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Western States Office Fund v. WPAS (9th Cir. 20-35545 1/31/22) ERISA
The panel affirmed the district court’s summary judgment in favor of the defendant in an ERISA action brought by a multiemployer pension plan, seeking a recalculation of defendant’s annual withdrawal liability payments following its withdrawal from the plan.
When an employer withdraws from a multiemployer pension plan, it is required to pay for its share of unfunded benefits. That share, called withdrawal liability, may be paid in annual installments, calculated in part based on the “highest contribution rate” the employer was required to pay into the plan during a specified time period. In addition, when a multiemployer plan is underfunded and in critical status, the employer must pay a surcharge of five or ten percent of the total amount of contributions the employer was required to make to the plan each year.
The panel held that, for purposes of determining an employer’s annual withdrawal payment, a surcharge paid by the employer when a plan is in critical status is not included in the calculation of the “highest contribution rate.”
Lawson v. PPG Architectural Finishes, Inc. (SC S266001 per curiam 1/27/22) Labor Code section 1102.5 Retaliation
The question in this case concerns the proper method for presenting and evaluating a claim of whistleblower retaliation under Labor Code section 1102.5. Since 2003, the Labor Code has prescribed a framework: Once an employee-whistleblower establishes by a preponderance of the evidence that retaliation was a contributing factor in the employee’s termination, demotion, or other adverse action, the employer then bears the burden of demonstrating by clear and convincing evidence that it would have taken the same action “for legitimate, independent reasons.” (Lab. Code, § 1102.6, added by Stats. 2003, ch. 484, § 3, pp. 3518–3519.) But in the years since section 1102.6 became law, some courts have persisted in instead applying a well-worn, but meaningfully different, burden-shifting framework borrowed from the United States Supreme Court’s decision in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792 (McDonnell Douglas). Noting the lack of uniformity, the United States Court of Appeals for the Ninth Circuit has asked us to decide which of these frameworks governs section 1102.5 retaliation claims. Unsurprisingly, we conclude courts should apply the framework prescribed by statute in Labor Code section 1102.6. Under the statute, employees need not satisfy the McDonnell Douglas test to make out a case of unlawful retaliation.
Hughes v. Northwestern Univ. (US 19–1401 per curiam 1/24/22) ERISA
Respondents administer retirement plans on behalf of current and former Northwestern University employees, including petitioners here. The plans are defined-contribution plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), under which each participant chooses an individual investment mix from a menu of options selected by the plan administrators. Petitioners sued respondents claiming that respondents violated ERISA’s duty of prudence required of all plan fiduciaries by: (1) failing to monitor and control recordkeeping fees, resulting in unreasonably high costs to plan participants; (2) offering mutual funds and annuities in the form of “retail” share classes that carried higher fees than those charged by otherwise identical share classes of the same investments; and (3) offering options that were likely to confuse investors. The District Court granted respondents’ motion to dismiss, and the Seventh Circuit affirmed, concluding that petitioners’ allegations fail as a matter of law.
Held: The Seventh Circuit erred in relying on the participants’ ultimate choice over their investments to excuse allegedly imprudent decisions by respondents. Determining whether petitioners state plausible claims against plan fiduciaries for violations of ERISA’s duty of prudence requires a context-specific inquiry of the fiduciaries’ continuing duty to monitor investments and to remove imprudent ones as articulated in Tibble v. Edison Int’l, 575 U. S. 523. Tibble concerned allegations that plan fiduciaries had offered “higher priced retail-class mutual funds as Plan investments when materially identical lower priced institutional-class mutual funds were available.” Id., at 525–526. The Tibble Court concluded that the plaintiffs had identified a potential violation with respect to certain funds because “a fiduciary is required to conduct a regular review of its investment.” Id., at 528. Tibble’s discussion of the continuing duty to monitor plan investments applies here. Petitioners allege that respondents’ failure to monitor investments prudently—by retaining recordkeepers that charged excessive fees, offering options likely to confuse investors, and neglecting to provide cheaper and otherwise-identical alternative investments—resulted in respondents failing to remove imprudent investments from the menu of investment offerings. In rejecting petitioners’ allegations, the Seventh Circuit did not apply Tibble’s guidance but instead erroneously focused on another component of the duty of prudence: a fiduciary’s obligation to assemble a diverse menu of options. But respondents’ provision of an adequate array of investment choices, including the lower cost investments plaintiffs wanted, does not excuse their allegedly imprudent decisions. Even in a defined-contribution plan where participants choose their investments, Tibble instructs that plan fiduciaries must conduct their own independent evaluation to determine which investments may be prudently included in the plan’s menu of options. See id., at 529–530. If the fiduciaries fail to remove an imprudent investment from the plan within a reasonable time, they breach their duty. The Seventh Circuit’s exclusive focus on investor choice elided this aspect of the duty of prudence. The court maintained the same mistaken focus in rejecting petitioners’ claims with respect to recordkeeping fees on the grounds that plan participants could have chosen investment options with lower expenses. The Court vacates the judgment below so that the Seventh Circuit may reevaluate the allegations as a whole, considering whether petitioners have plausibly alleged a violation of the duty of prudence as articulated in Tibble under applicable pleading standards. The content of the duty of prudence turns on “the circumstances . . . prevailing” at the time the fiduciary acts, 29 U. S. C. §1104(a)(1)(B), so the appropriate inquiry will be context specific. Fifth Third Bancorp v. Dudenhoeffer, 573 U. S. 409, 425. Pp. 4–6.
