by Assemblymember Patrick O’Donnell (D-Long Beach) – Public contracts: school facility projects: bidding requirements.
AB 2334 by Assemblymember Tony Thurmond (D-Richmond) – Occupational injuries and illness: employer reporting requirements: electronic submission.
AB 2505 by Assemblymember Miguel Santiago (D-Los Angeles) – California State University: budget oversight policies [hiring practices].
SB 1442 by Senator Scott Wiener (D-San Francisco) – Community pharmacies: staffing.

Bill Vetoed by Governor (9/19/18)

AB 2317 by Assemblymember Susan Talamantes Eggman (D-Stockton) – Whistleblower protection: county patients’ rights advocates. A veto message can be found here.

Bills Signed by Governor (9/18/18)

AB 2160 by Assemblymember Tony Thurmond (D-Richmond) – Classified employees: school and community college districts: part-time playground positions.
AB 2291 by Assemblymember David Chiu (D-San Francisco) – School safety: bullying [staff training].
SB 1312 by Senator Hannah-Beth Jackson (D-Santa Barbara) – State public employees: sick leave: veterans with service-related disabilities.
SB 1465 by Senator Jerry Hill (D-San Mateo) – Contractors: civil actions: reporting.

Marsh v. Alexander’s (9th Cir. 15-15791, 15-15794, 15-16561, 15-16659, 16-15003, 16-15004, 16-15005, 16-15118, 16-16033 9/18/18) DOL Tip Credit Guidance/Chevron-Auer Deference

The en banc court reversed district courts’ dismissals of actions under the Fair Labor Standards Act concerning tip credits toward servers’ and bartenders’ wages.

The FLSA permits employers to take a tip credit for employees in tipped occupations. Plaintiffs alleged that their employers abused the tip credit provision by paying them a reduced tip credit wage and treating them as tipped employees when they were engaged in either (1) non-tipped tasks unrelated to serving and bartending, such as cleaning toilets; or (2) non-incidental tasks related to serving or bartending, such as hours spent cleaning and maintaining soft drink dispensers in excess of 20% of the workweek.

The en banc court held that the Department of Labor foreclosed an employer’s ability to engage in this practice by promulgating a dual jobs regulation, 29 C.F.R. § 531.56(e), and subsequently interpreting that regulation in its 1988 Field Operations Handbook, known as the “Guidance.” The en banc court concluded that the regulation was entitled to Chevron deference. Agreeing with the Eighth Circuit, the en banc court held that the agency’s interpretation in the Guidance was entitled to Auer deference because the regulation was ambiguous and the Guidance’s interpretation was both reasonable and consistent with the regulation. The en banc court concluded that the plaintiffs had stated a claim under the FLSA for minimum wage violations. The en banc court reversed the district courts’ judgments and remanded for further proceedings.

Concurring in part and dissenting in part, Judge Graber wrote that plaintiffs stated a claim that their employers failed to pay them appropriate wages for non-tipped work unrelated to their jobs. Judge Graber wrote that she would affirm in part on the ground that plaintiffs failed to state a claim regarding wages for non-tipped work related to their jobs.

Dissenting, Judge Ikuta, joined by Judge Callahan, wrote that deference to the agency was improper because the agency’s purported interpretation effectively eliminated an employer’s statutory right to take a tip credit. Judge Ikuta wrote that this legislative act was accomplished without compliance with the Administrative Procedure Act, resulting in an unfair and unexpected imposition of liability on employers.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/18/15-15791.pdf

Bills Signed by Governor (9/17/18)

SB 867 by the Committee on Budget and Fiscal Review – Legislative Counsel: workplace conduct services.
SB 873 by the Committee on Budget and Fiscal Review – State public employment: memorandum of understanding: approval: State Bargaining Units 9 and 10.
SB 877 by the Committee on Budget and Fiscal Review – State Government [prevailing wage & work stoppage].

SB 1252 by Senator Richard Pan (D-Sacramento) – Wages: records: inspection and copying.
SB 1262 by Senator Jim Beall (D-San Jose) – Construction Manager/General Contractor project delivery method: Department of Transportation.

Taylor v. BNRH (9th Cir. 16-35205 9/17/18) Obesity and Disability/Washington Law Against Discrimination

The panel certified to the Washington Supreme Court the following question:

Under what circumstances, if any, does obesity qualify as an “impairment” under the Washington Law against Discrimination, Wash. Rev. Code § 49.60.040?

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/17/16-35205.pdf

Nunies v. HIE Holdings (9th Cir. 16-16494 9/17/18) ADAAA/Regarded as Disabled/Substantial Limitation

The panel affirmed in part and reversed in part the district court’s summary judgment in favor of the defendant in an employment discrimination action under the Americans with Disabilities Act.

The panel held that, under the ADA Amendments Act, the scope of the ADA’s “regarded-as” definition of disability was expanded. Prior to the ADAAA, to sustain a regarded-as claim, the plaintiff had to provide evidence that the employer subjectively believed the plaintiff was substantially limited in a major life activity. Under the ADAAA, however, the plaintiff must show that he has been subjected to a prohibited action “because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity.” Applying the correct law, and viewing the evidence in the light most favorable to the non-moving party, the panel concluded that the plaintiff established a genuine issue of material fact as to whether his employer regarded him as having a disability.

The panel held that the district court further erred in concluding that the plaintiff did not meet the “physical” definition of disability under the ADA, which requires a showing that the plaintiff has a physical impairment that substantially limits one or more major life activities. The panel concluded that there was at least a dispute about whether the plaintiff’s shoulder injury substantially limited the life activities of working and lifting.

