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Johnson v. Maxim Healthcare Services, Inc. (CA4/1 D077599 7/21/21) PAGA/Time-Barred Individual Claim/Representative Claim
Gina Johnson filed a lawsuit against her employer, Maxim Healthcare Services, Inc. (Maxim), under the Private Attorney General Act of 2004 (PAGA) (Lab. Code, § 2698, et seq.). The superior court sustained Maxim’s demurrer to complaint, finding that Johnson’s individual claim was time-barred. The court subsequently dismissed Johnson’s suit with prejudice. Relying on Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73 (Kim), we reverse.
Bill Signed by Governor (7/21/21)
SB 144 by Senator Portantino. Taxes: credits: qualified motion pictures: certified studio construction projects; wages and diversity: reports.
Bernstein v. Virgin America (9th Cir. 19-15382, 20-15186, amend. opn. 7/20/21) Wage and Hour/Dormant Commerce Clause
The panel filed an order amending its opinion, denying petitions for panel rehearing, and denying on behalf of the court petitions for rehearing en banc; and an amended opinion in which the panel affirmed in part, reversed in part, and vacated the district court’s judgment in a putative class action, brought by a plaintiff class of California-based flight attendants who were employed by Virgin America, Inc., alleging that Virgin violated California labor laws.
During the Class Period, approximately 25% of Virgin’s flights were between California airports. Class members spent approximately 31.5% of their time working within California’s borders. The district court certified: a Class of all individuals who worked as California-based Virgin flight attendants during the period from March 18, 2011; a California Resident Subclass; and a Waiting Time Penalties Subclass.
As a threshold matter, the panel held that the dormant Commerce Clause did not bar applying California law in the context of this case.
The panel reversed the district court’s summary judgment to plaintiffs on their claims for minimum wage and payment for all hours worked. Specifically, the panel held that Virgin’s compensation scheme based on block time did not violate California law. The fact that pay was not specifically attached to each hour of work did not mean that Virgin violated California law.
The panel held that under the circumstances of this case, Virgin was subject to the overtime strictures of California Labor Code § 510 as to both the Class and California Resident Subclass.
The panel affirmed the district court’s summary judgement to plaintiffs on their rest and meal break claims. The panel rejected Virgin’s contention that federal law preempted California’s meal and rest break requirement in the aviation context because federal law occupied the field. Specifically, the panel held that field preemption under the Federal Aviation Act was not necessarily limited to state laws that regulate aviation safety. Also, conflict preemption did not bar application of California’s meal and rest break requirements. With respect to Virgin’s impossibility preemption argument, the panel held that it was physically possible to comply with federal regulations prohibiting a duty period of longer than fourteen hours and California’s statutes requiring ten-minute rest breaks and thirty-minute meal periods at specific intervals. The panel held further that Virgin’s obstacle preemption argument mischaracterized the relevant federal regulation and improperly dismissed the possibility of increasing flight attendant staffing on longer flights. Contrary to Virgin’s characterization, the relevant regulations defined safety duties for a minimum number of flight attendants. The panel agreed with the district court, which held that airlines could comply with both the Federal Aviation Administration safety rules and California’s meal and rest break requirements by staffing longer flights with additional flight attendants in order to allow for duty-free breaks.
Finally, the meal and rest break requirements were not preempted under the Airline Deregulation Act. Extrapolating the principles of Sullivan v. Oracle Corp., 254 P.3d 237 (Cal. 2011), the panel held that California’s meal and rest break requirements applied to the work performed by the Class and California Resident Subclass.
Applying Ward v. United Airlines, Inc., 466 P.3d 309, 321 (Cal. 2020) (holding that California Labor Code § 226(a) applied to workers who do not perform the majority of their work in any one state, but who are based for work purposes in California), the panel affirmed the district court’s summary judgment to plaintiffs on their wage statement claim.
The panel affirmed the district court’s summary judgment to plaintiffs on their waiting time penalties claim. Specifically, the panel held that although there was no California Supreme Court case specifically interpreting the reach of the waiting time penalties statute – Cal. Labor Code §§ 201 and 202 – for interstate employees, the analogy to Cal. Labor Code 226 was compelling. Because the California Supreme Court held § 226 to apply under these circumstances, the panel held that §§ 201 and 202 applied as well.
The panel affirmed the district court’s decision on class certification. Specifically, the panel held that the applicability of California law has been adjudicated on a class-wide or subclass-wide basis, and thus no individual choice-of-law analysis was necessary.
The panel reversed the district court’s holding that Virgin was subject to heightened penalties for subsequent violations under California’s Private Attorney General Act. Virgin was not notified by the Labor Commissioner or any court that it was subject to California Labor Code until the district court partially granted plaintiff’s motion for summary judgment. On this basis, the panel held that Virgin was not subject to heightened penalties for any labor code violation that occurred prior to that point.
The panel held that since it reversed in part the district court’s judgment on the merits, California law required that the panel vacate the attorneys’ fees and costs award. The panel remanded the issue to the district court.
Mauia v. Petrochem Insulatio (9th Cir. 20-15810 7/20/21) Meal and Rest Breaks/Oil Platforms
The panel reversed the district court’s order denying the motion of defendant Petrochem Insulation, Inc., to dismiss Iafeta Mauia’s claims that Petrochem violated California’s wage and hour laws by failing to provide adequate meal and rest periods to workers on oil platforms off the coast of California.
The panel held that pursuant to the Outer Continental Shelf Lands Act, all law on the Outer Continental Shelf is federal, and state law is adopted only to the extent it is applicable and not inconsistent with federal law. Under Parker Drilling Mgmt. Servs. v. Newton, 139 S. Ct. 1881 (2019), there must be a gap in federal law before state law will apply on the Outer Continental Shelf. The panel concluded that because the Fair Labor Standards Act addresses meal and rest periods, there was no gap in the applicable federal law.
