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Bill Signed by Governor (8/31/21)
AB 1480 by Assemblymember Freddie Rodriguez (D-Pomona) – Employers: prohibited disclosure of information: arrest or detention.
Wasito v. Kazali (CA2/6 B308826 8/31/21) Wage and Hour/998 Offer
Adi Kazali, Santy Kazali, and Harry Kazali (Kazalis) appeal from two postjudgment orders awarding costs to Subiono Wasito and Enny Soenjoto and attorney fees to their attorney, Brendan Maloney. The Kazalis contend the trial court erred when it found the cost-shifting provision of Code of Civil Procedure section 998 did not apply to their pretrial section 998 offer. Here we hold that Labor Code sections 206 and 206.5 preclude a section 998 offer that resolves disputed wage claims if there are undisputed wages due at the time of the offer. We affirm.
Yu v. Idaho State University (9th Cir. 20-35582 8/31/21) Title VI Race/National Origin Discrimination
Jun Yu, a Chinese international student, enrolled in Idaho State University’s (“ISU”) Doctoral Program in Clinical Psychology (the “Program”) in 2008. He completed the requisite four years of instruction and wrote and successfully defended his dissertation. However, he failed to complete the last requirement of the Program, satisfactory completion of a professional internship consisting of 2,000 clinical hours over the course of 11 months. After Yu was dismissed from the internship, ISU dismissed Yu from the Program altogether.
Yu filed the present suit, alleging that ISU violated Title VI because it intentionally discriminated against him based on his race or national origin. At trial, Yu relied in part on the expert testimony of Dr. Leslie Wade Zorwick. Dr. Zorwick opined that Yu was a victim of “aversive racism,” a theory of prejudice that the district court, the parties, and Dr. Zorwick compare to “unconscious” or “implicit” bias. After a bench trial, the district court found that Yu had failed to show that ISU intentionally discriminated against him. Yu appealed the verdict. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm judgment in favor of ISU. In so holding, we take this opportunity to clarify that evidence of unconscious bias against a protected class in an appropriate case may be probative of whether an entity has intentionally discriminated in a Title VI case. But this question is factual, and here the evidence in the record shows that the district court permissibly found that ISU did not intentionally discriminate against Yu.
Swenberg v. Dmarcian (CA1/2 A159148, filed 7/30/21, pub. ord. 8/30/21) Breach of Employment Contract/Jurisdiction
Charles Swenberg brought this action against dmarcian, Inc., Timothy Draegen, and Martijn Groeneweg, alleging various claims related to his ownership interest in and employment with the company. This appeal is from the trial court’s order granting Groeneweg’s motion to quash service for lack of personal jurisdiction. For the reasons explained herein, we reverse and remand.
Reddish v. Westamerica Bank (CA1/5 A161079 8/27/21) Wage and Hour/Depositions Costs/Appealability
In this [wage and hour] class action, the trial court ordered the parties to share equally the costs of certain depositions. We must answer a threshold question—whether the order is appealable under the collateral order doctrine. We conclude that it is not, and we dismiss the appeal.
Ohlson v. Brady (9th Cir. 20-15656 8/23/21) Government Employee/First Amendment Protected Speech
The panel affirmed the district court’s judgment in favor of government officials on grounds of qualified immunity in plaintiff’s action alleging that his employer violated his First Amendment rights by disciplining him for protected speech.
Plaintiff was a forensic scientist employed by the state of Arizona in the Arizona Department of Public Safety, Scientific Analysis Bureau (“Department”), an agency that analyzes blood samples for alcohol content. His job was to test blood samples and report the findings, and to testify about those findings in court proceedings. Plaintiff advocated for changes in how the lab disclosed batched test results and, contrary to his superiors’ orders, communicated his opinions within the Department, with defense attorneys, and in court hearings. He was disciplined and eventually forced to retire. The district court concluded that plaintiff spoke as a private citizen and that his speech was protected expression but that defendants were entitled to qualified immunity.
The panel noted that there was no dispute that plaintiff’s advocacy led to his employer’s action against him. Nor was there any serious dispute that what he was speaking about—the manner in which forensic evidence is produced and presented in court—was a matter of public concern. The only serious dispute was whether plaintiff’s speech should be treated as that of a private citizen exercising the right protected by the First Amendment to criticize the government, or as that of a government employee subject to discipline for undermining agency administration and public confidence in agency operations.
The panel first disagreed with the district court’s conclusion that plaintiff spoke as a private citizen, and therefore his speech was protected, in large part because he spoke against his supervisors’ orders. The panel held that protecting speech because it violates a supervisor’s order would make it difficult for an agency to enforce any rules, even those necessary to preserve proper agency administration. The panel also had doubts about the district court’s conclusion that, because citizens have a duty to testify when subpoenaed to do so, plaintiff was speaking in court as a citizen rather than as an employee. The panel noted that plaintiff’s job duties included testifying in court. Whether testimony given as part of a government employee’s duties was protected speech was a question the Supreme Court left open in Lane v Franks, 573 U.S. 228 (2014).
The panel also could not say that defendants failed to identify any possible injury. The panel noted that plaintiff’s advocacy in the course of his employment duties could conceivably have adversely affected confidence in the accuracy of the Department’s test results, as well as in the Department. The panel agreed, however, with the district court that defendants had not violated any clearly established law. The panel stated that where, as in this case, an employee, in the course of doing the job, has expressed views the employer regards as contrary to its interests, controlling legal principles remained particularly uncertain. Because it was abundantly clear that the law was not clearly established, defendants were entitled to qualified immunity.