953 F. 3d 980, vacated and remanded.
SOTOMAYOR, J., delivered the opinion for a unanimous Court. BARRETT, J., took no part in the consideration or decision of this case.
Vines v. O'Reilly Auto Enterprises, LLC (CA2/7 B301000 1/21/22) FEHA/Attorney Fees
Renee Vines sued his former employer O’Reilly Auto Enterprises, LLC for violations of the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.), alleging race- and age-based discrimination, harassment and retaliation-related claims. After a jury found in his favor and awarded damages on his claims for retaliation and failure to prevent retaliation, Vines moved for an award of $809,681.25 in attorney fees. The trial court awarded only $129,540.44 in fees, based in part on its determination the unsuccessful discrimination and harassment claims were not sufficiently related or factually intertwined with the successful retaliation claims. On appeal Vines contends that determination was based on a legal error and the court thus abused its discretion in reducing the fee award. We agree, reverse the postjudgment fee order and remand for the court to recalculate Vines’s fee award.
Espinoza v. Hepta Run, Inc. (CA2/7 B306292 1/19/22) PAGA/Preemption
Guillermo Espinoza sued his former employer, Hepta Run, Inc., and its owner, Ed Tseng, asserting causes of action for Labor Code wage and hour violations, unfair business practices in violation of California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.) and representative claims for penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). Following a bench trial the court entered judgment in favor of Espinoza for $84,117.73. Hepta Run and Tseng appeal the judgment, as well as the trial court’s earlier order denying their motion for summary adjudication based on federal preemption of Espinoza’s meal and rest period claims. We agree the trial court erred in denying the motion for summary adjudication, reverse the judgment to that extent, otherwise affirm, and remand with directions for the trial court to redetermine the appropriate damage award and modify the judgment accordingly.
Armstrong v. Reynolds (9th Cir. 20-15256 1/13/21) Nevada Whistleblower Retaliation
The panel affirmed in part and reversed in part the district court’s dismissal of plaintiff’s claims brought pursuant to 42 U.S.C. § 1983 and Nevada state law against four state officials arising from plaintiff’s termination from her workplace, Ear Nose and Throat Associates, after she filed complaints with the Nevada Occupational Safety and Health Administration regarding unsafe medical practices at her workplace.
After attempting without success to raise her concerns with her employer, plaintiff Helen Armstrong filed a complaint with the Nevada Occupational Safety and Health Administration (NOSHA). Nevada law supports and encourages such reporting by prohibiting retaliation against whistleblowers who report health and safety hazards. Nev. Rev. Stat. § 618.445. Armstrong alleges that Ear, Nose and Throat Associates (ENTA) retaliated against her, leading her to return to NOSHA to file a second complaint. But when Armstrong withdrew the whistleblowing complaint for fear of further retaliation—before ENTA learned of it—NOSHA notified ENTA about the complaint and, Armstrong alleges, more retaliation followed. When she filed a third whistleblowing complaint, NOSHA scuttled any investigation. Eventually, ENTA fired Armstrong.