Winns v. Postmates Inc. (CA1/3 A155717 7/20/21) Arbitration/PAGA Civil Penalties
Postmates Inc. (Postmates) appeals from the trial court’s order denying its petition to compel arbitration of a Private Attorney General Act (PAGA) claim for civil penalties brought by Plaintiffs Melanie Ann Winns, Ralph John Hickey Jr., and Kristie Logan (collectively Plaintiffs). In denying Plaintiffs’ petition with respect to their PAGA claim, the trial court followed our Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), which held that representative action waivers were unenforceable. We reject Postmates’ arguments that Iskanian was abrogated by subsequent United States Supreme Court decisions and affirm the order denying the motion to compel arbitration of the PAGA claim.
Kennedy v. Bremerton School District (9th Cir. 20-35222 den. rehg. en banc 7/19/21) First Amendment Establishment Clause/Title VII
The panel issued an order denying on behalf of the court a sua sponte request for rehearing en banc, in a case in which the panel affirmed the district court’s summary judgment in favor of Bremerton School District in an action brought by Joseph Kennedy, BSD’s former high school football coach, who alleged that his rights were violated under the First Amendment and Title VII of the Civil Rights Act of 1964 when BSD prohibited him from praying at the conclusion of football games, in the center of the field, potentially surrounded by Bremerton students and members of the community.
Concurring in the denial of rehearing en banc, Judge M. Smith first addressed Judge O’Scannlain’s statements, and wrote that Kennedy was never disciplined for offering silent, private prayers, and that BSD disciplined him only after Kennedy demanded the right to pray in the middle of the high school field immediately after the conclusion of games while the players were on the field and the crowd was still in the stands. He wrote that the panel’s opinion specifically identified BSD’s potential allowance of Kennedy’s religious activity as the state action that would have violated the Establishment Clause. BSD’s decision to limit Kennedy’s religious expression was thus backed by a compelling interest. The real threat of an Establishment Clause violation justified Kennedy’s suspension. BSD’s possible option to provide a disclaimer – that Kennedy’s religious activities did not carry the school’s endorsement – was insufficient in coercive contexts, such as this instance.
Judge M. Smith next addressed Judge R. Nelson’s dissent from the denial of rehearing en banc. He wrote that this court was not at liberty to change the Supreme Court’s guidance in Sante Fe Independent School District v. Doe, 530 U.S. 290 (2000); and strongly disagreed with the suggestion that the panel applied Sante Fe’s test incorrectly.
Judge M. Smith wrote further that the actual facts of this case left no question that Kennedy did not carry his burden to show that he spoke as a private citizen, which was an independent basis to affirm the district court. Judge O’Scannlain’s contention – that the panel opinion misapplied Garcetti v. Cellalos, 547 U.S. 410 (2006) – was wrong on the current law.
Concurring in the denial of rehearing en banc, Judge Christen, joined by Judge D.W. Nelson, wrote that the panel’s opinion affirmed the district court’s summary judgment ruling because Kennedy spoke as a public employee, because BSD did not demonstrate a hint of hostility or bias toward religion or non-religion, and because BSD had a compelling interest in avoiding an Establishment Clause violation. The outcome of this appeal was driven by the particular facts and circumstances of Kennedy’s postgame, on-field prayers. She further wrote that the dissenting statements concerning the denial of rehearing en banc painted an inaccurate picture of the dilemma that Kennedy created. The dissents’ suggestion that BSD could have issued a public disclaimer was not a realistic option.
Respecting the denial of rehearing en banc, Judge O’Scannlain, joined in full by Judges Callahan, Bea, R. Nelson, Collins, and Lee, joined by Judge Bumatay as to Part III, and joined by Judge VanDyke as to all parts except Part II-B, wrote that the panel’s opinion obliterated First Amendment protections by announcing a new rule that any speech by a public school teacher or coach, while on the clock and in earshot of others, was subject to plenary control by the government. He wrote further that the panel opinion weaponized the Establishment Clause to defeat the Free Exercise claim of Kennedy, who prayed as a private person. He wrote that the panel opinion was in clear conflict with Garcetti and decades of Supreme Court cases affirming the principle that the First Amendment safeguards – not banishes – private, voluntary religious activity by public employees. He wrote that a proper application of Garcetti and its progenitors dictates that Kennedy’s prayer was his private speech, not that of the government. Consequently, Kennedy’s Free Speech rights were implicated, and the government’s stated justifications for its censorship must face constitutional scrutiny.
Judge O’Scannlain wrote that a faithful reading of the Supreme Court’s religion clauses jurisprudence makes clear that BSD’s unfounded fears of Establishment Clause liability did not justify BSD’s incursions on either Kennedy’s Free Speech rights or his Free Exercise rights. Because there was no Establishment Clause violation without state action, BSD’s sole stated interest in avoiding Establishment Clause liability could not justify suppressing the Free Exercise rights of its coach. Because strict scrutiny limits courts to considering state interests that are genuine, not hypothesized, it necessarily followed that BSD had no compelling interest in punishing Kennedy’s prayer. He wrote further that even if an observer could mistake
Kennedy’s private speech for that of the school, it was still erroneous for the panel to assume that BSD’s sole constitutional option was to suspend Kennedy. Instead, the panel should have considered the accommodation proposed by Kennedy’s counsel: a simple disclaimer, clarifying Kennedy’s prayer was his own private speech, not that of BSD.
Respecting the denial of rehearing en banc, Judges O’Scannlain and Bea agreed with the views expressed by Judge Ikuta in her dissent from rehearing en banc.
Respecting the denial of rehearing en banc, Judge O’Scannlain agreed with the views expressed by Judge R. Nelson in his dissent from denial of rehearing en banc.
Respecting the denial of rehearing en banc, Judge O’Scannlain agreed with the views expressed by Judge Collins in his dissent from denial of rehearing en banc.
Respecting the denial of rehearing en banc, Judge Bea agreed with the views expressed by Judge Collins in his dissent from denial of rehearing en banc.
