CALIFORNIA CASE LAW ALERT
Reverse chronological e-mail alerts prepared for the 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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Wadler v. Bio-Rad Laboratories (9th Cir. 17-16193 2/26/19) Whistleblower Retaliation/Sarbanes-Oxley Act/Dodd-Frank Act
The panel vacated in part the district court’s judgment after a jury trial, affirmed in part, and remanded in a whistleblower retaliation suit.
The jury found that Bio-Rad Laboratories, Inc., and its CEO violated the Sarbanes-Oxley Act, the Dodd-Frank Act, and California public policy by terminating the employment of Bio-Rad’s former general counsel, Sanford Wadler, in retaliation for his internal report that he believed the company had engaged in violations of the Foreign Corrupt Practices Act in China.
Vacating the SOX verdict, the panel held that the district court erred in instructing the jury that statutory provisions of the FCPA constitute rules or regulations of the SEC for purposes of whether Wadler engaged in protected activity under SOX § 806. Because a properly instructed jury could return a SOX verdict in favor of Wadler, the panel remanded for the district court to determine whether a new trial was warranted.
With respect to Wadler’s California public policy claim, the panel concluded that the district court’s SOX instructional error was harmless and therefore affirmed the verdict and corresponding damages as to that claim.
Addressing additional issues in a contemporaneously filed memorandum disposition, the panel also vacated the district court’s Dodd-Frank verdict and remanded.
Miller v. Inslee (9th Cir. 16-35939 2/26/19) Collective Bargaining/First Amendment
The panel affirmed the district court’s summary judgment for the State of Washington in an action brought pursuant to 42 U.S.C. § 1983 alleging that Washington’s authorization for the Service Employees International Union Local 925 (SEIU) to act as the exclusive collective bargaining representative for Washington’s publicly-subsidized childcare providers violated plaintiff’s First Amendment rights.
Plaintiff, a Washington State childcare provider, alleged that Washington’s arrangement with SEIU violated her rights of free speech and association. Applying Minnesota State Board for Community Colleges v. Knight, 465 U.S. 271 (1984), the panel held that Washington’s authorization of an exclusive bargaining representative did not infringe plaintiff’s First Amendment rights. The panel further held that even assuming that Knight no longer governed the question presented in light of the Supreme Court’s decision in Janus v. American Federation of State, County, & Municipal Employees, Council 31, 138 S. Ct. 2448 (2018), the panel would still conclude that Washington’s exclusive bargaining arrangement with SEIU was constitutionally permissible. The panel noted that the childcare providers were partial state employees for whom SEIU’s scope of representation was relatively circumscribed and that the State’s exclusive bargaining arrangement with SEIU served the compelling— and enduring—state interest of labor peace.
Concurring, Judge Graber wrote separately to state her view that, with respect to plaintiff’s associational rights, she would follow the Eighth Circuit’s analysis in Bierman v. Dayton, 900 F.3d 570, 574 (8th Cir. 2018), and hold that there was no “meaningful distinction” between this case and the Supreme Court’s decision in Minnesota State Board for Community Colleges v. Knight, 465 U.S. 271 (1984).
Correia v. NB Baker Electric, Inc. (CA4/1 D073798 2/25/19) Arbitration/PAGA
Plaintiffs Mark Correia and Richard Stow sued their former employer, NB Baker Electric, Inc. (Baker), alleging wage and hour violations and seeking civil penalties under the Private Attorney General Act of 2004 (PAGA). (Lab. Code, § 2699 et seq.) Baker responded by petitioning for arbitration under the parties' arbitration agreement. The agreement provided that arbitration shall be the exclusive forum for any dispute and prohibited employees from bringing a "representative action."
The trial court granted the arbitration petition on all causes of action except for the PAGA claim. On the PAGA claim, the court followed the California Supreme Court decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), which held unenforceable agreements to waive the right to bring PAGA representative actions in any forum, and the California Court of Appeal decision in Tanguilig v. Bloomingdale's, Inc. (2016) 5 Cal.App.5th 665 (Tanguilig), which held a PAGA claim cannot be compelled to arbitration without the state's consent. The trial court stayed the PAGA claim pending the conclusion of the arbitration.
Baker contends the court erred because: (1) plaintiffs' response to its arbitration petition was untimely; (2) Iskanian is no longer binding as it is inconsistent with a recent United States Supreme Court decision, Epic Systems Corp. v. Lewis (2018) __ U.S. __ [138 S.Ct. 1612] (Epic); and (3) the parties' arbitration agreement should be interpreted to mean that if the representative-action waiver is unenforceable, the PAGA claim for statutory penalties remains subject to arbitration.
We determine the court acted within its discretion in considering plaintiffs' response to the arbitration petition despite that plaintiffs filed the response after the statutory deadline. We additionally determine we remain bound by Iskanian. Although the Epic court reaffirmed the broad preemptive scope of the Federal Arbitration Act (FAA), Epic did not address the specific issues before the Iskanian court involving a claim for civil penalties brought on behalf of the government and the enforceability of an agreement barring a PAGA representative action in any forum. We thus conclude the trial court properly ruled the waiver of representative claims in any forum is unenforceable.
We also reject Baker's contention that the court erred in failing to order plaintiffs' PAGA claim to arbitration. Although Iskanian did not decide the issue of whether courts have the authority to order a PAGA representative action into arbitration, several California Courts of Appeal have held a PAGA arbitration requirement in a predispute arbitration agreement is unenforceable based on Iskanian's view that the state is the real party in interest in a PAGA claim. These courts reasoned the state must have consented to the agreement to effectively waive the right to bring the PAGA claim into court. We agree with this analysis as applied to the circumstances before us.