SW Fair Housing v. Maricopa Domestic Water (9th Cir. 20-15506 8/23/21) FHA/Disparate Impact and Treatment
The panel affirmed the district court’s summary judgment in favor of the Maricopa Domestic Water Improvement District (District) in an action brought by two Pinal County public housing residents and Southwest Fair Housing Council, Inc., an Arizona nonprofit corporation (together, “Appellants”), who challenged as impermissibly discriminatory under the federal Fair Housing Act a District policy increasing to $180 the refundable security deposit required of new public housing customers before the District would agree to provide water services, while non-public housing customers were subject only to a $55 deposit.
Appellants’ primary argument alleged the policy caused a disparate impact under the Fair Housing Act because it applied only to the District’s public housing customers, who are disproportionately African American, Native American, and single mothers. The district court granted the District summary judgment on the basis that Appellants failed to provide evidence sufficient to establish a triable issue of fact that the policy caused the claimed disproportionate effect (an element of a prima facie disparate impact case). In light of Texas Department Housing & Community Affairs v. The Inclusive Communities Project, Inc., 576 U.S. 519, 540 (2015), the panel clarified that, for a plaintiff to make out a prima facie case of disparate impact, he must demonstrate: (1) the existence of a policy, not a one-time decision, that is outwardly neutral; (2) a significant, adverse, and disproportionate effect on a protected class, of which the plaintiff is a member; and (3) robust causality that shows, beyond mere evidence of a statistical disparity, that the challenged policy, and not some other factor or policy, caused the disproportionate effect. The district court held that Appellants failed to demonstrate robust causality. The panel held that the district court erred in that judgment, concluding that Appellants did establish robust causation and did meet their prima facie burden. The panel nonetheless affirmed the district court’s judgment because the District established by undisputed evidence that the policy served in a significant way the District’s legitimate business interests and because Appellants failed to establish a triable issue of fact that there existed an equally effective, but less discriminatory, alternative.
Appellants also brought a disparate-treatment claim, alleging that discriminatory animus was a motivating factor behind the District’s decision to implement its policy. The panel affirmed the district court’s holding that Appellants did not adduce evidence sufficient to establish a triable issue of fact with respect to that claim.
Maner v. Dignity Health (9th Cir. 18-17159 8/20/21) Title VII/Paramour Preference
Affirming the district court’s award of summary judgment to an employer in a terminated employee’s Title VII action alleging unlawful sex discrimination and retaliation in a case that presented the question whether an employer who exhibits preferential treatment toward a supervisor’s sexual or romantic partner discriminates against other employees because of their sex, the panel held that discrimination motivated by an employer’s “paramour preference” is not unlawful sex discrimination against the complaining employee within the ordinary meaning of Title VII’s terms.
Affirming summary judgment on the claim of unlawful sex discrimination, the panel explained that the plaintiff’s “paramour preference” reading of Title VII fails the test set forth in Bostock v. Clayton County, 140 S. Ct. 1731 (2020), for assessing whether an adverse employment action violated Title VII—whether changing the employee’s sex would have yielded a different choice by the employer. The panel noted that the motive behind the adverse employment action is the supervisor’s special relationship with the paramour, not any protected characteristics of the disfavored employees. The panel wrote that the plaintiff’s contention that “sex” means sexual activity contradicts the “fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” The panel disagreed with the plaintiff’s reading of Bostock to bar as unlawful sex discrimination any effects on the individual that can be correlated with sex discrimination. The panel also disagreed with the plaintiff’s assertion that the “paramour preference” theory of Title VII liability finds support in an EEOC regulation interpreting the statute to prohibit sexual harassment in the workplace.
Affirming summary judgment on the claim that the employer unlawfully terminated the plaintiff in retaliation for opposing instances of favoritism arising out of the relationship between the plaintiff’s supervisor and the supervisor’s romantic partner, the panel did not need to decide whether it was unreasonable to believe that the supervisor’s favoritism to his romantic partner violated the law, because the plaintiff failed to establish any causal connection between the claimed protected activity and the termination decision.
Aya Healthcare Services v. AMN Healthcare (9th Cir. 20-55679 8/19/21) Nursing Services/Non-solicitation and Antitrust
The panel affirmed the district court’s summary judgment in favor of AMN Healthcare, Inc., in Aya Healthcare Services, Inc.’s antitrust action involving the non-solicitation provision within AMN’s contract with Aya to provide travel nursing services to hospitals and other healthcare facilities.
Both parties are healthcare staffing agencies that place travel nurses on temporary assignments. To receive spillover assignments, Aya contracted with AMN. The contract included a provision prohibiting Aya from soliciting AMN’s employees.
Aya alleged that the non-solicitation provision is an unreasonable restraint prohibited by Section 1 of the Sherman Act. The panel held that the non-solicitation agreement is an ancillary—rather than a naked—restraint because it is reasonably necessary to the parties’ procompetitive collaboration. Accordingly, the restraint is not per se unlawful, but is subject to the rule-of-reason standard.
The panel held that Aya failed to satisfy its initial burden under the rule-of-reason standard because it did not demonstrate through direct or indirect evidence that a triable issue of fact exists with respect to whether AMN’s nonsolicitation agreement has a substantial anticompetitive effect that harms consumers in the relevant market.
The panel held that Aya’s claim for retaliatory damages fails because it did not present any evidence of a cartel or a concerted action in the termination of its agreement with AMN.