Dissenting from the denial of rehearing en banc, Judge Ikuta, joined by Judges Callahan, R. Nelson, Bade, Forrest, and Bumatay, wrote that, given the circumstances of this case, no objective observer would think that BSD was endorsing Kennedy’s prayers. BSD’s concern that Kennedy’s religious activities would be attributed to BSD was simply not plausible. Applying the objective observer test from Sante Fe, there was no Establishment Clause violation here. Judge Ikuta wrote that en banc consideration of this case would raise an opportunity for the court to develop a framework for evaluating how a public employer can protect its employee’s religious expression without becoming vulnerable to an Establishment Clause claim.
Dissenting from the denial of rehearing en banc, Judge R. Nelson, joined in full by Judges Callahan, Bumatay, and VanDyke, and joined by Judge Ikuta, as to Part I, wrote that the panel misapplied Supreme Court precedent since none of BSD’s actions would have come close to an endorsement of religion or coercion. He wrote further that the panel’s reliance of Sante Fe was inapt as there would not have been an endorsement of religion by allowing Kennedy to pray. Moreover, Sante Fe should not have been extended by the panel as it stemmed from Lemon v. Kurtzman, 403 U.S. 602 (1971), which the Supreme Court has effectively killed. Judge R. Nelson also wrote that the panel’s analysis went far afield from the original meaning of an established religion, especially in light of American Legion v. Humanist Ass’n, 139 S. Ct. 2067 (2019). Under existing Supreme Court precedent, there was no Establishment Clause violation here.
Dissenting from the denial of rehearing en banc, Judge Collins wrote he dissented for the reasons in Judge O’Scannlain’s statement, which he joined. He also wrote to underscore one irreducible aspect of the panel’s opinion. The panel’s holding – that allowing any publicly observable prayer behavior by the coach in these circumstances, even silent prayer while kneeling, would violate the Establishment Clause – was indefensible under Supreme Court caselaw.
Western Bagel Co., Inc. v. Superior Court (CA2/1 B305625, filed 6/24/21, pub. ord. 7/16/21) Arbitration/Ambiguity
At all relevant times, real party in interest Jose Calderon (Calderon), a Spanish-speaker who can read and write only basic English, was employed by petitioner Western Bagel Company, Inc. (Western Bagel) at one of its retail stores. Calderon commenced a putative class action against Western Bagel for allegedly failing to provide its employees with legally compliant meal and rest breaks. Western Bagel moved to compel arbitration, arguing that Calderon had executed an arbitration agreement that required him to resolve disputes arising out of his employment through binding arbitration. As the parties briefed the motion, it became apparent that the severability clause in the Spanish version of the arbitration agreement Calderon signed indicates the parties agreed to nonbinding arbitration, whereas the severability clause in the original English version of that document suggests the parties consented to binding arbitration. Western Bagel attributed the discrepancy to a typographical error that a third-party company had made when it translated the English version of the document to Spanish. Other provisions in both the English and Spanish versions of the agreement, however, either state explicitly, or strongly support the conclusion, that the agreement calls for binding arbitration.
The trial court found that the Federal Arbitration Act (FAA) governs the parties’ arbitration agreement, concluded that the inconsistency between the Spanish and English severability clauses creates an ambiguity regarding whether the parties consented to binding or nonbinding arbitration, resolved this ambiguity against Western Bagel pursuant to the constructive canon of contra proferentem (whereby an ambiguity in a contract is construed against the drafter thereof), and ordered the parties to arbitrate their dispute on a nonbinding basis.
Although it is unclear whether Western Bagel has sought review of an appealable order, we need not reach that issue because we exercise our discretion to construe Western Bagel’s appeal as a petition for writ of mandate. Upon reaching the merits of Western Bagel’s writ petition, we conclude the FAA preempted the trial court’s use of contra proferentem. Next, assuming arguendo there is an ambiguity regarding whether the parties consented to binding or nonbinding arbitration, we employ the FAA’s default rule that any ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration as envisioned by the FAA, a fundamental attribute of which is a binding arbitral proceeding. We thus grant Western Bagel’s petition and direct the trial court to enter a new order compelling the parties to arbitrate their dispute via binding arbitration in accordance with the terms of their arbitration agreement.
Bills Signed by Governor (7/16/21)
AB 138 by the Committee on Budget – Employment: health care benefits: unemployment insurance: policies and practices.
AB 289 by Assemblymember Lisa Calderon (D-Whittier) – Classified school employees: merit system: adoption and termination.
AB 302 by Assemblymember Christopher Ward (D-San Diego) – San Diego Metropolitan Transit Development Board: regulation of for-hire vehicle and passenger jitney services.
SB 657 by Senator Rosilicie Ochoa Bogh (R-Yucaipa) – Employment: electronic documents.
Ferra v. Loews Hollywood Hotel, LLC (SC S259172 per curiam 7/15/21) Regular Rate of Pay Encompasses Nondiscretionary Payments
Under California law, employers must provide employees with overtime pay when employees work more than a certain amount of time. (Lab. Code, § 510, subd. (a) (section 510(a)); all undesignated statutory references are to this code.) To calculate overtime pay, section 510(a) requires an employer to compensate an employee by a multiple of the employee’s “regular rate of pay.” California law also provides for meal, rest, and recovery periods. If an employer does not provide an employee with a compliant meal, rest, or recovery period, section 226.7, subdivision (c) (section 226.7(c)) requires the employer to “pay the employee one additional hour of pay at the employee’s regular rate of compensation.”
The question here is whether the Legislature intended “regular rate of compensation” under section 226.7(c) to have the same meaning as “regular rate of pay” under section 510(a), such that the calculation of premium pay for a noncompliant meal, rest, or recovery period, like the calculation of overtime pay, must account for not only hourly wages but also other nondiscretionary payments for work performed by the employee. We hold that the terms are synonymous: “regular rate of compensation” under section 226.7(c), like “regular rate of pay” under section 510(a), encompasses all nondiscretionary payments, not just hourly wages.