The panel first reversed the dismissal of Armstrong’s procedural due process claim. The panel held that even though Armstrong conceded that she was an at-will employee, Nevada law has created limited exceptions to at-will employment and protections for whistleblowers that can support a property interest in continued employment. Although the panel agreed with defendants that Armstrong had not plausibly alleged that their conduct as state actors caused her to be fired, citing Johnson v. Duffy, 588 F.2d 740, 743–44 (9th Cir. 1978), the panel noted that the information contained in Armstrong’s briefing suggested that she might be able to plausibly allege a relationship between the defendants and her termination sufficient to sustain either a “direct participation” or “setting in motion” theory. Accordingly, the panel held that Armstrong must be granted leave to amend her complaint.
The panel next considered Armstrong’s contention that, in addition to interfering with her right to continued employment by causing her to be fired, defendants deprived her of a property interest in being reinstated by failing to investigate her retaliation complaint, as they were obligated to do under Nevada law. The panel agreed with Armstrong that Nevada’s statute created a property interest beyond continued employment, but not that that interest extended to reinstatement. Thus, the panel held that the district court erred in holding that Armstrong did not have a property right in the investigation of her whistleblowing complaint because § 618.445 creates a protected property interest in an investigation and in an action brought in court on behalf of those whose claims have merit. The panel further determined that the complaint plausibly alleged that the process Armstrong received was essentially nonexistent and so constitutionally deficient. The panel concluded that with respect to the due process claim, Armstrong demonstrated a protected property interest in an investigation and to some degree, in continued employment.
The panel agreed with the district court that Armstrong had not sufficiently alleged a substantive due process claim based on a liberty interest. Thus, Armstrong had not plausibly alleged that she was unable to pursue an entire occupation, nor did the complaint allege any facts supporting the calculation of 13 years of lost future employment, or otherwise suggest that defendants’ actions entirely precluded Armstrong’s ability to work as a human resources professional elsewhere. Accordingly, the panel held that the district court did not err in dismissing Armstrong’s substantive due process claim and denying Armstrong leave to amend her complaint.
Addressing the negligent infliction of emotional distress claim—that NOSHA official Lara Pellegrini negligently notified plaintiff’s employer about her complaint—the panel held that the district court erred in concluding that the claim was subject to Nevada’s discretionary function immunity statute. Applying the Berkovitz-Gaubert test, the panel held that Pellegrini had offered no cognizable social, political, or economic reason for her allegedly negligent action. Finally, the panel held that the district court did not err in dismissing Armstrong’s civil conspiracy claim as barred by the intracorporate conspiracy doctrine, but that the district court abused its discretion in dismissing the claim without leave to amend.
National Federation of Independent Business v. OSHA (US 21A244 and 21A247 per curiam 1/13/22) Private Employment COVID-19 Vaccine or Testing Rules
The Secretary of Labor, acting through the Occupational Safety and Health Administration, recently enacted a vaccine mandate for much of the Nation’s work force. The mandate, which employers must enforce, applies to roughly 84 million workers, covering virtually all employers with at least 100 employees. It requires that covered workers receive a COVID–19 vaccine, and it pre-empts contrary state laws. The only exception is for workers who obtain a medical test each week at their own expense and on their own time, and also wear a mask each workday. OSHA has never before imposed such a mandate. Nor has Congress. Indeed, although Congress has enacted significant legislation addressing the COVID–19 pandemic, it has declined to enact any measure similar to what OSHA has promulgated here.
Many States, businesses, and nonprofit organizations challenged OSHA’s rule in Courts of Appeals across the country. The Fifth Circuit initially entered a stay. But when the cases were consolidated before the Sixth Circuit, that court lifted the stay and allowed OSHA’s rule to take effect. Applicants now seek emergency relief from this Court, arguing that OSHA’s mandate exceeds its statutory authority and is otherwise unlawful. Agreeing that applicants are likely to prevail, we grant their applications and stay the rule.
Biden v. Missouri (US 21A240 and 21A241 per curiam 1/13/22) Health Care Workers COVID-19 Vaccine Rules
The Secretary of Health and Human Services administers the Medicare and Medicaid programs, which provide health insurance for millions of elderly, disabled, and lowincome Americans. In November 2021, the Secretary announced that, in order to receive Medicare and Medicaid funding, participating facilities must ensure that their staff—unless exempt for medical or religious reasons—are vaccinated against COVID–19. 86 Fed. Reg. 61555 (2021). Two District Courts enjoined enforcement of the rule, and the Government now asks us to stay those injunctions. Agreeing that it is entitled to such relief, we grant the applications.