Romero v. Watkins & Shepard Trucking (9th Cir. 20-55768 8/19/21) Arbitration/FAA Exemption/Interstate Commerce Transportation Workers
In a case in which Alejandro Romero filed a putative class action suit claiming Watkins & Shepard Trucking did not give him and other ex-employees advance notice of termination as the federal and California WARN acts require, and in which the district court granted Watkins’s motion to compel individual arbitration of Romero’s claims, the panel affirmed the district court’s ruling that the Federal Arbitration Act (FAA) does not apply to a stand-alone binding arbitration agreement in which Romero waived his right to bring a class action.
The panel held that the district court correctly concluded that Romero, a truck driver who did not himself cross state lines but delivered goods that had once crossed state lines, fell within FAA § 1’s exemption for transportation workers engaged in interstate commerce. The panel held that the district court also correctly ruled that the exemption cannot be waived by private contract.
The panel affirmed on the remainder of issues in a concurrently filed memorandum disposition.
Skidgel v. Cal. Unemployment Ins. Appeals Bd. (SC S250149 8/19/21) Unemployment Insurance and Beneficiaries
The In-Home Supportive Services (IHSS) program (Welf. & Inst. Code, § 12300 et seq.) authorizes certain disabled and elderly Californians to receive in-home services from third parties or family members, paid for with public funds. Under one program option — which we will refer to as the Direct Hiring method — service recipients directly hire their own providers, and the providers are then paid either by the recipients with funds they have received from a public entity or by a public entity itself. We granted review in this case to consider whether, under these circumstances, a provider who is the recipient’s minor child, parent, or spouse is covered by the state’s unemployment insurance program. The Court of Appeal answered this question in the negative, reasoning that sections 631 and 683 of the Unemployment Insurance Code exclude such a provider from coverage. (Skidgel v. California Unemployment Ins. Appeals Bd. (2018) 24 Cal.App.5th 574, 577–578 (Skidgel).) For reasons that follow, we agree with the Court of Appeal’s conclusion and affirm its judgment.
Gonzalez v. Mathis (SC S247677 8/19/21) Landowner Liability/Independent Contractor and Workers
There is a strong presumption under California law that a hirer of an independent contractor delegates to the contractor all responsibility for workplace safety. (See generally Privette v. Superior Court (1993) 5 Cal.4th 689 (Privette); SeaBright Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590 (SeaBright).) This means that a hirer is typically not liable for injuries sustained by an independent contractor or its workers while on the job. Commonly referred to as the Privette doctrine, the presumption originally stemmed from the following rationales: First, hirers usually have no right to control an independent contractor’s work. (Privette, at p. 693.) Second, contractors can factor in “the cost of safety precautions and insurance coverage in the contract price.” (Ibid.) Third, contractors are able to obtain workers’ compensation to cover any on-the-job injuries. (Id. at pp. 698–700.) Finally, contractors are typically hired for their expertise, which enables them to perform the contracted-for work safely and successfully. (See id. at p. 700; Rest.3d Torts, Liability for Physical and Emotional Harm, § 57, com. c, p. 402.)
We have nevertheless identified two limited circumstances in which the presumption is overcome. First, in Hooker v. Department of Transportation (2002) 27 Cal.4th 198 (Hooker), we held that a hirer may be liable when it retains control over any part of the independent contractor’s work and negligently exercises that retained control in a manner that affirmatively contributes to the worker’s injury. (Id. at p. 202.) Second, in Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659 (Kinsman), we held that a landowner who hires an independent contractor may be liable if the landowner knew, or should have known, of a concealed hazard on the property that the contractor did not know of and could not have reasonably discovered, and the landowner failed to warn the contractor of the hazard. (Id. at p. 664.)
We granted review in this case to decide whether a landowner may also be liable for injuries to an independent contractor or its workers that result from a known hazard on the premises where there were no reasonable safety precautions it could have adopted to avoid or minimize the hazard. We conclude that permitting liability under such circumstances, thereby creating a broad third exception to the Privette doctrine, would be fundamentally inconsistent with the doctrine. When a landowner hires an independent contractor to perform a task on the landowner’s property, the landowner presumptively delegates to the contractor a duty to ensure the safety of its workers. This encompasses a duty to determine whether the work can be performed safely despite a known hazard on the worksite. As between a landowner and an independent contractor, the law assumes that the independent contractor is typically better positioned to determine whether and how open and obvious safety hazards on the worksite might be addressed in performing the work. Our case law makes clear that, where the hirer has effectively delegated its duties, there is no affirmative obligation on the hirer’s part to independently assess workplace safety. Thus, unless a landowner retains control over any part of the contractor’s work and negligently exercises that retained control in a manner that affirmatively contributes to the injury (Hooker, supra, 27 Cal.4th at p. 202), it will not be liable to an independent contractor or its workers for an injury resulting from a known hazard on the premises. Because the Court of Appeal held otherwise, we reverse the judgment.
Taylor v. Financial Casualty & Surety (CA4/1 D076869 8/17/21) Bail Recovery Workers/Joint Employer/Wage and Hour
Plaintiffs and appellants Will Taylor, Ken Gorman and Nicholas Wayman, individuals who formerly conducted bail fugitive recovery, appeal from a summary judgment in favor of defendant and respondent Financial Casualty & Surety, Inc (FCS), a surety admitted to write bail in California. Plaintiffs sued FCS and other bail-agent entities and individuals for, inter alia, fraud, various Labor Code violations (wage and hour, classification, and notice) as well as statutory damages under the Labor Code, conversion, unfair competition, discrimination and wrongful termination, alleging in part that FCS was a co-employer with the right to control the manner in which they performed their assignments. FCS moved for summary judgment on grounds plaintiffs were not FCS employees as a matter of law, disposing of their claims based on the Labor Code as well as for fraud and conversion, which related to misrepresentations of their employment status or withholding final paychecks. The trial court granted the motion, in part ruling FCS did not employ plaintiffs for purposes of causes of action based on the Labor Code or dependent on an employment relationship; plaintiffs’ claims for fraud and conversion were barred by the “new right-exclusive remedy doctrine”; and plaintiffs could not make out a claim for unfair competition on their allegations that FCS violated the law.
