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McPherson v. EF Intercultural Foundation, Inc. (CA2/3 B290869 part. pub. 4/1/20) Unlimited Time Off/Accrued Vacation
When an employer’s policy allows an employee to take an unspecified amount of paid time off without accruing vacation time, does the employee’s right to that paid time off vest so the employer must pay her for unused vacation under Labor Code section 227.3 when her employment ends? Or does section 227.3 apply only to policies providing a fixed amount of vacation that accrues over time? That is the primary issue posed by this appeal by EF Intercultural Foundation, Inc. (EF) from the trial court’s judgment awarding vacation wages to three of EF’s former exempt employees—Teresa McPherson, Donna Heimann, and Linda Brenden.
In the published portion of this opinion, we conclude section 227.3 applies to EF’s purported “unlimited” paid time off policy based on the particular facts of this case. We by no means hold that all unlimited paid time off policies give rise to an obligation to pay “unused” vacation when an employee leaves. Flexible work arrangements and unlimited paid vacation policies may be of considerable benefit to employees and to the employers who want to recruit and retain those employees. Employees and employers are free to contract for unlimited paid vacation, consistent with the Labor Code and governing case law. Here, however, EF never told McPherson and her fellow plaintiffs that they had unlimited paid vacation. EF had no written policy or agreement to that effect, nor did its employee handbook cover these plaintiffs. As it turned out, McPherson, Heimann, and Brenden took less vacation than many of EF’s other managers and exempt employees covered by the employee handbook, whose accrued vacation vested as they worked for EF month after month.
As to Heimann only, we reverse the judgment and remand the case to the trial court to recalculate the amount of vacation wages owed her, excluding vacation wages earned after she moved to Virginia in 2005. We affirm the judgment in all other respects, addressing EF’s additional contentions in the unpublished portions of the opinion.
Redgrave v. Ducey (9th Cir. 18-17150 3/25/20) Fair Labor Standards Act
The panel certified the following question to the Arizona Supreme Court:
Has Arizona consented to damages liability for a State agency’s violation of the minimum wage or overtime provisions of the federal Fair Labor Standards Act, 29 U.S.C. §§ 206– 207?
Comcast Corp. v. National Assn. of African-American Owned Media (US 18-1171 3/23/20) Race Discrimination in Contracts/But-For Causation
Entertainment Studios Network (ESN), an African-American-owned television-network operator, sought to have cable television conglomerate Comcast Corporation carry its channels. Comcast refused, citing lack of programming demand, bandwidth constraints, and a preference for programming not offered by ESN. ESN and the National Association of African American-Owned Media (collectively, ESN) sued, alleging that Comcast’s behavior violated 42 U. S. C. §1981, which guarantees “[a]ll persons . . . the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens.” The District Court dismissed the complaint for failing plausibly to show that, but for racial animus, Comcast would have contracted with ESN. The Ninth Circuit reversed, holding that ESN needed only to plead facts plausibly showing that race played “some role” in the defendant’s decisionmaking process and that, under this standard, ESN had pleaded a viable claim.
Held: A §1981 plaintiff bears the burden of showing that the plaintiff’s race was a but-for cause of its injury, and that burden remains constant over the life of the lawsuit. Pp. 3–13.
(a) To prevail, a tort plaintiff typically must prove but-for causation. See University of Tex. Southwestern Medical Center v. Nassar, 570 U. S. 338, 347. Normally, too, the essential elements of a claim remain constant throughout the lawsuit. See, e.g., Lujan v. Defenders of Wildlife, 504 U. S. 555, 561. ESN suggests that §1981 creates an exception to one or both of these general principles, either because a §1981 plaintiff only bears the burden of showing that race was a “motivating factor” in the defendant’s challenged decision or because, even when but for causation applies at trial, a plausible “motivating factor” showing is all that is necessary to overcome a motion to dismiss at the pleading stage. Pp. 3–12.
(1) Several clues, taken collectively, make clear that §1981 follows the usual rules. The statute’s text suggests but-for causation: An ordinary English speaker would not say that a plaintiff did not enjoy the “same right” to make contracts “as is enjoyed by white citizens” if race was not a but-for cause affecting the plaintiff’s ability to contract. Nor does the text suggest that the test should be different in the face of a motion to dismiss. The larger structure and history of the Civil Rights Act of 1866 provide further clues. When enacted, §1981 did not provide a private enforcement mechanism for violations. That right was judicially created, see Johnson v. Railway Express Agency, Inc., 421 U. S. 454, 459, but even in that era, the Court usually insisted that the legal elements of implied causes of action be at least as demanding as those found in analogous statutory causes of action. That rule supplies useful guidance here, where a neighboring section of the 1866 Act uses the terms “on account of” and “by reason of,” §2, 14 Stat. 27—phrases often held to indicate but-for causation—and gives no hint that a different rule might apply at different times in the life of a lawsuit. Another provision provides that in cases not provided for by the Act, the common law shall govern, §3, ibid., which in 1866, usually treated a showing of but-for causation as a prerequisite to a tort suit. This Court’s precedents confirm what the statute’s language and history indicate. See, e.g., Johnson, 421 U. S., at 459–460; Buchanan v. Warley, 245 U. S. 60, 78–79. Pp. 4–8.