The panel reversed the district court’s dismissal of both the ADA claims and plaintiff’s state law discrimination claim. The panel affirmed the district court’s ruling that Haw. Rev. Stat. § 378-35, which provides an exclusive remedy for certain claims arising from a workplace injury, did not bar the ADA claims. The panel remanded the case to the district court for further proceedings.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/17/16-16494.pdf

Bills Signed by Governor (9/14/18)

AB 2184 by Assemblymember David Chiu (D-San Francisco) – Business licenses.

SB 846 by the Committee on Budget and Fiscal Review – Employment.

SB 1165 by Senator Richard Pan (D-Sacramento) – State teachers’ retirement.
SB 1428 by Senator Mike McGuire (D-Healdsburg) – Minors: employment: work permits.
SB 1435 by Senator Bill Dodd (D-Napa) – State military: officer commissions.

Campbell v. City of Los Angeles (9th Cir. 15-56990 9/13/18) FLSA Overtime/Decertification

The panel affirmed the district court’s decertification of two related collective actions brought under the Fair Labor Standards Act by officers of the Los Angeles Police Department, alleging a pervasive, unwritten policy discouraging the reporting of overtime.

The district court granted the City’s motion for decertification and dismissed the officers without prejudice to refiling their FLSA claims individually. The original plaintiffs in the two decertified actions then reached settlements with the City on their own claims, and the district court entered final judgment. Although no longer plaintiffs at that point, the officers filed timely appeals from final judgment, challenging their decertification and dismissal. Agreeing with the Eleventh Circuit, and disagreeing with the Third Circuit, the panel held that the officers had standing to appeal because opt-in plaintiffs are parties to the collective action, and an order of decertification and dismissal disposes of their statutory right to proceed collectively. They therefore have standing to appeal and may do so after the interlocutory decertification order to which they are adverse merges with final judgment.

The panel further held that the collective actions were properly decertified and the officers properly dismissed for failure to satisfy the “similarly situated” requirement of the FLSA. Rejecting other approaches to this requirement, the panel held that party plaintiffs are similarly situated, and may proceed as a collective, to the extent they share a similar issue of law or fact material to the disposition of their FLSA claims. Addressing post-discovery decertification, the panel held that, when decertification overlaps with the merits of the underlying FLSA claims, the summary judgment standard applies. The panel concluded that the officers failed, as a matter of law, to create a triable question of fact regarding the existence of a department-wide policy or practice. In the absence of such a policy or practice, and in the absence of allegations of any other similarity of law or fact material to the disposition of the officers’ claims, the officers were not “similarly situated” within the meaning of the FLSA.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/13/15-56990.pdf

Hipsher v. Los Angeles County Employees etc., 234 Cal.Rptr.3d 564 (2018) (SC S250244/B276486 & B276486M review granted 9/12/18) Public Pension forfeiture/Due Process

The petition for review is granted. Further action in this matter is deferred pending consideration and disposition of a related issue in Alameda County Deputy Sheriffs' Assn. v. Alameda County Employees' Retirement Assn., S247095 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520, is deferred pending further order of the court. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar and Kruger, JJ. Review granted/holding for lead case.

Docket

Court of Appeal Decision

EEOC v. BNSF (9th Cir. 16-35457 amend 9/12/18) ADA/Scope of Injunction

The panel amended the opinion filed on August 29, 2018, in which the panel affirmed the district court’s judgment imposing liability on BNSF Railway Company under the Americans with Disabilities Act (“ADA”); vacated the nationwide injunction that prohibited BNSF from engaging in certain hiring practices; and remanded with instructions for the district court to make further factual findings in order to establish the proper scope of the injunction.

Russell Holt received a conditional job offer from BNSF for the position of Senior Patrol Officer contingent on Holt’s satisfactory completion of a post-offer medical review. BNSF demanded that Holt submit an MRI of his back at his own cost, which he could not afford. BNSF revoked Holt’s job offer, and the Equal Employment Opportunity Commission sued BNSF for violations of the ADA.

The panel held that the EEOC demonstrated all three elements of a 42 U.S.C. § 12112(a) claim by showing (1) that Holt had a “disability” within the meaning of the ADA because BNSF perceived him to have a back impairment; (2) that Holt was qualified for the job; and (3) that BNSF impermissibly conditioned Holt’s job offer on Holt procuring an MRI at his own expense because it assumed that Holt had a back impairment. The panel noted that BNSF offered no affirmative defense on appeal; and affirmed the district court’s holding that the EEOC made a prima facie case for a violation of ADA, and was entitled to summary judgment.

The district court held that it could grant an injunction to the EEOC by statute, without looking to the four-factor test for injunctive relief. The panel held that it need not, and did not, decide whether the standard four-factor test for injunctive relief was required in the Title VII/ADA context, because even if the four-factor test applied, that test would be satisfied. Namely, the panel held that Holt suffered an irreparable injury, the remedies at law were inadequate, and the balance of equities, and the public interest weighed in favor of an injunction. The panel concluded that the district court properly entered an injunction.

The panel held that the district court must make further factual findings to support the scope of the injunction; and remanded for the district court to establish the proper scope of the injunction.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/12/16-35457.pdf

Bills Signed by Governor (9/11/18)

SB 954 by Senator Bob Wieckowski (D-Fremont) – Mediation: confidentiality: disclosure.
SB 1113 by Senator Bill Monning (D-Carmel) – Mental health in the workplace: voluntary standards.
SB 1383 by Senator Jean Fuller (R-Bakersfield) – Teacher credentialing: Committee of Credentials: membership.