We are aware the federal courts have reached a different conclusion regarding the arbitrability of a PAGA representative claim, but find these decisions unpersuasive because the courts did not fully consider the implications of the qui tam nature of a PAGA claim on the enforceability of an employer-employee arbitration agreement. Moreover, although we provided Baker the specific opportunity to do so, it failed to identify a sound basis for this court to apply the federal decisions on this issue.
Marquez v. City of Long Beach (CA2/7 B282270 2/25/19) State Minimum Wage/Charter Cities
Plaintiffs Wendy Marquez and Jasmine Smith appeal from a judgment of dismissal entered after the trial court sustained without leave to amend the demurrer filed by the City of Long Beach (City) to plaintiffs’ class action complaint. Plaintiffs alleged causes of action for violations of the Labor Code and the Industrial Welfare Commission’s (IWC) wage orders based on the City’s alleged failure to pay workers employed as pages and recreation leader specialists wages at or above the statewide minimum wage.
The trial court found the authority to determine employee compensation was reserved to the City as a charter city under article XI, section 5 of the California Constitution, and the state could not impose a minimum wage for the City’s employees because the City’s compensation of its employees was not a matter of statewide concern. On appeal, plaintiffs contend the Legislature’s interest in the provision of a living wage to all workers is a matter of statewide concern, and the minimum wage requirement is appropriately tailored to address that concern.
This case pits article XI, section 5 of the state Constitution, which grants to charter cities authority over municipal affairs, including “plenary authority” to provide for the compensation of city employees, against article XIV, section 1 of the state Constitution, which provides “[t]he Legislature may provide for minimum wages and for the general welfare of employees . . . .” Despite the century-long history of the home rule doctrine (see Popper v. Broderick (1899) 123 Cal. 456 (Popper)) and the state’s regulation of the minimum wage (see Stats. 1913, ch. 324, pp. 632-637), the Supreme Court has not squarely resolved whether charter cities must comply with state law minimum wage requirements.
We conclude legislation setting a statewide minimum wage, generally applicable to both private and public employees, addresses the state’s interest in protecting the health and welfare of workers by ensuring they can afford the necessities of life for themselves and their families. Thus, the Legislature may constitutionally exercise authority over minimum wages, despite the constitutional reservation of authority in charter cities to legislate as to their municipal affairs. We reverse.
Yovino v. Rizo (US 18–272 Per Curiam 2/25/19) Equal Pay Act/Prior Salary
The petition in this case presents the following question: May a federal court count the vote of a judge who dies before the decision is issued? A judge on the United States Court of Appeals for the Ninth Circuit, the Honorable Stephen Reinhardt, died on March 29, 2018, but the Ninth Circuit counted his vote in cases decided after that date. In the present case, Judge Reinhardt was listed as the author of an en banc decision issued on April 9, 2018, 11 days after he passed away. By counting Judge Reinhardt’s vote, the court deemed Judge Reinhardt’s opinion to be a majority opinion, which means that it constitutes a precedent that all future Ninth Circuit panels must follow. See United States v. Caperna, 251 F. 3d 827, 831, n. 2 (2001). Without Judge Reinhardt’s vote, the opinion attributed to him would have been approved by only 5 of the 10 members of the en banc panel who were still living when the decision was filed.
Although the other five living judges concurred in the judgment, they did so for different reasons. The upshot is that Judge Reinhardt’s vote made a difference. Was that lawful?
Because Judge Reinhardt was no longer a judge at the time when the en banc decision in this case was filed, the Ninth Circuit erred in counting him as a member of the majority. That practice effectively allowed a deceased judge to exercise the judicial power of the United States after his death. But federal judges are appointed for life, not for eternity. We therefore grant the petition for certiorari, vacate the judgment of the United States Court of Appeals for the Ninth Circuit, and remand the case for further proceedings consistent with this opinion.
Fierro v. Landry's Restaurant, Inc. (CA4/1 D071904A 2/15/19) Wage & Hour/Class Certification
Plaintiff Jorge Fierro filed the underlying action against defendant Landry's Restaurants, Inc., seeking remedies for what Fierro alleges to be Landry's Restaurants's violations of specified California labor laws and wage orders. Fierro asserts claims on behalf of himself and on behalf of a class of individuals that he alleges is similarly situated. Landry's Restaurants demurred to the complaint on the basis that each of the causes of action is barred by the applicable statute of limitations.
As to Fierro's individual claims, the trial court overruled the demurrer, concluding that the statute of limitations defense did not appear affirmatively on the face of the complaint. As to the class claims, the trial court sustained the demurrer without leave to amend on the basis that a prior class action with identical class claims against Landry's Restaurants had been dismissed for failure to bring the case to trial in five years as required by Code of Civil Procedure sections 583.310 and 583.360. Under the "death knell" doctrine, Fierro appeals from that portion of the order sustaining without leave to amend the demurrer to the class claims.
Previously, we filed an opinion reversing the order on the basis that the applicable statutes of limitations on the class claims had been tolled. However, the California Supreme Court granted review and transferred the matter to this court with directions to vacate the opinion and to reconsider the cause in light of the United States Supreme Court's opinion in China Agritech, Inc. v. Resh (2018) __ U.S. __ [138 S.Ct. 1800] (China Agritech)—an opinion issued following the filing of our opinion but before issuance of the remittitur. After vacating our decision, we requested and received supplemental briefing from the parties as to the potential application of China Agritech to the issues presented in this appeal.
