Reverse chronological e-mail alerts prepared pro bono for the California Lawyers Association (formerly State Bar of California) Labor & Employment Law Section since 2007, covering California, 9th Circuit and US Supreme Court decisions, and new laws signed by Governor. To subscribe, contact LaborLaw@CLA.Legal.
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Bills Signed by Governor (9/9/20)
AB 736 by Assemblymember Jacqui Irwin (D-Thousand Oaks) – Employee classification: professional classification: specified educational employees.
AB 1867 by Committee on Budget – Small employer family leave mediation: handwashing: supplemental paid sick leave.
AB 2234 by Assemblymember Ed Chau (D-Monterey Park) – Classified school and community college employees: personnel commission: legal counsel.
Dept. of Fair Employment and Housing v. Super. Ct. (CA5 F078245 9/9/20) DFEH/Unruh Act/ Entry of Judgment
This writ presents a question whether the trial court improperly construed the effect of an entry of judgment in an action filed by the Department of Fair Employment and Housing (DFEH) under Government Code section 12974.
Section 12974 permits the DFEH, during the course of its investigation of an administrative complaint, to seek a limited court order for provisional relief only, much like the provisional relief that may be sought under Code of Civil Procedure section 527. Indeed, any order for provisional relief granted under section 12974 is to be “issued in accordance with Section 527 of the Code of Civil Procedure.” (§ 12974.) To determine whether such provisional relief should issue, courts consider the likelihood the plaintiff will prevail on the merits at trial, and the comparative interim harm the parties are likely to suffer if the relief is either denied or granted. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70.) The provisional relief granted under section 12974 is of limited duration, lasting only until final disposition of the administrative complaint. After completing its investigation of the complaint, the DFEH may elect to file suit under section 12965 for permanent relief on the claims stemming from the administrative complaint.
In this case, the underlying section 12974 civil action was initiated by the DFEH in December 2017 by a petition seeking provisional relief to temporarily enjoin Tastries and Catharine Miller from refusing to sell wedding cakes to same-sex couples. The petition for relief was based on an administrative complaint filed with the DFEH by Eileen and Mireya Rodriquez-Del Rio, who alleged Tastries had refused to sell them a wedding cake based on their sexual orientation. Tastries maintained it could not be compelled to create and design custom wedding cakes for same-sex weddings under California’s public accommodation law, the Unruh Civil Rights Act, because compelling such conduct would violate both the free exercise clause and the free speech clause of the First Amendment.
Tastries opposed the DFEH’s requests for a temporary restraining order and a preliminary injunction, and both forms of provisional relief were denied by the court. By order in February 2018, the court denied the DFEH’s preliminary injunction request based upon Tastries’s purported UCRA violation, finding Catharine Miller had an absolute right to refuse to create and design wedding cakes for same-sex couples, which violated her sincerely held religious beliefs.
Thereafter, the DFEH agreed to entry of judgment in the section 12974 action. When the DFEH continued its investigation of the administrative complaint following the court’s denial of provisional relief and its entry of judgment, Tastries filed a motion to enforce the judgment arguing the DFEH was precluded from continuing its investigation as the UCRA claim had been finally adjudicated, and judgment had been entered. The court agreed and, in September 2018, ordered that any further investigation by the DFEH be tailored “to the ascertainment and discovery of facts reasonably and rationally calculated to serve as the basis for an argument for modification of the judgment.” The trial court also ordered that if the DFEH’s investigation caused it to believe further enforcement was necessary, “then any such further proceeding should be brought before this court in the nature of action or petition for modification of the court’s original judgment.”
The DFEH then filed a petition with this court seeking the issuance of a writ of mandate directing the superior court to set aside and vacate its September 2018 order and enter a new and different order denying in full Tastries’s motion to enforce the judgment. The DFEH asserts the trial court’s order violated the separation of powers doctrine by proscribing the scope of the DFEH’s statutorily required investigation of the administrative complaint, and improperly precluded the DFEH from filing a section 12965 civil action if the DFEH determined it necessary. The DFEH contends the trial court’s view of its preliminary injunction order and the nature of the section 12974 action were erroneous, and the judgment in that action cannot preclude the DFEH from performing its statutory duties.
We agree with the DFEH, and its writ petition shall be granted. In considering the effect of its judgment, the trial court improperly construed its decision on the preliminary injunction request to be a final adjudication of the merits of the underlying administrative complaint. The court had neither jurisdiction under section 12974 nor any inherent authority to undertake a merits-based final determination of the issues in the context of deciding a preliminary injunction request. By erroneously construing its preliminary injunction order as a final adjudication of the merits, the trial court violated the separation of powers doctrine in limiting the scope of the DFEH’s investigation and barring the DFEH from filing suit under section 12965.
Our decision to grant the DFEH’s writ petition is focused narrowly on procedural grounds. We do not reach the merits of any constitutional question raised in the section 12974 action, which should have been considered only for the purpose of deciding whether provisional relief was warranted. Any merits-based determinations of the ultimate rights of the parties are to be made by the trial court in the first instance in the section 12965 action that is now pending before it.