Cal. Trucking Ass’n v Su (9th Cir. 17-55133 9/10/18) Borello Standard/Driver Classification/FAAAA Preemption

The panel affirmed the district court’s dismissal of an action seeking declaratory and injunctive relief regarding the Labor Commissioner of the State of California Department of Industrial Relations’ use of a common law test, often referred to as the Borello standard, to determine whether a motor carrier has properly classified its drivers as independent contractors.

Classifications pursuant to the Borello standard impact what benefits workers are entitled to under the State’s labor laws and the corresponding burdens placed on the entities that hire them. California Trucking Association, an association of licensed motor carriers, alleged that its “owner-operator” drivers were independent contractors, rather than employees. CTA alleged that the Commissioner’s application of the Borello standard disrupted the contractual arrangements between owner-operators and motor carriers, which introduced inefficiencies into the transportation services market and was inconsistent with Congress’s deregulatory goals under the Federal Aviation Administration Authorization Act.

The panel held that the Borello standard, a generally applicable test used in a traditional area of state regulation, is not “related to” prices, routes, or services, and therefore is not preempted by the FAAAA.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/10/17-55133.pdf

AFM v. Paramount Pictures (9th Cir. 16-55996 9/10/18) LMRA § 301/Hot Cargo Defense

The panel reversed the district court’s grant of summary judgment in favor of defendant Paramount Pictures Corp. in an action brought under § 301 of the Labor Management Relations Act, alleging breach of a collective bargaining agreement in connection with the motion picture Same Kind of Different As Me, which was scored in Slovakia.

The American Federation of Musicians of the United States and Canada, a bargaining representative for musicians, alleged breach of Article 3 of the Basic Theatrical Motion Picture Agreement of 2010, which required signatory movie studios to score domestically, with AFM musicians, any motion picture that the studios produced domestically. Paramount contended that Article 3 did not apply because it did not produce SKODAM.

The panel held that the district court misinterpreted Article 3 to apply only if a signatory producer employed the cast and crew shooting the picture. The panel concluded that the Basic Agreement was a labor agreement involving scoring musicians, and Article 3 functioned as a work preservation provision that dictated when a signatory has to hire those musicians. Therefore, Article 3 applied when a signatory studio produced a motion picture and had authority over the hiring and employment of scoring musicians. Whether a studio also employed the cast and crew was not relevant to Article 3. The panel held that, on the summary judgment record, it was a disputed question of fact whether Paramount produced SKODAM and had sufficient authority over the hiring of scoring musicians such that Article 3 applied.

The panel rejected Paramount’s affirmative defense that Article 3 violated the National Labor Relations Act’s “hot cargo” provision, which prohibits an employer from entering into an agreement to cease or refrain from dealing in the products of another employer or to cease doing business with any other person. Paramount asserted that AFM’s suit to enforce Article 3 violated the hot cargo provision because AFM’s tactical objective was to force SKODAM Films, a neutral employer, to employ AFM musicians. The panel held that the hot cargo provision does not apply to valid work preservation agreements. The panel’s conclusion that there was a genuine dispute of material fact whether Paramount had authority over the hiring and employment of scoring musicians prevented summary judgment on the hot cargo defense. Reversing two of the district court’s evidentiary rulings, the panel held that the district court abused its discretion in excluding an expert report and an internal Paramount email.

The panel remanded the case for further proceedings.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/10/16-55996.pdf

Bills Signed by Governor (9/7/18)

AB 2261 by Assemblymember Laura Friedman (D-Glendale) – School employees: merit system: classified service: community representatives.
AB 3068 by Assemblymember Tom Daly (D-Anaheim) – County government: contract legal counsel: auditor-controller.

Bill Vetoed by Governor (9/6/18)

AB 183 by Assemblymember Tom Lackey (R-Palmdale) – Bill of Rights for State Excluded Employees. A veto message can be found here.

Bill Signed by Governor (9/5/18)

AB 2388 by Assemblymember Kansen Chu (D-San Jose) – Employment: minors.

King v. Great American Chicken Corp. (9th Cir. 18-55911 9/6/18) Wage & Hour/CAFA

Great American Chicken Corp, Inc. (“GAC”), which does business in California as Kentucky Fried Chicken, appeals the district court’s remand of plaintiff Celena King’s putative [wage and hour] class action to Los Angeles Superior Court. The action was originally filed in that court and removed to federal court by GAC under the Class Action Fairness Act (“CAFA”). It is undisputed that removal under CAFA was proper here, but King sought remand to state court based on the local controversy or home-state controversy exception to CAFA jurisdiction. The question presented in this appeal is whether the district court correctly found that King met her burden of proving a factual requirement for remand under these exceptions, specifically that greater than two-thirds of the putative class members were California citizens at the time the case was removed to federal court.

After GAC removed the case to federal court, King sought discovery from GAC relevant to that factual question. GAC resisted King’s discovery requests. In lieu of providing responses to the requests, GAC proposed a stipulation that at least two-thirds (sometimes expressed as at least 67 percent) of the putative class members under the definition proposed by King—current and former GAC employees—had last-known addresses in California. King declined GAC’s proposal, but the district court held that the stipulation resolved the discovery dispute and ordered that it be accepted. Subsequently, based on the stipulation and 2 other inferences, the district court granted King’s motion to remand, finding King had made the necessary factual showing.