(2) ESN urges applying the “motivating factor” causation test in Title VII of the Civil Rights Act of 1964 to §1981 cases. But this Court has already twice rejected such efforts in other contexts, see, e.g., Gross v. FBL Financial Services, Inc., 557 U. S. 167, and there is no reason to think it would fit any better here. Moreover, when that test was added to Title VII in the Civil Rights Act of 1991, Congress also amended §1981 without mentioning “motivating factors.” Even if ESN is correct that those amendments clarified that §1981 addresses not just contractual outcomes but the whole contracting process, its claim that a process-oriented right necessarily pairs with a motivating factor causal standard is mistaken. The burden-shifting framework of McDonnell Douglas Corp. v. Green, 411 U. S. 792, also supplies no support for the innovations ESN seeks. Pp. 8–12.
(b) The court of appeals should determine in the first instance how the operative amended complaint in this case fares under the proper standard. P. 13.
743 Fed. Appx. 106, vacated and remanded.
GORSUCH, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, BREYER, ALITO, SOTOMAYOR, KAGAN, and KAVANAUGH, JJ., joined, and in which GINSBURG, J., joined except for the footnote. GINSBURG, J., filed an opinion concurring in part and concurring in the judgment.
Walker v. Fred Meyer, Inc. (9th Cir. 18-35592 3/20/20) Job Applicants/Employer Disclosure on FCRA Consumer Reports
The panel affirmed in part and reversed in part the district court’s dismissal of an action under the Fair Credit Reporting Act, which requires employers who obtain a consumer report on a job applicant to first provide the applicant with a “clear and conspicuous disclosure” that the employer may obtain such a report, and to provide this disclosure “in a document that consists solely of the disclosure.”
Reversing the dismissal, for failure to state a claim, of plaintiff’s claim under 15 U.S.C. § 1681b(b)(2)(A), the panel held that the disclosure provided by defendant violated the FCRA’s standalone disclosure requirement, which does not allow for the inclusion of any extraneous information in the consumer report disclosure. Addressing what qualifies as part of the disclosure, the panel held that, beyond a plain statement disclosing “that a consumer report may be obtained for employment purposes,” some concise explanation of what the phrase means may be included. The panel remanded, leaving it for the district court to decide in the first instance whether the remaining language in defendant’s disclosure satisfied the “clear and conspicuous” requirement.
Affirming the dismissal of plaintiff’s claim under § 1681b(b)(3)(A), the FCRA’s pre-adverse action notice requirement, the panel held that the right provided by the FCRA to dispute inaccurate information in a consumer report does not require employers to provide job applicants or employees with an opportunity to discuss their consumer reports directly with the employer. Instead, the FCRA requires that an employer provide, in a pre-adverse action notice to the consumer, a description of the consumer’s right to dispute with a consumer reporting agency the completeness or accuracy of any item of information contained in the consumer’s file at the consumer reporting agency.
Herrera v. Zumiez, Inc. (9th Cir. 18-15135 3/19/20) Wage and Hour Class Action/Call-in Shifts
The panel affirmed in part, and reversed in part, the district court’s decision in a putative class action alleging that Zumiez, Inc. failed to pay employees at its California retail stores reporting time pay for “Call-In” shifts.
While this appeal was pending, the California Court of Appeal decided Ward v. Tilly’s, Inc., 243 Cal. Rptr. 3d 461 (Ct. App. 2019), review denied (May 15, 2019), which held that reporting time pay must be paid in a closely analogous situation, an outcome consistent with the district court’s denial of Zumiez’s motion for judgment on the pleadings here.
The panel followed Ward’s controlling interpretation of state law, and affirmed the district court with respect to the reporting time pay claim. Following Ward, the panel concluded that, under subsection (5)(A) of California’s Wage Order 7, a requirement that employees call their manager thirty minutes to one hour before a scheduled shift constitutes “reporting for work.” The panel held that the district court correctly determined that the plaintiff stated a claim for reporting time pay when she alleged that she was scheduled for a shift, expected to work, incurred costs or arranged her other obligations and planned activities to make herself available, and then was not permitted to work.
Plaintiff also asserted an “hours worked” minimum wage claim for unpaid wages for the time that employees spent calling their managers for Call-In shifts. Construing the facts alleged in the complaint as true and in the light most favorable to the non-moving party, the panel held that plaintiff alleged a claim for unpaid wages where plaintiff alleged that she and other employees were required to call their managers thirty minutes to one hour before their Call-In shifts, alleged that these calls were required three to four times per week and lasted five to fifteen minutes, and, critically, alleged that employees could be disciplined for failing to comply with the Call-In shift policy. The panel concluded that the allegations pled were sufficient to defeat Zumiez’s motion for judgment on the pleadings.
Plaintiff and putative class members sought indemnification for phone expenses incurred in calling Zumiez before Call-In shifts. The panel held that under California law, to state a claim for reimbursement of phone expenses turns on whether it was necessary that the employees make calls and do so with phones that were not provided by the company. The panel further held that plaintiff failed to include specific, non-conclusory facts about how she made the calls or what costs she incurred. Accordingly, the panel reversed the district court’s denial of judgment on the pleadings as to the indemnification claim, and remanded for the district court to allow plaintiff leave to amend the complaint to include more specific allegations.
Because plaintiff’s remaining claims were derivative of plaintiff’s reporting time pay, minimum wage, and indemnification claims, the panel affirmed the denial of the motion for judgment on the pleadings on the remaining claims, to the extent the district court determined they related to the reporting time pay and minimum wage claims.
Judge Berzon concurred, and wrote separately to respond to Judge R. Nelson’s concurrence. She wrote that where, as here, the panel is following the only state appellate opinion on point and there was no reason to think the state Supreme Court, which denied review of that appellate question, would disagree, then certifying the issue was unwise. She concluded that no issue of federalism was at stake here that was not inherent in the existence of diversity jurisdiction.