Western Growers Assn. v. Occupational Safety & Health Stds. Bd. (CA1/1 A162343, filed 12/21/21, pub. ord. 1/12/22) Cal/OSHA ETS COVID-19
Western Growers Association, California Farm Bureau Federation, California Business Roundtable, Grower-Shipper Association of Central California, California Association of Winegrape Growers, and Ventura County Agricultural Association (appellants) challenged the emergency temporary standards (ETS) promulgated by the California Occupational Safety and Health Standards Board (Board) in response to the COVID-19 pandemic. After filing suit, appellants sought a preliminary injunction suspending enforcement of the ETS. The trial court denied the request, concluding appellants had not shown a likelihood of prevailing on the merits and finding the public interest in curbing the spread of COVID-19 weighed “heavily” in favor of ongoing enforcement of the ETS. On appeal, appellants contend the trial court erroneously applied a deferential standard of review, the findings of emergency (FOE) lacked necessary findings, and the ETS exceeded the Board’s statutory authority. We affirm the order.
Lozano v. City of L.A. (CA2/3 B307412 1/7/22) POBRA
Louis Lozano and Eric Mitchell (petitioners), former police officers for the City of Los Angeles (the City), filed a petition for writ of administrative mandate challenging the City’s decision to terminate their employment. A board of rights found petitioners guilty on multiple counts of misconduct, based in part on a digital in-car video system (DICVS) recording that captured petitioners willfully abdicating their duty to assist a commanding officer’s response to a robbery in progress and playing a Pokémon mobile phone game while on duty. Petitioners contend the City proceeded in a manner contrary to the law by using the DICVS recording in their disciplinary proceeding and by denying them the protections of the Public Safety Officers Procedural Bill of Rights Act (Gov. Code, § 3300 et seq.) (POBRA or the Act). The trial court denied their petition. We affirm.
Nat. Fed'n of Indep. Bus. v. Dept. of Labor (US 21A244) and Ohio v. Dept. of Labor (US 21A247) (consolidated, oral argument transcripts, 1/7/21) COVID-19 Vaccines or Tests and Masks/Workers
Centers on the vaccine-or-test mandate issued by the Occupational Safety and Health Administration. It requires all employers with 100 or more employees – roughly two-thirds of the private sector – to compel those employees to either be fully vaccinated against COVID-19 or be tested weekly and wear masks at work.
Biden v. Missouri (US 21A240) and Becerra v. Louisiana (US 21A241) (consolidated, oral argument transcripts, 1/7/21) COVID-19 Vaccines/Healthcare Workers
Whether the Biden administration can enforce nationwide a rule that requires all health care workers at facilities that participate in the Medicare and Medicaid programs to be fully vaccinated against COVID-19 unless they qualify for a medical or religious exemption. The Department of Health and Human Services issued the rule, which applies to more than 10 million workers, in November.
Columbia Export Terminal v. ILWU (9th Cir. 20-35037 1/5/21) Labor Law/RICO
The panel filed (1) an order withdrawing an opinion and dissent and denying, on behalf of the court, a petition for rehearing en banc; and (2) a new opinion and dissent. In the new opinion, 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.
Dissenting from the denial of rehearing en banc, Judge Bennett, joined by Judges Ikuta, R. Nelson, Bumatay, and VanDyke, wrote that, whether called preemption or preclusion, the LMRA does not bar a federal statutory claim brought in federal court. Judge Bennett wrote that a footnote in Alaska Airlines Inc. v. Schurke, 898 F.3d 904, 920 n.10 (9th Cir. 2018) (en banc), erroneously suggested that § 301 “precludes” federal statutory claims in the same way it preempts state law claims, and the court should have reheard this case en banc to excise this erroneous preclusion notion from its jurisprudence. Judge Bennett wrote that preclusion of federal claims is inconsistent with the purpose of § 301, and a statute passed by Congress to help maintain a uniform body of federal labor law does not somehow nullify a different statute passed by Congress to, among other objectives, eradicate organized attempts to defraud through a pattern of racketeering activity. Judge Bennett wrote that the panel also erred in applying a presumption of arbitrability contrary to Supreme Court precedent and created an agreement to arbitrate RICO claims, even though the parties never signed such an agreement.