King had the burden to prove that “greater than two-thirds” of the putative class members were “citizens” of California. See 28 U.S.C. § 1332(d)(4). The stipulation left very little cushion, if any, to account for former employees who were not domiciled in California at the time this case was removed to federal court, because, for example, they had moved to another state. Similarly, there was little margin to cover employees who may have had last-known addresses in California but who did not qualify as citizens of California because they were not citizens of the United States. There was no evidentiary basis for the district court to find that subtracting those groups would not reduce the fraction of class members that were California citizens at the time of removal to a level less than the required “greater than two-thirds.” Because there was no other evidence before the district court on that subject, the finding that more than two-thirds of the putative class members were citizens of California at the time of removal was clearly erroneous. The order of remand to state court must be vacated, and this case must be remanded to federal district court for further proceedings. In district court, however, King should be permitted to conduct jurisdictional discovery in this matter and to renew her motion to remand.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/06/18-55911.pdf

Busker v. WABTEC (9th Cir. 17-55165 cert. ques. 9/6/18) Public Works/Onboard Work

In a case involving the Southern California Regional Rail Authority (“Metrolink”) and a federally-mandated comprehensive communications network known as Positive Train Control (“PTC”), the panel certified the following question of state law to the Supreme Court of California:

Whether work installing electrical equipment on locomotives and rail cars (i.e., the “onboard work” for Metrolink’s PTC project) falls within the definition of “public works” under California Labor Code § 1720(a)(1) either (a) as constituting “construction” or “installation” under the statute or (b) as being integral to other work performed for the PTC project on the wayside (i.e., the “field installation work”).

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/06/17-55165.pdf

Dent v. NFL (9th Cir. 15-15143 9/6/18) § 301 LMRA Preemption

The panel reversed the district court’s dismissal on preemption grounds of an action alleging a variety of state law claims brought against the National Football League (“NFL”) by former professional football players, and remanded for further proceedings.

The putative class of retired NFL players alleged that the NFL distributed controlled substances and prescription drugs to its players in violation of both state and federal laws, and that the manner in which these drugs were administered left the players with permanent injuries and chronic medical conditions. The panel held that the district court erred in holding that the players’ claims were preempted by § 301 of the Labor Management Relations Act.

The panel held that as pled, the players’ claims neither arose from collective bargaining agreements (“CBA”) nor required their interpretation. Specifically, the panel held that plaintiffs’ negligence claim regarding the NFL’s alleged violation of federal and state laws governing controlled substances was not preempted by § 301. The panel also held that the players’ negligent hiring and retention claims, and their negligent misrepresentation claim, were not preempted because they could be evaluated without interpreting the CBAs. The panel further held that the NFL had not identified any CBA provisions that must be interpreted in order to resolve the players’ fraud claims, and resolving those claims did not require interpreting CBA provisions.

The panel held that the players’ loss of consortium claim, and their requests for declaratory judgment and medical monitoring were derivative of their other claims. Because those claims were not preempted, the panel reversed the dismissal of the derivative claims and remanded.

The panel rejected the NFL’s argument that the dismissal should be affirmed on the ground that the players failed to exhaust the grievance procedures required by the CBAs.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/06/15-15143.pdf

Barone v. City of Springfield (9th Cir. 17-35355 9/5/18) Retaliation/First Amendment

The panel affirmed in part and reversed in part the district court’s summary judgment and remanded in an action brought pursuant to 42 U.S.C. § 1983 alleging that plaintiff was retaliated against in her employment as a Community Service Officer for the Springfield Police Department, in violation of her First Amendment rights.

Plaintiff asserted that appellees retaliated against her after she responded at a public event to a citizen inquiry about racial profiling by the Police Department. The panel held that plaintiff’s retaliation claim failed because she spoke as a public employee, so her speech was not protected by the First Amendment. The panel noted that plaintiff’s speech at the event clearly fell within her job duties. Plaintiff was aware that she was speaking as a representative of the Department and discussing her work with the Department. Moreover, the panel noted that the speech at issue was a response to an inquiry about racial profiling complaints, a type of complaint plaintiff regularly received in her capacity as a Community Service Officer.

The panel next held that an amended Last Chance Agreement which plaintiff was required to sign before returning to work was an unconstitutional prior restraint. Paragraph 5(g) of the amended Agreement barred plaintiff from saying or writing anything negative about the Department, the City or its employees. The panel held that Paragraph 5(g) restrained plaintiff’s speech as a private citizen on matters of public concern, and appellees had not presented justifications sufficient to warrant Paragraph 5(g)’s overbroad restrictions. The panel thus held that Paragraph 5(g)’s prospective restriction violated the First Amendment.

Addressing plaintiff’s claim of municipal liability under Monell v. Department of Social Services, 436 U.S. 658 (1978), the panel held that there was a genuine issue of material fact about whether the City Manager delegated final policymaking authority over employee discipline to the Police Chief. If such authority was delegated, the City would be liable under Monell. The panel therefore reversed and remanded for consideration of whether the City could be held liable for the Police Chief’s conduct in requiring plaintiff to sign the amended Agreement.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/05/17-35355.pdf

Harris v. County of Orange (9th Cir. 13-56061 9/5/18) Retirement Benefits/FEHA Age Discrimination

The panel affirmed in part, and reversed in part, the district court’s dismissal of an action brought by a class of retired employees alleging that the County of Orange violated their vested rights when it restructured its health benefits program; and remanded for further proceedings.

The County restructured two retiree benefits: the Retiree Premium Subsidy (which combined active and retired employees into a single unified pool for purposes of calculating medical insurance premiums); and the Grant Benefit (providing retired employees with a monthly grant to defray the cost of health care premiums). The retirees contended that the County’s decision in 2006 to eliminate the Retiree Premium Subsidy and to reduce the Grant Benefit increased their health care costs significantly.