Judge R. Nelson concurred. He agreed that the decision to follow the decision in Ward accorded with this sound constitutional principle, but he wrote further that by publishing without first seeking the views of the California Supreme Court, the panel risked undermining cooperative judicial federalism.
Wood v. Super. Ct. (CA4/1 D076325 3/13/20) DFEH/Attorney-Client Privilege [Unruh Act case equally applicable to FEHA employment cases]
Petitioner Christynne Lili Wrene Wood contacted the California Department of Fair Employment and Housing (DFEH) to report alleged gender discrimination by her Crunch fitness club, which is owned and operated by CFG Jamacha, LLC and John Romeo (collectively, Crunch). After an investigation, DFEH filed a lawsuit against Crunch alleging violations of the Unruh Civil Rights Act (Civ. Code, § 51) for unlawful discrimination on the basis of gender identity or expression. Wood intervened as a plaintiff in the lawsuit. During discovery, Crunch requested that Wood produce all communications with DFEH relating to Crunch. As relevant here, Wood refused to produce one such communication, a prelitigation email she sent to DFEH lawyers regarding her DFEH complaint, on the grounds of attorney-client privilege. Crunch moved to compel production of the email, and the trial court granted the motion.
Wood filed a petition for writ of mandate in this court. She argued that the trial court erred by overruling her objection based on the attorney-client privilege and compelling production of the email. We summarily denied the petition. The California Supreme Court granted review and transferred the matter back to this court with directions "to vacate [our] order denying mandate and to issue an order directing the superior court to show cause why the relief sought in the petition should not be granted." We issued the order to show cause as directed, and these proceedings followed.
We conclude that Wood has not shown the attorney-client privilege applies to the email at issue. A prima facie showing of privilege requires that the communication be made in the course of an attorney-client relationship. (See Evid. Code, § 952; Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733 (Costco).) DFEH lawyers have an attorney-client relationship with the State of California. Wood has not shown DFEH lawyers formed an attorney-client relationship with her. As such, any communications between Wood and DFEH lawyers were not made in the course of an attorney-client relationship and were not privileged. We therefore deny the petition.
Kim v. Reins Internat. Cal., Inc. (SC S246911 per curiam 3/12/20) PAGA/Individual Labor Code Settlements
This case presents an issue of first impression: Do employees lose standing to pursue a claim under the Labor Code Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.) if they settle and dismiss their individual claims for Labor Code violations? We conclude the answer is no. Settlement of individual claims does not strip an aggrieved employee of standing, as the state’s authorized representative, to pursue PAGA remedies.
Lange v. Monster Energy Co. (CA2/1 B294091 3/12/20) Arbitration/Unconscionability
Monster Energy Company appeals from a trial court order denying its motion to compel arbitration [of an employment agreement]. The trial court concluded that the parties’ arbitration agreement was so permeated with unconscionability that it could not remove the unconscionability merely by severing. The trial court based that conclusion on two independent grounds: that the existence of more than one unconscionable provision in the arbitration agreement precluded severance, and that merely severing provisions would not eliminate the unconscionability. We disagree with the trial court’s conclusion that the existence of more than one unconscionable provision precludes severance. But Monster did not address the trial court’s alternative basis for its order. We have undertaken an independent unconscionability analysis and we reach the same conclusion the trial court reached. We affirm.
McHenry v. Asylum Entertainment Delaware, LLC (CA2/2 B292457 3/12/20) Jones Act/Maritime Law
A seaman on a commercial fishing vessel out on the Gulf of Mexico accidentally sliced up his hands with hooks and fish gills. The vessel’s captain arranged to have a second vessel meet them at sea and ferry the seaman back to shore so he could get medical attention. The middle-of-the-night rendezvous on the high seas was a success but did not come soon enough to save all of the seaman’s fingers; due to infection, many had to be amputated. These dramatic events were all caught on film because, as serendipity would have it, a production company was filming a reality TV show on the fishing vessel as these events unfolded. The seaman sued the vessel’s owner and the production company, among other parties, for his injuries under federal maritime law.
The viability of the seaman’s lawsuit against the production company requires us to address the following questions: (1) Is the production company liable under the Jones Act (46 U.S.C. § 30104) because it “borrowed” the crew members as “employees” by filming them doing their jobs and by occasionally asking them to repeat what they are doing for the camera and explain it, and (2) Is the production company liable under maritime tort law because (a) it had a “special relationship” with the crew members it was filming sufficient to give rise to a duty to rescue them, (b) it voluntarily assumed a duty to rescue but effectuated that rescue with gross negligence, worsened the crewman’s position or caused the crewman to detrimentally rely on its rescue efforts, or (c) it acted negligently in “taking charge” of a “helpless” person within the meaning of Restatement First and Second of Torts, section 324? We conclude that the answer to these questions is “no,” and affirm the trial court’s grant of summary judgment in favor of the production company.
Montoya v. Ford Motor Co. (CA4/3 G056752 3/12/20) Class Action/Multiple Tolling Periods or Stacking [may be applicable to employment cases]
We attempt here to limn the borders of a rule recently promulgated by the United States Supreme Court in China Agritech, Inc. v. Resh (2018) 548 U.S. ___ [138 S.Ct. 1800] (China Agritech). We conclude the proper application of the rule of that case dictates that multiple tolling periods cannot be “stacked” here to extend a statute of limitations. We publish because no other California court has addressed multiple tolling since China Agritech, and we feel publication will facilitate appellate discussion in case we have it wrong.