Cirrincione v. American Scissor Lift (CA3 C092519, filed 12/6/21, pub. ord. 1/4/22) Wage & Hour/Class Certification
Plaintiff Jason Cirrincione appeals from the order denying class certification in this wage and hour action he filed against his former employer, defendant American Scissor Lift, Inc. (ASL). He contends reversal is required for a number reasons, including that the trial court’s ruling rests upon improper merits determinations and incorrect assumptions. We disagree and affirm the order denying class certification.
Garcia v. Expert Staffing West (CA2/6 B307371 12/29/21) Arbitration between Applicants and Former Employers
Respondent Roseana Garcia had an employment agreement with her former employers, appellants Essential Seasons and Cool-Pak, LLC. The agreement did not include an arbitration clause. After that employment ended, Garcia applied for work with appellant Expert Staffing West. As a part of her application for employment with Expert Staffing West, Garcia agreed to submit all disputes between them to arbitration. Her application was rejected.
Garcia later joined an existing class action for wage and hour violations against all three appellants. She based her claims on her prior employment by Essential Seasons and Cool-Pak. The issue presented here is whether the arbitration agreement between Garcia and Expert Staffing West applies to disputes arising between Garcia and her former employers. We conclude that the arbitration clause between a job applicant and her prospective employer does not apply to disputes between the applicant and her former employers based on the existence of a business relationship between the prospective employer and the applicant’s past employers.
Expert Staffing West and its Chief Executive Officer Edward Bright, Essential Seasons and its owner/managing partner Kathleen Winters, and Cool-Pak, LLC (collectively “Appellants”) appeal from the trial court’s orders denying their motion to compel Garcia to arbitrate her individual claims and denying their motions to dismiss her class claims and stay the action. Essential Seasons and Cool-Pak contend the trial court erred when it determined that the arbitration agreement between Garcia and Expert Staffing West did not apply to Garcia’s claims against them. We disagree and affirm.
Ahlstrom v. DHI Mortgage Co. (9th Cir. 20-15114 12/29/21) Arbitration
The panel reversed the district court’s order dismissing a putative class action complaint and granting the defendant’s motion to compel arbitration pursuant to the Federal Arbitration Act, and remanded for further proceedings.
When the plaintiff was hired as a loan officer by DHI Mortgage Co. (“DHIM”), he signed a Mutual Arbitration Agreement (“MAA”) with D.R. Horton, the parent company of DHIM. The MAA included a delegation clause providing that the arbitrator would have “exclusive authority to resolve any dispute relating the formation, enforceability, applicability, or interpretation” of the MAA. The plaintiff brought employment-related claims. DHIM moved to compel arbitration and to dismiss the putative class claims. The plaintiff opposed the motion, contending that the MAA was never properly formed due to a failure to satisfy a condition precedent in the MAA. The district court granted DHIM’s motion. Citing the delegation clause, the district court concluded that formation issues, including the plaintiff’s condition precedent argument, could not be decided by the court, and were instead delegated to the arbitrator.
The panel held that it is well-established that some “gateway” issues pertaining to an arbitration agreement, such as issues of validity and arbitrability, can be delegated to an arbitrator by agreement. Agreeing with other circuits, the panel held, however, that parties may not agree to delegate issues of formation to an arbitrator.
The panel further held that the MAA did not constitute a properly formed agreement between the plaintiff and D.R. Horton, with which the plaintiff had no employment relationship. The panel concluded that the MAA, as drafted, described a relationship between the plaintiff and D.R. Horton that did not exist, and thus did not constitute a properly formed agreement to arbitrate.
Carmona v. Dominos Pizza (9th Cir. 21-55009 12/23/21) Arbitration/Pizza Delivery Drivers/FAA Exemption
The panel affirmed the district court’s order denying Domino’s Pizza, LLC’s motion to compel arbitration in a putative class action brought by Domino’s drivers, asserting violations of various California labor laws.
The district court denied the motion based on its finding that the drivers were a “class of workers engaged in foreign or interstate commerce,” and were therefore exempt from the requirements of the Federal Arbitration Act (“FAA”), notwithstanding their contracts with Domino’s that provided claims between the parties be submitted to arbitration under the FAA.
Section 1 of the FAA exempts from the arbitration mandate certain employment contracts, including “workers engaged in foreign and interstate commerce,” referred to as the “residual clause.” The exemption applies if the class of workers is engaged in a “single, unbroken stream of interstate commerce” that renders interstate commerce a “central part” of their job description. Capriole v. Uber Techs., Inc., 7 F.4th 854, 866 (9th Cir. 2021).