Briley v. City of West Covina (CA2/4 B295666M, filed 7/1/21, mod. 7/14/21) Labor Code section 1102.5 Retaliation
It is ordered that the opinion filed July 1, 2021 be modified as follows:
On page two, line four replace the word “Alberts” with “Albers”.
The modification does not change the judgment.
NLRB v. Nexstar Broadcasting, Inc. (9th Cir. 20-71480 7/12/21) NLRA/Unfair Labor Practices
The panel granted the National Labor Relations Board’s petition for enforcement of its decision holding that management of a television station committed unfair labor practices under subsections 8(a)(1) and (5) of the National Labor Relations Act (“NLRA”) by making two unilateral changes to the existing terms of the conditions of employment after a collective bargaining agreement (“CBA”) expired.
Following expiration of the CBA, management began requiring employees to complete an annual motor vehicle and driving history background check. In addition, management began posting employee work schedules two weeks in advance after it had previously posted schedules four months in advance.
Agreeing with the Board, the panel rejected management’s argument that it was entitled to make changes to the terms and conditions of employment under the “contract coverage” doctrine. The panel held that the Board’s decision was rational and consistent with the NLRA where the Board applied its longstanding rule that after a CBA has expired, unilateral changes by management are permissible during bargaining only if the CBA contained language explicitly providing that the relevant provision permitting such a change would survive contract expiration. The panel concluded that there was no explicit language in the CBA to allow management to make unilateral changes to terms and conditions of employment in the post-expiration period.
The panel rejected management’s argument that the Board should have referred this dispute to arbitration.
Certified Tire & Service Centers Wage & Hour Cases (CA4/1 D072265A 7/2/21) Wage and Hour Class Action
This is an appeal in a certified wage and hour class action following a judgment after a bench trial in favor of defendants Certified Tire and Service Centers, Inc. (Certified Tire) and Barrett Business Services, Inc. (collectively defendants). Plaintiffs contend that Certified Tire violated the applicable minimum wage and rest period requirements by implementing a compensation program, which guaranteed its automotive technicians a specific hourly wage above the minimum wage for all hours worked during each pay period but also gave them the possibility of earning a higher hourly wage for all hours worked during each pay period based on certain productivity measures.
We previously issued an opinion in this appeal on September 18, 2018, in which we affirmed the judgment. (Certified Tire & Service Centers Wage & Hour Cases (2018) 28 Cal.App.5th 1, review granted Jan. 16, 2019, S252517 (Certified Tire).) Our Supreme Court granted review in January 2019, deferring consideration and disposition until it decided a related issue in Oman v. Delta Air Lines, Inc. (2020) 9 Cal.5th 762 (Oman)). In September 2020, our Supreme Court transferred this matter to us with directions to vacate our September 18, 2018 opinion and to reconsider this appeal in light of Oman. We directed the parties to submit supplemental briefing regarding Oman and any other matter arising after our original decision, and we held oral argument.
As we will explain, after considering the parties’ supplemental briefing on the applicability of Oman to the issues presented in this matter, we conclude that that plaintiffs’ appeal lacks merit, and we accordingly affirm the judgment.
Bill Signed by Governor (7/1/21)
SB 159 by the Committee on Budget and Fiscal Review – State Employment: State Bargaining Unit 6.
Briley v. City of West Covina (CA2/4 B295666 7/1/21) Labor Code section 1102.5 Retaliation
Respondent Jason Briley worked for appellant, the City of West Covina (the City), as a deputy fire marshal. During his employment, Briley complained that various City officials, including his then-direct superior Larry Whithorn, had ignored his reports of safety issues and engaged in misconduct. He later complained that Whithorn and others had retaliated against him in various ways. The City commissioned an investigation of Briley’s claims but ultimately concluded they were unfounded. While this investigation was still pending, the City commissioned an investigation of allegations that Briley had repeatedly engaged in misconduct and unprofessional behavior. At the conclusion of this second investigation, Whithorn initiated Briley’s termination, and another City official upheld the decision.
Briley contended his termination was the result of retaliation for his prior complaints and initiated an appeal to the City’s Human Resources Commission (HR Commission). The commission was to hold an evidentiary hearing and deliver its findings and recommendations to Whithorn and City Manager Chris Freeland, who were the ultimate decisionmakers in the appeal. However, Briley later abandoned the appeal, asserting, among other things, that the commission had no jurisdiction to consider his retaliation claims, and that the appeal procedure was futile and violated due process because Whithorn and Freeland were biased against him and had prejudged his claims. He then filed this action against the City, alleging retaliation under Labor Code section 1102.5.
The City asked the trial court to dismiss Briley’s action for failure to exhaust available administrative remedies, but the court concluded that an appeal to the HR Commission was unnecessary. It found that the commission had no authority to consider Briley’s retaliation claim, and that an appeal would have been futile because Whithorn and Freeland had been personally embroiled in appellant’s matter. The case proceeded to trial, and the jury found for Briley and awarded him about $4 million, including $2 million in past noneconomic damages and $1.5 million in future noneconomic damages. The trial court later denied the City’s motion for a new trial. On appeal, the City claims the trial court: (1) erred in concluding Briley was not required to exhaust his administrative remedies; (2) committed various evidentiary errors at trial; and (3) abused its discretion in failing to reduce the jury’s excessive awards for noneconomic damages.
We conclude that Whithorn’s involvement in the underlying dispute, on one hand, and his expected role in deciding Briley’s appeal, on the other, violated the requirements of due process and therefore excused Briley from proceeding with his administrative appeal. We also find no reversible evidentiary error by the trial court. However, we agree with the City that the $3.5 million noneconomic damages award -- comprising $2 million in past and $1.5 million in future noneconomic damages -- was so excessive as to suggest it resulted from passion or prejudice. We therefore vacate the awards for past and future noneconomic damages and remand for a new trial on these issues, unless Briley accepts a reduction of the awards to $1 million and $100,000, respectively. In all other respects, the judgment is affirmed.
