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Davidson v. O’Reilly Auto Enters. (9th Cir. 18-56188 8/3/20) Wage and Hour Class Certification
The panel affirmed the district court’s order denying plaintiff’s motion for class certification in an action challenging the written rest-break policy of plaintiff’s former employer, O’Reilly Auto Enterprises, LLC.
In her procedural challenge, plaintiff argued that the district court abused its discretion by declining to extend the September 21 deadline for moving to certify the class, and this impeded plaintiff’s ability to obtain pre-certification discovery of information. The panel held that the district court did not abuse its discretion by requiring plaintiff to meet the deadline for filing her motion for class certification while at the same time granting her an additional month to develop evidence and submit a supplemental brief.
In her substantive argument, plaintiff argued that the district court erred in refusing to certify a “rest break” class. The panel held that plaintiff failed to show that “there are questions of law or fact common to the class,” which was one of the requirements for class certification under Fed. R. Civ. P. 23(a)(2).
The panel held that plaintiff waived her right to appeal the dismissal of her wage-statement claim. The panel held that in a stipulation, plaintiff preserved the right to appeal the denial of class certification and the ruling on the motion for summary judgment, but she did not preserve the right to appeal the district court’s dismissal of her wage-statement claim.
Concurring in part and dissenting in part, Judge Christen agreed that plaintiff did not preserve her right to appeal the district court’s order dismissing her wage statement claim. However, she would hold that the district court erred in imposing an unworkable class certification deadline, and it abused its discretion by denying plaintiff an opportunity to conduct pre-certification discovery. She also disagreed with the majority’s conclusion that plaintiff’s rest break claims failed for lack of commonality pursuant to Rule 23(a)(2).
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/08/03/18-56188.pdf
Ixchel Pharma, LLC v. Biogen, Inc. (SC S256927 8/3/20) Interference with Contractual and Prospective Economic Relations
This case presents two questions about the bounds of legitimate business competition under California tort and antitrust law. Plaintiff Ixchel Pharma, LLC (Ixchel), a biotechnology company, entered into an agreement with Forward Pharma (Forward) to jointly develop a drug for the treatment of a disorder called Friedreich’s ataxia. The drug development went according to plan until Forward decided to withdraw from the agreement, as was allowed by its terms. Pursuant to a settlement with another biotechnology company, defendant Biogen, Inc. (Biogen), Forward had agreed to terminate its contract with Ixchel.
Ixchel sued Biogen in federal court for tortiously interfering with Ixchel’s contractual and prospective economic relationship with Forward and claimed that Biogen did so in violation of Business and Professions Code section 16600. On appeal, the United States Court of Appeals for the Ninth Circuit asked us to decide (1) whether Biogen’s interference in Ixchel’s at-will contract with Forward must be independently wrongful and (2) how Business and Professions Code section 16600 applies to the settlement provision requiring Forward to terminate its agreement with Ixchel.
We hold that tortious interference with at-will contracts requires independent wrongfulness and that a rule of reason applies to determine the validity of the settlement provision under Business and Professions Code section 16600.
https://www.courts.ca.gov/opinions/documents/S256927.PDF
California Disability Services Assn. v. Bargmann (CA3 C088493 7/31/20) Department of Development Services Providers/Salary Rate Adjustment
Petitioners California Disability Services Association; Horrigan Cole Enterprises, Inc., doing business as Cole Vocational Services; Unlimited Quest, Inc.; Loyd’s Liberty Homes, Inc.; and First Step Independent Living Program, Inc. (collectively petitioners) filed a petition for writ of mandamus and damages and a complaint for declaratory relief against the California Department of Developmental Services (Department) and its director, Nancy Bargmann (collectively respondents). Petitioners challenged the Department’s denial of their requests for a rate adjustment due to the increase of the minimum wage, which, in turn, impacted the salaries of their exempt program directors, who must be paid twice the minimum wage. The trial court upheld the Department’s denial. We affirm.
https://www.courts.ca.gov/opinions/documents/C088493.PDF
Alameda County Deputy etc. v. Alameda County Employees' etc. (SC S247095 per curiam 7/30/20) Retirement/Pensions
The California Public Employees’ Pension Reform Act of 2013 (PEPRA; Stats. 2012, ch. 296, § 1) substantially revised the laws governing the pension plans of the state’s public employees. In a prior decision, Cal Fire Local 2881 v. California Public Employees’ Retirement System (2019) 6 Cal.5th 965 (Cal Fire), we rejected a constitutional challenge to one change effected by PEPRA, the elimination of the opportunity for public employees to purchase “additional retirement service credit” under Government Code section 20909. The present decision addresses legal issues raised by a different provision of PEPRA, which amended the County Employees Retirement Law of 1937 (CERL; Gov. Code, § 31450 et seq.).
CERL governs the pension systems maintained by many of the state’s counties. Each county system is administered by its own retirement board, which is tasked with implementing CERL’s provisions. Under CERL, the amount of an employee’s pension benefit is determined as a percentage of the “compensation earnable” received by the employee during a representative year of county employment. Even before PEPRA, CERL expressly excluded overtime pay from compensation earnable and limited the inclusion of payments from a deferred compensation plan. The PEPRA provision at issue here amended CERL’s definition of compensation earnable to exclude or limit the inclusion of additional types of compensation in an effort to prevent perceived abuses of the pension system. Although this amendment applies to the calculation of the pensions of all employees covered by CERL, the parties agree that the issues raised in this appeal relate only to the amendment’s impact on the pensions of persons who were first employed by a county prior to the effective date of PEPRA, referred to as “legacy employees.”