Dept. of Fair Employment and Housing v. Cathy's Creations, Inc. (CA5 F077802 9/9/20) Prevailing Defendant in DFEH Action/Attorneys’ Fees
The question presented in this appeal is whether an award of attorneys’ fees under Code of Civil Procedure section 1021.5 was properly denied to the prevailing defendants in an action brought by California’s Department of Fair Employment and Housing (DFEH) under Government Code section 12974.
Section 12974 contains a unilateral attorneys’ fee provision in favor of the DFEH. In this case, section 12974’s attorneys’ fee provision conflicts with Code of Civil Procedure section 1021.5, and the two statutes cannot reasonably be harmonized. As section 12974 is the more specific, later-enacted statute, it governs. We therefore conclude that a prevailing defendant in a section 12974 action is not entitled to an award of fees against the DFEH under Code of Civil Procedure section 1021.5, and the trial court did not err in denying defendants’ attorneys’ fee request.
Salter v. Quality Carriers, Inc. (9th Cir. 20-55709 9/8/20) Wage and Hour Class Action/Amount in Controversy
Clayton Salter, a truck driver, filed this putative class action against Quality Carriers, Inc. and Quality Distribution, Inc. (collectively “Quality”), alleging that Quality failed to provide truck drivers with meal breaks, rest periods, overtime wages, minimum wages, and reimbursement for necessary expenditures as required by California law. The crux of Salter’s claim is that Quality misclassified the truck drivers as independent contractors rather than employees. In January 2020, Quality removed the action to the United States District Court for the Central District of California asserting that the amount in controversy exceeded $5 million. Salter filed a motion to remand to state court. The district court granted the motion finding that the declaration submitted by Quality failed to adequately show that the amount in controversy exceeded $5 million. We hold that Salter challenged the form, not the substance, of Quality’s showing, and the form of that showing was sufficient under our case law. Accordingly, we vacate the remand order and remand this case to the district court.
Bill Signed by Governor (9/4/20)
AB 2257 by Assemblymember Lorena Gonzalez (D-San Diego) – Worker classification: employees and independent contractors: occupations: professional services.
In re Grice (9th Cir. 20-70780 9/4/20) Ride Share Drivers/FAA Exemption
The panel denied a petition for a writ of mandamus seeking to vacate the district court’s order compelling arbitration in an Uber driver’s putative class action alleging that the company failed to safeguard his and other drivers’ and riders’ personal information and mishandled a data security breach.
The district court concluded that the Uber driver did not fall within an arbitration exemption set forth in § 1 of the Federal Arbitration Act for workers engaged in foreign or interstate commerce. The panel held that, even accepting that there were some tensions between the district court’s ruling and recent circuit cases addressing the scope and application of the exemption, the district court’s decision was not clearly erroneous as a matter of law, as required for granting a writ of mandamus.
Mortiz v. Universal City Studios LLC (CA2/1 B299083 9/2/20) Arbitration
Over the course of approximately 16 years, respondents Neal Moritz and Neal H. Moritz, Inc. (collectively, Moritz) worked for appellants, Universal City Studios LLC and its wholly-owned subsidiary, FFSO Productions LLC (collectively, Universal), rendering services as a producer for the film The Fast and the Furious (Universal Pictures 2001) and several sequels thereto (collectively, the Fast & Furious franchise). The lawsuit underlying this appeal involves a “spin-off” of the Fast & Furious franchise, a project ultimately released as Fast & Furious Presents: Hobbs & Shaw (Universal Pictures 2019) (Hobbs & Shaw), on which Moritz allegedly worked as a producer pursuant to an oral agreement with Universal. Moritz named Universal, as well as appellant Jimmy Horowitz, president of Universal City Studios LLC (collectively, appellants) as defendants in the suit. Appellants moved to compel arbitration of the suit based on arbitration agreements in written producer contracts regarding Moritz’s work for Universal on the Fast & Furious franchise. The court concluded that these arbitration agreements did not apply to the Hobbs & Shaw dispute, and denied appellants’ motion.
Appellants contend the court erred by deciding whether the Hobbs & Shaw dispute was arbitrable under the arbitration agreements contained in the Fast & Furious contracts, as those agreements are valid and binding on all parties and delegate the question of arbitrability to an arbitrator. We disagree, and therefore affirm.
Frlekin v. Apple (9th Cir. 15-17382 9/2/20) Waiting and Exit Search Times
The panel reversed the district court’s grant of summary judgment in favor of defendant Apple, Inc., in a wage-and-hour class action brought by employees who sought compensation under California law for time spent waiting for and undergoing exit searches.
Upon the panel’s certification of a question of California law, the California Supreme Court concluded that 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 was compensable as “hours worked” within the meaning of California Industrial Welfare Commission Wage Order 7.
The panel reversed the district court’s grant of Apple’s motion for summary judgment and remanded with instructions to (1) grant plaintiffs’ motion for summary judgment on the issue of whether time spent by class members waiting for and undergoing exit searches pursuant to Apple’s “Employee Package and Bag Searches” policy is compensable as “hours worked” under California law, and (2) determine the remedy to be afforded to individual class members.