Plaintiffs contend the trial court erred by its ruling. With the exception of their conversion cause of action which they concede is unavailable, they argue summary judgment was improperly granted because (1) the court ignored their operative complaint’s allegations of agency and too narrowly construed that pleading; (2) FCS failed to present admissible evidence to shift the summary judgment burden to them; (3) the agreements between FCS and the other defendants purporting to limit FCS’s liability are unlawful; (4) FCS’s liability stems from its agency relationship with the codefendant bail agents; (5) FCS is directly liable for Labor Code violations as an employer as it exercised control over their wages, hours and working conditions, knew of their work, and had a common law employment relationship with plaintiffs; and (6) they brought valid causes of action for fraud, unfair competition, discrimination and wrongful termination. We affirm.
Busker v. Wabtec Corporation (SC S251135 8/16/21) Public Work/Minimum Wage
California’s prevailing wage law (Lab. Code, § 1720 et seq.) is a minimum wage provision that generally applies to those employed on “public works.” This case involves two questions: (1) Does publicly funded work on rolling stock, like train cars, fall under the statutory definition of “public works”? (2) Alternatively, does the work on rolling stock in this case qualify as “public work” because it is integral to other activity that itself qualifies as public work? The answer to both questions is no.
Mendoza v. Fonseca McElroy Grinding Co., Inc. (SC S253574 8/16/21) Public Work/Prevailing Wage
California’s Labor Code requires that certain kinds of jobs performed on a public works project be compensated at a per diem rate no less than the prevailing wage paid in the area where the work is done. (Lab. Code, § 1771.) The Labor Code delineates with specificity the kinds of “public work” covered by the prevailing wage statutes. (See §§ 1720–1720.9.)
The question here is whether the prevailing wage must be paid for plaintiffs’ mobilization work, which involved transporting heavy machinery to and from a public works site. It is undisputed that operation of the machinery at the site qualifies as “public work.” However, plaintiffs do not contend that mobilization is “public work” as that term is defined in the applicable statutes. Instead, they argue that, under Labor Code section 1772, they are “deemed to be employed upon public work” because their mobilization work was performed “in the execution” of a public works contract. Plaintiffs urge an interpretation of section 1772 that would enlarge the scope of the prevailing wage law to encompass activities that the Legislature has not otherwise defined as public work.
This expansive interpretation is unsupported by either the statutory language or legislative history. Section 1772 was not intended to define or expand the categories of work covered by the prevailing wage law. As a result, plaintiffs’ reliance on that statute is misplaced.
Gallano v. Burlington Coat Factory of Cal., LLC (CA1/1158391 8/16/21) Investigation Privilege/Class Action Wage & Hour/Anti-SLAPP
Defendant Burlington Coat Factory of California (Burlington) appeals from the trial court’s order granting in part and denying in part its special motion to strike under Code of Civil Procedure section 425.16 (the anti-SLAPP statute). Krizel Gallano, a former employee, filed a putative class action complaint alleging that Burlington forces its employees to pay for business losses incurred for common on-the-job mistakes by misusing California’s shoplifting statute. In a prior opinion, we reversed the lower court’s determination that Burlington’s conduct amounted to extortion as a matter of law and was therefore unprotected by the anti-SLAPP statute. (Gallano v. Burlington Coat Factory of Cal. LLC (Apr. 27, 2017 No. A146335) [nonpub. opn.] (Gallano I).) We remanded and directed the trial court to determine whether Gallano has established a probability of prevailing on her claims. On remand, the trial court sustained Burlington’s motion to strike two of the four causes of action in the complaint, and denied the motion with respect to the other two causes of action. We conclude the trial court erred in striking one of Gallano’s causes of action. Accordingly, we affirm the order in part, reverse in part, and remand for further proceedings.
Nixon v. AmeriHome Mortgage Co., LLC (CA2/7 B302754 8/16/21) Arbitration/Wage & Hour/PAGA
Sylvia Nixon sued her former employer, AmeriHome Mortgage Company, LLC, in a putative class action lawsuit for unpaid overtime compensation and unlawful business practices. The superior court granted AmeriHome’s motion to compel arbitration, ordered arbitration of Nixon’s individual claims and dismissed the class claims.
On appeal Nixon argues AmeriHome’s motion should have been denied pursuant to Labor Code section 229, which provides, “Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.” Alternatively, Nixon contends the superior court abused its discretion under Code of Civil Procedure section 1281.2 by ordering her to arbitrate her wage-and-hour claim notwithstanding the pendency of a nonarbitrable lawsuit against AmeriHome by another former employee under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).
In light of the uncertainty of our jurisdiction to consider Nixon’s appeal from the order compelling arbitration and the absence of any delay or prejudice our intervention at this stage would cause, we find this an appropriate case in which to exercise our discretion to treat the appeal from that order as a petition for writ of mandate. We deny the petition on the merits and affirm the order dismissing the putative class claims.
Zuniga v. Alexandria Care Center, LLC (CA2/7 mod. B297023M 8/12/21) PAGA/Expert Witness Testimony
It is ordered that the opinion filed herein on August 12, 2021 be modified as follows:
On page 20, replace Salazar v. See’s Candy Shops, Inc. (2021) 64 Cal.App.5th 85, 90 with Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58, 65.
There is no change in the appellate judgment.