Alexander v. Community Hospital of Long Beach (CA2/1 B279155, filed 2/13/20, ord. pub. 3/10/20) Hostile Work Environment/Wrongful Discharge/Exhaustion of Administrative Remedies
A jury found that a hospital and medical group created a hostile work environment and wrongfully discharged three nurses based on their opposition to a supervisor’s harassment, using a pretext that the nurses had abused a patient. The nurses soon found new jobs, but a year later lost them when the State of California filed criminal charges against them for the patient abuse. They were acquitted of the charges. The jury awarded the nurses substantial past and future economic and noneconomic damages suffered up to and after—but not during—their second round of employment. The hospital and medical group appeal, and the nurses cross-appeal.
The hospital and medical group contend insufficient evidence supported the verdict in several respects, the jury improperly awarded damages caused by the criminal prosecution, and the trial court made prejudicial evidentiary errors. The medical group further contends the nurses failed to exhaust their administrative remedies as to it. The nurses argue a second medical group should have been found liable as an alter ego of the first.
We conclude plaintiffs failed to exhaust their administrative remedies against the medical group; insufficient evidence supported some of the jury’s findings and its damages awards; and the court made several prejudicial evidentiary errors. We also conclude the second medical group may not be held liable on an alter ego theory. We therefore reverse the judgment and remand the matter for further proceedings.
Zhang v. Chu (CA2/8 B292418 3/5/20) Malicious Prosecution/Wage and Hour
In this malicious prosecution suit, the plaintiff lacked evidence showing the defendant acted with malice [in the underlying wage and hour case]. The trial court thus rightly granted the defendant’s special motion to strike the plaintiff’s meritless suit. We affirm.
Kansas v. Garcia (US 17–834 3/3/20) I-9 Employment Verification
The Immigration Reform and Control Act of 1986 (IRCA) makes it unlawful to hire an alien knowing that he or she is unauthorized to work in the United States. 8 U. S. C. §§1324a(a)(1), (h)(3). IRCA requires employers to comply with a federal employment verification system. §1324a(b). Using a federal work-authorization form (I–9), they “must attest” that they have “verified” that any new employee, regardless of citizenship or nationality, “is not an unauthorized alien” by examining approved documents, e.g., a United States passport or an alien registration card, §1324a(b)(1)(A). IRCA concomitantly requires all employees to complete an I–9 by their first day of employment and to attest that they are authorized to work. §1324a(b)(2). Every employee must also provide certain personal information, including name, address, birth date, Social Security number, e-mail address, and telephone number. It is a federal crime for an employee to provide false information on an I–9 or to use fraudulent documents to show work authorization. See 18 U. S. C. §§1028, 1546. But it is not a federal crime for an alien to work without authorization, and state laws criminalizing such conduct are preempted. Arizona v. United States, 567 U. S. 387, 403–407. The I–9 forms and appended documentation, as well as the employment verification system, may only be used for enforcement of the Immigration and Nationality Act or other specified federal prohibitions. See §§1324a(b)(5), (d)(2)(F). IRCA does not directly address the use of an employee’s federal and state tax-withholding forms, the W–4 and K–4 respectively. Finally, IRCA expressly “preempt[s] any State or local law imposing civil or criminal sanctions . . . upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens.” §1324a(h)(2).
Kansas makes it a crime to commit “identity theft” or engage in fraud to obtain a benefit. Respondents, three unauthorized aliens, were tried for fraudulently using another person’s Social Security number on the W–4’s and K–4’s that they submitted upon obtaining employment. They had used the same Social Security numbers on their I–9 forms. Respondents were convicted, and the Kansas Court of Appeals affirmed. A divided Kansas Supreme Court reversed, concluding that §1324a(b)(5) expressly prohibits a State from using any information contained within an I–9 as the basis for a state law identity theft prosecution of an alien who uses another’s Social Security information in an I–9. The court deemed irrelevant the fact that this information was also included in the W–4 and K–4. One justice concurred based on implied preemption.
1. The Kansas statutes under which respondents were convicted are not expressly preempted. IRCA’s express preemption provision applies only to employers and those who recruit or refer prospective employees and is thus plainly inapplicable. The Kansas Supreme Court instead relied on §1324a(b)(5), which broadly restricts any use of an I– 9, information “contained in” an I–9, and any documents appended to an I–9, reasoning that respondents’ W–4’s and K–4’s used the same false Social Security numbers contained in their I–9’s. The theory that no information placed on an I–9 could ever be used by any entity or person for any reason—other than the handful of federal statutes mentioned in §1324a(b)(5)—is contrary to standard English usage. A tangible object can be “contained in” only one place at any point in time, but information may be “contained in” many different places. The mere fact that an I–9 contains an item of information, such as a name or address, does not mean that information “contained in” the I–9 is used whenever that name or address is used elsewhere. Nothing in §1324a(b)(5)’s text supports the Kansas Supreme Court’s limiting interpretation to prosecuting aliens for using a false identity to establish “employment eligibility.” And respondents’ express preemption argument cannot be saved by §1324a(d)(2)(F), which prohibits use of the federal employment verification system “for law enforcement purposes other than” enforcement of IRCA and the same handful of federal statutes mentioned in §1324a(b)(5). This argument fails because it rests on a misunderstanding of the meaning of the federal “employment verification system.” The sole function of that system is to establish that an employee is not barred from working in this country. The completion of tax-withholding documents plays no part in the process of determining whether a person is authorized to work. Pp. 10–14.