China Agritech, supra, __ U.S. __ [138 S.Ct. 1800] holds that, upon denial of class certification, a putative class member may not commence a new class action asserting the same claim, if the statute of limitations on the claim has run. (Id. at p. __ [138 S.Ct. at p. 1804].) The Court reasoned that the " 'efficiency and economy of litigation' " which support tolling the statutes of limitations for individual claims during the pendency of the initial class action do not support tolling the statutes of limitations for the class claims. (Id. at p. __ [138 S.Ct. at p. 1806].)
As we explain, the superior court's stated basis for sustaining the demurrer and dismissing the class claims is erroneous. As we further explain, in determining whether the statutes of limitations bar Fierro's class claims, we will conclude that there is no basis on which to apply equitable (or any other form of) tolling. Although that determination will result in at least some of the class's claims being time-barred, on the present record, we cannot say that all of the class's claims are untimely. Thus, we will reverse the order sustaining Fierro's demurrer without leave to amend and remand for further proceedings in which the trial court can decide, on a more developed record, issues related to class certification and/or timeliness of class claims.
Mijares v. Orange Co. Employees Retirement System (CA4/3 G055439, filed 1/23/19, pub. ord. 2/15/19) Pension Benefits/Unfunded Liability
In this declaratory relief action, the trial court ruled the Orange County Department of Education (Employer) must pay approximately $3.3 million in additional contributions to fund pension benefits promised to its employees. Employer argues we must independently review the legal issues raised in its complaint because the judgment arises from an order granting a motion for judgment on the pleadings. Applying this standard, we nevertheless reach the same conclusion as the trial court. The requested payment from Employer, which related to an unfunded liability of its employees’ pension benefits, was permissible and did not violate the California constitution.
Jimenez-Sanchez v. Dark Horse Express, Inc. (CA5 F072599 1/16/19) Wage and Hour/Class Certification
The named plaintiffs, former employees of defendant, brought this action asserting wage and hour claims on behalf of themselves and other similarly situated employees of defendant. The trial court denied plaintiffs’ motion for class certification. Plaintiffs appeal, asserting the claims of the proposed class are based on statutory and regulatory requirements and uniform policies of defendant, which present predominantly common issues of law and fact suitable for determination on a class basis. They contend the trial court’s decision was based on improper legal criteria and erroneous legal assumptions and was unsupported by substantial evidence. We conclude that, in denying the motion for class certification, the trial court used improper criteria or erroneous legal assumptions, which affected its analysis of whether plaintiffs’ claims and one of defendant’s defenses presented predominantly common issues, suitable for determination on a class basis. Accordingly, we reverse and remand for a redetermination of the motion.
Wilmot v. Contra Costa Co. Empl. Retirement (2018) 29 Cal.App.5th 846 (SC S252988/A152100 rev. granted 2/13/19) Public Employees' Pension Reform Act (PEPRA)
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, Kruger and Groban, JJ. Review granted/holding for lead case.
Goonewardene v. ADP, LLC (SC S238941 en banc 2/7/19) Wage & Hour/No Liability for Payroll Provider
Under the Labor Code, an employee who believes he or she has not been paid the wages due under the applicable labor statutes and wage orders may bring a civil action against his or her employer. (See, e.g., Lab. Code, § 1194; Martinez v. Combs (2010) 49 Cal.4th 35, 49-51; see also Lab. Code, § 2699.) This case presents the question whether, when an employer hires an independent payroll service provider (hereafter payroll company) to take over all the payroll tasks that would otherwise be performed by an internal payroll department, the employee may bring a civil action against not only his or her employer but against the payroll company as well.
The Court of Appeal, while agreeing with prior appellate court decisions that a payroll company cannot properly be considered an employer of the hiring business’s employee that may be liable under the applicable labor statutes for failure to pay wages that are due, held that the employee may nonetheless maintain causes of action for unpaid wages against the payroll company for (1) breach of the payroll company’s contract with the employer under the third party beneficiary doctrine, (2) negligence, and (3) negligent misrepresentation. We granted review to determine the validity of the Court of Appeal’s conclusions with respect to these three causes of action.
For the reasons discussed hereafter, we disagree with the Court of Appeal’s conclusion as to each of the proposed causes of action.
First, we conclude that the Court of Appeal erred in holding that an employee may maintain a breach of contract action against the payroll company under the third party beneficiary doctrine. As explained, under California’s third party beneficiary doctrine, a third party — that is, an individual or entity that is not a party to a contract — may bring a breach of contract action against a party to a contract only if the third party establishes not only (1) that it is likely to benefit from the contract, but also (2) that a motivating purpose of the contracting parties is to provide a benefit to the third party, and further (3) that permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.
Here, we conclude that whether or not a contract between an employer and a payroll company will in fact generally benefit employees with regard to the wages they receive, providing a benefit to its employees with regard to the wages they receive is ordinarily not a motivating purpose of the contracting parties. Instead, the relevant motivating purpose of the contracting parties is to provide a benefit to the employer. In addition, permitting each employee to name the payroll company as an additional defendant in any wage and hour lawsuit an employee may pursue would impose considerable litigation defense costs on the payroll company that inevitably would be passed on to the employer through an increased cost of the payroll company’s services, a result that would not be consistent with the objectives of the contract and the reasonable expectations of the employer or payroll company. Accordingly, we conclude that an employee should not be viewed as a third party beneficiary who may maintain an action against the payroll company for an alleged breach of the contract between the employer and the payroll company with regard to the payment of wages.
Second, we conclude that the Court of Appeal also erred in determining that an employee who alleges that he or she has not been paid wages that are due may maintain tort causes of action for negligence and negligent misrepresentation against a payroll company. As we explain, in light of a variety of policy considerations that are present in the wage and hour setting, we conclude that it is neither necessary nor appropriate to impose upon a payroll company a tort duty of care with regard to the obligations owed to an employee under the applicable labor statutes and wage orders and consequently that the negligence and negligent misrepresentation causes of action lack merit.