This challenge to PEPRA’s amendment of CERL raises two sets of issues. First, the Alameda County Deputy Sheriff’s Association (Association) and its coplaintiffs (collectively, plaintiffs) contend that employees in the three counties involved in this matter have a contractual right to receive pension benefits calculated without regard to PEPRA’s changes, a right based either on (1) agreements in effect when PEPRA was enacted or (2) application of the doctrine of equitable estoppel. Long prior to the passage of PEPRA, employees in each of these counties had entered into litigation settlement agreements with their respective retirement boards that specify the types of compensation included in compensation earnable. In some cases, the provisions added by PEPRA conflict with the terms of these agreements, excluding or restricting items of compensation that the agreements require to be included in compensation earnable. Plaintiffs argue that these agreements confer on existing employees the contractual right to continue to include these items of compensation in their pensionable compensation, notwithstanding their exclusion by the provisions added by PEPRA, or, alternatively, that the counties are equitably estopped from implementing the PEPRA amendment in a manner inconsistent with the agreements. In turn, Central Contra Costa Sanitary District (District) and the State of California (State) (collectively, defendants) respond that the retirement boards are required to implement the provisions of CERL, including PEPRA’s amendment, notwithstanding any contrary agreements they might have entered into with county employees.
Wholly apart from these ordinary contract issues, plaintiffs also contend that county employees who began their work prior to PEPRA’s enactment have a constitutional right to receive pension benefits calculated according to the law as it existed prior to PEPRA. Since at least the middle of the last century, our precedents have granted constitutional protection to public employee pension plans. Under the “California Rule,” as it has come to be known (Cal Fire, supra, 6 Cal.5th at p. 971), the contract clause of the state Constitution requires any modification of public employee pension plans to satisfy a standard established in a long line of California Supreme Court decisions, including most prominently Allen v. City of Long Beach (1955) 45 Cal.2d 128 (Allen I). As explained below, in determining the constitutional validity of a modification to a public employee pension plan, Allen I requires a court first to determine whether the modification imposes disadvantages on affected employees, relative to the preexisting pension plan, and, if so, whether those disadvantages are accompanied by comparable new advantages. Assuming the disadvantages are not offset in this manner, the court must then determine whether the agency’s purpose in making the changes was sufficient, for constitutional purposes, to justify an impairment of pension rights. Public employee pension plans may be modified “for the purpose of keeping [the] pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system,” but to survive contract clause scrutiny, such changes “must bear some material relation to the theory of a pension system and its successful operation.” (Id. at p. 131.) Finally, assuming the changes occurred for a constitutionally permissible purpose, we interpret Allen I to require the modification to provide comparable new advantages to public employees unless to do so would undermine, or would otherwise be inconsistent with, that proper purpose.
Invoking the contract clause, plaintiffs argue that persons employed by a county at the time of PEPRA’s enactment possessed implied contractual rights in the pre-PEPRA terms of CERL that are protected against impairment. Because PEPRA’s amendment has the practical effect of diminishing some employees’ pension benefits without granting any comparable new advantages, plaintiffs contend, its application to the pensions of existing employees is precluded by the California Rule. In turn, defendants respond that (1) PEPRA’s amendment did not trigger constitutional scrutiny because its provisions constituted a clarification, rather than a modification of CERL, and, alternatively, (2) any changes met the requirements of the California Rule.
With regard to the ordinary contract issues, we hold that county employees have no express contractual right to the calculation of their pension benefits in a manner inconsistent with the terms of the PEPRA amendment. Because the county retirement boards are required to implement CERL as enacted by the Legislature, the settlement agreements, which are silent on this issue, must be interpreted to permit the modification of board policies to accommodate statutory changes to CERL. In addition, we conclude that plaintiffs have failed to demonstrate the elements necessary for the invocation of equitable estoppel. In particular, there is no evidence that the county boards made any representations regarding the continued enforceability of the terms of the settlement agreements in the event of inconsistent legislative changes to the controlling statutory provisions.
With regard to the constitutional question, we reject defendants’ threshold argument that no constitutional issue is presented here because the exclusions and limitations from compensation earnable imposed by PEPRA did not constitute a change in the law governing CERL pension benefits. Although the inclusion in compensation earnable of the elements of compensation excluded by PEPRA had not been specifically addressed when the amendment was enacted, either in CERL itself or its judicial interpretations, the more general law of compensation earnable was sufficiently settled prior to PEPRA to justify treating the amendment as a change in the law for purposes of contract clause analysis. With respect to the merits of plaintiffs’ constitutional claim, however, we hold that the challenged provisions added by PEPRA meet contract clause requirements. They were enacted for the constitutionally permissible purpose of closing loopholes and preventing abuse of the pension system in a manner consistent with CERL’s preexisting structure. Further, it would defeat this proper objective to interpret the California Rule to require county pension plans either to maintain these loopholes for existing employees or to provide comparable new pension benefits that would perpetuate the unwarranted advantages provided by these loopholes.
https://www.courts.ca.gov/opinions/documents/S247095.PDF
Judd v. Weinstein (9th Cir. 19-55499 7/29/20) Sexual Harassment/Unruh Civil Rights Act
The panel reversed the district court’s dismissal of a sexual harassment claim under California Civil Code section 51.9 brought by actor Ashley Judd against producer Harvey Weinstein. The panel held that, as alleged, section 51.9 plainly encompassed Judd and Weinstein’s relationship, which was “substantially similar” to the “business, service, or professional relationship[s]” enumerated in the statute. Cal. Civ. Code § 51.9(a)(1)(F) (1996). The panel held further that their relationship consisted of an inherent power imbalance wherein Weinstein was uniquely situated to exercise coercion or leverage over Judd by virtue of his professional position and influence as a top producer in Hollywood. The panel concluded that the California Supreme Court would reach the same conclusion, obviating the need to certify the question. The panel rejected Weinstein’s arguments. The panel held that the fact that the traditional balance of power in a relationship may be flipped in some scenarios did not negate the reality that a power imbalance nevertheless tended to exist in these relationships under normal circumstances. The panel also held that there was more than enough to allege a professional relationship at the time of the alleged harassment.
The panel held that whether Judd and Weinstein’s relationship was in fact an employment relationship outside the purview of section 51.9 was a question for the trier of fact. The panel remanded for further proceedings.
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/29/19-55499.pdf
Schwake v. Arizona Board of Regents (9th Cir. 18-15725 7/29/20) Title IX
The panel reversed in part and vacated in part the district court’s order of dismissal and remanded in an action alleging that Arizona State University violated Title IX, 20 U.S.C. § 1681(a), by discriminating against plaintiff on the basis of sex during the course of a sexual misconduct disciplinary case against him.