2. Respondents’ argument that Kansas’s laws are preempted by implication is also rejected. Pp. 15–20.
(a) The laws do not fall into a field that is implicitly reserved exclusively for federal regulation, including respondents’ claimed field of “fraud on the federal verification system.” The submission of taxwithholding forms is neither part of, nor “related” to, the verification system. Employees may complete their W–4’s, K–4’s, and I–9’s at roughly the same time, but IRCA plainly does not foreclose all state regulation of information required as a precondition of employment. In arguing that the State’s statutes require proof that the accused engaged in the prohibited conduct for the purpose of getting a “benefit,” respondents conflate the benefit that results from complying with the federal employment verification system with the benefit of actually getting a job. Submitting W–4’s and K–4’s helped respondents get jobs, but it did not assist them in showing that they were authorized to work in this country. Federal law does not create a comprehensive and unified system regarding the information that a State may require employees to provide. Pp. 15–17.
(b) There is likewise no ground for holding that the Kansas statutes at issue conflict with federal law. It is certainly possible to comply with both IRCA and the Kansas statutes, and respondents do not suggest otherwise. They instead maintain that the Kansas statutes, as applied in their prosecutions, stand as “an obstacle to the accomplishment and execution of the full purposes” of IRCA—one of which is purportedly that the initiation of any legal action against an unauthorized alien for using a false identity in applying for employment should rest exclusively within the prosecutorial discretion of federal authorities. Respondents analogize their case to Arizona v. United States, 567 U. S., at 404–407, where the Court concluded that a state law making it a crime for an unauthorized alien to obtain employment conflicted with IRCA, which does not criminalize that conduct. But here, Congress made no decision that an unauthorized alien who uses a false identity on tax-withholding forms should not face criminal prosecution, and it has made using fraudulent information on a W–4 a federal crime. Moreover, in the present cases, there is certainly no suggestion that the Kansas prosecutions frustrated any federal interests. Federal authorities played a role in all three cases, and the Federal Government fully supports Kansas’s position in this Court. In the end, however, the possibility that federal enforcement priorities might be upset is not enough to provide a basis for preemption. The Supremacy Clause gives priority to “the Laws of the United States,” not the criminal law enforcement priorities or preferences of federal officers. Art. VI, cl. 2. Pp. 18–20.
306 Kan. 1113, 401 P. 3d 588 (first judgment); 306 Kan. 1100, 401 P. 3d 155 (second judgment); and 306 Kan. 1107, 401 P. 3d 159 (third judgment), reversed and remanded.
ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, GORSUCH, and KAVANAUGH, JJ., joined. THOMAS, J., filed a concurring opinion, in which GORSUCH, J., joined. BREYER, J., filed an opinion concurring in part and dissenting in part, in which GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined.
Scalia v. Employer Solutions Staffing Grp. (9th Cir. 18-16493 3/2/20) FLSA Overtime/Staffing Agency/Willful Violation
The panel affirmed the district court’s summary judgment entered in favor of the Secretary of Labor in an action challenging four companies’ failure to pay overtime to employees who worked more than 40 hours in a workweek in violation of the Fair Labor Standards Act (“FLSA”).
Employer Solutions Staffing Companies (“ESSG”) contracts with other companies to recruit employees and place them at jobsites for which ESSG handled administrative tasks. ESSG conceded that it qualified as an “employer” of the recruited employees under FLSA. ESSG contracted with Sync Staffing, which placed the recruited employees at a jobsite run by TBG Logistics. One of ESSG’s employees, Michaela Haluptzok, was responsible for processing the TBG Logistics payroll. A Sync employee told Haluptzok to pay overtime hours as “regular” hours, which was a FLSA violation.
Consistent with the law of agency, the panel imputed Haluptzok’s actions to ESSG. The panel held that because Haluptzok admitted that she knew the recruited employees were not being paid overtime owed to them, the district court correctly found no dispute of material fact as to ESSG’sultimate liability under the FLSA.
Ordinarily, a two-year statute of limitations applies to claims under FLSA, but for a “willful violation,” the limitations period extends to three years. The panel held that through its agent, Haluptzok, ESSG recklessly disregarded the possibility that it was violating FLSA. Accordingly, the three-year statute of limitations applied to the Secretary’s claim, making the action timely.
FLSA mandates liquidated damages in an amount equal to the unpaid overtime compensation claims unless the employer acted in “good faith” and had “reasonable grounds” to believe it was not violating FLSA. The panel held that because ESSG’s violations were willful, it could not have
acted in good faith. Accordingly, the panel affirmed the award of liquidated damages.
The panel held that there was no indication that Congress intended to create a right to contribution or indemnification for liable employers from another employer under FLSA. The panel further held that no right to contribution or indemnification arose under federal common law.
Rizo v. Yovino (9th Cir 16-15372 en banc 2/27/20) Equal Pay Act/Prior Rate of Pay/Factor Other Than Sex
Affirming, on remand from the Supreme Court, the district court’s order denying defendant’s motion for summary judgment on claims under the Equal Pay Act, the en banc court held that plaintiff’s prior rate of pay was not a “factor other than sex” that allowed defendant to pay her less than male employees who performed the same work, and only job-related factors may serve as affirmative defenses to Equal Pay Act claims.
The en banc court’s previous opinion was vacated by the Supreme Court on a procedural issue concerning the death of the author of the majority opinion. On remand, the en banc court affirmed the district court’s denial of summary judgment. Agreeing with other circuits, the en banc court held that the scope of the “factor other than sex” affirmative defense is limited. Based on the text and purpose of the Equal Pay Act, the en banc court held that this defense comprises only job-related factors. The en banc court held that prior pay does not qualify as a job-related factor that can defeat a prima facie Equal Pay Act claim. The en banc court overruled Kouba v. Allstate Ins. Co., 691 F.2d 873 (9th Cir. 1982), which held that prior pay could qualify as an affirmative defense if the employer considered prior pay in combination with other factors and used it reasonably to effectuate a business policy.