The retirees alleged that they had an implied contractual right to receive the Grant Benefit throughout their retirement. The panel held that the retirees’ second amended complaint set forth sufficient allegations regarding the continuation of the Grant Benefit during the employees’ lifetime to survive a motion to dismiss. The panel noted that the retirees alleged the existence of annual memorandum of understanding between the union and the County, establishing a right to the Grant Benefit; and the retirees’ specific allegations plausibly supported the conclusion that the County impliedly promised a lifetime benefit, which could not be eliminated or reduced. The panel reversed the district court’s order insofar as it dismissed the retirees’ contract claims regarding the Grant Benefit.

The retirees’ California Fair Employment and Housing Act (“FEHA”) age discrimination claim challenged the elimination of the Retiree Premium Subsidy. The panel noted that retirees had no contractual right to continue receiving the Retiree Premium Subsidy pursuant to the holding in Retired Emps. Ass’n of Orange Cty., Inc. v. Cty. of Orange (REAOC V), 742 F.3d 1137 (9th Cir. 2014). The panel held that California law did not fault the County for offering different benefits to retirees and to active employees at the outset, absent a FEHA violation. The panel further held that the retirees’ FEHA claim was a novel one, and therefore the panel looked to federal cases interpreting employment discrimination and civil rights for guidance. The panel held that the federal Age Discrimination in Employment Act applied to retirees. The panel further held that changes in retirees’ health benefits were covered by FEHA, despite the fact that they were not active employees. The panel concluded that the County, under the Age Discrimination in Employment Act, and so, under California’s FEHA age discrimination provisions, may treat retirees as a group differently, with regard to medical benefits, than employees as a group, taking into account that the cost of providing medical benefits to the retiree group was higher because the retirees were on average older. Accordingly, retirees’ claim of unlawful age discrimination under FEHA failed as a matter of law, and the panel affirmed the district court’s dismissal of the claim.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/05/13-56061.pdf

Hansen v. Group Health Cooperative (9th Cir. 16-35684 9/4/18) ERISA Preemption

The panel reversed the district court’s exercise of subject matter jurisdiction in dismissing state law claims brought by mental health providers against an insurance company, and remanded for the entirety of the dispute to be returned to the state court from which it had been removed.

The mental health providers filed a class action complaint in state court, alleging violation of the Washington Consumer Protection Act in defendant’s use of certain screening criteria for mental healthcare coverage. Defendant removed the case to federal court on the ground that the providers had been assigned benefits by patients who were insured under health plans governed by the Employee Retirement Income Security Act, which, defendant asserted, therefore completely preempted the providers’ claims. The district court dismissed in part, concluding that the providers’ claims were subject to conflict and express preemption to the extent that they concerned defendant’s business practices in administering ERISA plans. The district court declined to exercise supplemental jurisdiction over the providers’ claims as to defendant’s administration of non-ERISA plans, and it remanded that part of the case to Washington state court.

The panel held that the providers’ claims did not fall within the scope of, and so were not completely preempted by, ERISA section 502(a)(1)(B). There was no dispute that the providers’ claim for wrongfully licensing allegedly biased mental health coverage guidelines was based on an independent duty to refrain from engaging in unfair and deceptive business practices. The panel held that there also was not complete preemption of a claim that defendant used its treatment guidelines to avoid complying with Washington’s Mental Health Parity Act, or of a claim that defendant unfairly competed in the marketplace by discouraging its patients from seeking treatment by rival practitioners. The panel concluded that all three of the providers’ claims for unfair and deceptive business practices were based on independent duties beyond those imposed by their patients’ ERISA plans.

The panel reversed the district court’s exercise of subject matter jurisdiction in dismissing the providers’ claims, and it remanded with instructions for the district court to return the entirety of the action to the Washington state court.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/04/16-35684.pdf

Bd. of Trustees v. Chambers (9th Cir. 16-15588 9/4/18) ERISA Preemption/Mootness

Vacating the district court’s summary judgment in favor of the plaintiffs, the panel held that Nevada Senate Bill 223 was a legitimate exercise of Nevada’s traditional state authority and was not preempted by the Employee Retirement Income Security Act.

Nevada law holds general contractors vicariously liable for the labor debts owed by subcontractors to subcontractors’ employees on construction projects. SB 223 limited the damages that can be collected from general contractors and imposed notification requirements on contractors and welfare benefit plans regulated under ERISA before an action could be brought under Nevada law against general contractors. Plaintiffs, ERISA trusts that managed ERISA plans, claimed that SB 223 was preempted by ERISA because it impermissibly “related to” ERISA plans.

The panel concluded that the appeal was not moot following the Nevada legislature’s repeal of SB 223 and enactment of SB 338, a replacement that repeats some of the challenged aspects of SB 223. The panel held that legislative change in response to an adverse judicial ruling is generally the type of “voluntary cessation” that defeats mootness on appeal. The panel concluded that Nevada did not rebut a presumption that its appeal was not moot because it did not demonstrate that the legislature would certainly not reenact the challenged provisions of SB 223.

On the merits, the panel held that SB 223 was not preempted because it did not intrude on any federally regulated field, conflict with ERISA’s objectives, or otherwise impermissibly “relate to” ERISA plans. Instead, it targeted an area of traditional state concern—debt collection—and pared back a state-conferred entitlement to collect unpaid debts from third-party general contractors. The panel explained that ERISA empowers ERISA trusts to bring actions against subcontractors for subcontractors’ labor debts, but it does not establish a cause of action for collecting debts from non-parties to an ERISA plan, such as general contractors. That right exists, if at all, as a matter of state vicarious liability law. The panel held that, because SB 223 targeted an area of traditional state regulation, a presumption against preemption applied. The panel concluded that SB 223 did not invade the federal field regulated by ERISA or pose an obstacle to ERISA’s objectives; rather, plaintiffs’ obligations under ERISA remained the same with or without SB 223. Thus, SB 223 had neither an impermissible “connection with” nor did it make an impermissible “reference to” ERISA plans. The panel vacated the district court’s grant of summary judgment and remanded for entry of judgment consistent with the panel’s opinion.