Land v. Cal. Unemployment Ins. Appeals Bd. (CA1/1 A153959, filed 8/7/20, ord. pub. 9/1/20) Unemployment Insurance Benefits
Justin Land appeals from the denial of his petition for a writ of administrative mandamus (Code Civ. Proc., § 1094.5) challenging the denial of unemployment insurance benefits. We reverse on the ground the California Unemployment Insurance Appeals Board (Appeals Board or Board) prejudicially abused its discretion in refusing to consider additional evidence proffered by Land. We appreciate that the Appeals Board has considerable discretion in allowing or refusing to consider new evidence. However, given the particular circumstances here, we conclude the proffered evidence should have been accepted and considered.
Bill Signed by Governor (9/1/20)
AB 3364 by Assembly Judiciary Committee – Judiciary Omnibus
[Among other things, sections 31-33 of this legislation clarifies that, for the purposes of the Fair Employment and Housing Act, military or veteran status is deemed a civil right to be protected by the Act.]
Reilly v. Marin Housing Authority (SC S249593 8/31/20) Section 8 Housing Subsidy
The federal Housing Choice Voucher program is a key program in section 8 of the United States Housing Act of 1937. (42 U.S.C. § 1437 et seq., as amended by § 201(a) of the Housing and Community Development Act of 1974.) Commonly referred to as “Section 8,” the program provides low-income families a monthly subsidy to pay for a portion of their rent. The amount of the subsidy depends, in part, on the income Section 8 families receive. The program, which is funded and regulated by the United States Department of Housing and Urban Development (HUD), is administered locally by public housing authorities (PHAs). In this case, we address whether a Section 8 beneficiary’s compensation for providing in-home care for a severely disabled adult daughter should be excluded from income in calculating the rental subsidy. For reasons that follow, we conclude that it should be excluded and reverse the Court of Appeal’s judgment.
Gund v. County of Trinity (SC S249792 8/27/20) Active Law Enforcement/Workers’ Compensation Exclusivity
We entrust to police officers the enormous responsibility of ensuring public safety with integrity and appropriate restraint, a mission they sometimes pursue by requesting help from the very public they’re sworn to protect. When members of the public engage in “active law enforcement service” at a peace officer’s request, California law treats those members of the public as employees eligible for workers’ compensation benefits. (Lab. Code, § 3366, subd. (a).) While this allows such individuals to receive compensation for their injuries without regard to fault, it comes with a catch: Workers’ compensation then becomes an individual’s exclusive remedy for those injuries under state law. (§ 3602, subd. (a); Shoemaker v. Myers (1990) 52 Cal.3d 1, 16 (Shoemaker).) That can make a difference for some members of the public who answer a peace officer’s call to help with “active law enforcement,” because workers’ compensation benefits are narrower in scope than the menu of damages available in tort claims. Whether compensation for a member of the public injured in the course of responding to a request for assistance from law enforcement is limited to workers’ compensation, or whether civil damages are available, depends on the question at the heart of this case: What does it mean for an individual to engage in “active law enforcement service”?
Norma and James Gund received a call from Trinity County Sheriff’s Corporal Ronald Whitman, who asked them to assist law enforcement by checking on a neighbor who had called 911 requesting help. When the Gunds did so, they walked into an active murder scene and suffered a violent attack. What we must resolve is whether Mr. and Mrs. Gund engaged in active law enforcement service and are limited to workers’ compensation benefits for their injuries based on Corporal Whitman’s request for assistance, which they allege misrepresented the potential danger.
We conclude the Gunds were indeed engaged in “active law enforcement service.” When the Gunds provided the requested assistance, they delivered an active response to the 911 call of a local resident pleading for help. A response of this kind unquestionably falls within the scope of a police officer’s law enforcement duties. Whether or not any alleged omissions in Corporal Whitman’s request could conceivably prove relevant to legal actions alleging malfeasance, they do not change our conclusion about the scope of workers’ compensation in this tragic case. We affirm the judgment of the Court of Appeal.
Conyer v. Hula Media Services, LLC (CA2/8 B296738 8/26/20) Arbitration/Employee Handbook
An employee signed an acknowledgment of receipt of the employee handbook. In it, he agreed he was bound by the provisions of the handbook, and it was his responsibility to read and familiarize himself with all its provisions. The handbook contained an agreement to arbitrate disputes. The employer did not highlight or otherwise call the employee’s attention to the arbitration clause.
We hold the employee demonstrated his assent to the arbitration clause by signing the acknowledgment, and the employer had no duty to call the arbitration agreement to the employee’s attention. We further find that provisions in the arbitration clause concerning arbitrator’s fees and costs and attorney fees are unenforceable, but they may be severed, and the rest of the agreement is enforceable.
Accordingly, we reverse the trial court order denying the employer’s motion to compel arbitration.
City of Oakland v. Wells Fargo & Co. (9th Cir. 19-15169 8/26/20) Fair Housing Act/Predatory Loans to Black and Latino Residents
The panel affirmed in part and reversed in part the district court’s partial grant and partial denial of a motion to dismiss for failure to state a claim in an action brought under the Fair Housing Act by the City of Oakland, alleging that Wells Fargo & Company and Wells Fargo Bank, N.A., engaged in discriminatory lending practices by issuing predatory loans to Black and Latino residents.