Accordingly, we conclude that the decision of the Court of Appeal should be reversed insofar as it held that plaintiff employee in this case may proceed against defendant payroll company on causes of action for breach of contract, negligence, and negligent misrepresentation.
EEOC v. Global Horizons (9th Cir. 16-35528 2/6/19) EEOC/Joint Employer
The panel reversed the district court’s orders in an enforcement action brought by the Equal Employment Opportunity Commission (“EEOC”) under Title VII of the Civil Rights Act of 1964 on behalf of Thai workers alleging discrimination charges against Green Acre Farms and Valley Fruit Orchards (the “Growers”).
The Growers retained Global Horizons, Inc., a labor contractor, to obtain temporary workers for their orchards. Global Horizons recruited workers from Thailand and brought them to the United States under the H-2A guest worker program. The district court entered a default judgment against Global Horizons after it discontinued its defense in the action; this case focuses solely on the liability of the Growers.
The district court granted in part the Growers’ Fed. R. Civ. P. 12(b)(6) motions to dismiss. The district court drew a distinction between orchard-related matters (managing, supervising, and disciplining the Thai workers at the orchards) and non-orchard-related matters (housing, feeding, transporting, and paying the workers).
The panel held that the district court erred in holding that the Growers could not be held liable under Title VII for non-orchard-related matters.
Deciding in the first instance what test to employ for determining whether an entity is a joint employer under Title VII, the panel held that the common-law agency test should be applied. Under the common-law test, the principle guidepost is the element of control. The panel rejected the chief alternative for analyzing employment relationships in the Title VII context: the economic-reality test.
The panel held that the district court correctly determined that the EEOC’s allegations were sufficient to establish that the Growers and Global Horizons were joint employers as to orchard-related matters. Applying the common-law agency test, the panel concluded that the EEOC adequately alleged that the Growers’ employment relationship with the Thai workers also subsumed non-orchard-related matters.
The panel held that the EEOC plausibly alleged Green Acre’s liability as a joint employer for the discriminatory conduct of Global Horizons. The panel further held that the EEOC plausibly alleged Green Acre’s liability under Title VII for discrimination relating to non-orchard-related matters. The panel also held that the EEOC’s allegations were thinner as they related to the liability of Valley Fruit. The panel reversed the district court’s dismissal of the EEOC’s allegations against Valley Fruit with respect to non-orchard-related matters; and directed on remand that the EEOC be permitted to amend its complaint as to Valley Fruit’s liability for non-orchard-related matters. The panel further directed that the district court should then reconsider the disparate treatment claim (and the related pattern-or practice claim) in light of the EEOC’s allegations regarding both orchard-related and non-orchard-related matters.
The panel reversed the district court’s order denying the EEOC’s motions to compel discovery regarding the Growers’ liability with respect to non-orchard-related matters. The panel also reversed the district court’s order granting the Growers’ motion for summary judgment. Finally, the panel reversed the district court’s order granting the Growers’ motions for attorneys’ fees because the Growers were no longer prevailing parties.
Ward v. Tilly's, Inc. (CA2/3 B280151 2/4/19) On-Call Scheduling
This appeal, which follows an order sustaining a demurrer without leave to amend, concerns the practice of on-call scheduling. As alleged, on-call scheduling works this way: Employees are assigned on-call shifts, but are not told until they call in two hours before their shifts start whether they should actually come in to work. If they are told to come in, they are paid for the shifts; if not, they do not receive any compensation for having been “on call.”
Plaintiff Skylar Ward challenges the on-call scheduling practices of her former employer, Tilly’s, Inc. (Tilly’s), as violating wage order No. 7-2001 (codified at California Code of Regulations, title 8, section 11070; hereafter, Wage Order 7), which regulates the wages, hours, and working conditions in the mercantile industry. Among other things, Wage Order 7 requires employers to pay employees “reporting time pay” for each workday “an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work.” Plaintiff contends that when on-call employees contact Tilly’s two hours before on-call shifts, they are “report[ing] for work” within the meaning of the wage order, and thus are owed reporting time pay. Tilly’s disagrees, urging that employees “report for work” only by physically appearing at the work site at the start of a scheduled shift, and thus that employees who call in and are told not to come to work are not owed reporting time pay.
We conclude that the on-call scheduling alleged in this case triggers Wage Order 7’s reporting time pay requirements. As we explain, on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts—but who nonetheless receive no compensation from Tilly’s unless they ultimately are called in to work. This is precisely the kind of abuse that reporting time pay was designed to discourage. We therefore reverse the judgment and remand this case to the trial court for further proceedings.
Economy v. Sutter East Bay Hospitals (CA1/4 A150211 2/4/19) Termination of Physician Staff Privileges
May a hospital avoid its obligation to provide notice and a hearing before terminating a doctor’s ability to practice in the hospital for jeopardizing patient quality of care, by directing the medical group employing the doctor to refuse to assign the doctor to the hospital? We agree with the trial court that it may not, and that it will be liable for damages when it causes such a termination without complying with statutorily mandated procedures.