Natarajan v. Dignity Health (SC S259364 per curiam 8/12/21) Hospital Peer Review/Hearing Officer’s Financial Interest
Under California’s peer review statute, a hospital must afford a physician a fair hearing before revoking the physician’s staff privileges. (Bus. & Prof. Code, § 809 et seq.) A panel of the physician’s peers generally serves as the trier of fact at these proceedings. Proceedings before a peer review panel may be conducted by a hearing officer who makes evidentiary and procedural rulings, but who may not vote on the merits. To ensure impartiality, the statute provides that neither panel members nor hearing officers may gain a “direct financial benefit from the outcome.” (Bus. & Prof. Code, § 809.2, subds. (a) & (b).)
The question in this case is whether a person hired by a hospital to serve as a hearing officer may be disqualified for financial bias under Business and Professions Code section 809.2, subdivision (b), on grounds that the officer has an incentive to favor the hospital in order to increase the chances of receiving future appointments. The Court of Appeal in this case answered no. We reach a different conclusion. While a hearing officer’s interest in future employment is not automatically disqualifying, neither is it categorically beyond the reach of the statute. In some cases, depending on the circumstances, the hearing officer’s financial interest in currying favor with the hiring entity may create an intolerable risk of bias requiring disqualification under the statute. But because the record does not establish this is such a case, we affirm the judgment of the Court of Appeal.
Zuniga v. Alexandria Care Center, LLC (CA2/7 B297023 8/12/21) PAGA/Expert Witness Testimony
Rosalinda Zuniga appeals the judgment in favor of Alexandria Care Center, LLC, Skilled Healthcare, LLC and Skilled Healthcare Group, Inc. (collectively Alexandria Care) entered after a five-day bench trial of her representative claim for penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). Zuniga contends the trial court erred in excluding the testimony of her two proposed expert witnesses, Dean Van Dyke and Richard Drogin, Ph.D., and the spreadsheets prepared by Van Dyke’s company, iBridge LLC, which provided the basis for Dr. Drogin’s opinions establishing Alexandria Care’s Labor Code violations. We agree the court erred in excluding the expert testimony of Dr. Drogin even if the iBridge spreadsheets lacked the foundation necessary to be admitted into evidence, and the error was prejudicial. The judgment is reversed, and the cause remanded for a new trial.
Jamie Zepeda Labor Contracting v. Department of Industrial etc. (CA4/1 D078062 8/12/21) DLSE Minimum Wage Citations/Farm Labor Contractors
California law requires that employers pay agricultural workers a minimum wage “on the established payday for the period involved.” (Cal. Code. Regs., tit. 8, § 11140, subd. (4)(B).) Labor Code section 205 in turn requires farm labor contractors to establish weekly paydays for the payment of wages to their workers.
In addition to these minimum wage provisions, the Labor Code’s final wage prompt payment provisions impose timing requirements on the payment of final wages to employees who are discharged (§ 201) or who quit (§ 202). If an employer “discharges” an employee within the meaning of the statute, “the wages earned and unpaid at the time of discharge are due and payable immediately.” (§ 201, subd. (a).) In addition, generally speaking, if an employee quits without notice, her wages become due and payable 72 hours thereafter, unless she has given 72 hours previous notice of her intention to quit, in which case the wages are due at the time of quitting. (§ 202, subd. (a).) An employer that “willfully fails to pay,” in accordance with sections 201 and 202, “any wages of an employee who is discharged or who quits” is subject to so-called waiting-time penalties of up to an amount equal to 30 days of wages. (§ 203, subd. (a).)
California law also specifies how the minimum wage and final wage prompt payment provisions may be enforced. As relevant to this appeal, section 1197.1, subdivision (b) authorizes the Division of Labor Standards Enforcement (the Division) to issue a citation to the employer if the Division “determines that a person has paid or caused to be paid a wage less than the minimum under applicable law.” While a section 1197.1 minimum wage citation may include “any applicable penalties imposed pursuant to Section 203 in connection with the citation,” the existence of a minimum wage violation is a prerequisite to the issuance of such a citation.
In this appeal, we consider whether certain employers, farm labor contractor Jaime Zepeda Labor Contracting, Inc. (Zepeda), and Zepeda’s “client employers” (§ 2810.3), Anthony Vineyards, Inc. (AVI) and Richard Bagdasarian, Inc. (RBI) (collectively “Employers”), committed minimum wage violations that would support the Division’s issuance of section 1197.1 citations. It is undisputed that the Employers paid all of the employees at issue at least the minimum wage by payday. Nevertheless, the Division contends that it properly issued section 1197.1 minimum wage citations because the Employers did not promptly pay the final wages of the employees who were purportedly discharged or deemed by the Division to have quit in accordance with the prompt payment mandates of sections 201, 202 and 203. The Division reasons that the failure to pay wages on the dates that the employees were discharged (§ 201, subd. (a)), or within 72 hours of when they quit (§ 202, subd. (a)), subjected the Employers to waiting time penalties under section 203, and constituted independent minimum wage violations that supported the issuance of section 1197.1 citations, even though the Employers paid final wages that were at or above the minimum wage on or before payday, in accordance with the minimum wage law.
After considering the text, structure, and purpose of the relevant laws, the lack of any authority supporting the conclusion that the Employers committed minimum wage violations under these circumstances, and a persuasive decision from another jurisdiction rejecting an argument nearly identical to the one that the Division advances here, we conclude that the Division improperly issued the section 1197.1 minimum wage citations to the Employers. We therefore conclude that the superior court properly issued a peremptory writ of administrative mandate directing the Division to dismiss the section 1197.1 minimum wage citations with prejudice. Accordingly, we affirm the superior court’s judgment granting a peremptory writ directing the Division to dismiss the citations with prejudice.