Bill Signed by Governor (6/30/21)
SB 142 by the Committee on Budget and Fiscal Review – State employment: State Bargaining Units.
Moreno v. Bassi (CA5 F078400M 6/30/21) Wage and Hour/Attorney’s Fees and Costs
A jury awarded plaintiff Marina Moreno $16 in unpaid minimum wages and $16 in liquidated damages and found against her on causes of action alleging she had been raped by her employer. In posttrial proceedings, the trial court determined plaintiff was the prevailing party for purposes of Code of Civil Procedure section 1032 and awarded her $19,523 in costs. The court also awarded plaintiff $3.20 in attorney fees based on the formula in section 1031 that multiples the wages recovered by 20 percent.
Plaintiff’s appeal and defendant’s cross-appeal raise issues about the award of costs and the award of attorney fees. We note that the Legislature addressed cases involving a small award of damages and a relatively large amount of costs by enacting section 1033. It allows a trial court to reduce the costs otherwise recoverable as a matter of right under section 1032 “where the prevailing party recovers a judgment that could have been rendered in a limited civil case.” (§ 1033, subd. (a).) Defendant asserts the costs awarded to plaintiff could have been reduced under section 1033. However, defendant’s primary argument asserts Government Code section 12965, subdivision (b) bars plaintiff’s recovery of many of the costs. That provision controls the award of costs on claims alleging violations of the California Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.).
In this case, plaintiff lost all the FEHA claims, lost some non-FEHA claims, and prevailed on some non-FEHA claims. In such a situation, the award of costs is governed by the interaction of section 1032 and Government Code section 12965, subdivision (b). We conclude Government Code section 12965, subdivision (b) bars plaintiff from recovering the costs caused solely by the inclusion of the FEHA causes of action in this lawsuit. The other costs incurred in the lawsuit are recoverable under section 1032, subject to the discretionary exception in section 1033, subdivision (a). On remand, the trial court must determine which cost items, if any, are barred by Government Code section 12965, subdivision (b) before entering an award in accordance with sections 1032 and 1033.
The parties’ dispute over attorney fees requires an interpretation of section 1031 and Labor Code section 1194. The literal terms of these attorney fees provisions cover this case because of the recovery of minimum wages. In situations where these statutes overlap, we conclude Labor Code section 1194 controls because it is the more specific statute and its attorney fees provision is the most recently enacted. Accordingly, the trial court should have exercised the discretion granted by Labor Code section 1194 and awarded plaintiff reasonable attorney fees, rather than applying section 1031 and awarding 20 percent of the wages recovered. On remand, the trial court must determine the amount of reasonable attorney fees.
In the unpublished portion of this opinion, we address plaintiff’s challenges the trial court’s denial of her motion for a new trial. We conclude plaintiff was entitled to prejudgment interest on the damages awarded for the Labor Code violations; the trial court did not commit evidentiary error when it allowed the defendant to testify that he had never been convicted of a sex crime; plaintiff’s assertions of defense counsel misconduct do not justify reversal because the jury was not prejudiced against plaintiff; and the trial court properly granted the motion for nonsuit by defendant’s wife. Thus, the motion for new trial was properly denied.
We therefore affirm the judgment in part, reverse it in part, and remand for further proceedings on the issues of attorney fees and costs.
Bills Signed by Governor (6/28/21)
AB 761 by Assemblymember Phillip Chen (R-Yorba Linda) – County employees’ retirement: personnel: Orange County.
AB 1383 by Assemblymember Wendy Carrillo (D-Los Angeles) – Community colleges: academic employees: involuntary administrative leave.
Columbia Export Terminal v. ILWU (9th Cir. 20-35037 6/28/21) RICO/Fraudulent Time Sheets/LMRA § 301
The panel affirmed the district court’s dismissal of an action brought by Columbia Export Terminal under the Racketeer Influenced and Corrupt Organizations Act against the International Longshore and Warehouse Union and individual union workers.
The panel concluded that Columbia Export Terminal’s RICO claims alleging overbilling via fraudulent timesheets required interpretation of the collective bargaining agreement (“CBA”) under which the workers were employed, and the CBA provided a process for arbitration of disputes. The panel concluded that the CBA’s arbitration provision applied to the RICO claims. Accordingly, § 301 of the Labor Management Relations Act precluded adjudication of the RICO claims before the arbitration process was exhausted.
The panel agreed with the district court that Hubbard v. United Airlines, Inc., 927 F.2d 1094 (9th Cir. 1991), remained good law, and the panel found persuasive Hubbard’s holding that the Railway Labor Act preempted a fraud claim under RICO. The panel held that a RICO claim is precluded by § 301 of the LMRA when the right or duty upon which the claim is based is created by a CBA or resolution of the claim substantially depends on analysis of a CBA.
Dissenting, Judge Ikuta wrote that the majority erred in holding that any federal claim that is related to a CBA is preempted or precluded by § 301 of LMRA and must automatically be dismissed by the district court and sent for arbitration. The majority also erred in applying a presumption of arbitrability and in determining that the CBA’s arbitration provision encompassed the RICO claims at issue.
Levanoff v. Dragas (CA4/3 G058480 6/25/21) Rate-in-Effect Method for Overtime Calculation/PAGA
The issue presented by this appeal is whether defendant employers violated California law in their method of calculating the regular rate of pay for purposes of compensating overtime hours of employees who worked at different rates of pay within a single pay period (dual rate employees). Defendants used the rate-in-effect method, by which dual rate employees are paid for overtime hours based on the rate in effect when the overtime hours began. Plaintiffs contend that California law required defendants to use the weighted average method, by which dual rate employees are paid for overtime based on an hourly rate calculated by adding all hours worked in one pay period and dividing that number into the employee’s total compensation for the pay period.