Oakland alleged that the predatory loans caused widespread foreclosures that reduced the City’s property-tax revenues and increased its municipal expenses. The panel affirmed the district court’s denial of Wells Fargo’s motion to dismiss as to Oakland’s claims for lost property-tax revenues and the district court’s grant of Wells Fargo’s motion to dismiss as to Oakland’s claims for increased municipal expenses. The panel reversed the district court’s denial of Wells Fargo’s motion to dismiss as to Oakland’s claims for injunctive relief, seeking to enjoin Wells Fargo from continuing to issue predatory home loans to Black and Latino borrowers.
The panel held that under Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296 (2017), to establish proximate cause under the FHA, a plaintiff must show some direct relation between the injury asserted and the injurious conduct alleged. Evaluating the contours of the FHA’s proximate-cause requirement, the panel reviewed the statute’s text and legislative history and concluded that Congress clearly intended the nature of the statutory cause of action to be broad and inclusive enough to encompass less direct, aggregate, and city-wide injuries. The panel also concluded that it was administratively feasible for the district court to administer the aggregate, city-wide injuries that Oakland claimed it suffered as a result of Wells Fargo’s unlawful discriminatory lending practices throughout the City.
The panel held that the allegations in Oakland’s amended complaint were sufficient to plead that its reduced property-tax revenues, but not its increased municipal expenses, were proximately caused by Wells Fargo’s discriminatory lending practices. Construing the amended complaint’s allegations in the light most favorable to the City, including the City’s proposed statistical regression analyses, the panel held that Oakland had plausibly alleged that its decrease in property-tax revenues had some direct and continuous relation to Wells Fargo’s discriminatory lending practices throughout much of the City.
The further panel held that the FHA’s proximate-cause requirement applies to claims for injunctive or declaratory relief. Accordingly, the panel reversed the district court’s conclusion that Oakland did not have to satisfy this requirement as to its claims for injunctive and declaratory relief. The panel instructed that on remand, the district court should determine whether Oakland plausibly alleged that its ongoing injuries are being proximately caused by Wells Fargo’s alleged wrongdoing
Starks v. Vortex Industries (CA2/1 B288005 8/25/20) PAGA/LWDA Civil Penalties
The Labor and Workforce Development Agency (LWDA) is authorized to recover civil penalties from employers for violations of the Labor Code. Under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.), an employee aggrieved by his or her employer’s Labor Code violations may be authorized to act as an agent of the LWDA to recover such penalties in a civil action. In the cases underlying these consolidated appeals, Chad Starks and Adolfo Herrera, each acting as the LWDA’s agent, separately filed substantially identical PAGA actions against their former employer, Vortex Industries, Inc. (Vortex). Herrera, who filed his PAGA action (the Herrera action) 16 months after Starks commenced his action (the Starks action), never moved to consolidate the cases and did little to litigate his action.
Starks settled with Vortex. The court approved the settlement and entered judgment thereon. The LWDA thereafter accepted its share of the judgment proceeds. After learning of the judgment, Herrera moved to vacate the judgment and to intervene in the Starks action. The court denied the motions and subsequently granted Vortex’s motion for summary judgment against Herrera.
Herrera appealed the denial of his motions in the Starks action and the judgment in his lawsuit. We hold: (1) The trial court did not abuse its discretion when it determined that Herrera’s motion to intervene in the Starks action was untimely; and (2) Because the LWDA accepted the proceeds from the judgment in the Starks action, Herrera, as the LWDA’s agent, cannot attack that judgment. We also affirm the judgment in the Herrera action.
Guenther v. Lockheed Martin (9th Cir. 17-16984/18-15823 8/25/20) ERISA
Affirming the district court’s summary judgment in favor of defendants, the panel held that a claim of breach of fiduciary duty in violation of the Employee Retirement Income Security Act was time-barred under 29 U.S.C. § 1113(2), which provides that such a claim must be brought within three years of the date on which the plaintiff obtained “actual knowledge” of the breach.
First, the panel held that the defendant did not waive its statute of limitations affirmative defense, raised in answer to a second amended complaint filed during proceedings on remand from this court, either by litigating the case to judgment without ever raising the defense or by compelling plaintiff to exhaust administrative remedies without asserting the defense.
Addressing the merits of the defense, the panel applied Intel Corp. Inv. Policy Committee v. Sulyma, 140 S. Ct. 768 (2020), which held that “actual knowledge” requires more than merely a possible inference from ambiguous circumstances, but rather knowledge that is actual. Plaintiff alleged that in a letter regarding bridging of service under a retirement plan, defendant breached its duty to make accurate representations to a beneficiary. The panel concluded that the sending of this letter provided the basis for plaintiff’s claim, and he had actual knowledge of defendant’s alleged misrepresentation upon receipt of the letter. The panel held that actual knowledge does not mean that a plaintiff has knowledge that the underlying action violated ERISA, not does it merely mean that the plaintiff has knowledge that the underlying action occurred. Instead, the defendant must show that the plaintiff was actually aware of the facts constituting the breach, as well as the nature of the breach. The panel concluded that plaintiff’s suit was barred by the statute of limitations because he did not file suit within three years of obtaining actual knowledge of the alleged breach. The panel held that an exception for fraudulent concealment, triggering application of ERISA’s six-year statute of limitations, did not apply. The panel also held that the district court did not abuse its discretion in denying plaintiff’s post-judgment motion for reconsideration.