The panel held that plaintiff stated a Title IX claim against the University because he plausibly alleged gender bias. The panel held that plaintiff first established a background indicia of sex discrimination relevant to his Title IX claim by alleging that: (1) the University faced contemporaneous pressure as a result of a Department of Education investigation, which affected how it handled sexual misconduct complaints; and (2) the University had a pattern of gender-based decisionmaking.
The panel next considered the allegations concerning the disciplinary case against plaintiff. The panel held that public statements made by an associate professor at the University reflected an atmosphere of bias against plaintiff during the course of the University’s disciplinary case. The panel further noted that plaintiff alleged that the University (1) denied plaintiff an opportunity to appeal the punishment and the underlying findings; (2) refused plaintiff permission to file a harassment complaint against the complainant; and (3) conducted a one-sided investigation.
Considering the combination of plaintiff’s allegations of background indicia of sex discrimination along with the allegations concerning his particular disciplinary case, the panel concluded that sex discrimination was a plausible explanation for the University’s handling of the sexual misconduct disciplinary case against plaintiff. This was sufficient for plaintiff’s Title IX claim to proceed beyond the motion to dismiss stage.
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/29/18-15725.pdf
King v. U.S. Bank National Assn. (CA3 C085276 7/28/20) Wrongful Termination/Defamation/Punitive Damages
A jury returned verdicts in favor of plaintiff Timothy King against defendant U.S. Bank National Association (U.S. Bank) for defamation, wrongful termination in violation of public policy, and breach of the implied covenant of good faith and fair dealing, awarding King almost $24.3 million in compensatory and punitive damages. U.S. Bank filed a motion for judgment notwithstanding the verdict on the ground that there was no substantial evidence to support the jury’s verdicts and the award of punitive damages. The trial court denied the motion. U.S. Bank also filed a motion for new trial on the grounds that there was insufficient evidence to support the verdicts, the damages were excessive, and there was an irregularity in the proceedings that prevented a fair trial. The trial court conditionally granted the motion for new trial on the excessive damages ground conditioned upon King agreeing to a remittitur, but denied the motion on the other grounds asserted. King accepted the remittitur and the trial court entered judgment on the remitted award of over $5.4 million.
U.S. Bank appeals, challenging the jury’s verdicts on each of the causes of action and the remitted award of punitive damages. King cross-appeals, challenging the trial court’s new trial orders on excessive damages. We find no merit in U.S. Bank’s challenge to the jury’s verdicts in favor of King; we do, however, find merit in some of King’s arguments.
We reverse the trial court’s new trial orders, but agree with the trial court, following our own independent review, that a one-to-one ratio between compensatory and punitive damages is the constitutional limit under the facts of this case. We remand with directions to modify the judgment accordingly. As a result, King is awarded $8,689,696 in compensatory damages and $8,489,696 in punitive damages, for a total of $17,179,392.
https://www.courts.ca.gov/opinions/documents/C085276.PDF
Pasos v. L.A. County Civil Service Com. (CA2/7 B291952 7/27/20) Police Officer Discharge/Civil Service Commission
The Los Angeles County Sheriff’s Department (Department) discharged Deputy Sheriff Meghan Pasos based on her failure to report another deputy’s use of force against an inmate and her failure to seek medical assistance for the inmate. During the Department’s subsequent investigation Pasos admitted she did not report the use of force because she was concerned she would be “labeled as a rat” by her fellow deputies. The custody division’s acting chief determined discharge was appropriate because Pasos’s conduct in perpetuating a code of silence among deputies undermined the Department’s operation of the jail and brought embarrassment to the Department. The Los Angeles County Civil Service Commission (Commission) affirmed the discharge, but the trial court granted Pasos’s petition for writ of mandate and directed the Commission to set aside Pasos’s discharge, award her back pay, and reconsider a lesser penalty. On appeal, the Department contends the trial court erred by substituting its own discretion for that of the Department in determining the appropriate penalty. We agree and reverse.
https://www.courts.ca.gov/opinions/documents/B291952.PDF
Bautista v. Fantasy Activewear, Inc. (CA2/1 B297070, filed 6/25/20, ord. pub. 7/24/20) Wage and Hour/Arbitration/Waivers of Representative Actions
Fantasy Activewear, Inc. (AW), Fantasy Dyeing and Finishing, Inc. (DF), and Anwar Gajiani appeal from orders denying petitions to compel arbitration in two actions involving substantially similar wage and hour allegations filed by Saul Bautista against AW and Gajiani and Apolinar Garcia against DF and Gajiani.
Bautista and Garcia both signed settlement agreements with Fantasy in 2014 in connection with a case called Guerra v. Fantasy Activewear, Inc. (LASC No. BC517633) containing the arbitration clauses at issue in this appeal. In 2018, Bautista and Garcia filed class action complaints alleging a variety of wage and hour causes of action against AW, DF, and Gajiani, and amended them to allege causes of action under the Private Attorneys General Act (PAGA) (Lab. Code, § 2698 et seq.). Fantasy filed petitions to compel arbitration in each action based on the 2014 settlement agreements. Bautista and Garcia dismissed their class allegations. In each case, the trial court denied the petition to compel arbitration based on, among other independent grounds, their conclusions that the arbitration clauses’ predispute waivers of representative actions were unenforceable under Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian) and Julian v. Glenair, Inc. (2017) 17 Cal.App.5th 853 (Julian).