Domino’s contended that the drivers who delivered goods to individual Domino’s franchisees in California were not engaged in interstate commerce because the franchisees, all located in California, placed orders with the supply center in the state, and the goods delivered were not in the same form in which they arrived at the supply center. The panel disagreed. The panel held that Rittman v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020), which concerned Amazon package delivery drivers, was instructive. Like Amazon, Domino’s was directly involved in the procurement and delivery of interstate goods, was involved in the process from the beginning to the ultimate delivery of the goods to their destinations, and its business included not just the selling of goods, but also the delivery of those goods. The alteration of the goods at the supply center did not change the result. The panel concluded that, as with the Amazon drivers, the transportation of interstate goods on the final leg of their journey by the Domino’s drivers satisfied the requirements of the residual clause.
Buero v. Amazon.com Services (9th Cir. 20-35633 12/22/21) Oregon Wage & Hour Laws
Plaintiff Lindsey Buero filed a class action complaint against Amazon.com Services, Inc. and Amazon.com, Inc., alleging that Defendants’ failure to compensate employees for time spent waiting for and passing through mandatory security screenings violates Oregon’s wage and hour laws. The district court granted Defendants’ motion for judgment on the pleadings, concluding that Oregon wage and hour law incorporates the standard set forth in the Portal-to-Portal Act, 29 U.S.C. § 254. Plaintiff appealed the district court’s order.
We respectfully ask the Oregon Supreme Court to answer the certified question presented below pursuant to section 28.200 of the Oregon Revised Statutes, because we have concluded that it raises an important, dispositive question of state law: whether time employees spend at an employer’s premises waiting for and undergoing mandatory security screening is compensable under Oregon law.1 See W. Helicopter Servs., Inc. v. Rogerson Aircraft Corp., 811 P.2d 627 (Or. 1991). We offer the following statement of relevant facts and explanation of the “nature of the controversy in which the question[ ] arose.” Or. Rev. Stat. § 28.210(2) (2005).
Bichai v. DaVita, Inc. (CA5 F079815 12/20/21) Peer Review/Medical Staff
Plaintiff William N. Bichai, M.D., filed this lawsuit to challenge the denial of his application for appointment to the medical staff of a dialysis clinic. The superior court denied Bichai’s request for a writ of administrative mandate pursuant to Code of Civil Procedure section 1094.5. Bichai appealed.
This appeal addresses the procedural fairness of the hearing Bichai received after the clinic’s peer review committee recommended his application be denied. The procedures for such a hearing are established by the medical staff bylaws and California’s peer review statute. The hearing officer, applying burdens specified in the bylaws, concluded that (1) the clinic sustained its initial burden of presenting evidence to support the denial of staff privileges and (2) Bichai did not sustain his burden of proving that the denial “lacks any substantial factual basis, or is otherwise arbitrary or capricious.”
We conclude the burden of proof contained in the medical staff bylaws is not consistent with the preponderance of the evidence standard required by Business and Professions Code section 809.3, subdivision (b)(2). We further conclude the statute controls in the event of an inconsistency, the application of the bylaws’ more demanding burden of proof constituted procedural error, the error deprived Bichai of a fair hearing and, therefore, was prejudicial. As a result, he is entitled to a writ of administrative mandamus vacating the hearing officer’s decision.
We therefore reverse the judgment.
Woods v. American Film Institute (CA2/2 B307220 12/17/21) Unpaid Labor/Class Certification
Laurie Woods appeals from an order denying certification of a class of persons who worked without pay for respondent American Film Institute (AFI). Since 1987, AFI has presented an annual film festival in Los Angeles (the Festival) for which it uses volunteer workers. Woods contends that those volunteers were actually employees because AFI is not permitted to use unpaid labor under California law. Woods filed a putative class action alleging that such workers were therefore denied benefits that California employers are required to provide to employees, such as minimum and overtime wages, meal and rest breaks, and wage statements.
The trial court denied class certification on the ground that common issues would not predominate over individual ones. The court reasoned that a worker cannot be classified as an employee unless the worker expects some compensation. Determining whether any particular class members expected compensation would therefore require separate, individual mini-trials. The court also found that whether AFI had an unlawful meal and rest break policy that it uniformly applied to its workers could not be determined through common proof.