Concurring, Judge McKeown, joined by Judges Tallman and Murguia, wrote that prior salary alone is not a defense to unequal pay for equal work, but employers do not necessarily violate the Equal Pay Act when they consider prior salary among other factors when setting initial wages. Accordingly, Judge McKeown concurred in the result but not in the majority’s rationale.
Concurring, Judge Callahan, joined by Judges Tallman and Bea, disagreed with the majority’s holding that prior pay can never be considered as a factor in determining pay under the Equal Pay Act.
Intel Corp. Investment Policy Comm. v. Sulyma (US 18–1116 per curiam 2/26/20) ERISA/Actual Knowledge
The Employee Retirement Income Security Act of 1974 (ERISA) requires plaintiffs with “actual knowledge” of an alleged fiduciary breach to file suit within three years of gaining that knowledge, 29 U. S. C. §1113(2), rather than within the 6-year period that would otherwise apply. Respondent Sulyma worked at Intel Corporation from 2010 to 2012 and participated in two Intel retirement plans. In October 2015, he sued petitioners—administrators of those plans—alleging that they had managed the plans imprudently. Petitioners countered that the suit was untimely under §1113(2) because Sulyma filed it more than three years after they had disclosed their investment decisions to him. Although Sulyma had visited the website that hosted many of these disclosures many times, he testified that he did not remember reviewing the relevant disclosures and that he had been unaware of the allegedly imprudent investments while working at Intel. The District Court granted summary judgment to petitioners under §1113(2). The Ninth Circuit reversed. That court agreed with petitioners that Sulyma could have known about the investments from the disclosures, but held that his testimony created a dispute as to when he gained “actual knowledge” for purposes of §1113(2).
Held: A plaintiff does not necessarily have “actual knowledge” under §1113(2) of the information contained in disclosures that he receives but does not read or cannot recall reading. To meet §1113(2)’s “actual knowledge” requirement, the plaintiff must in fact have become aware of that information. Pp. 5–12.
(a) ERISA’s “plain and unambiguous statutory language” must be enforced “according to its terms.” Hardt v. Reliance Standard Life Ins. Co., 560 U. S. 242, 251. Although ERISA does not define the phrase “actual knowledge,” its meaning is plain. Dictionaries confirm that, to have “actual knowledge” of a piece of information, one must in fact be aware of it. Legal dictionaries give “actual knowledge” the same meaning. The law will sometimes impute knowledge—often called “constructive” knowledge—to a person who fails to learn something that a reasonably diligent person would have learned. The addition of “actual” in §1113(2) signals that the plaintiff’s knowledge must be more than hypothetical. Congress has repeatedly drawn the same “linguistic distinction,” Merck & Co. v. Reynolds, 559 U. S. 633, 647, elsewhere in ERISA. When Congress has included both actual and constructive knowledge in ERISA limitations provisions, Congress has done so explicitly. But Congress has never added to §1113(2) the language it has used in those other provisions to encompass both forms of knowledge. Pp. 5–8.
(b) Petitioners’ arguments for a broader reading of §1113(2) based on text, context, purpose, and statutory history all founder on Congress’s choice of the word “actual.” Petitioners may well be correct that heeding the plain meaning of §1113(2) substantially diminishes the protection that it provides for ERISA fiduciaries. But if policy considerations suggest that the current scheme should be altered, Congress must be the one to do it. Pp. 8–11.
(c) This opinion does not foreclose any of the “usual ways” to prove actual knowledge at any stage in the litigation. Farmer v. Brennan, 511 U. S. 825, 842. Plaintiffs who recall reading particular disclosures will be bound by oath to say so in their depositions. Actual knowledge can also be proved through “inference from circumstantial evidence.” Ibid. And this opinion does not preclude defendants from contending that evidence of “willful blindness” supports a finding of “actual knowledge.” Cf. Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. 754, 769. Pp. 11–12.
909 F. 3d 1069, affirmed.
ALITO, J., delivered the opinion for a unanimous Court.
Gulf Offshore Logistics, LLC v. Super. Ct. (CA2/6 B298318 2/18/20) Wage and Hour in Pacific Ocean/What Law Controls
Non-California residents and former crew members of a vessel that provided maintenance services to oil platforms located in the Pacific Ocean off the California coast filed this action alleging violations of California state wage and hour laws against their employers and the owners of the vessel, petitioners Gulf Offshore Logistics, LLC and JNB Operating, LLC. Petitioners moved for summary judgment on the theories that Louisiana rather than California law governed the employment relationships at issue, and that either the federal Fair Labor Standards Act (FLSA) or the dormant commerce clause preempted California law with respect to these employees. The superior court denied the motion because petitioners “have not demonstrated that Louisiana law should apply” or that California law has been preempted.
Petitioners sought writ of mandate directing the superior court to vacate its order denying the motion for summary judgment and to enter a new order granting the motion. We issued an order to show cause and temporarily stayed all trial court proceedings. We conclude the trial court erred because Louisiana law, rather than California law, applies. Accordingly, we grant the writ of mandate.
Schmidt v. Super. Ct. (CA2/8 B291385M mod. 2/14/20) Sexual Harassment
Two court employees alleged a security guard named David Jacques sexually harassed them with his metal detecting wand during the courthouse entry screening process. All security screening was in public and on video. None of the video supported the allegations. After a lengthy bench trial, the trial court ruled the plaintiffs had not proved their allegations. The employees appeal, primarily targeting the trial court’s decision not to credit testimony favorable to them. We affirm because substantial evidence supports the trial court’s fact finding. The employees also unsuccessfully argue the judge was biased against them.