Fantasy contends here that the question of whether Bautista and Garcia’s waivers of representative actions were enforceable is a question of arbitrability that, pursuant to the terms of Fantasy’s arbitration agreements with Bautista and Garcia, must be left for the arbitrator to decide. We conclude, however, that Bautista and Garcia were not acting as agents of the Labor and Workforce Development Agency (LWDA) when they entered into their settlement agreements with AW and DF. Consequently, their agreements with AW and DF were not entered into on behalf of the LWDA, and Fantasy has alleged the existence of no arbitration agreement existing between it and the LWDA—the real party in interest here. Accordingly, we affirm the trial court’s denials of Fantasy’s petitions to compel arbitration.
https://www.courts.ca.gov/opinions/documents/B297070.PDF
Garner v. Inter-State Oil Co. (CA3 C088374, filed 6/26/20, ord. pub. 7/23/20) Arbitration/Individual and Class Claims
Chris Garner sued Inter-State Oil Company (Inter-State Oil), alleging employment claims and seeking certification of a class action. Based on an arbitration agreement between Garner and Inter-State Oil, the trial court granted Inter-State Oil’s petition to compel arbitration of individual claims only, effectively denying Garner the ability to pursue class action claims. The trial court relied on language in the arbitration agreement stating that Garner waived his right to participate in class action lawsuits.
On appeal from the order granting the motion to compel arbitration, Garner contends (1) the plain language of the arbitration agreement gives him the right to pursue his class claims in arbitration, and (2) Inter-State Oil waived reliance on the arbitration agreement.
We conclude (1) the arbitration agreement requires arbitration of Garner’s class claims, and (2) Inter-State Oil did not waive reliance on the arbitration agreement.
We will modify the trial court’s order to require arbitration of both individual and class claims, and affirm the order as modified.
https://www.courts.ca.gov/opinions/documents/C088374.PDF
Moreno v. Cal. State Teachers' Retirement System (CA3 C089558, filed 6/26/20, ord. pub. 7/20/20) Public Retirement/Overpayment
The California State Teachers’ Retirement System (CalSTRS) determined that Ernest H. Moreno’s retirement benefits had been incorrectly calculated and initiated action to adjust Moreno’s retirement benefits and collect the overpayment. The trial court denied Moreno’s petition for writ of administrative mandamus challenging the CalSTRS actions, and Moreno appeals.
Moreno contends (1) CalSTRS’s adjustment of his retirement benefits and collection of the overpayment are barred by the statute of limitations found in Education Code section 22008, subdivision (c) because CalSTRS was on inquiry notice of the problem as early as 2008, and (2) CalSTRS must be equitably estopped from adjusting his retirement benefits and collecting the overpayments. We conclude (1) CalSTRS was not on inquiry notice of the reporting error that led to overpayment until December 2014 when it began an audit of Moreno’s retirement benefits, and, therefore, CalSTRS’s adjustments to Moreno’s retirement benefits and collection of overpayments were not barred by the statute of limitations; and (2) CalSTRS is not equitably estopped because CalSTRS was not apprised of (or on notice about) the overpayments until December 2014.
Accordingly, we will affirm the judgment.
https://www.courts.ca.gov/opinions/documents/C089558.PDF
Torrecillas v. Fitness International (CA2/8 B296194 7/21/20) Arbitration/Unconscionability
Jose Torrecillas agreed with his employer, Fitness International, to arbitrate claims. Instead Torrecillas sued in court. When Fitness moved to compel arbitration, the trial court deemed the agreement unconscionable. But there was little or no unconscionability of any sort. Fitness encouraged Torrecillas to consult a lawyer and their agreement included a term allowing amendments if both parties agreed. Torrecillas had the opportunity to bargain and had meaningful bargaining power. The agreement’s terms are standard, not shocking. Torrecillas separately argues a different employee’s case against Fitness preclusively dictates a conclusion of unconscionability, but that case had different facts and a different holding. We reverse.
https://www.courts.ca.gov/opinions/documents/B296194.PDF
Collie v. The Icee Co. (CA4/2 E071654 7/20/20) PAGA
The Icee Company and J & J Snack Foods Corp. (collectively, Icee) appeal the trial court’s order denying their motion to compel arbitration of a dispute with a former employee. The employee, Taraun Collie, alleged a single cause of action against Icee 2 under the Private Attorneys General Act of 2004 (PAGA). (Lab. Code, § 2698 et seq.) We hold that under Iskanian v. CLS Transportation Los Angeles LLC (2014) 59 Cal.4th 348 (Iskanian) and Betancourt v. Prudential Overall Supply (2017) 9 Cal.App.5th 439 (Betancourt), an employee cannot be compelled to arbitrate a PAGA cause of action on the basis of a predispute arbitration agreement. (Iskanian, supra, at pp. 386-387; Betancourt, supra, at pp. 445-446.) We also join Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602 (Correia) in holding that Epic Systems Corp. v. Lewis (2018) __ U.S. __ [138 S.Ct. 1612] (Epic) does not undermine the reasoning of Iskanian and Betancourt. (Correia, at pp. 619-622.) We therefore affirm.
https://www.courts.ca.gov/opinions/documents/E071654.PDF
Heineke v. Santa Clara University (9th Cir. 18-16348 7/20/20) Professor-Student Sexual Harassment/42 U.S.C. § 1983/14th Amendment/Non-State Actor
The panel affirmed the district court’s dismissal of an action brought pursuant to 42 U.S.C. § 1983 alleging violations of the Fourteenth Amendment and of state law arising from the suspension and termination of plaintiff’s employment. Santa Clara University terminated plaintiff’s employment as an economics professor after concluding that plaintiff had sexually harassed his former student.
The panel stated that it could not conclude, on the basis of plaintiff’s allegations, that Santa Clara University was a state actor. The panel held that the University, as a private university, does not become a state actor merely by virtue of being required by generally applicable civil rights laws to ameliorate sex (or any other form of) discrimination. The panel further held that receipt of federal and state funds conditioned on compliance with anti-discrimination laws is insufficient to convert private conduct into state action. The panel addressed plaintiff’s other claims in a concurrently filed memorandum disposition.
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/20/18-16348.pdf
Farrell v. Boeing Employees Credit Union (9th Cir. 19-16130 7/16/20) Garnishment of Wages/Fair Debt Collection Practices Act
The panel affirmed the district court’s summary judgment in favor of defendants on claims that the garnishment of plaintiff’s wages violated the Fair Debt Collection Practices Act and California law. Defendant obtained a judgment debt against plaintiff in California state court in 2010. Plaintiff moved to Indiana in 2012. Defendant obtained a California wage garnishment order against plaintiff’s federal employer, which garnished his wages from 2012 to 2015. Plaintiff moved to Texas in 2014. He alleged that the continued garnishment of his wages, absent domestication of the California judgment in Indiana and Texas, violated the FDCPA and California law.