Defendants Sutter East Bay Hospitals and Alta Bates Summit Medical Center (collectively, the hospital) appeal a judgment awarding plaintiff Dr. Kenneth Economy substantial damages based on the suspension and later termination of his “staff privileges, membership, or employment” with the hospital. The termination was “based on a medical disciplinary cause or reason” without prior notice and a hearing in violation of Business and Professions Code section 809 et seq. The hospital contends the court erred in concluding that plaintiff was entitled to notice and a hearing prior to his suspension and termination and, alternatively, if he was entitled to any statutory protections, he failed to establish that the hospital’s failure to hold a hearing caused his damages. The hospital also challenges the inclusion of approximately $650,000 in damages to account for “tax neutralization” on the ground that the evidence in support of the award was speculative. In a cross-appeal, plaintiff contends the court erred in denying his motion for attorney fees and costs under section 809.9. We find no error and shall affirm the judgment in full.
NAAAOM V. Charter Communications (9th Cir. 17-55723 2/4/19) § 1981/Race Discrimination/Contracting
The panel filed (1) an order withdrawing its prior opinion and denying, on behalf of the court, a petition for rehearing en banc, and (2) a superseding opinion affirming the district court’s denial of a cable television-distribution company’s motion to dismiss a claim that its refusal to enter into a carriage contract with an African American-owned operator of television networks was racially motivated, and in violation of 42 U.S.C. § 1981.
In the superseding opinion, reconsidering the court’s approach to the causation standard for § 1981 claims under Metoyer v. Chassman, 504 F.3d 919 (9th Cir. 2007), following the Supreme Court’s decisions in Gross v. FBL Fin. Servs., Inc., 557 U.S. 167 (2009), and Univ. of Tex. Sw. Med. Ctr. v. Nassar, 570 U.S. 338 (2013), the panel held that a plaintiff need not plead that racial discrimination was the but-for cause of a defendant’s conduct, but only that racial discrimination was a factor in the decision not to contract such that the plaintiff was denied the same right as a white citizen. The panel concluded that Gross and Nassar undercut Metoyer’s approach of borrowing the causation standard of Title VII’s discrimination provision. The panel instead looked to the text of § 1981, and it held that mixed-motive claims are cognizable under § 1981.
The panel held that the plaintiffs’ allegations regarding the defendant’s treatment of the African American-owned operator, and its differing treatment of white-owned companies, were sufficient to state a viable claim pursuant to § 1981. The panel also held that plaintiffs’ § 1981 claim was not barred by the First Amendment. The panel concluded that the fact that cable operators engage in expressive conduct when they select which networks to carry did not automatically require the application of strict scrutiny. The panel concluded that at most intermediate scrutiny applied, and § 1981 would satisfy intermediate scrutiny because it was a content-neutral statute and was narrowly tailored to serve a significant government interest in preventing racial discrimination. The panel remanded the case for further proceedings.
Symmonds v. Mahoney (CA2/1 B283529 2/1/19) Age and Disability Discrimination/Anti-SLAPP
Defendants Edward Joseph Mahoney, also known as Eddie Money, and Eddie Money Entertainment, Inc. (collectively, defendants) appeal from the trial court’s order denying a special motion to strike under Code of Civil Procedure section 425.16, the anti-SLAPP (Strategic Lawsuit Against Public Participation) statute.
Mahoney is a singer and songwriter who performs in concerts across the country. In 2015 he terminated his drummer, plaintiff and respondent Glenn Symmonds, who subsequently sued defendants for discrimination on the basis of age, disability, and medical condition. Defendants filed an anti-SLAPP motion arguing that Mahoney’s decision as to which musicians performed with him was an act in furtherance of the exercise of his constitutional right of free speech in connection with an issue of public interest, and thus protected under section 425.16.
The trial court denied the motion, finding that Symmonds’ cause of action arose from defendants’ discriminatory conduct, not the decision to terminate him, and thus Symmonds’ claim did not implicate Mahoney’s free speech rights.
We hold that defendants met their burden to establish that Mahoney’s decision to terminate Symmonds was protected conduct. Accordingly, we reverse and remand so the trial court may conduct the second step of the anti-SLAPP analysis and determine whether Symmonds has demonstrated a probability of prevailing on the merits of his claim. We deny Symmonds’ requests for attorney fees and sanctions.
Vasquez v. San Miguel Produce, Inc. (CA2/6 B287696, filed 1/3/19, pub. ord. 1/30/19) Arbitration
Respondents Antonia Vasquez and Cecilia Zacarias were hired by appellant Employer’s Depot, Inc. (EDI), a staffing agency. EDI was respondents’ employer when they worked on assignment. Respondents and EDI agreed in writing to arbitrate “all disputes that may arise within the employment context.”
EDI assigned respondents to pack produce for appellant San Miguel Produce, Inc. Respondents later sued San Miguel for labor law violations. San Miguel cross-complained, blaming EDI for causing respondents’ alleged damages. Appellants jointly moved to compel arbitration. The trial court denied their motion. (Code Civ. Proc., §1281.2.)
On de novo review, we conclude that arbitration is mandated. Appellants are co-employers with an identity of interests and mutual responsibility for complying with state law governing employers in the produce packing industry. It is inconsequential that respondents chose not to name EDI as a defendant. They agreed to arbitrate “all disputes” arising from their employment. At all relevant times EDI was their employer. We reverse and remand with directions to stay court proceedings and order the parties to arbitrate their dispute.
Frost v. BNSF (9th Cir. 17-35513 1/30/19) Federal Railroad Safety Act/Honest Belief Jury Instruction
The panel reversed the district court’s judgment, after a jury trial, in favor of the defendant in an action under the Federal Railroad Safety Act and remanded for a new trial.
Michael Frost alleged that BNSF Railway Co. violated the FRSA when it disciplined and ultimately terminated him after he committed a pair of safety rule violations and filed an injury report. At trial, the district court instructed the jury that BNSF could not be liable if it terminated Frost due to an “honest belief” that he violated the company’s safety rules.