We affirm based upon the trial court’s first reason for denying certification. The trial court correctly decided that putative class members who expected no compensation were not employees under California law. The class that Woods moved to certify is broad enough to include persons who expected to be paid. Thus, if the case were to proceed as a class action, the trier of fact would need to decide whether each class member expected to be paid or was in fact a volunteer. The trial court acted within its discretion in finding that the need to decide such individual issues would preclude common issues from predominating.
Arroyo v. Rosas (9th Cir. 19-55974 12/10/21) Declining to Extend Supplemental Jurisdiction under Unruh Act
The panel reversed the district court’s order granting summary judgment to plaintiff on his claim under Title III of the Americans with Disabilities Act but declining to exercise supplemental jurisdiction over his claim under California’s Unruh Civil Rights Act.
The panel held that, because any violation of the ADA is automatically a violation of the Unruh Act, the district court’s summary judgment ruling effectively dictated the outcome of plaintiff’s Unruh Act claim as well. The panel held that the district court abused its discretion in nonetheless declining to exercise supplemental jurisdiction over the Unruh Act claim under 28 U.S.C. § 1367(c)(4), which permits a district court to decline to exercise supplemental jurisdiction over a claim if, “in exceptional circumstances, there are other compelling reasons for declining jurisdiction.”
According to the district court, recent changes in California law had made it much more difficult to file Unruh Act claims in state court, leading to a wholesale shifting of such cases to the federal courts. The district court ruled that retaining jurisdiction over the Unruh Act claim would allow plaintiff to evade the California requirements, contrary to the interest in federal-state comity.
The panel agreed with the district court that the extraordinary situation created by the unique confluence of California rules involved here, pairing a damages remedy with special procedural requirements aimed at limiting suits by high-frequency litigants, presented “exceptional circumstances” that authorized consideration, on a case-by-case basis, of whether the principles of judicial economy, convenience, comity, and fairness underlying the pendent jurisdiction doctrine provided “compelling reasons” that warranted declining supplemental jurisdiction. However, because the district court effectively completed its adjudication of this case before it considered the question of supplemental jurisdiction, the interests in judicial economy, convenience, comity, and fairness all overwhelmingly favored retaining jurisdiction and entering the foreordained judgment on the Unruh Act claim. The panel therefore reversed and remanded.
De Leon v. Pinnacle Property Management Services, LLC (CA4/3 G059801, filed 11/17/21, pub. ord. 12//8/21) Arbitration
Defendants Pinnacle Property Management Services, LLC (Pinnacle) and Jennifer Stewart (Stewart) appeal from the court’s order denying their motion to compel arbitration. The court denied the motion because it determined the arbitration agreement was procedurally and substantively unconscionable. As to the former, the court noted the agreement was unconscionable because plaintiff Anthony De Leon was required to sign the arbitration agreement as a precondition to his employment. As to the latter, the court found the agreement was substantively unconscionable because of its limits on discovery and because it shortened the statute of limitations to one year on all claims.
On appeal, defendants contend the arbitration agreement had low procedural unconscionability and contained only one substantively unconscionable provision—the statute of limitations provision. They alternatively claim the court erred by failing to sever any unconscionable provisions. For the reasons below, we agree with the court’s unconscionability findings. The court also did not abuse its discretion by refusing to sever any portion of the arbitration agreement. We accordingly affirm.
Gunther v. Alaska Airlines, Inc. (CA4/1 D076762 partial pub. 12/1/21) PAGA Penalties
California law requires employers to provide wage statements containing certain information, including the applicable hourly wage rates, and the number of hours worked by the employee, and says workers must be able to “promptly and easily determine” that information. (Lab. Code, § 226, subds. (a) & (b).) In Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732 (Ward I), a group of airline pilots and flight attendants who perform duties across the country, sued their employer alleging that it failed to provide wage statements compliant with subdivision (a) of section 226 (hereafter, § 226(a)). (Ward I, at p. 741.) The California Supreme Court explained that these employees are entitled to section 226(a)-compliant wage statements if California qualifies as the employee’s principal place of work. “For pilots, flight attendants, and other interstate transportation workers who do not perform a majority of their work in any one state, this test is satisfied when California serves as their base of work operations, regardless of their place of residence or whether a collective bargaining agreement governs their pay.” (Ward I, at p. 740.)
The plaintiffs in this case are flight attendants who alleged that their employer, Alaska Airlines, Inc. (Alaska), failed to provide section 226(a)-compliant wage statements. They sought penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (§ 2699 et seq.). After a bench trial, the trial court concluded that section 226(a) applied to the flight attendants because their employment is based in California and Alaska’s wage statements did not comply with section 226(a). The court found Alaska liable for over $25 million in heightened penalties under section 226.3 of PAGA. In a postjudgment order, the court awarded Gunther attorney’s fees.