The panel held that the Hatch Act Reform Amendments of 1993, 5 U.S.C. § 5520a(b), waived the federal government’s sovereign immunity and subjected a federal employee’s pay to “legal process in the same manner and to the same extent as if the agency were a private person.” Thus, federal employees’ wages are subject to garnishment to the extent allowed by state law. The panel held that plaintiff’s wages were properly garnished under California law because the California court issuing the garnishment order had jurisdiction over the garnishee, which was the federal government, and defendant did not need to domesticate the California judgment in any other state to reach plaintiff’s federal wages.
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/16/19-16130.pdf
Aixtron, Inc. v. Veeco Instruments Inc. (CA6 H045126 7/16/20) Breach of Employee Confidentiality Agreement/Arbitrator’s Discovery Order
Miguel Saldana is a former employee of respondent Veeco Instruments, Inc. (Veeco). In 2017, Saldana resigned from his position at Veeco and went to work for a competitor, appellant Aixtron, Inc. (Aixtron). Veeco initiated arbitration proceedings against Saldana pursuant to an arbitration clause in his employee confidentiality agreement, alleging causes of action for breach of contract, breach of the duty of loyalty, and conversion, including alleged data theft. Aixtron was not a party to the arbitration. The arbitrator granted Veeco’s application for a pre-hearing discovery subpoena for Aixtron’s business records, which included a demand that Aixtron produce any computers that Saldana had used for forensic examination by “an agreed-upon third-party neutral expert.” Over Aixtron’s objections, the arbitrator granted Veeco’s motion to compel and ordered Aixtron to comply with the subpoena. Aixtron initiated a special proceeding in the superior court seeking judicial review of the arbitrator’s discovery order. The superior court denied that petition. Veeco filed a separate petition in the superior court to enforce the arbitrator’s discovery order, which the court granted. Aixtron appeals both orders.
On appeal, we reject Veeco’s contention that the superior court’s orders are not appealable. We find it unnecessary to resolve the parties’ dispute over whether this case is governed by the Federal Arbitration Act (FAA) or the California Arbitration Act (CAA), since we conclude that under either statutory scheme, the arbitrator did not have the authority to issue a discovery subpoena to Aixtron in the circumstances of this case. We agree with federal appellate cases that hold there is no right to pre-hearing discovery under the FAA. As part of our analysis, we construe Code of Civil Procedure section 1282.6 and address, as an issue of first impression, whether it granted the arbitrator broad powers to issue pre-hearing discovery subpoenas. We conclude that it did not and hold that the arbitrator’s discovery subpoena to Aixtron was not authorized under the CAA since the parties to the arbitration did not provide for full discovery rights in their arbitration agreement (§ 1283.1). Since we conclude the arbitrator did not have the authority to issue the discovery subpoena, we reverse the superior court’s orders.
https://www.courts.ca.gov/opinions/documents/H045126.PDF
Savaikie v. Kaiser Foundation Hospitals (CA2/8 B291120, filed 6/23/20, ord. pub. 7/16/20) Coming and Going Rule/Required Vehicle Use Exception
Plaintiffs Teresa, Michael, and Ryan Savaikie appeal from a judgment in favor of defendant Kaiser Foundation Hospitals (Kaiser) after the trial court granted Kaiser’s motion for summary judgment. Appellants sued Kaiser for the acts of its volunteer Ralph Steger. Steger struck and killed 14-year-old Wyatt Savaikie as Steger was driving his own vehicle home from an assisted living facility where he provided dog therapy to a Kaiser patient. Appellants acknowledge an employer is not liable for the acts of employees while they are coming to or going from their place of employment, but appellants contend there are triable issues of fact as to whether the “required vehicle use” exception to the coming and going rule applied in this case. Appellants also contend there are triable issues of fact as to whether Kaiser received an “incidental benefit” from Steger’s use of his personal vehicle and whether Steger had specially equipped his vehicle to transport his therapy dog; they claim both circumstances are two additional independent exceptions to the coming and going rule. Finally, appellants contend Steger’s stop at a credit union on the way home from the therapy session did not insulate Kaiser from vicarious liability for Steger’s subsequent accident. We find no triable issues of material fact and affirm the judgment.
https://www.courts.ca.gov/opinions/documents/B291120.PDF
Gerawan Farming, Inc. v. Agricultural Labor Relations Bd. (CA5 F077033 7/15/20) ALRB Authority/Mandatory Mediation and Conciliation
This writ proceeding addresses a decision by the Agricultural Labor Relations Board (ALRB or Board) that agricultural employer Gerawan Farming, Inc. (Gerawan) committed unfair labor practices by (1) engaging in bad faith “surface bargaining,” and (2) insisting on the exclusion of workers employed by farm labor contractors (FLC workers) from the core benefits of any collective bargaining agreement (CBA) reached between Gerawan and the United Farm Workers of America (UFW or Union). The Board’s findings were based on Gerawan’s bargaining conduct both before and after the Board ordered the parties to “mandatory mediation and conciliation” (MMC) under the MMC statutory scheme, Labor Code section 1164 et seq. To remedy these violations, the Board awarded make-whole relief for the period January 18, 2013, to June 30, 2013.