The panel held that the “honest belief” jury instruction was inconsistent with the FRSA’s clear statutory mandate and prior caselaw. To establish a claim of unlawful discrimination under the FRSA, a plaintiff must prove by a preponderance of the evidence that his protected conduct was a contributing factor in an adverse employment action. The panel held that there is no separate requirement that the plaintiff prove that his employer acted with discriminatory intent. Rather, by proving that an employee’s protected activity contributed in some way to the employer’s adverse conduct, the FRSA plaintiff has proven that the employer acted with some level of retaliatory intent. The panel held that the “honest belief” jury instruction therefore misstated the applicable law, and BNSF did not rebut the presumption of prejudice. Accordingly, the panel reversed the district court’s determination and remanded for a new trial.
Gilbert v. Cal. Check Cashing Stores (9th Cir. 17-16263 1/29/19) Fair Credit Reporting Act/Employers’Standalone Document
The panel affirmed in part and vacated in part the district court’s summary judgment in favor of defendants in an action under the Fair Credit Reporting Act, and remanded for further proceedings.
FCRA requires employers who obtain a consumer report on a job applicant to provide the applicant with a “clear and conspicuous disclosure” that they may obtain such a report (the “clear and conspicuous” requirement) “in a document that consists solely of the disclosure” (the “standalone document” requirement) before procuring the report.
The panel held that a prospective employer violates FCRA’s “standalone document” requirement by including extraneous information relating to various state disclosure requirements in that disclosure.The panel concluded that defendant’s form violated this requirement, as well as the “standalone document” requirement of California’s Investigative Consumer Reporting Agencies Act. The panel further held that defendant’s disclosure did not satisfy FCRA’s and ICRAA’s “clear and conspicuous” requirements because, although the disclosure was conspicuous, it was not clear.
The panel addressed additional issues in a concurrently filed memorandum disposition.
Curtis v. Irwin Industries (9th Cir. 16-56515 1/25/19) Overtime Pay/CBA/§301 LMRA Preemption
The panel affirmed in part the district court’s dismissal of a wage-and-hour suit and remanded in part.
Plaintiffs worked for a company that conducted operations on oil platforms located off the coast of California, on the Outer Continental Shelf. The panel held that plaintiffs’ claim for overtime pay was preempted under § 301 of the Labor Management Relations Act because California overtime law does not apply to an employee working under a qualifying collective bargaining agreement; therefore, plaintiffs’ right to overtime existed solely as a result of their CBAs.
The panel remanded to the district court to review meal and rest period and minimum wage claims, as well as derivative claims, and address issues of preemption under § 301 and the Outer Continental Shelf Lands Act, as well as issues of California labor law.
Mackey v. Bd. of Trustees of the Cal. State University (CA4/1 D072198 1/23/19) Title VI and Unruh Act
Five African-American women on the basketball team at California State University at San Marcos (CSUSM) sued head coach Sheri Jennum and the Board of Trustees of the California State University, claiming Jennum had engaged in race-based discrimination and retaliation. They alleged she derogatorily referred to them as "the group," reduced their playing time, afforded them fewer opportunities, punished them more severely and generally singled them out for harsher treatment as compared to their non-African-American teammates. The trial court granted both motions for summary judgment filed by the Board, concluding plaintiff Danielle Cooper's claims were untimely and that the remaining plaintiffs could not show a triable issue on the merits.
On plaintiffs' appeal from that ruling, we reverse the order granting summary judgment and direct the court to enter a new order granting summary adjudication on some, but not all, of plaintiffs' claims. Plaintiffs cannot sue the Board under 42 United States Code sections 1981 and 1983 because CSUSM is not a "person" subject to suit under those statutes. That disposes of Cooper's sole contention on appeal that her claim under section 1981 is timely.
Turning to the remaining claims brought by the four "freshmen plaintiffs," summary adjudication is improper as to their racial discrimination claims under title VI of the Civil Rights Act of 1964 (hereafter title VI) (42 U.S.C. § 2000d et seq.) and the Unruh Civil Rights Act (Unruh Act) (Civ. Code, § 51 et seq.). Viewing the evidence, as we must, in the light most favorable to the freshmen plaintiffs, the Board did not meet its moving burden to show the lack of a triable issue as to whether these plaintiffs suffered a materially adverse action under circumstances suggesting a racially discriminatory motive.
For similar reasons, summary adjudication is improper on title VI retaliation claims brought by three of the four freshmen plaintiffs, Lynette Mackey, Kianna Williams, and Sierra Smith. Each of these women complained about Jennum's discriminatory treatment and indicated how they suffered adverse consequences as a result. We reach a different conclusion as to plaintiff Crystal Hicks, who never made a complaint and denied facing any consequences as a result of complaints made by her peers.
Zhang v. Jenevein (CA2/7 B280047, filed1/2/19, mod. pub. ord. 1/23/19) Secret Recording/Arbitration
E. Patrick Jenevein III, president of Tang Energy Group, Ltd., secretly recorded conversations with a business associate, Sherman Xuming Zhang, president of AVIC International USA, Inc. (AVIC USA), and later introduced the recordings as evidence in contractual arbitration. The arbitrators ultimately issued an award in favor of Tang Energy.
After the arbitration, Zhang and AVIC USA filed this action against Jenevein for invasion of privacy and eavesdropping on or recording confidential communications in violation of Penal Code sections 632 and 637.2. Jenevein filed a special motion to strike under Code of Civil Procedure section 425.16 (section 425.16). The trial court denied the motion, ruling that neither making the recordings nor using them as evidence in the arbitration was protected activity.