Dissenting, Judge Wallace wrote that it was his conclusion that the Nevada legislature’s repeal of SB 223, and its enactment of SB 338, mooted the appeal. Judge Wallace explained that the general rule in this circuit is that statutory change is generally enough to render a case moot unless the case presents a rare situation, such as “where it is virtually certain that the repealed law will be reenacted.” In this case, Judge Wallace concluded that the Nevada legislature’s repeal and replacement of SB 223 amounted to a “complete statutory overhaul,” and that there was no indication the legislature intended to reenact the repealed law. Therefore, in Judge Wallace’s view, there was no reason to depart from the rule that statutory change is usually enough to render a case moot.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/04/16-15588.pdf

McCray v. Marriot Hotel Services (9th Cir. 17-15767 8/31/18) LMRA § 301 Preemption

The panel vacated the district court’s grant of summary judgment in favor of the defendant and its denial of the plaintiff’s motion to remand to state court an action alleging violation of a City of San Jose minimum wage ordinance.

The defendant had removed the case from state court on the basis that the plaintiff’s claims were preempted by § 301 of the Labor Management Relations Act. The panel held that the district court lacked subject matter jurisdiction to hear the case, which amounted to an interpretive challenge to the San Jose ordinance, rather than a lawsuit that required substantial analysis of the plaintiff’s union’s collective bargaining agreement. The panel remanded with instructions for the district court to return the case to state court for further proceedings.

Dissenting, Judge Schroeder wrote that she would affirm the district court because the case substantially depended upon analysis of the terms of the collective-bargaining agreement, which should be interpreted in accordance with federal law.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/31/17-15767.pdf

Fierro v. Landry’s Restaurant (2018) 23 Cal.App.5th 325 (SC S249487/D071904 rev. granted/transf. CA4/1 8/29/18) Wage & Hour/Tolling Class Claims

The petition for review is granted, and the matter is transferred to the Court of Appeal, Fourth Appellate District, Division One, with directions to vacate its decision and to reconsider the cause in light of China Agritech, Inc. v. Resh (2018) ___U.S.___ [138 S.Ct. 1800, 201 L.Ed.2d 123] [upon denial of class certification, a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, may not commence a class action anew beyond the time allowed by the applicable statute of limitations]. (Cal. Rules of Court, rule 8.528(d).) Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar and Kruger, JJ. Review granted/transferred.

Docket

Court of Appeal Decision

EEOC v. BNSF (9th Cir. 16-35457 8/29/18) ADA/Permanent Injunction

The panel affirmed the district court’s judgment imposing liability on BNSF Railway Company under the Americans with Disabilities Act (“ADA”); vacated the nationwide injunction that prohibited BNSF from engaging in certain hiring practices; and remanded with instructions for the district court to apply the traditional four-factor test to determine whether to issue a permanent injunction, and if so, the scope of the injunction.

The panel concluded that the district court properly entered an injunction. The panel held that the district court must make further factual findings to support the scope of the injunction; and remanded for the district court to establish the proper scope of the injunction.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/29/16-35457.pdf

Martinez v. Landry's Restaurants, Inc. (CA2/7 B278513, filed 8/1/18, pub. ord. 8/28/18) Misclassification/Failure to Bring to Trial

Roberto Martinez, Lisa Saldana, Craig Eriksen and Chanel Rankin-Stephens (collectively Martinez parties) sued Crab Addison, Inc., Ignite Restaurant Group, Inc. (formerly known as Joe’s Crab Shack Holdings, Inc.) and Landry’s Restaurants, Inc. on behalf of a putative class of salaried employees of Joe’s Crab Shack restaurants in California who were allegedly misclassified as exempt managerial/executive employees and unlawfully denied overtime pay. On August 3, 2016 the trial court granted a motion to dismiss pursuant to Code of Civil Procedure sections 583.310 and 583.360, finding the Martinez parties had failed to bring their lawsuit to trial within five years, as extended. On appeal the Martinez parties argue the court abused its discretion in refusing to exclude from its calculation of the mandatory five-year period 319 days during which a writ petition challenging that court’s order to produce the names and contact information for putative class members was pending (see Crab Addison, Inc. v. Superior Court (2008) 169 Cal.App.4th 958 (Joe’s Crab Shack I)), 169 days between the notice of remand following removal of the case to United States District Court and the Ninth Circuit’s order affirming the District Court’s remand, and a nine-month period between the court’s order granting the Martinez parties’ motion to compel production of electronically stored information and full compliance with that order. We affirm.

http://www.courts.ca.gov/opinions/documents/B278513.PDF

Bills Signed by Governor (8/27/18)

AB 2310 by Assemblymember Cecilia Aguiar-Curry (D-Winters) – Public Employees’ Retirement System: contracting members.
AB 2396 by Assemblymember Frank Bigelow (R-O’Neals) – Public contracting: conflicts of interest: exemption.
AB 2420 by Assemblymember Sharon Quirk-Silva (D-Fullerton) – Workforce development: soft skills training.