Gerawan contends (1) the MMC statute does not authorize the Board to impose unfair labor practice liability for its bargaining conduct within the MMC process, (2) the Board lacks the power to impose make-whole relief when a party is engaged in MMC, and (3) the Board’s unfair labor practice findings are erroneous, arbitrary, and unsupported by substantial evidence. Gerawan also contends the Board erred when it denied its prehearing motion to disqualify one of the Board members who participated in this proceeding. Finding no merit to Gerawan’s arguments, we affirm the Board’s decision.
https://www.courts.ca.gov/opinions/documents/F077033.PDF
Mattei v. Corporate Management Solutions (CA2/7 B291377, filed 6/22/20, ord. pub. 7/14/20) Wage and Hour/Status as Employer
Alyosha Mattei, Greg Jensen, Scott Todd and Janos Csoma, all members of the International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts (IATSE), sued Corporate Management Solutions, Inc. and its owner and president, Anthony Low (collectively CMS), for wage-and-hour violations under the California Labor Code incurred in the 2016 production of a television commercial for Ulta Beauty, Inc., which operates a chain of beauty stores. The superior court granted CMS’s motion for summary judgment on the ground it was not an employer of the four IATSE members. We reverse.
https://www.courts.ca.gov/opinions/documents/B291377.PDF
Saw v. Avago Technologies Limited (CA1/1 A153824 7/10/20) Terminated Employee's Stock Repurchase/Choice of Law
Appellant Kong-Beng Saw worked for a Malaysian subsidiary of respondent Avago Technologies Limited (Avago). He was given the opportunity to acquire ordinary shares and stock options of Avago stock under a management shareholders agreement governed by the laws of Singapore. The shareholders agreement allowed Avago to repurchase shares and options at fair market value should an employee be terminated “for any reason whatsoever” within five years from the date of purchase. After Saw’s position was eliminated in 2009, Avago repurchased his equitable interest. Saw sued Avago’s subsidiary for wrongful termination and obtained a favorable judgment in Malaysia. Saw separately sued Avago in the Superior Court of San Mateo County, asserting that Avago breached the shareholders agreement by relying on an unlawful termination to repurchase his shares. Avago successfully moved for summary judgment, from which Saw now appeals. We conclude that Saw is not entitled to any relief under Singapore law and affirm the judgment below.
https://www.courts.ca.gov/opinions/documents/A153824.PDF
Kec v. Superior Court (CA4/3 G058119, filed 6/19/20, ord. pub. 7/9/20) PAGA/Arbitration Blow-Up Provision
It is the established law of this state that a predispute contractual waiver of claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.) is invalid. Here, the parties’ arbitration agreement purports to waive class actions and any “other representative action” (the representative waiver). There is no dispute that this representative waiver is broad enough to cover a PAGA claim, and is thus invalid. Usually, where a single contract provision is invalid, but the balance of the contract is lawful, the invalid provision is severed, and the balance of the contract is enforced. But here, the arbitration agreement goes on to provide that the provision containing the class action and representative waiver is not modifiable nor severable. The arbitration agreement also contains a provision that if the representative waiver is found to be invalid, “the Agreement becomes null and void as to the employee(s) who are parties to that particular dispute”—a so-called “‘blow-up’ provision.”
Plaintiff Nichole Kec brought individual, class, and PAGA claims against defendants R.J. Reynolds Tobacco Company, Reynolds American Inc., and three individual employees at R.J. Reynolds Tobacco Company. Plaintiff alleged, in essence, that she and others were misclassified as exempt employees, resulting in various violations of the Labor Code. R.J. Reynolds Tobacco Company and Reynolds American Inc., moved to compel arbitration of plaintiff’s individual claims except the PAGA claim.
The court granted the motion. The court reasoned: (1) Because defendants had not asked the court to rule on the enforceability of the representative waiver, it had not found the representative waiver invalid, and thus the blow-up provision had not been triggered; and (2) the blow-up provision may apply only to the attempted waiver of the PAGA claim, not to the arbitrability of plaintiff’s claims under the Labor Code. Plaintiff filed the present writ petition.
https://www.courts.ca.gov/opinions/documents/G058119.PDF
Canela v. Costco (9th Cir. 18-16592 7/9/20) PAGA/CAFA
The panel vacated the district court’s summary judgment with instructions to remand to state court because the district court lacked subject matter jurisdiction at the time the action was removed to federal court. Plaintiff, a Costco Wholesale Corporation employee, filed a state class action complaint alleging that Costco violated California Labor Code § 1198 by failing to provide her and other employees suitable seating. Plaintiff’s only claim arose under California’s Private Attorney General Act (“PAGA”). Costco removed the case to federal court based on the federal diversity statute, 28 U.S.C. § 1332(a), and the Class Action Fairness Act (“CAFA”). Concerning traditional diversity jurisdiction, the panel held that the amount in controversy did not meet the statutory threshold at the time of removal. Because the named plaintiff’s pro-rata share of civil penalties, including attorney’s fees, totaled $6,600 at the time of removal, and the claims of other employees could not be aggregated with hers under Urbino v. Orkin Services of California, Inc., 726 F.3d 1118 (9th Cir. 2013), the requisite $75,000 jurisdictional threshold was not met. Accordingly, the district court lacked diversity jurisdiction at the time of removal.
The panel held that the district court also lacked subject matter jurisdiction under CAFA because plaintiff’s standalone PAGA lawsuit was not, and could not have been, filed under a state rule similar to Rule 23 of the Federal Rules of Civil Procedure. The panel held that the holding in Baumann v. Chase Investment Services Corp., 747 F.3d 1117, 1122 (9th Cir. 2014), that “PAGA actions are [] not sufficiently similar to Rule 23 class actions to trigger CAFA jurisdiction,” controlled the outcome of this appeal. The panel rejected Costco’s argument that because the named plaintiff originally sought class status in her complaint, her case was filed as a class action within the meaning of CAFA. The panel also rejected Costco’s argument that the decisions in Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161 (2014), and Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., 761 F.3d 1027 (9th Cir. 2014), compelled a different result.
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/09/18-16592.pdf
Our Lady of Guadalupe School v. Morrissey-Berru (US 19-267 7/8/20) Ministerial Exception
The First Amendment protects the right of religious institutions “to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.” Kedroff v. Saint Nicholas Cathedral of Russian Orthodox Church in North America, 344 U. S. 94, 116. Applying this principle, this Court held in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U. S. 171, that the First Amendment barred a court from entertaining an employment discrimination claim brought by an elementary school teacher, Cheryl Perich, against the religious school where she taught. Adopting the so-called “ministerial exception” to laws governing the employment relationship between a religious institution and certain key employees, the Court found relevant Perich’s title as a “Minister of Religion, Commissioned,” her educational training, and her responsibility to teach religion and participate with students in religious activities. Id., at 190–191.