The trial court was correct. Because Jenevein’s actions in recording the conversations and using the recordings in the arbitration were not in connection with a judicial or official proceeding authorized by law, they were not protected activities under section 425.16. Therefore, we affirm.
Siri v. Sutter Home Winery, Inc. (CA1/4 A141335 1/23/19) Wrongful Termination/Whistleblower Retaliation
Plaintiff Says Siri appeals the dismissal of her wrongful discharge complaint following the entry of summary judgment in favor of defendant Sutter Home Winery, Inc., doing business as Trinchero Family Estates (defendant or TFE). Defendant has cross-appealed, challenging the trial court’s denial of its motion for sanctions.
Plaintiff’s complaint alleges that she was terminated in retaliation for having brought to the attention of defendant’s management and the Board of Equalization defendant’s failure to have paid use taxes owed by the company in violation of Labor Code section 1102.5 and public policy. The litigation has an unnecessarily complex and extended history, due in large part to a misconception of the relevant issues by both parties. Proceeding as if the case turns on whether plaintiff correctly accused defendant of failing to pay use taxes it owed, plaintiff pursued and defendant strenuously resisted efforts to obtain copies of defendant’s tax returns, leading ultimately to a decision by this court that defendant had not “waived the privilege against forced disclosure of tax returns” and that no exception to the tax return privilege applied to entitle plaintiff to compel the production of the returns. (No. A139114, Sept. 5, 2013 [nonpub. opn.].) Much disputation has also centered on whether plaintiff wrongly obtained, disclosed or destroyed material evidence. However, in moving for summary judgment defendant failed to address, much less negate, plaintiff’s allegation that she was terminated in retaliation for raising the tax-avoidance issue, nor did it seek to establish an affirmative defense to the claim. The summary judgment motion was based and granted on the premise that plaintiff had acknowledged that she could not prove her case without the tax returns. Because plaintiff has not so acknowledged and defendant has not shown this to be true, the motion was improperly granted. There was no abuse in the trial court’s denial of sanctions.
In re Certified Tire and Service Centers Wage and Hour Cases (SC S252517/D072265 review granted January 16, 2019) Wage and Hour
The request for judicial notice, dated December 21, 2018, is granted. The petition for review is granted. Further action is this matter is deferred pending consideration and disposition of a related issue in Oman v. Delta Air Lines, Inc., S248726 (see Cal. rules of Court, rule 8.524 (c)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.528, is deferred pending further order of the court. The requests for an order directing depublication of the opinion are denied. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/holding for lead case.
[Note: In Oman, the Ninth Circuit had certified the following questions to the California Supreme Court “(1) Do California Labor Code sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time? (2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? (See Cal. Labor Code, §§ 1182.12, 1194; Cal. Code Regs., § 11090(4).) (3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? (See Gonzales v. Downtown LA Motors, LP (2013) 215 Cal.App.4th 36, 155 Cal. Rptr. 3d 18; Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 37 Cal. Rptr. 3d 460.)”]
Rall v. Tribune 365 LLC (CA2/8 B284566 1/17/19) Wrongful Termination/Defamation
Plaintiff Frederick Theodore Rall III, a political cartoonist and blogger, sued Los Angeles Times Communications LLC (The Times) after it published a “note to readers” and a later more detailed report questioning the accuracy of a blog post plaintiff wrote for The Times. The Times told its readers that it had serious questions about the accuracy of the blog post; that the piece should not have been published; and that plaintiff’s future work would not appear in The Times. Plaintiff sued The Times, related entities, and several individual defendants, alleging causes of action for defamation and for wrongful termination in violation of public policy, among other claims.
All defendants filed anti-SLAPP (strategic lawsuit against public participation) motions to strike plaintiff’s complaint (Code Civ. Proc., § 425.16). The trial court granted the motions. We affirm the trial court’s orders.
Robles v. Dominos Pizza LLC (9th Cir. 17-55504 1/15/19) ADA Web Site /App Accessibility
The panel reversed the district court’s dismissal of an action under Title III of the Americans with Disabilities Act and California’s Unruh Civil Rights Act, alleging that Domino’s Pizza’s website and mobile application were not fully accessible to a blind or visually impaired person.
The panel held that the ADA applied to Domino’s website and app because the Act mandates that places of public accommodation, like Domino’s, provide auxiliary aids and services to make visual materials available to individuals who are blind. Even though customers primarily accessed the website and app away from Domino’s physical restaurants, the panel stated that the ADA applies to the services of a public accommodation, not services in a place of public accommodation. The panel stated that the website and app connected customers to the goods and services of Domino’s physical restaurants.
The panel held that imposing liability on Domino’s under the ADA would not violate the company’s Fourteenth Amendment right to due process. The panel held that the statute was not impermissibly vague, and Domino’s had received fair notice that its website and app must comply with the ADA. Further, the plaintiff did not seek to impose liability on Domino’s for failure to comply with the Web Content Accessibility Guidelines 2.0, private industry standards for website accessibility. Rather, an order requiring compliance with WCAG 2.0 was a possible equitable remedy. Finally, the lack of specific regulations, not yet promulgated by the Department of Justice, did not eliminate Domino’s statutory duty.
The panel held that the district court erred in invoking the prudential doctrine of primary jurisdiction, which allows courts to stay proceedings or to dismiss a complaint without prejudice pending the resolution of an issue within the special competence of an administrative agency. The panel reasoned that the DOJ was aware of the issue, and its withdrawal of an Advanced Notice of Proposed Rulemaking meant that undue delay was inevitable. The delay was needless because the application of the ADA to the facts of this case was well within the district court’s competence. The panel remanded the case to the district court.