Plaintiffs are employees of Buffalo Wild Wings Restaurants owned and/or operated by defendants. In their lawsuit against defendants, plaintiffs asserted individual and class claims under various provisions of the Labor Code and the California Unfair Competition Law, and claims for violations of the Labor Code Private Attorneys General Act of 2004, Labor Code section 2698 et seq. (PAGA). The trial court certified eight classes and two subclasses, but later decertified all classes except for a subclass of dual rate employees who allegedly were underpaid by defendants for overtime hours worked. We refer to this subclass as the dual rate overtime subclass.
By agreement of the parties, a bench trial was conducted on the issue of liability under PAGA for underpayment of overtime hours worked by dual rate employees. In a thorough statement of decision, the trial court found, among other things, that defendants did not violate California employment law by using the rate‑in‑effect method for calculating the overtime rate of pay. Based on the ruling in the bench trial, the trial court decertified the dual rate overtime subclass and dismissed the PAGA claims. Plaintiffs appeal from the order decertifying the dual rate overtime subclass and the order dismissing the PAGA claims.
We affirm. We agree with the trial court and hold defendants did not violate California law by using the rate-in-effect method for calculating the regular rate of pay for purposes of establishing the overtime rate of pay for dual rate employees. The method employers must always use is an issue we need not decide: The only issue before us is whether under the facts of this case defendants’ use of the rate-in-effect method was lawful. California law does not mandate the use of the weighted average method, and defendants’ dual rate employees, including plaintiffs, overall received net greater overtime pay under the rate-in-effect method than they would have received under the weighted average method. Because defendants did not violate California law by using the rate‑in‑effect method, the trial court did not err by decertifying the dual rate overtime subclass and dismissing the dual rate overtime PAGA claim.
Goals for Autism v. Rosas (CA1/5 A158062 6/24/21) Workplace Violence Restraining Order
Goals for Autism (Goals) obtained a two-year workplace violence restraining order (Code Civ. Proc., § 527.8) against its former employee, Paul Rosas. The restraining order includes a variety of personal conduct and stay away orders protecting another employee, A.K., and her parents. Rosas appeals the issuance of the restraining order. We affirm and hold that section 527.8, subdivision (o) does not require trial courts to grant respondents a continuance once they have responded to a petition for a restraining order.
Brighton Collectibles, LLC v. Hockey (CA2/6 B307235, filed 6/3/21, mod. & rehg. den. 6/24/21) Unpaid Wages on Discharge/Anti-SLAPP
It is ordered that the opinion filed herein on June 3, 2021, be modified as follows:
1. On page 5, the last paragraph beginning with “The evidence submitted during the proceedings below . . .” and ending on page 6 with “No more was required at this stage of the proceedings” is deleted and replaced with:
The evidence submitted during the proceedings below shows that Brighton’s fraud cross-claim has the requisite minimal merit. To defeat Hockey’s anti-SLAPP motion to strike its fraud claim, Brighton had to produce prima facie evidence that: (1) Hockey failed to disclose a material fact, (2) Hockey had a duty to disclose that fact, (3) Hockey intended to induce Brighton to rely on the fact, (4) Brighton justifiably relied on it, and (5) damages. (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248; see also Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 [defining elements of fraud].) Here, Brighton submitted evidence that Hockey concealed a material fact when she failed to tell the company she expected payment immediately upon her “termination” as an “employee” when the photoshoot concluded. She had a duty to disclose that fact to Brighton since the terms of her contract provided that the company would pay LA Models for her services upon receipt of an invoice. (See LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 [duty to disclose exists where one makes partial representations but suppresses other material facts].) It can be inferred that Hockey intended for Brighton to rely on the concealed fact—and that Brighton justifiably did so—given that (a) those were her instructions to Brighton, and (b) her instructions comported with standard industry practices. Reliance on the concealed fact damaged Brighton by exposing it to $90,000 in waiting-time penalties plus attorney fees and costs—in addition to the costs Brighton incurred in defending itself against Hockey’s lawsuit. No more was required at this stage of the proceedings.
There is no change in judgment.
Respondent’s petition for rehearing is denied.
Cedar Point Nursery v. Hassid (US 20-107 06/23/2021) Right to Take Access to Agricultural Employers’ Property for Union Organizing/Pe Se Physical Taking
A California regulation grants labor organizations a “right to take access” to an agricultural employer’s property in order to solicit support for unionization. Cal. Code Regs., tit. 8, §20900(e)(1)(C). The regulation mandates that agricultural employers allow union organizers onto their property for up to three hours per day, 120 days per year. Organizers from the United Farm Workers sought to take access to property owned by two California growers—Cedar Point Nursery and Fowler Packing Company. The growers filed suit in Federal District Court seeking to enjoin enforcement of the access regulation on the grounds that it appropriated without compensation an easement for union organizers to enter their property and therefore constituted an unconstitutional per se physical taking under the Fifth and Fourteenth Amendments. The District Court denied the growers’ motion for a preliminary injunction and dismissed the complaint, holding that the access regulation did not constitute a per se physical taking because it did not allow the public to access the growers’ property in a permanent and continuous manner. A divided panel of the Court of Appeals for the Ninth Circuit affirmed, and rehearing en banc was denied over dissent.
Held: California’s access regulation constitutes a per se physical taking. Pp. 4–20.
(a) The growers’ complaint states a claim for an uncompensated taking in violation of the Fifth and Fourteenth Amendments. Pp. 4–17.
(1) The Takings Clause of the Fifth Amendment, applicable to the States through the Fourteenth Amendment, provides: “[N]or shall private property be taken for public use, without just compensation.” When the government physically acquires private property for a public use, the Takings Clause obligates the government to provide the owner with just compensation. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 321. The Court assesses such physical takings using a per se rule: The government must pay for what it takes. Id., at 322.