In these cases, two elementary school teachers at Roman Catholic schools in the Archdiocese of Los Angeles had teaching responsibilities similar to Perich’s. Agnes Morrissey-Berru taught at Our Lady of Guadalupe School (OLG), and Kristen Biel taught at St. James School. Both were employed under nearly identical agreements that set out the schools’ mission to develop and promote a Catholic School faith community; imposed commitments regarding religious instruction, worship, and personal modeling of the faith; and explained that teachers’ performance would be reviewed on those bases. Each was also required to comply with her school’s faculty handbook, which set out similar expectations. Each taught religion in the classroom, worshipped with her students, prayed with her students, and had her performance measured on religious bases.
Both teachers sued their schools after their employment was terminated. Morrissey-Berru claimed that OLG had demoted her and had failed to renew her contract in order to replace her with a younger teacher in violation of the Age Discrimination in Employment Act of 1967. OLG invoked Hosanna-Tabor’s “ministerial exception” and successfully moved for summary judgment, but the Ninth Circuit reversed, holding that Morrissey-Berru did not fall within the exception because she did not have the formal title of “minister,” had limited formal religious training, and did not hold herself out publicly as a religious leader. Biel alleged that St. James discharged her because she had requested a leave of absence to obtain breast cancer treatment. Like OLG, St. James obtained summary judgment under the “ministerial exception.” But the Ninth Circuit reversed, reasoning that Biel lacked Perich’s credentials, religious training, and ministerial background.
Held:
The First Amendment’s Religion Clauses foreclose the adjudication of Morrissey-Berru’s and Biel’s employment-discrimination claims. Pp. 10–27.
(a) The independence of religious institutions in matters of “faith and doctrine” is closely linked to independence in what the Court has termed “ ‘matters of church government.’ ” Hosanna-Tabor, 565 U. S., at 186. For this reason, courts are bound to stay out of employment disputes involving those holding certain important positions with churches and other religious institutions. Pp. 10–11.
(b) When the “ministerial exception” reached this Court in Hosanna-Tabor, the Court looked to precedent and the “background” against which “the First Amendment was adopted,” 565 U. S., at 183, and unanimously recognized that the Religion Clauses foreclose certain employment-discrimination claims brought against religious organizations, id., at 188. Pp. 11–14
(c) In Hosanna-Tabor, the Court applied the “ministerial exception” but declined “to adopt a rigid formula for deciding when an employee qualifies as a minister.” 565 U. S., at 190. Instead, the Court identified four relevant circumstances of Perich’s employment at an Evangelical Lutheran school. First, Perich’s church had given her the title of “minister, with a role distinct from that of most of its members.” Id., at 191. Second, her position “reflected a significant degree of religious training followed by a formal process of commissioning.” Ibid. Third, she “held herself out as a minister of the Church” and claimed certain tax benefits. Id., at 191–192. Fourth, her “job duties reflected a role in conveying the Church’s message and carrying out its mission.” Id., at 192. Pp. 14–16.
(d) A variety of factors may be important in determining whether a particular position falls within the ministerial exception. The circumstances that informed the Court’s decision in Hosanna-Tabor were relevant because of their relationship to Perich’s “role in conveying the Church’s message and carrying out its mission.” 565 U. S., at 192. But the recognition of the significance of those factors in Perich’s case did not mean that they must be met in all other cases. What matters is what an employee does. Implicit in the Hosanna-Tabor decision was a recognition that educating young people in their faith, inculcating its teachings, and training them to live their faith are responsibilities that lie at the very core of a private religious school’s mission. Pp. 16–21.
(e) Applying this understanding of the Religion Clauses here, it is apparent that Morrissey-Berru and Biel qualify for the exception recognized in Hosanna-Tabor. There is abundant record evidence that they both performed vital religious duties, such as educating their students in the Catholic faith and guiding their students to live their lives in accordance with that faith. Their titles did not include the term “minister” and they had less formal religious training than Perich, but their core responsibilities were essentially the same. And their schools expressly saw them as playing a vital role in carrying out the church’s mission. A religious institution’s explanation of the role of its employees in the life of the religion in question is important. Pp. 21–22.
(f) The Ninth Circuit mistakenly treated the circumstances the Court found relevant in Hosanna-Tabor as a checklist of items to be assessed and weighed against each other. That rigid test produced a distorted analysis. First, it invested undue significance in the fact that Morrissey-Berru and Biel did not have clerical titles. Second, it assigned too much weight to the fact that Morrissey-Berru and Biel had less formal religious schooling that Perich. Third, the St. James panel inappropriately diminished the significance of Biel’s duties. Respondents would make Hosanna-Tabor’s governing test even more rigid. And they go further astray in suggesting that an employee can never come within the Hosanna-Tabor exception unless the employee is a “practicing” member of the religion with which the employer is associated. Deciding such questions risks judicial entanglement in religious issues. Pp. 22–27.
No. 19–267, 769 Fed. Appx. 460; No. 19–348, 911 F. 3d 603, reversed and remanded.
ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, BREYER, KAGAN, GORSUCH, and KAVANAUGH, JJ., joined. THOMAS, J., filed a concurring opinion, in which GORSUCH, J., joined. SOTOMAYOR, J., filed a dissenting opinion, in which GINSBURG, J., joined.
https://www.supremecourt.gov/opinions/19pdf/19-267_1an2.pdf
Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania (US 19-431 7/8/20) ACA Religious Employer Exemption/Contraceptives
The Patient Protection and Affordable Care Act of 2010 (ACA) requires covered employers to provide women with “preventive care and screenings” without “any cost sharing requirements,” and relies on Preventive Care Guidelines (Guidelines) “supported by the Health Resources and Services Administration” (HRSA) to determine what “preventive care and screenings” includes. 42 U. S. C. §300gg–13(a)(4). Those Guidelines mandate that health plans provide coverage for all Food and Drug Administration approved contraceptive methods. When the Departments of Health and Human Services, Labor, and the Treasury (Departments) incorporated the Guidelines, they also gave HRSA the discretion to exempt religious employers, such as churches, from providing contraceptive coverage. Later, the Departments also promulgated a rule accommodating qualifying religious organizations that allowed them to opt out of coverage by self-certifying that they met certain criteria to their health insurance issuer, which would then exclude contraceptive coverage from the employer’s plan and provide participants with separate payments for contraceptive services without imposing any cost-sharing requirements.