Namisnak v. Uber Technologies (9th Cir. 18-15860 8/24/20) ADA/Deterrent Effect Doctrine
The panel affirmed the district court’s order denying in part the motion of defendant Uber Technologies, Inc., to compel arbitration of claims brought under the Americans with Disabilities Act.
Plaintiffs sued Uber for not providing a wheel-chair-accessible ride-sharing option, known as “uberWAV,” in their hometown of New Orleans. Two plaintiffs never downloaded the Uber App and therefore did not sign Uber’s arbitration agreement, included in its Terms and Conditions, before filing suit. The panel held that plaintiffs plausibly alleged sufficient facts to establish Article III standing. The panel held that plaintiffs sufficiently alleged injury in fact pursuant to the “deterrent effect doctrine,” which recognizes that when a plaintiff who is disabled has actual knowledge of illegal barriers at a public accommodation to which he or she desires access, the plaintiff need not engage in the “futile gesture” of attempting to gain access. The panel distinguished a Seventh Circuit case in which uberWAV was available to the plaintiff, who therefore lacked standing.
The panel held that plaintiffs also plausibly alleged the causation and redressability elements of standing because their alleged injury was directly traceable to Uber’s refusal to offer uberWAV in New Orleans, and an injunction would redress that injury by requiring Uber to offer access to its services.
The panel further held that, under California law, plaintiffs were not equitably estopped from avoiding arbitration because their ADA claims did not rely on Uber’s Terms and Conditions.
Canela v. Costco (9th Cir. 18-16592 8/21/20) Diversity Jurisdiction/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.
Betancourt v. OS Restaurant Services, LLC (2020) 262 Cal.Rptr.3d 745 (SC S262866/B293625 review granted 8/20/20) Wage and Hour/Attorneys’ Fees
The petition for review is granted. Further action in this matter is deferred pending consideration and disposition of a related issue in Naranjo v. Spectrum Security Services, Inc., S258966 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520, is deferred pending further order of the court. Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/waiting for lead case.
Davis v. Kozak (CA1/3 A156234A filed 8/19/20, reposted 8/20/20) Arbitration/FEHA
This consolidated appeal arises out of plaintiff Scott Davis’s lawsuit against executives of Red Bull North America, Inc. (Red Bull) for age and sex harassment in violation of the Fair Employment and Housing Act (FEHA, Gov. Code § 12900 et seq.) and related tort claims. Red Bull and its executives appeal from the trial court’s orders denying their motions to compel arbitration of Davis’s claims. We conclude that the arbitration agreement between Davis and Red Bull was unconscionable and unenforceable, and that the trial court properly refused enforcement of the entire agreement. Accordingly, we affirm.
Biel v. St. James School (9th Cir. 2018) 911 F.3d 603 (9th Cir. 17-55180 order 8/20/20) Ministerial Exception
In accordance with the United States Supreme Court’s decision in Our Lady of Guadalupe School v. Morrissey-Berru, 140 S. Ct. 2049 (2020), the district court’s grant of summary judgment to Defendants-Appellees is AFFIRMED.
Li v. Dept. of Industrial Relations etc. (CA2/7 B288104 7/23/20) Writ of Mandate/Labor Commissioner/Posting Bond
Labor Code section 1197.1, subdivision (c)(2), authorizes an employer to challenge by petition for writ of mandate in superior court decisions of the Labor Commissioner concerning underpayment of wages. Section 1197.1, subdivision (c)(3), requires, “[a]s a condition to filing a petition for writ of mandate, the petitioner seeking the writ shall first post a bond with the Labor Commissioner equal to the total amount of any minimum wages, contract wages, liquidated damages, and overtime compensation that are due and owing” pursuant to the citation being contested.
Fushan Li’s petition for writ of mandate was dismissed by the superior court after his request that the court waive the bond requirement was denied and he failed to post a bond. On appeal Li contends he was not properly subject to the bond requirement, which was adopted after the citations he challenged were issued, and, alternatively, the trial court abused its discretion in denying his request for relief from the requirement once he had demonstrated his indigency. We affirm.
Rittmann v. Amazon.com (9th Cir. 19-35381 8/19/20) Arbitration/FAA Exemption
The panel affirmed the district court’s order denying the motion of Amazon.com, Inc., and Amazon Logistics, Inc., to compel arbitration of federal and state wage and hour claims brought by delivery workers.
One of the named plaintiffs agreed to Amazon’s Terms of Service when he signed up to work as a delivery provider for Amazon’s app-based delivery program Amazon Flex (AmFlex). The Terms of Service included an arbitration provision.
Agreeing with the First Circuit, the panel held that AmFlex delivery workers were exempt from the Federal Arbitration Act’s enforcement provisions because they were transportation workers engaged in interstate commerce under 9 U.S.C. § 1 when they made “last mile” deliveries of goods in the stream of interstate commerce. Considering the plain meaning of the relevant statutory text, case law interpreting the exemption’s scope and application, and the construction of similar statutory language, the panel held that to be “engaged in interstate commerce,” the AmFlex workers did not themselves need to cross state lines.
The panel held that the arbitration provision, which included a choice-of-FAA clause, could not be enforced under either federal law or Washington state law.