A different standard applies when the government, rather than appropriating private property for itself or a third party, instead imposes regulations restricting an owner’s ability to use his own property. Id., at 321–322. To determine whether such a use restriction amounts to a taking, the Court has generally applied the flexible approach set forth in Penn Central Transportation Co. v. New York City, 438 U. S. 104, considering factors such as the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action. Id., at 124. But when the government physically appropriates property, Penn Central has no place—regardless whether the government action takes the form of a regulation, statute, ordinance, or decree. Pp. 4–7.
(2) California’s access regulation appropriates a right to invade the growers’ property and therefore constitutes a per se physical taking. Rather than restraining the growers’ use of their own property, the regulation appropriates for the enjoyment of third parties (here union organizers) the owners’ right to exclude. The right to exclude is “a fundamental element of the property right.” Kaiser Aetna v. United States, 444 U. S. 164, 179–180. The Court’s precedents have thus treated government-authorized physical invasions as takings requiring just compensation. As in previous cases, the government here has appropriated a right of access to private property. Because the regulation appropriates a right to physically invade the growers’ property—to literally “take access”—it constitutes a per se physical taking under the Court’s precedents. Pp. 7–10.
(3) The view that the access regulation cannot qualify as a per se taking because it does not allow for permanent and continuous access 24 hours a day, 365 days a year is insupportable. The Court has held that a physical appropriation is a taking whether it is permanent or temporary; the duration of the appropriation bears only on the amount of compensation due. See United States v. Dow, 357 U. S. 17, 26. To be sure, the Court in Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, discussed the heightened concerns associated with “[t]he permanence and absolute exclusivity of a physical occupation” in contrast to “temporary limitations on the right to exclude,” and stated that “[n]ot every physical invasion is a taking.” Id., at 435, n. 12. But the regulation here is not transformed from a physical taking into a use restriction just because the access granted is restricted to union organizers, for a narrow purpose, and for a limited time. And although the Board disputes whether the access regulation appropriates an easement as defined by California law, it cannot absolve itself of takings liability by appropriating the growers’ right to exclude in a form that is a slight mismatch from state property law.
PruneYard Shopping Center v. Robins, 447 U. S. 74, does not cut against the Court’s conclusion that the access regulation constitutes a per se taking. In PruneYard the California Supreme Court recognized a right to engage in leafleting at the PruneYard, a privately owned shopping center, and the Court applied the Penn Central factors to hold that no compensable taking had occurred. 447 U. S., at 78, 83. PruneYard does not establish that limited rights of access to private property should be evaluated as regulatory rather than per se takings. Restrictions on how a business generally open to the public such as the PruneYard may treat individuals on the premises are readily distinguishable from regulations granting a right to invade property closed to the public. Pp. 10–15.
(4) The Court declines to adopt the theory that the access regulation merely regulates, and does not appropriate, the growers’ right to exclude. The right to exclude is not an empty formality that can be modified at the government’s pleasure. Pp. 15–17.
(b) The Board’s fear that treating the access regulation as a per se physical taking will endanger a host of state and federal government activities involving entry onto private property is unfounded. First, the Court’s holding does nothing to efface the distinction between trespass and takings. The Court’s precedents make clear that isolated physical invasions, not undertaken pursuant to a granted right of access, are properly assessed as individual torts rather than appropriations of a property right. Second, many government-authorized physical invasions will not amount to takings because they are consistent with longstanding background restrictions on property rights, including traditional common law privileges to access private property. See Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1028–1029. Third, the government may require property owners to cede a right of access as a condition of receiving certain benefits, without causing a taking. Under this framework, government health and safety inspection regimes will generally not constitute takings. In this case, however, none of these considerations undermine the Court’s determination that the access regulation gives rise to a per se physical taking.
Pp. 17–20. 923 F. 3d 524, reversed and remanded.
ROBERTS, C. J., delivered the opinion of the Court, in which THOMAS, ALITO, GORSUCH, KAVANAUGH, and BARRETT, JJ., joined. KAVANAUGH, J., filed a concurring opinion. BREYER, J., filed a dissenting opinion, in which SOTOMAYOR and KAGAN, JJ., joined.
National Collegiate Athletic Assn. v. Alston (US 20–512 per curiam 6/21/21) Student-Athletes Compensation/Antitrust
Colleges and universities across the country have leveraged sports to bring in revenue, attract attention, boost enrollment, and raise money from alumni. That profitable enterprise relies on “amateur” student athletes who compete under horizontal restraints that restrict how the schools may compensate them for their play. The National Collegiate Athletic Association (NCAA) issues and enforces these rules, which restrict compensation for student-athletes in various ways. These rules depress compensation for at least some student-athletes below what a competitive market would yield.
Against this backdrop, current and former student-athletes brought this antitrust lawsuit challenging the NCAA’s restrictions on compensation. Specifically, they alleged that the NCAA’s rules violate §1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.” 15 U. S. C. §1. Key facts were undisputed: The NCAA and its members have agreed to compensation limits for student-athletes; the NCAA enforces these limits on its member-schools; and these compensation limits affect interstate commerce. Following a bench trial, the district court issued a 50-page opinion that refused to disturb the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. At the same time, the court found unlawful and thus enjoined certain NCAA rules limiting the education-related benefits schools may make available to student-athletes. Both sides appealed. The Ninth Circuit affirmed in full, holding that the district court “struck the right balance in crafting a remedy that both prevents anticompetitive harm to Student-Athletes while serving the procompetitive purpose of preserving the popularity of college sports.” 958 F. 3d 1239, 1263. Unsatisfied with that result, the NCAA asks the Court to find that all of its existing restraints on athlete compensation survive antitrust scrutiny. The student-athletes have not renewed their across-the-board challenge and the Court thus does not consider the rules that remain in place. The Court considers only the subset of NCAA rules restricting education-related benefits that the district court enjoined. The Court does so based on the uncontested premise that the NCAA enjoys monopsony control in the relevant market— such that it is capable of depressing wages below competitive levels for student-athletes and thereby restricting the quantity of student-athlete labor.
Held: The district court’s injunction is consistent with established antitrust principles. Pp. 15–36.