Maplebear v. Busick (CA1/2 A151677 8/21/18) Misclassification/Reviewability of Partial Arbitration Award

The California Arbitration Act (CAA, Code. Civ. Proc., § 1280 et seq.) allows a party to an arbitration to petition the superior court to confirm, correct or vacate an arbitrator’s “award,” an award that must be set out in writing and “include a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy.” (§ 1283.4.) In this case, the arbitrator issued a “partial final award” determining only that the parties’ arbitration agreement permits the claimant to move for class certification. The primary issue before us is whether this constituted an “award” that was immediately reviewable by the superior court. When appellant filed a petition in superior court to vacate the “partial final award,” the trial court concluded that it had no jurisdiction under the CAA to review it at this preliminary stage. Appellant urges us to remand the case to the trial court to determine the merits of the petition to vacate. We affirm the trial court’s order of dismissal.

http://www.courts.ca.gov/opinions/documents/A151677.PDF

Chippewa Cree Tribe v. USDOI (9th Cir. 15-71772 8/21/18) Tribal Employment/Whistleblower

The panel denied a petition for review by the Chippewa Cree Tribe challenging a decision of the U.S. Department of the Interior that ordered the Tribe to provide relief to Ken St. Marks, who was removed from the Tribe’s governing body – the Business Committee – in retaliation for his whistleblowing.

St. Marks informed the Department of the Interior that members of the Business Committee were misusing federal stimulus funds awarded to the Tribe by the Department pursuant to the American Recovery and Reinvestment Act. The Act contains robust whistleblower protections.

The panel rejected the Tribe’s challenges to the Department of Interior’s decision. First, the panel held that St. Marks was an “employee” and eligible for whistleblower protection under the Act because he provided services on behalf of his employer, the Tribe. Second, the panel held that the Department’s order did not infringe on the Tribe’s sovereignty and powers of self-governance, and moreover, the Tribe voluntarily agreed to federal oversight when it accepted the stimulus funds. Third, the panel held that the Tribe did not have a due process right to a hearing with cross-examination before the Department reached its conclusion where the Tribe consented to the procedures outlined in the Act, which do not include a hearing. The panel noted that the Department did commit a procedural error where the Tribe did not have access to the Inspector General’s report until the Department issued its preliminary decision, but this was harmless error. Finally, the panel held that the Department did not err in finding that the removal of St. Marks was retaliatory.

The panel held that the Tribe could not raise for the first time on appeal its argument that the Department incorrectly calculated St. Marks’s monetary award.

The panel addressed St. Marks’s petition for review in a concurrently filed memorandum disposition.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/21/15-71772.pdf

Bills Signed by Governor (8/20/18)

AB 2196 by Assemblymember Jim Cooper (D-Elk Grove) – Public employees’ retirement: service credit: payments.
AB 2249 by Assemblymember Ken Cooley (D-Rancho Cordova) – Public contracts: local agencies: alternative procedure.
AB 2329 by Assemblymember Jay Obernolte (R-Big Bear Lake) – Special districts: board of directors: compensation.
AB 2550 by Assemblymember Shirley Weber (D-San Diego) – Prisons: female inmates and male correctional officers.
AB 3224 by Assemblymember Tony Thurmond (D-Richmond) – Public social services: county employees.

Connor v. First Student, Inc. (SC S229428 8/20/18) Employer Background Checks/ICRAA and CCRAA

We granted review to resolve a conflict in the Courts of Appeal over whether the Investigative Consumer Reporting Agencies Act (ICRAA) (Civ. Code, § 1786 et seq.) is unconstitutionally vague, in violation of due process, as applied to employer background checks because it overlaps, in part, with the Consumer Credit Reporting Agencies Act (CCRAA) (§ 1785.1 et seq.). We agree with the Court of Appeal that some overlap between the two statutes does not render ICRAA unconstitutionally vague when the statutes are otherwise unambiguous. We therefore affirm the Court of Appeal judgment.

http://www.courts.ca.gov/opinions/documents/S229428.PDF

Burkes v. Robertson (CA1/5 A150249 8/20/18) Overtime/ Bond or Waiver on Notice of Appeal

The Labor Commissioner (Commissioner) issued an award in favor of Larry Burkes, an employee of Damon Robertson (doing business as All Ways Delivery) for unpaid overtime wages, penalties, and interest. Robertson filed a timely pro se notice of appeal in the Solano County Superior Court, but he failed to post a statutorily required undertaking (an appeal bond or cash deposit in the amount of the award) within the time provided. (Lab. Code, § 98.2, subd. (b); hereafter section 98.2(b).)[1] He subsequently requested a waiver of the undertaking requirement, alleging indigency. The trial court found Robertson’s failure to request a waiver prior to the deadline for filing a section 98.2 notice of appeal deprived it of jurisdiction to consider the request. Accordingly, the trial court dismissed the appeal. We agree and affirm.

http://www.courts.ca.gov/opinions/documents/A150249.PDF

[1] Undesignated statutory references are to the Labor Code. As discussed post, a section 98.2 “notice of appeal is the statutory prerequisite for obtaining a trial de novo in superior court; although an ‘appeal’ and ‘trial de novo’ are distinct concepts, in this context the terms are often used interchangeably . . . .” (Palagin v. Paniagua Construction, Inc. (2013) 222 Cal.App.4th 124, 127 (Palagin).)

Rangel v. PLS Check Cashers of CA (9th Cir. 16-56826 8/16/18) Wage & Hour Class Action Settlement/Res Judicata

The panel affirmed the district court’s dismissal, on res judicata grounds, of a wage-and-hour action brought under the Fair Labor Standards Act.