Dissenting, Judge Bress wrote that the narrow FAA exemption for certain transportation workers did not apply. In his view, for a delivery worker to be “engaged in” interstate commerce, the worker must belong to a “class of workers” that crosses state lines in the course of making deliveries.
Pasos v. Los Angeles County Civil Service Com. (CA2/7 B291952M, filed 7/20/20, mod., depub. den. 8/18/20) Law Enforcement 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.
Castillo v. Metropolitan Life Ins. Co. (9th Cir. 19-56093 8/17/20) ERISA/Attorneys’ Fees Administrative Phase
Affirming the district court’s dismissal of an action under the Employee Retirement Income Security Act, the panel held that 29 U.S.C. § 1132(a)(3) does not authorize an award of attorney’s fees incurred during the administrative phase of the ERISA claims process.
In administrative proceedings, plaintiff filed a successful appeal from defendant’s reduction of his long-term disability benefits to account for his rollover of his pension benefits into an individual retirement account. Plaintiff subsequently filed a civil action under § 1132(a)(3), alleging that defendant, the administrator of the ERISA plan, breached its fiduciary duties of prudence and loyalty by delaying its determination of the effect of plaintiff’s rollover of his pension benefits and failing to inform him that it was considering an offset based on the rollover. Plaintiff sought an order surcharging defendant for his losses, measured by the amount of attorney’s fees he was forced to incur to get defendant to reverse the reduction of his disability benefits.
The panel held that the attorney’s fees incurred in an administrative proceeding did not constitute “appropriate equitable relief” under § 1132(a)(3). The panel reasoned that allowing an award of such fees would contravene this court’s decision in Cann v. Carpenters’ Pension Trust Fund for Northern California, 989 F.3d 313 (9th Cir. 1993), which held that such awards would undermine ERISA’s purpose of ensuring plan soundness and stability. The panel noted, moreover, that ERISA’s express fee-shifting provision, 29 U.S.C. § 1132(g), authorizes an award of attorney’s fees incurred in a civil action but is silent as to fees incurred in an administrative proceeding. Under the expressio unius canon, this silence gives rise to the inference that § 1132(a)(3) does not authorize such fees.
Henry v. Adventist Health Castle Med. Ctr. (9th Cir. 19-16010 8/14/20) Title VII/Independent Contractor (Hawaii)
The panel affirmed the district court’s grant of summary judgment in favor of the defendant in a Title VII action brought by a surgeon who provided on-call service in a hospital emergency department.
The panel held that Title VII did not protect the surgeon because he was an independent contractor, not an employee of defendant Adventist Health Castle Medical Center. The panel considered the surgeon’s payment arrangement, his limited obligations to Castle, and his description as an independent contractor in the parties’ contracts. The panel concluded that other factors, including the surgeon’s high skill level, Castle’s provision of assistants and medical equipment, and its mandatory professional standards, did not weigh strongly in the surgeon’s favor.
Arnold v. Dignity Health (CA3 C087465, filed 7/17/20, ord. pub. 8/13/20) FEHA Age and Race Discrimination
Plaintiff and appellant Virginia M. Arnold appeals from summary judgment in favor of her employer, defendant and respondent Dignity Health (Dignity) and other individually named defendants.
Arnold, an African-American woman who was employed as a medical assistant, alleged defendants engaged in discrimination, harassment, and retaliation based on her age and her association with her African-American coworkers, including by terminating her employment in violation of the Fair Employment and Housing Act (FEHA).
On summary judgment, the trial court concluded defendants provided evidence of legitimate reasons for plaintiff’s termination and, in rebuttal, plaintiff failed to offer any evidence that defendants’ actions were discriminatory, harassing, or retaliatory.
On appeal, plaintiff contests the grant of summary judgment. She adds that the current law should be re-examined. We disagree and affirm the judgment.
Robinson v. Southern Counties Oil Co. (CA1/4 A158791 8/13/20) PAGA/Claim Preclusion
Plaintiff Richard Robinson, on behalf of himself and other aggrieved employees, appeals from the judgment entered in favor of his former employer defendant Southern Counties Oil Company (Southern Counties). Robinson’s complaint seeks civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.) based on Southern Counties’s alleged unlawful denial of meal and rest breaks. Robinson contends the court erred in holding that he is barred by claim prelusion from asserting certain of the Labor Code violations alleged in his complaint and that he lacks standing with respect to the remaining alleged violations. We shall affirm.
Ducksworth v. Tri-Model Distribution Services (2020) 261 Cal.Rptr.3d 108 (SC S262699/B294872 review granted 8/12/20) FEHA Statute of Limitations/Costs on Appeal
Petition for review after the Court of Appeal affirmed the judgment in a civil action. This case presents the following issues: (1) In a cause of action alleging quid pro quo sexual harassment resulting in a failure to promote in violation of the Fair Employment and Housing Act, did the statute of limitations to file an administrative complaint with the Department of Fair Employment and Housing begin to run when the successful candidate was offered and accepted the position, or when that promotion later took effect, if there is no evidence that the plaintiff was aware of the promotion on the earlier date? (2) Was it proper for the Court of Appeal to award costs on appeal under rule 8.278 of the California Rules of Court against an unsuccessful FEHA claimant in the absence of a finding that the underlying claims were objectively frivolous? Votes: Cantil-Sakauye, C.J., Chin, Corrigan, Liu, Cuéllar, Kruger and Groban, JJ. Review granted/brief due.