Frlekin v. Apple Inc. (SC S243805 2/13/20) Waiting Time = Hours Worked
Industrial Welfare Commission wage order No. 7-2001 (Wage Order 7) requires employers to pay their employees a minimum wage for all “hours worked.” (Cal. Code Regs., tit. 8, § 11070, subd. 4(B).) “Hours worked” is defined as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” (Id., § 11070, subd. 2(G).)
We granted the request of the United States Court of Appeals for the Ninth Circuit to decide the following question of California law, as reformulated by this court (see Cal. Rules of Court, rule 8.548(f)(5)): Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees compensable as “hours worked” within the meaning of Wage Order 7? For the reasons that follow, we conclude the answer to the certified question is, yes.
IUOE Local 501 v. NLRB (9th Cir. 18-72079, 18-72121 2/7/20) NLRA/Standing
The panel denied Station GVR Acquisition, LLC, and International Union of Operating Engineers Local 501, AFLCIO’s petitions for review, and granted the National Labor Relations Board’s cross-application for enforcement of the Board’s order holding that slot technicians were not “guards” under section 9(b)(3) of the National Labor Relations Act (the “Act”).
Station GVR owned and operated a hotel and casino in Henderson, Nevada, and it employed slot technicians whose primary responsibilities included installing, repairing, and maintaining gaming machines. The Union filed a petition with the Board to represent GVR’s slot technicians. The Board certified Local 501 as the slot technicians’ bargaining representative, concluding that the slot technicians were not guards. When GVR refused to recognize and bargain with the Union, the Board found that GVR engaged in unfair labor practices within the meaning of the Act and ordered various remedies.
The Act prohibits a union from representing a guard unit if it also represents non-guard employees. Because it was undisputed that the Union represented non-guard employees at the casino, the panel’s inquiry focused on whether a slot technician was employed as a guard.
The panel agreed with the Board’s determination that the casino’s slot technicians were not guards under the statute. The panel held that the slot technicians’ duties differed in fundamental respects from those of the surveillance technicians in Bellagio, LLC v. NLRB, 863 F.3d 839 (D.C. Cir. 2017). The panel rejected GVR’s argument that the slot technicians were guards because they enforced GVR’s rules and policies against GVR’s guests and other employees.
The Union sought review of the Board’s decision not to impose an affirmative remedy ordering GVR to provide certain information that it had previously requested. The panel held that the Union did not have standing to bring this petition because the Board granted it all of the relief that it had specifically sought in the charge and complaint, and therefore, the Union was not a “person aggrieved” within the meaning of 29 U.S.C. § 160(f).
Grande v. Eisenhower Medical Center (CA4/2 E068730 2/6/20) Wage and Hour Class Action/Res Judicata/Released Party
FlexCare, LLC (FlexCare), a temporary staffing agency, assigned Lynn Grande to work as a nurse at Eisenhower Medical Center (Eisenhower). According to Grande, during her employment at Eisenhower, FlexCare and Eisenhower failed to ensure she received her required meal and rest breaks, wages for certain periods she worked, and overtime wages.
Grande was a named plaintiff in a class action lawsuit against FlexCare brought on behalf of FlexCare employees assigned to hospitals throughout California. Her own claims were based solely on her work on assignment at Eisenhower. FlexCare settled with the class, including Grande, and Grande received $162.13 for her injuries, plus a class representative incentive bonus of $20,000. Grande executed a release of claims, and the trial court entered a judgment incorporating the settlement agreement.
About a year later, Grande brought a second class action alleging the same labor law violations, this time against Eisenhower, who was not a party to the previous lawsuit. FlexCare intervened in the action asserting Grande could not bring the separate lawsuit against Eisenhower because she had settled her claims against them in the prior class action. The trial court held a trial limited to questions as to the propriety of the lawsuit, and ruled Eisenhower was not a released party under the settlement agreement and could not avail itself of the doctrine of res judicata because the hospital was neither a party to the prior litigation nor in privity with FlexCare.
Eisenhower filed a petition for a writ of mandate and FlexCare appealed the trial court’s interlocutory order. We affirm the trial court and deny the petition because Eisenhower and FlexCare were not in privity, preventing Eisenhower from blocking Grande’s claims under the doctrine of res judicata, and Eisenhower was not a released party under the settlement agreement.
Alaniz v. Sun Pacific Shippers, L.P. (CA2/6 B290013 2/5/20) Negligence/Liability of Subcontractor Hiring Independent Contractor
The Privette/Hooker doctrine limits the circumstances in which the hirer of an independent contractor can be liable for injuries to the contractor’s employees. (Privette v. Superior Court (1993) 5 Cal.4th 689; Hooker v. Department of Transportation (2002) 27 Cal.4th 198 (Hooker).) In a negligence action, the hirer of an independent contractor may be liable to the contractor’s employee only if “the hirer retained control over safety conditions at [the] worksite” and that “exercise of retained control affirmatively contributed to the employee’s injuries.” (Hooker, at p. 202, original italics.) In a premises liability action, the hirer may be liable for injuries to the employee only if: “(1) it knows or reasonably should know of a concealed, preexisting hazardous condition on its premises; (2) the contractor does not know and could not reasonably ascertain the condition; and (3) the [hirer] fails to warn the contractor.” (Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659, 675 (Kinsman), italics added.) We conclude that the trial court here prejudicially erred when it omitted these limitations from its instructions on negligence and premises liability.