Lim v. TForce Logistics (9th Cir. 20-55564 8/12/21) Arbitration/Unconscionability
The panel affirmed the district court’s denial of defendants’ motion to compel arbitration of employment-related claims on the grounds that the delegation clause and arbitration provision in the plaintiff’s contract were unenforceable as unconscionable under California law.
Plaintiff Santiago Lim alleged that he and other delivery drivers signed agreements purporting to classify them as independent contractors, but defendants treated and managed them as employees in violation of California labor laws. Lim’s Independent Contractor Operating Agreement included an arbitration provision.
The panel held that a delegation clause, requiring the arbitrator to determine the gateway issue of arbitrability, was unenforceable as to Lim because it was procedurally and substantively unconscionable. The panel held that the district court properly exercised its discretion by not severing the unconscionable provisions and enforcing what remained of the delegation clause.
The panel held that because the delegation clause was unenforceable, the district court properly proceeded to determine the gateway issue of arbitrability. The panel held that the same bases for concluding that the delegation clause was procedurally and substantively unconscionable—the take-it-or-leave-it circumstances and cost-splitting, fee-shifting, and Texas venue provisions—also rendered the arbitration provision unconscionable. The district court did not err by not severing those same terms and declining to enforce the arbitration provision.
Nowicki v. Contra Costa County Employees' Retirement etc. (CA1/2 A160337 8/10/21) Public Sector Retirement Benefits
Plaintiff Peter J. Nowicki appeals from the trial court’s judgment in favor of defendant Contra Costa County Employees’ Retirement Association (CCCERA) following the denial of Nowicki’s fourth amended petition for writ of mandate (petition), filed pursuant to Code of Civil Procedure section 1085. Nowicki had alleged in his petition that CCCERA and its governing Board of Retirement (Board) improperly reduced his retirement benefits retroactively, pursuant to Government Code section 31539. On appeal, he contends the trial court (1) utilized an incorrect and overly deferential standard of review; (2) ignored significant procedural errors by the Board that violated his due process rights; and (3) ignored various problems with the Board’s decision, including permitting it to misconstrue and misuse the Brown Act (Gov. Code, § 54950 et seq.). Because we conclude the Board’s decision to reduce Nowicki’s retirement allowance was an abuse of discretion, we shall reverse the judgment.
Herrera v. Doctors Medical Center of Modesto (CA5 F080963 8/5/21) Arbitration/PAGA Representative Actions
Defendant Doctors Medical Center of Modesto, Inc., appeals from an order denying its petition to compel arbitration of Labor Code claims pursued by former employees. The former employees contend their lawsuit is limited to recovering civil penalties under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.) and their arbitration agreements cannot be enforced to compel arbitration of the PAGA representative claims.
We again interpret the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian) to mean “that PAGA representative claims for civil penalties are not subject to arbitration” under a predispute arbitration agreement. (Esparza v KS Industries, L.P. (2017) 13 Cal.App.5th 1228, 1234 (Esparza).) The PAGA claims alleged in the former employees’ complaint are owned by the state and are being pursued by the former employees as the state’s agent or proxy. (ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 185 (ZB, N.A.).) The arbitration agreements in question are not enforceable as to the PAGA claims because the state was not a party to, and did not ratify, any of those agreements. Also, after the former employees became representatives of the state, they did not agree to arbitrate the PAGA claims. Consequently, under the rule of California law recognized in Esparza and many other decisions of the Court of Appeal, the PAGA claims cannot be forced into arbitration based on agreements made by the former employees before they became authorized representatives of the state. The trial court correctly applied this rule of law.
Defendant’s argument that arbitration is compelled by the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) and federal preemption fails for similar reasons. In Iskanian, our Supreme Court addressed the scope of the FAA and concluded that “a PAGA claim lies outside the FAA’s coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship.” (Iskanian, supra, 59 Cal.4th at p. 386.) Based on this precedent, we conclude the FAA does not reach the PAGA claims alleged in this case and, therefore, federal law does not preempt the rule of California law stating PAGA claims are subject to arbitration only if the state, or the state’s authorized representative, consents to arbitration.
We therefore affirm the order denying the petition to compel arbitration.
Capriole v. Uber Technologies (9th Cir. 20-16030 8/2/21) Arbitration/Class Action/MA Wage Laws
The panel affirmed the district court’s order compelling arbitration in a putative class action requesting a preliminary injunction prohibiting Uber from classifying drivers in Massachusetts as independent contractors and an order directing Uber to classify its drivers as employees and comply with Massachusetts wage laws.
Plaintiffs, Massachusetts residents who have worked as Uber drivers since at least May 2016, filed a putative class action in the District Court for the District of Massachusetts on behalf of all “individuals who have worked as Uber drivers in Massachusetts who have not released all of their claims against Uber.” When they signed up to become Uber drivers, Plaintiffs agreed to Uber’s 2015 Technology Services Agreement, which advised Plaintiffs of a mandatory arbitration agreement (“Arbitration Provision”), governed by the Federal Arbitration Act (“FAA”).
Uber moved to compel arbitration, stay proceedings pending arbitration, and transfer the case to the District Court for the Northern District of California pursuant to a forum selection clause in Uber’s driver agreements. The Massachusetts district court granted Uber’s motion to transfer the action to the California district court, including the pending Emergency Motion and Motion to Compel Arbitration. The California district court denied Plaintiffs’ request for a preliminary injunction and granted Uber’s Motion to Compel Arbitration.