Delta Sandblasting v. NLRB (9th Cir. 18-73097 8/11/20) Unfair Labor Practice
The panel denied Delta Sandblasting Company, Inc.’s petition for review, and granted the National Labor Relations Board’s cross-petition for enforcement of its order ruling that Delta committed an unfair labor practice when it decreased its employees’ hourly pension contribution rate to the Pacific Coast Shipyards Pension Fund without first notifying or bargaining with their union.
Specifically, Delta argued that the Board erred in ruling that Section 302(c)(5)(B) of the Labor Management Relations Act did not prohibit Delta from making pension contributions to the Pension Fund according to the rates contained within a schedule (Schedule A) that the Board found was incorporated into the collective bargaining agreement (CBA) between Delta and the Union.
The panel held that substantial evidence supported the Board’s finding that Schedule A was incorporated into the CBA in December 2014. Further, the panel affirmed the Board’s conclusion that the CBA, which incorporated Schedule A, met Section 302’s requirements. The panel held that the Board properly ruled that Section 302’s requirement of a “written agreement” defining pension contributions was satisfied here. Finally, the panel held that Delta’s failure to notify or bargain with its union over the pension contribution rate decrease was an unfair labor practice under Sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act.
Dissenting, Judge Bumatay would hold that the Board owed a reasoned explanation for its departure from the administrative law judge (“ALJ”)’s findings, and the Board fell far short of that here. Judge Bumatay would grant Delta’s petition for review and remand to the Board to reassess its conclusion in light of the ALJ’s express finding regarding the base pension rate of the CBA.
Crawford v. Comm. on Prof. Competence etc. (CA4/2 E071770 8/11/20) Teacher/Counselor Dismissal
In February 2017, students at Rubidoux High School (RHS) participated in a protest. As part of the protest, almost a quarter of RHS’s student body boycotted school for the day. Plaintiff and appellant, Patricia Crawford, a guidance counselor at RHS, criticized the students who boycotted in an e-mail to a colleague and by leaving several comments on a RHS teacher’s public Facebook post that was similarly critical of the boycotting students. Some students and others considered the post and Crawford’s comments on the post to be offensive. The Facebook post “went viral,” and a public outcry against Crawford and other RHS teachers’ comments ensued, resulting in nationwide media attention, a RHS student protest against the teachers, and a flurry of e-mails to RHS administration from the public.
Real party in interest, Jurupa Unified School District (the District), dismissed Crawford on the grounds that her conduct was “immoral” and showed that she was “evidently unfit for service” under Education Code section 44932. Defendant and respondent, the Commission on Public Competence of the Jurupa Unified School District (CPC), upheld Crawford’s dismissal, as did the trial court, and as do we. The trial court’s judgment is affirmed.
Oak Valley Hospital Dist. v. State Dept. of Health Care Services (CA3 C085869 8/10/20) In-House Medical Services for Employees/Medi-Cal
These four consolidated appeals present the question of whether medical providers who provide services under California’s Medi-Cal program are entitled to reimbursement for the costs of providing in-house medical services for their own employees through “nonqualifying” self-insurance programs. Nonqualifying self-insurance programs are those that do not meet all the requirements of section 2162.7 in the Centers for Medicare and Medicaid Services’ Publication 15-1 (Centers for Medicare and Medicaid Services, The Provider Reimbursement Manual, § 2162.7, p. 21-42.7 (rev. 406, 08-98); hereafter Provider Reimbursement Manual). Even for nonqualifying self-insurance programs, however, the Provider Reimbursement Manual allows providers to claim reimbursement for reasonable costs on a “claim-paid” basis. (§ 2162.7, par. A, p. 21-42.7 (rev. 406, 08-98).)
Here, Oak Valley Hospital District (Oak Valley) and Ridgecrest Regional Hospital (Ridgecrest) have self-insurance programs providing health benefits to their employees. Claims for in-house medical services to their employees were included in cost reports submitted to the State Department of Health Care Services (DHS). DHS allowed the costs when Oak Valley and Ridgecrest employees received medical services from outside providers but denied costs when the medical services were provided in-house. Oak Valley and Ridgecrest sought formal hearings on the denials of their costs for these in-house medical services. In each of the cases, DHS determined claims paid to Oak Valley and Ridgecrest out of their self-insurance plan for in-house medical services rendered to their employees are not allowable costs. Oak Valley and Ridgecrest then petitioned the trial court for writs of administrative mandate. The trial court granted the writ petitions on grounds that costs of in-house medical services are reimbursable so long as they are “ ‘reasonable’ ” as defined by the Provider Reimbursement Manual. DHS has timely appealed in each case.
In Oak Valley I, DHS contends the trial court erred because (1) Oak Valley’s self-insurance program does not meet the requirements for a qualified plan under section 2162.7, (2) the costs claimed by Oak Valley are not reasonable because they represent charges that exceed actual costs, and (3) the claimed costs are also not reasonable because they run afoul of related party principles. The issues and arguments in Oak Valley II and Oak Valley III are substantively the same as in Oak Valley I, but relate to later fiscal periods. Oak Valley II adds the contention that DHS properly denied the in-house medical services costs on the bases of sections 332, 332.1, and 2144.4. Ridgecrest presents substantively the same legal issues and arguments as the Oak Valley cases, but as they relate to Ridgecrest Regional Hospital.