Sun Pacific Shippers, L.P. (Sun Pacific), appeals from the judgment after a jury awarded damages against it for injuries sustained by Jesus Alaniz, an employee of one of its independent contractors. Sun Pacific contends: (1) the trial court erred when it did not instruct the jury on the Privette/Hooker doctrine, (2) the court erred when it did not instruct on mitigation of damages, (3) the court improperly denied its motion for judgment notwithstanding the verdict (JNOV), and (4) substantial evidence does not support the award of future medical expenses. We reverse the judgment, remand for a new trial on the negligence cause of action, and direct judgment for Sun Pacific on the premises liability cause of action.
Rojas V. FAA (9th Cir. 2019) 941 F.3d 392 (9th Cir. 17-155036 en banc rehrg granted 1/30/20) Traffic Controller Hiring/FOIA
Upon the vote of a majority of nonrecused active judges, it is ordered that this case be reheard en banc pursuant to Federal Rule of Appellate Procedure 35(a) and Circuit Rule 35-3. The three-judge panel disposition in this case shall not be cited as precedent by or to any court of the Ninth Circuit.
Karasek v. Regents of the Univ. of California (9th Cir. 18-15841 1/30/20) Title IX
The panel affirmed in part and vacated in part the district court’s judgment in favor of defendant Regents of the University of California on claims brought under Title IX of the Education Amendments of 1972 by three plaintiffs who were sexually assaulted while undergraduates at the University of California, Berkeley.
Plaintiffs alleged that UC violated Title IX by failing to adequately respond to their individual assaults and by maintaining a general policy of deliberate indifference to reports of sexual misconduct.
The panel affirmed the district court’s dismissal of two plaintiffs’ individual claims and grant of summary judgment on a third plaintiff’s individual claim. To state a Title IX claim arising from student-on-student or faculty-on-student sexual harassment or assault, a plaintiff suing a school must allege that (1) the school exercised substantial control over the harasser and the context in which the harassment occurred; (2) the harassment was so severe that it deprived the plaintiff of educational opportunities; (3) a school official with authority to address the alleged discrimination had actual knowledge of it; (4) the school acted with deliberate indifference to the harassment, such that the school’s response was clearly unreasonable in light of the known circumstances; and (5) the school’s deliberate indifference subjected the student to harassment. The panel affirmed the district court’s holding that two plaintiffs failed adequately to allege deliberate indifference in UC’s investigation delays, policy violations, failure to take steps to prevent continued harassment, inequitable response, or failure to permit a plaintiff to participate in an investigation. The panel affirmed the district court’s holding that the third plaintiff failed to establish a triable issue as to whether UC acted with deliberate indifference by failing to investigate her complaint, failing to take steps to prevent the harasser from harassing her again, or committing policy violations.
The panel vacated the district court’s dismissal of the pre-assault claim regarding an alleged policy of deliberate indifference to reports of sexual misconduct that created a sexually hostile environment for plaintiffs and heightened the risk that they would be sexually assaulted. The panel held that such a claim is a cognizable theory of Title IX liability. Finding persuasive a decision of the Tenth Circuit, the panel held that a pre-assault claim survives a motion to dismiss if the plaintiff plausibly alleges that (1) a school maintained a policy of deliberate indifference to reports of sexual misconduct, (2) which created a heightened risk of sexual harassment (3) in a context subject to the school’s control, and (4) the plaintiff was harassed as a result. The panel remanded the case for further proceedings.
Brome v. Cal. Highway Patrol (CA1/5 A154612 1/28/20) Sexual Orientation Discrimination and Harassment/Equitable Tolling and Continuing Violation
Jay Brome sued the California Highway Patrol (the Patrol) asserting that, during his career as a law enforcement officer, he suffered harassment and discrimination because of his sexual orientation in violation of the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.). The trial court granted summary judgment to the Patrol, holding that Brome’s claims were filed after the statute of limitations expired and a reasonable jury could not have concluded they were timely based on an exception to the deadline. The court also rejected Brome’s claim that he was constructively discharged. Brome now appeals the grant of summary judgment. We hold that the record does not preclude, as a matter of law, a conclusion that his claims were timely and that he was constructively discharged. Accordingly, we reverse.
Hance v. Super Store Industries (CA5 F075852 1/23/20) Wage & Hour Class Action/Division of Attorneys’ Fees
The attorneys who represented the plaintiff class in a class action moved the trial court for approval of a settlement of the action; they also moved for an award of attorney fees and a division of the award among co-counsel. The division of fees between two of the attorneys was disputed, one seeking compensation in accordance with an alleged written agreement for the division of the fees and the other contending the purported agreement was unenforceable. The trial court made an award of attorney fees and divided the fees in accordance with the alleged fee division agreement. Appellant challenges the enforceability of that agreement and the division of the attorney fee award between himself and respondent. We reverse and remand for a redetermination of the division of the attorney fee award between appellant and respondent.
Ferra v. Loews Hollywood Hotel (2019) 40 Cal.App.5th 1239 (SC S259172/B283218 review granted 1/22/20) Wage and Hour/Regular Rate of Pay
Petition for review after affirmance of summary judgment. Did the Legislature intend the term "regular rate of compensation" in Labor Code section 226.7, which requires employers to pay a wage premium if they fail to provide a legally compliant meal period or rest break, to have the same meaning and require the same calculations as the term "regular rate of pay" under Labor Code section 510(a), which requires employers to pay a wage premium for each overtime hour? Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/brief due.