Plaintiffs asserted that they are exempt from mandatory arbitration under Section 1 of the FAA because they are a class of workers engaged in foreign or interstate commerce. The panel disagreed. Rather, the panel joined the growing majority of courts holding that Uber drivers as a class of workers do not fall within the interstate commerce exemption from the FAA.
Section 1 of the Act exempts from its coverage contracts of employment of three categories of workers: seamen, railroad employees, and a residual category comprising any other class of workers engaged in foreign or interstate commerce. The panel noted that the Supreme Court has instructed that this last residual category must be afforded a narrow construction to further the FAA’s purpose to overcome judicial hostility to arbitration agreements.
The panel first held that in light of the text of the FAA and Supreme Court precedent, the relevant class of workers here, Uber drivers, needed to be assessed at the nationwide level, rather than confined to any limited geographic region. Limiting the relevant class of workers to a specific geographic area would undermine the very purpose of the FAA, by which Congress sought to create a national policy favoring arbitration.
The panel concluded that Uber drivers, as a nationwide class of workers, are not engaged in foreign or interstate commerce and are therefore not exempt from arbitration under the FAA. Here, the district court’s unchallenged factual findings compelled the conclusion that Uber’s service was primarily local and intrastate in nature. Only 2.5% of all trips fulfilled using the Uber Rides marketplace in the United States between 2015 and 2019 started and ended in different states. Moreover, only 10.1% of all trips taken in the United States in 2019 began or ended at an airport, not all of which involved interstate travel. Plaintiffs did not (and likely could not) point to any evidence that Uber drivers were sufficiently engaged in interstate commerce to fall under the Section 1 exemption.
The panel next concluded that the district court properly addressed the motion to compel arbitration prior to adjudicating Plaintiffs’ preliminary injunction motion. Because Plaintiffs’ claims and requested injunctive relief were arbitrable by the terms of the arbitration agreement and Plaintiffs’ requested injunctive relief would have upended the status quo rather than maintained it, the panel determined that the district court properly addressed the motion to compel arbitration first.
The panel further held that the district court properly concluded that the proposed injunction against Uber’s current driver classification as independent contractors was not one for public injunctive relief. Plaintiffs argued that a claim for public injunctive relief could not be waived contractually under Massachusetts law. The panel held that even assuming class-wide public injunctive relief, as conceptualized in McGill v. Citibank, N.A., 393 P.3d 85 (Cal. 2017), were available under Massachusetts law and that such relief could not be contractually waived, the requested injunctive relief here could not be remotely characterized as public injunctive relief as this court or any other court has recognized it.
Because the panel agreed with the district court that Plaintiffs’ requested injunctive relief did not constitute public injunctive relief, the panel also agreed that Plaintiffs could not evade the Class Action Waiver in Uber’s Arbitration Provision, even assuming Massachusetts law provided for such non-waivable relief. Likewise, because Plaintiffs’ request for injunctive relief regarding their classification was properly a matter for the arbitrator, the district court did not err by declining to reach the merits of Plaintiffs’ request for a preliminary injunction under Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008).
Bonni v. St. Joseph Health System (SC S244148 per curiam 7/29/21) Retaliation/Hospital Peer Review/Anti-SLAPP
Under California law, hospitals must use a process of professional peer review to evaluate physicians’ qualifications for medical staff privileges. (See Bus. & Prof. Code, §§ 805, 809–809.9.) Because the loss of privileges can significantly limit a physician’s ability to practice medicine, peer review proceedings are a frequent subject of litigation in California courts. And as the number of lawsuits challenging peer review determinations has grown, so too has the number of motions to strike under Code of Civil Procedure section 425.16. Familiarly known as the anti-SLAPP statute, this provision allows defendants to seek early dismissal of unmeritorious claims arising from protected speech and petitioning activities. (Code Civ. Proc., § 425.16, subd. (b).)
We have previously held that the anti-SLAPP statute’s protections extend to speech and petitioning in connection with hospital peer review. (See Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192.) This case requires us to consider the scope and limits of those protections. Plaintiff, a physician, alleges the defendant hospitals and members of its medical staff unlawfully retaliated against him for raising concerns about patient care. He says this retaliation began with the suspension of his staff privileges and culminated in the termination of those privileges after peer review. The hospitals seek to strike the retaliation claims under the anti-SLAPP statute. They contend that any claim arising from the peer review process necessarily targets protected speech or petitioning activity and therefore must be afforded anti-SLAPP protection. We hold otherwise. While some of the forms of retaliation alleged in the complaint — including statements made during and in connection with peer review proceedings and disciplinary reports filed with official bodies — do qualify as protected activity, the discipline imposed through the peer review process does not. Thus, while the hospitals may seek to strike some of the physician’s retaliation claims, they are not entitled to wholesale dismissal of these claims under the anti-SLAPP law.
Mahler v. Judicial Council of Cal. (CA1/1 A158696 7/28/21) FEHA Age Discrimination/Temporary Assigned Judges Program
Plaintiffs, retired superior court judges who have participated in the Temporary Assigned Judges Program (TAJP), challenge recent changes to the program made by the Chief Justice. These changes include limits on the duration of service in the program but provide for some exceptions. Plaintiffs claim these changes discriminate against “older” retired judges and have filed the instant lawsuit, alleging disparate impact age discrimination under the Fair Employment and Housing Act (FEHA). The trial court sustained defendants’ demurrer without leave to amend on the ground legislative immunity bars the suit.