The plaintiff conceded that she was subject to a state class-action settlement that released all claims arising from the allegations on which her FLSA action was predicated. She argued that her FLSA claims nonetheless could not have been released in the settlement because the settlement was the product of an opt-out class asserting only state labor law claims, but FLSA collective actions are opt-in actions. Applying California law, the panel held that the FLSA action was not excepted from the ordinary operation of res judicata because the decision in the prior proceeding was final and on the merits, the present proceeding was on the same cause of action as the prior proceeding, and the parties in the present proceeding were parties to the prior proceeding.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/16/16-56826.pdf

Fowler v. Guerin (9th Cir. 16-35052 8/16/18) Teacher Retirement Class Certification/Ripeness

The panel reversed the district court’s denial of a stipulated motion to certify a class and dismissal, as prudentially unripe, of an action brought by Washington public school teachers seeking the return of interest allegedly skimmed from their retirement accounts.

Plaintiffs brought this class action seeking an order that the Director of the Washington State Department of Retirement Systems return interest that was allegedly skimmed from their state-managed retirement accounts. Specifically, plaintiffs alleged a takings claim in their suit in federal court that the Director violated the Fifth and Fourteenth Amendments by withholding some of the daily interest earned on their accounts. The panel held that the district court erred in dismissing the plaintiffs’ takings claim as prudentially unripe.

The panel held that the Director’s withholding of the interest accrued on the plaintiffs’ accounts constituted a per se taking as to which Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985)’s prudential ripeness test did not apply. The panel also held that the plaintiffs’ taking claim was per se because the Director’s withholding of interest earned on funds in interest-bearing accounts was a direct appropriation of private property.

The panel considered the Director’s alternative grounds for summary judgment that were not reached by the district court, and rejected them. First, the panel held that the plaintiffs stated a takings claim for daily interest withheld by the Director.

The panel clarified that the core property right recognized in Schneider v. California Department of Corrections, 151 F.3d 1194 (9th Cir. 1988), covered interest earned daily, even if payable less frequently. Second, the panel held that the takings claim was not barred by issue preclusion or by the Rooker-Feldman doctrine. The panel held that no state-court judgment resolved the precise issue presented in this case, and the plaintiffs did not complain of any error by the state court or seek relief from the state court’s judgments. Finally, the panel held that the plaintiffs’ takings claim was not foreclosed by the Eleventh Amendment.

The panel also held that the district court erred in denying the motion for class certification on the ground that the plaintiff’s claim for “an indivisible injunction” for all members was really one for individualized monetary damages. The panel held that the plaintiffs’ claim could be certified for class treatment under Fed. R. Civ. P. 23(b)(2) because the relief of correcting the entire records system for the class members accounts was in the nature of injunctive relief.

The panel remanded for the district court to reconsider class certification, and if necessary, to permit further discovery before deciding if the class shall be given the requested injunctive relief.

http://cdn.ca9.uscourts.gov/datastore/opinions/2018/08/16/16-35052.pdf

Cal. Dept. of Industrial Relations v. AC Transit (CA1/4 A142799 8/13/18) Non-Air Conditioned Buses/Outdoor Places of Employment

In this appeal, we consider a narrow question of regulatory interpretation: Can the interior of a non-air-conditioned bus be deemed an “outdoor place of employment” for purposes of the heat illness prevention standards promulgated by the California Occupational Safety and Health Standards Board (Standards Board) as stated in section 3395 of title 8 of the California Code of Regulations (section 3395)? After the Department of Industrial Relation’s Division of Occupational Safety and Health (Division) cited the Alameda-Contra Costa Transit District (AC Transit) for several violations of section 3395 involving its non-air-conditioned buses, AC Transit sought administrative review, arguing, among other things, that the buses were not “outdoor” places of employment for purposes of the heat illness prevention regulation. The Occupational Safety and Health Appeals Board (Appeals Board) ultimately agreed, affirming the dismissal of the appealed-from violations by one of its administrative law judges (ALJ). However, after the Division filed a petition for writ of mandate in the trial court disputing this decision, the trial court determined that the Appeals Board’s definition of “outdoor” was too narrow and issued a peremptory writ of mandate instructing the Appeals Board to reconsider the matter using a broader definition of outdoor that could include non-air-conditioned vehicles. Both AC Transit and the Appeals Board appealed. We conclude—based upon our independent analysis of the question—that the trial court’s construction of section 3395 is well supported both by the language of the regulation and by its related regulatory history. We therefore remand the matter for further proceedings consistent with our analysis.

http://www.courts.ca.gov/opinions/documents/A142799.PDF

Ehret v. WinCo Foods, LLC (CA4/2 E067575 8/13/18) Meal Breaks/Collective Bargaining Waivers

Plaintiffs Kristina Parker and Elmer Gillett (collectively the Employees) were employees of WinCo Foods, LLC and/or WinCo Holdings, Inc. (collectively WinCo). They do not dispute that they were subject to a collective bargaining agreement which at least purported to provide that an employee who works a shift of not more than six hours is not entitled to a meal break.

The Employees filed this action claiming, among other things, that WinCo was violating Labor Code section 512, subdivision (a). This statute provides that an employee who works more than five hours is entitled to a meal break, “except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.” The trial court ruled that the collective bargaining agreement waived the Employees’ statutory right to a meal break whenever they worked more than five but not more than six hours.

The Employees appeal. They contend that the trial court erred because the waiver in the collective bargaining agreement was not “clear and unmistakable,” as required by federal law. We will hold that the waiver was clear and unmistakable, because it specifically mentioned meal breaks and it was irreconcilable with the statutory right to a meal break during a shift of more than five but not more than six hours. Hence, we will affirm.

http://www.courts.ca.gov/opinions/documents/E067575.PDF

PHYLLIS CHENG, ESQ .

CALIFORNIA CASE LAW ALERT

PHYLLIS CHENG, ESQ .

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CALIFORNIA CASE LAW ALERT