Mendoza v.. Fonseca McElroy Grinding Co. (9th Cir. 17-15221) Prevailing Wage/Contract for Public Work
The panel certified the following question to the California Supreme Court:
Is operating engineers’ offsite “mobilization work”—including the transportation to and from a public works site of roadwork grinding equipment—performed “in the execution of [a] contract for public work,” Cal. Lab. Code § 1772, such that it entitles workers to “not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed” pursuant to section 1771 of the California Labor Code?
New Prime Inc. v. Oliveira (US 17-340 1/15/19) FAA Exemption for transportation workers involved in interstate commerce applies to independent contractors
Petitioner New Prime Inc. is an interstate trucking company, and respondent Dominic Oliveira is one of its drivers. Mr. Oliveira works under an operating agreement that calls him an independent contractor and contains a mandatory arbitration provision. When Mr. Oliveira filed a class action alleging that New Prime denies its drivers lawful wages, New Prime asked the court to invoke its statutory authority under the Federal Arbitration Act to compel arbitration. Mr. Oliveira countered that the court lacked authority because §1 of the Act excepts from coverage disputes involving “contracts of employment” of certain transportation workers. New Prime insisted that any question regarding §1’s applicability belonged to the arbitrator alone to resolve, or, assuming the court could address the question, that “contracts of employment” referred only to contracts that establish an employer-employee relationship and not to contracts with independent contractors. The District Court and First Circuit agreed with Mr. Oliveira.
1. A court should determine whether a §1 exclusion applies before ordering arbitration. A court’s authority to compel arbitration under the Act does not extend to all private contracts, no matter how emphatically they may express a preference for arbitration. Instead, antecedent statutory provisions limit the scope of a court’s §§3 and 4 powers to stay litigation and compel arbitration “accord[ing to] the terms” of the parties’ agreement. Section 2 provides that the Act applies only when the agreement is set forth as “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” And §1 helps define §2’s terms, warning, as relevant here, that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” For a court to invoke its statutory authority under §§3 and 4, it must first know if the parties’ agreement is excluded from the Act’s coverage by the terms of §§1 and 2. This sequencing is significant. See, e.g., Bernhardt v. Polygraphic Co. of America, 350 U. S. 198, 201–202. New Prime notes that the parties’ contract contains a “delegation clause,” giving the arbitrator authority to decide threshold questions of arbitrability, and that the “severability principle” requires that both sides take all their disputes to arbitration. But a delegation clause is merely a specialized type of arbitration agreement and is enforceable under §§3 and 4 only if it appears in a contract consistent with §2 that does not trigger §1’s exception. And, the Act’s severability principle applies only if the parties’ arbitration agreement appears in a contract that falls within the field §§1 and 2 describe. Pp. 3–6.
2. Because the Act’s term “contract of employment” refers to any agreement to perform work, Mr. Oliveira’s agreement with New Prime falls within §1’s exception. Pp. 6–15.
(a) “[I]t’s a ‘fundamental canon of statutory construction’ that words generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’ ” Wisconsin Central Ltd. v. United States, 585 U. S. ___, ___ (quoting Perrin v. United States, 444 U. S. 37, 42). After all, if judges could freely invest old statutory terms with new meanings, this Court would risk amending legislation outside the “single, finely wrought and exhaustively considered, procedure” the Constitution commands. INS v. Chadha, 462 U. S. 919, 951. The Court would risk, too, upsetting reliance interests by subjecting people today to different rules than they enjoyed when the statute was passed. At the time of the Act’s adoption in 1925, the phrase “contract of employment” was not a term of art, and dictionaries tended to treat “employment” more or less as a synonym for “work.” Contemporaneous legal authorities provide no evidence that a “contract of employment” necessarily signaled a formal employer-employee relationship. Evidence that Congress used the term “contracts of employment” broadly can be found in its choice of the neighboring term “workers,” a term that easily embraces independent contractors. Pp. 6–10.
(b) New Prime argues that by 1925, the words “employee” and “independent contractor” had already assumed distinct meanings. But while the words “employee” and “employment” may share a common root and intertwined history, they also developed at different times and in at least some different ways. The evidence remains that, as dominantly understood in 1925, a “contract of employment” did not necessarily imply the existence of an employer-employee relationship. New Prime’s argument that early 20th-century courts sometimes used the phrase “contracts of employment” to describe what are recognized today as agreements between employers and employees does nothing to negate the possibility that the term also embraced agreements by independent contractors to perform work. And its effort to explain away the statute’s suggestive use of the term “worker” by noting that the neighboring terms “seamen” and “railroad employees” included only employees in 1925 rests on a precarious premise. The evidence suggests that even “seamen” and “railroad employees” could be independent contractors at the time the Arbitration Act passed. Left to appeal to the Act’s policy, New Prime suggests that this Court order arbitration to abide Congress’ effort to counteract judicial hostility to arbitration and establish a favorable federal policy toward arbitration agreements. Courts, however, are not free to pave over bumpy statutory texts in the name of more expeditiously advancing a policy goal. Rather, the Court should respect “the limits up to which Congress was prepared” to go when adopting the Arbitration Act. United States v. Sisson, 399 U. S. 267, 298. This Court also declines to address New Prime’s suggestion that it order arbitration anyway under its inherent authority to stay litigation in favor of an alternative dispute resolution mechanism of the parties’ choosing.
Pp. 10–15. 857 F. 3d 7, affirmed.
GORSUCH, J., delivered the opinion of the Court, in which all other Members joined, except KAVANAUGH, J., who took no part in the consideration or decision of the case. GINSBURG, J., filed a concurring opinion.