Legislative immunity does, indeed, shield the Chief Justice and the Judicial Council from suit, regardless of the nature of the relief sought, to the extent plaintiffs’ discrimination claim is based on the Chief Justice’s promulgation of changes to the TAJP. Legislative immunity does not, however, foreclose suit to the extent plaintiffs’ claim is based on defendants’ enforcement of the challenged provisions of the TAJP through individual judicial assignments. Rather, judicial immunity applies to the Chief Justice’s assignment of individual judges in accordance with the new TAJP provisions, and while judicial immunity forecloses monetary relief, it does not foreclose prospective declaratory relief.
Defendants also demurred on the ground plaintiffs’ allegations fail to state a viable disparate impact age discrimination claim. Although the trial court did not consider the sufficiency of the complaint, defendants press this as an alternative ground to affirm, and we therefore address the issue, given our conclusion that legislative immunity does not wholly bar plaintiffs’ suit. We agree that plaintiffs’ allegations are, at present, insufficient.
We do not agree, however, that plaintiffs must be denied leave to amend. In so concluding, we disagree with defendants that a disparate impact age discrimination claim cannot, as matter of law, be based on disparate impact on an older subgroup within the class of persons protected under the FEHA, namely employees forty years of age and older. No California court has squarely addressed this issue, and while several federal circuit courts have held “sub-class” disparate impact age discrimination claims are not viable under the Age Discrimination in Employment Act (ADEA), the majority view is now to the contrary. We find the reasoning of these recent cases more persuasive than that of the older cases and conclude it is in keeping with our Legislature’s stated intent that the FEHA age discrimination provisions be liberally construed to achieve its salutary purposes.
We therefore reverse the dismissal order and remand to allow plaintiffs an opportunity to amend. In doing so, we are expressing no opinion as to whether further amendment will sufficiently state a disparate impact age discrimination claim or as to the merits of plaintiffs’ claim.
Pollock v. Tri-Modal Distribution Services, Inc. (SC S262699 per curiam 7/26/21) FEHA Failure to Promote Statute of Limitations/Prevailing Defendant’s Fees & Costs
Plaintiff Pamela Pollock is a customer service representative at defendant Tri-Modal Distribution Services, Inc. (Tri-Modal), a corporation that ships freight by truck. She alleges that Tri-Modal passed her over for several promotions in part because she refused to have sex with defendant Michael Kelso, Tri-Modal’s executive vice-president. We granted review to address two questions. First, when does the statute of limitations begin to run in a failure to promote case brought under the harassment provision of the Fair Employment and Housing Act (FEHA) (Gov. Code, §§ 12940, subd. (j), 12960)? We hold that such a FEHA claim accrues, and thus the statute of limitations begins to run, at the point when an employee knows or reasonably should know of the employer’s allegedly unlawful refusal to promote the employee.
Second, does Government Code section 12965, subdivision (b)’s directive that a prevailing FEHA defendant “shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so,” apply to an award of costs on appeal? The answer is yes. The Court of Appeal in this case erred in awarding costs on appeal to defendants without first finding that Pollock’s underlying claim was objectively groundless.
Bills Signed by Governor (7/23/21)
AB 131 by Committee on Budget — Child development programs and workers
AB 845 by Assemblymember Freddie Rodriguez (D-Pomona) – Disability retirement: COVID-19: presumption.
SB 272 by Senator John Laird (D-Santa Cruz) – State government: gender-neutral terms: California Conservation Corps.
SB 411 by Senator Dave Cortese (D-San Jose) – Public Employees’ Retirement System: employment without reinstatement.
SB 461 by Senator Dave Cortese (D-San Jose) – Unfair Competition Law: enforcement.
Shooter v. State of Arizona (9th Cir. 19-16248 7/22/21) Legislator Sexual Harassment/Expulsion/42 U.S.C. §1983
The panel affirmed the district court’s dismissal, for failure to state a claim, of an action brought by Donald Shooter pursuant to 42 U.S.C. § 1983 alleging that the Speaker of the Arizona House of Representatives, Javan Mesnard, and the Arizona Governor’s Chief of Staff, Kirk Adams, wrongfully engineered Shooter’s expulsion as a representative from the Arizona House.
Shooter was expelled from the Arizona House by a 56-3 vote after a legislative investigation into sexual harassment allegations concluded that he had created a hostile work environment. Shooter filed suit against Mesnard, Adams, and the State of Arizona, alleging that his expulsion was the product of a conspiracy to suppress his anti-corruption efforts. Shooter’s complaint alleged federal causes of action under § 1983 based on due process and equal protection violations.
Shooter conceded on appeal that the district court correctly dismissed his § 1983 claim against the State of Arizona on the grounds that the State is not a person for the purposes of § 1983. Accordingly, the only question before the panel was whether the district court properly dismissed Shooter’s § 1983 claim for monetary relief against Mesnard and Adams.
The panel first held that even assuming that Shooter had not abandoned his violation of equal protection theory, he failed to state a claim because the complaint failed to plead sufficient facts to raise a plausible inference that Mesnard and Adams acted with a discriminatory intent based on Shooter’s sex.
Addressing the procedural due process claims based on a stigma-plus theory, the panel held that even assuming that Shooter had any cognizable liberty interest, the claim failed because Mesnard and Adams were entitled to qualified immunity. The panel stated that in arguing that his due process rights to notice and a hearing were violated, Shooter relied on cases that arose in factual contexts that differed from the internal workings of a state legislature, thereby underscoring his failure to show clearly established law that was particularized to the facts of the case. Moreover, the legislative context in which Shooter’s claims arose presented distinct federalism concerns that were not addressed, much less clearly resolved, by the broadly framed due process principles he invoked. Given the lack of any relevant caselaw that placed the merits of his claims beyond debate, Shooter failed to carry his burden to show that the proceedings that led to his expulsion from the Arizona House violated clearly established law.