(a) The courts below properly subjected the NCAA’s compensation restrictions to antitrust scrutiny under a “rule of reason” analysis. In the Sherman Act, Congress tasked courts with enforcing an antitrust policy of competition on the theory that market forces “yield the best allocation” of the Nation’s resources. National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 104, n. 27. The Sherman Act’s prohibition on restraints of trade has long been understood to prohibit only restraints that are “undue.” Ohio v. American Express Co., 585 U. S. ___, ___. Whether a particular restraint is undue “presumptively” turns on an application of a “rule of reason analysis.” Texaco, Inc. v. Dagher, 547 U. S. 1, 5. That manner of analysis generally requires a court to “conduct a fact-specific assessment of market power and market structure” to assess a challenged restraint’s “actual effect on competition.” American Express, 585 U. S., at ___. Pp. 15–24.
(1) The NCAA maintains the courts below should have analyzed its compensation restrictions under an extremely deferential standard because it is a joint venture among members who must collaborate to offer consumers the unique product of intercollegiate athletic competition. Even assuming the NCAA is a joint venture, though, it is a joint venture with monopoly power in the relevant market. Its restraints are appropriately subject to the ordinary rule of reason’s fact-specific assessment of their effect on competition. American Express, 585 U. S., at ___. Circumstances sometimes allow a court to determine the anticompetitive effects of a challenged restraint (or lack thereof) under an abbreviated or “quick look.” See Dagher, 547 U. S., at 7, n. 3; Board of Regents, 468 U. S., at 109, n. 39. But not here. Pp. 15–19.
(2) The NCAA next contends that the Court’s decision in Board of Regents expressly approved the NCAA’s limits on student-athlete compensation. That is incorrect. The Court in Board of Regents did not analyze the lawfulness of the NCAA’s restrictions on student-athlete compensation. Rather, that case involved an antitrust challenge to the NCAA’s restraints on televising games—an antitrust challenge the Court sustained. Along the way, the Court commented on the NCAA’s critical role in maintaining the revered tradition of amateurism in college sports as one “entirely consistent with the goals of the Sherman Act.” Id., at 120. But that sort of passing comment on an issue not presented is not binding, nor is it dispositive here. Pp. 19–21.
(3) The NCAA also submits that a rule of reason analysis is inappropriate because its member schools are not “commercial enterprises” but rather institutions that exist to further the societally important noncommercial objective of undergraduate education. This submission also fails. The Court has regularly refused these sorts of special dispensations from the Sherman Act. See FTC v. Superior Court Trial Lawyers Assn., 493 U. S. 411, 424. The Court has also previously subjected the NCAA to the Sherman Act, and any argument that “the special characteristics of [the NCAA’s] particular industry” should exempt it from the usual operation of the antitrust laws is “properly addressed to Congress.” National Soc. of Professional Engineers v. United States, 435 U. S. 679, 689. Pp. 21–24.
(b) The NCAA’s remaining attacks on the district court’s decision lack merit. Pp. 24–36.
(1) The NCAA contends that the district court erroneously required it to prove that its rules are the least restrictive means of achieving the procompetitive purpose of preserving consumer demand for college sports. True, a least restrictive means test would be erroneous and overly intrusive. But the district court nowhere expressly or effectively required the NCAA to show that its rules met that standard. Rather, only after finding the NCAA’s restraints “patently and inexplicably stricter than is necessary” did the district court find the restraints unlawful. Pp. 24–29.
(2) The NCAA contends the district court should have deferred to its conception of amateurism instead of “impermissibly redefin[ing]” its “product.” But a party cannot declare a restraint “immune from § 1 scrutiny” by relabeling it a product feature. American Needle, Inc. v. National Football League, 560 U. S. 183, 199, n. 7. Moreover, the district court found the NCAA had not even maintained a consistent definition of amateurism. Pp. 29–30.
(3) The NCAA disagrees that it can achieve the same pro-competitive benefits using substantially less restrictive alternatives and claims the district court’s injunction will “micromanage” its business. Judges must indeed be sensitive to the possibility that the “continuing supervision of a highly detailed decree” could wind up impairing rather than enhancing competition. Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U. S. 398, 415. The district court’s injunction honored these principles, though. The court enjoined only certain restraints—and only after finding both that relaxing these restrictions would not blur the distinction between college and professional sports and thus impair demand, and further that this course represented a significantly (not marginally) less restrictive means of achieving the same procompetitive benefits as the NCAA’s current rules. Finally, the court’s injunction preserves considerable leeway for the NCAA, while individual conferences remain free to impose whatever rules they choose. To the extent the NCAA believes meaningful ambiguity exists about the scope of its authority, it may seek clarification from the district court.
Pp. 30–36. 958 F. 3d 1239, affirmed.
GORSUCH, J., delivered the opinion for a unanimous Court. KAVANAUGH, J., filed a concurring opinion.
Meland v. Weber (9th Cir. 20-15762 6/21/21) Women on Corporate Boards/14th Amendment
The panel reversed the district court’s dismissal for lack of standing of an action brought by a corporate shareholder challenging the constitutionality of California Senate Bill 826, which requires all public corporations headquartered in California to have a minimum number of females on their boards of directors. Plaintiff alleged that Senate Bill 826 (SB 826) requires shareholders to discriminate on the basis of sex when exercising their corporate voting rights, in violation of the Fourteenth Amendment. The panel held that plaintiff plausibly alleged that SB 826 requires or encourages him to discriminate based on sex. Plaintiff therefore adequately alleged an injury in fact, the only Article III standing element at issue, and thus had Article III standing to challenge SB 826. Plaintiff’s alleged injury was also distinct from any injury to the corporation, and he could bring his own Fourteenth Amendment challenge. Thus, plaintiff had prudential standing to challenge SB 826. Finally, plaintiff’s injury was ongoing and neither speculative or hypothetical, and the district court could grant meaningful relief. This case was therefore ripe and not moot.