Religious entities challenged the rules under the Religious Freedom Restoration Act of 1993 (RFRA). In Burwell v. Hobby Lobby Stores, Inc., 573 U. S. 682, this Court held that the contraceptive mandate substantially burdened the free exercise of closely held corporations with sincerely held religious objections to providing their employees with certain methods of contraception. And in Zubik v. Burwell, 578 U. S. ___, the Court opted to remand without deciding the RFRA question in cases challenging the self-certification accommodation so that the parties could develop an approach that would accommodate employers’ concerns while providing women full and equal coverage.
Under Zubik’s direction and in light of Hobby Lobby’s holding, the Departments promulgated two interim final rules (IFRs). The first significantly expanded the church exemption to include an employer that “objects . . . based on its sincerely held religious beliefs,” “to its establishing, maintaining, providing, offering, or arranging [for] coverage or payments for some or all contraceptive services.” 82 Fed. Reg. 47812. The second created a similar “moral exemption” for employers with sincerely held moral objections to providing some or all forms of contraceptive coverage. The Departments requested post-promulgation comments on both IFRs.
Pennsylvania sued, alleging that the IFRs were procedurally and substantively invalid under the Administrative Procedure Act (APA). After the Departments issued final rules, responding to post-promulgation comments but leaving the IFRs largely intact, New Jersey joined Pennsylvania’s suit. Together they filed an amended complaint, alleging that the rules were substantively unlawful because the Departments lacked statutory authority under either the ACA or RFRA to promulgate the exemptions. They also argued that the rules were procedurally defective because the Departments failed to comply with the APA’s notice and comment procedures. The District Court issued a preliminary nationwide injunction against the implementation of the final rules, and the Third Circuit affirmed.
Held:
1. The Departments had the authority under the ACA to promulgate the religious and moral exemptions. Pp. 14–22.
(a) As legal authority for both exemptions, the Departments invoke §300gg–13(a)(4), which states that group health plans must provide women with “preventive care and screenings . . . as provided for in comprehensive guidelines supported by [HRSA].” The pivotal phrase, “as provided for,” grants sweeping authority to HRSA to define the preventive care that applicable health plans must cover. That same grant of authority empowers it to identify and create exemptions from its own Guidelines. The “fundamental principle of statutory interpretation that ‘absent provision[s] cannot be supplied by the courts,’ ” Rotkiske v. Klemm, 589 U. S. ___, ___ applies not only to adding terms not found in the statute, but also to imposing limits on an agency’s discretion that are not supported by the text, see Watt v. Energy Action Ed. Foundation, 454 U. S. 151, 168. Concerns that the exemptions thwart Congress’ intent by making it significantly harder for interested women to obtain seamless access to contraception without cost-sharing cannot justify supplanting the text’s plain meaning. Even if such concerns are legitimate, they are more properly directed at the regulatory mechanism that Congress put in place. Pp. 14–18.
(b) Because the ACA provided a basis for both exemptions, the Court need not decide whether RFRA independently compelled the Departments’ solution. However, the argument that the Departments could not consider RFRA at all is without merit. It is clear from the face of the statute that the contraceptive mandate is capable of violating RFRA. The ACA does not explicitly exempt RFRA, and the regulations implementing the contraceptive mandate qualify as “Federal law” or “the implementation of [Federal] law” under RFRA. §2000bb– 3(a). Additionally, this Court stated in Hobby Lobby that the mandate violated RFRA as applied to entities with complicity-based objections. And both Hobby Lobby and Zubik instructed the Departments to consider RFRA going forward. Moreover, in light of the basic requirements of the rulemaking process, the Departments’ failure to discuss RFRA at all when formulating their solution would make them susceptible to claims that the rules were arbitrary and capricious for failing to consider an important aspect of the problem. Pp. 19–22.
2. The rules promulgating the exemptions are free from procedural defects. Pp. 22–26.
(a) Respondents claim that because the final rules were preceded by a document entitled “Interim Final Rules with Request for Comments” instead of “General Notice of Proposed Rulemaking,” they are procedurally invalid under the APA. The IFRs’ request for comments readily satisfied the APA notice requirements. And even assuming that the APA requires an agency to publish a document entitled “notice of proposed rulemaking,” there was no “prejudicial error” here, 5 U. S. C. §706. Pp. 22–24.
(b) Pointing to the fact that the final rules made only minor alterations to the IFRs, respondents also contend that the final rules are procedurally invalid because nothing in the record suggests that the Departments maintained an open mind during the post-promulgation process. The “open-mindedness” test has no basis in the APA. Each of the APA’s procedural requirements was satisfied: The IFRs provided sufficient notice, §553(b); the Departments “g[a]ve interested persons an opportunity to participate in the rule making through submission of written data, views or arguments,” §553(c); the final rules contained “a concise general statement of their basis and purpose,” ibid.; and they were published more than 30 days before they became effective, §553(d). Pp. 24–26.
930 F. 3d 543, reversed and remanded.
THOMAS, J., delivered the opinion of the Court, in which ROBERTS, C. J., and ALITO, GORSUCH, and KAVANAUGH, JJ., joined. ALITO, J., filed a concurring opinion, in which GORSUCH, J., joined. KAGAN, J., filed an opinion concurring in the judgment, in which BREYER, J., joined. GINSBURG, J., filed a dissenting opinion, in which SOTOMAYOR, J., joined.
https://www.supremecourt.gov/opinions/19pdf/19-431_5i36.pdf