We conclude Oak Valley’s and Ridgecrest’s self-insurance programs do not meet the requirements of a qualified plan under section 2162.7. However, neither medical provider ever claimed they operated qualified plans. We reject DHS’s contention that Oak Valley and Ridgecrest costs relating to in-house medical services for their employees are inherently unreasonable. Oak Valley and Ridgecrest incur actual costs in providing in-house medical services for their employees in the form of time expended by medical professionals, supplies required for treatment, and facilities within which treatment can take place. To the extent DHS argues the cost reports are not per se unreasonable, but unreasonable under the circumstances of the actual treatments of Oak Valley and Ridgecrest employees, we determine the evidence in the record supports the trial court’s findings that expert testimony established Oak Valley and Ridgecrest incur actual expenses in providing in-house medical services for their employees that are not otherwise reimbursed.
We reject DHS’s assertions regarding violation of related party principles for failure to develop the argument. Moreover, DHS did not raise the related party argument during the administrative or trial court hearings in these cases. We discern nothing in sections 332, 332.1, and 2144.4 that supports DHS’s categorical denial of in-house treatment costs. Sections 332 and 332.1 are inapposite because they apply to circumstances in which the patient is billed directly, whereas this case involves the question of reimbursement for hospital self-insurance plans that are not fully qualified under section 2162.7. Section 2144.4 states that fringe benefits, such as unrecovered costs for in-house treatment of employees, are allowable costs. Finally, we decline to address DHS’s assertion it calculated costs correctly in Ridgecrest, for failure to set forth the facts in the light most favorable to the judgment. Contrary to appellant’s burden on appeal, DHS sets forth a statement of facts in which it ignores the majority of the testimony introduced during the administrative hearing. Accordingly, we affirm the trial court’s granting of the petitions for writs of administrative mandate.
Dent v. Nat’l Football League (9th Cir. 19-16017 8/7/20) § 301 LMRA Preemption
The panel affirmed in part and reversed in part the district court’s dismissal of a third amended complaint (“TAC”) brought by a putative class of former National Football League (“NFL”) players, alleging that the NFL negligently facilitated the hand-out of controlled substances to dull players’ pain and to return them to the game in order to maximize profits.
The panel affirmed the district court’s dismissal of plaintiffs’ per se theory of negligence. The panel held that while the district court’s order held plaintiffs to an unnecessarily high pleading standard, it still correctly identified the main deficiency in plaintiffs’ pleading: the dearth of allegations regarding NFL behavior that violated the duty to comply with federal and state laws outlined in the TAC. In addition, the panel held that although it was evident that plaintiffs suffered serious and long-standing injuries, plaintiffs could not explain exactly what NFL actions were responsible for them, and therefore it was impossible to ascertain whether there was proximate causation.
The panel held that plaintiffs sufficiently alleged a voluntary undertaking theory of negligence to survive a motion to dismiss, and the district court erred in concluding otherwise. Specifically, the panel held that plaintiffs’ allegations supported their theory that the NFL undertook The panel affirmed in part and reversed in part the district court’s dismissal of a third amended complaint (“TAC”) brought by a putative class of former National Football League (“NFL”) players, alleging that the NFL negligently facilitated the hand-out of controlled substances to dull players’ pain and to return them to the game in order to maximize profits. The panel affirmed the district court’s dismissal of plaintiffs’ per se theory of negligence. The panel held that while the district court’s order held plaintiffs to an unnecessarily high pleading standard, it still correctly identified the main deficiency in plaintiffs’ pleading: the dearth of allegations regarding NFL behavior that violated the duty to comply with federal and state laws outlined in the TAC. In addition, the panel held that although it was evident that plaintiffs suffered serious and long-standing injuries, plaintiffs could not explain exactly what NFL actions were responsible for them, and therefore it was impossible to ascertain whether there was proximate causation. The panel held that plaintiffs sufficiently alleged a voluntary undertaking theory of negligence to survive a motion to dismiss, and the district court erred in concluding otherwise. Specifically, the panel held that plaintiffs’ allegations supported their theory that the NFL undertook the duty of overseeing the administration of the distribution of pain medications to players, and the NFL was aware that it should be providing protections. The panel also concluded that there were adequate allegations that the NFL’s carelessness in allowing drugs to be distributed as they were increased the risk of harm to plaintiffs.
Plaintiffs argued that the TAC allegations supported a negligence claim arising out of the special relationship between themselves, as players, and the NFL. The panel rejected the argument because plaintiffs failed to reference a special relationship in the TAC, and upheld the district court’s dismissal of this theory.
Because the district court did not consider whether plaintiffs’ voluntary undertaking claim was preempted by § 301 of the Labor Management Relations Act, the panel remanded to the district court for consideration in light of the relevant collective bargaining agreements, and the guidance in prior appeal outlined in Dent v. Nat’l Football League, 902 F.3d 1109 (9th Cir. 2018).
Bill Signed by Governor (8/6/20)
SB 119 by the Committee on Budget and Fiscal Review – State employment: State Bargaining Units.