Notwithstanding the implications of Ward I, in this appeal Alaska contends that section 226(a) cannot be applied to the flight attendants because it is preempted by federal law. Alaska also raises multiple challenges to PAGA penalties, including that the trial court erred in awarding heightened penalties under section 226.3 of PAGA.
In the published portion of this opinion, we reject Alaska’s argument that application of section 226 is preempted by federal law and affirm the trial court’s determination that the flight attendants in this case are entitled to section 226(a)-compliant wage statements. We conclude, however, that the trial court erred in awarding heightened penalties under section 226.3 because the plain language of the statute provides that heightened penalties apply only where the employer fails to provide wage statements or fails to keep required records, which is not the situation here. Accordingly, we reverse the penalties awarded under section 226.3 and remand the matter to the trial court to determine the penalty amount under section 2699, subdivision (f)(2) of PAGA. We also conclude that, on this record, reversal of the penalty award does not require vacation of the attorney’s fees award. In the unpublished portion of this opinion, parts B and C, we reject Alaska’s defenses to the application of section 226(a).
Santos v. El Guapos Tacos, LLC (CA6 H046470 11/30/21) PAGA Notice
In this wage and hour action, the trial court dismissed with prejudice plaintiff Carolina Chavez-Cortez’s representative cause of action under the Private Attorneys General Act (PAGA, Lab. Code, § 2698 et seq.) for failure to satisfy notice requirements under the act. She argues that Khan v. Dunn-Edwards Corp. (2018) 19 Cal.App.5th 804 (Khan), which addressed a deficient PAGA prefiling notice and was considered dispositive by the trial court, was wrongly decided, and that her notice to the Labor and Workforce Development Agency submitted jointly with co-plaintiff Lourdes Santos satisfies the statutory requirement. The notice at issue in Khan differs substantially from plaintiffs’ notice, and we therefore do not find Khan controlling here. As we will explain, because plaintiffs’ notice alerted the agency and defendants to ongoing Labor Code violations that were not by nature isolated or unique to plaintiffs, the notice was not deficient for failing to reference other aggrieved employees implicated by the representative action. Plaintiffs’ letter provided fair notice to the agency of representative claims for meal break, rest break, and overtime violations. We will accordingly reverse the judgment.
Gamboa v. Northeast Community Clinic (CA2/7 B304833 11/30/21) Arbitration
Hope Gamboa sued the Northeast Community Clinic (Clinic) for employment related claims. The Clinic moved to compel arbitration under Code of Civil Procedure section 1281.2. The trial court denied the motion.
Because the Clinic failed to prove the existence of an arbitration agreement by a preponderance of the evidence after Gamboa produced evidence disputing an agreement, we affirm.
Moniz v. Adecco USA (CA1/4 A159410 11/30/21) PAGA Settlement
Under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.), an employee aggrieved by his or her employer’s alleged Labor Code violations may be authorized to act as an agent of the Labor Workforce and Development Agency (LWDA) to bring a civil action to recover civil penalties. If an aggrieved employee settles such an action, the trial court must review and approve the settlement, and the civil penalties are distributed 75 percent to the LWDA and 25 percent to the aggrieved employees. (§ 2699, subds. (i), (l)(2).)
In separate PAGA representative actions, Rachel Moniz and Paola Correa sued respondent Adecco to recover civil penalties for Adecco’s alleged violations of the Labor Code. Moniz settled her case first, and the trial court approved the settlement. In this current set of consolidated appeals, Correa attacks many aspects of the settlement process and approval, including the manner in which the trial court treated objections to the settlement by Correa and the LWDA, the standard used by the trial court to approve the settlement, numerous alleged legal deficiencies of the settlement, and its overall fairness. She also contests the trial court’s ruling denying her attorney fees and an incentive payment.
We find that the trial court applied an appropriate standard of review by inquiring whether the settlement was “fair, adequate, and reasonable” as well as meaningful and consistent with the purposes of PAGA, and we reject many of Correa’s contentions regarding the settlement’s purported substantive and procedural deficiencies. Nonetheless, we reverse the judgment because we cannot infer from the record that the trial court assessed the fairness of the settlement’s allocation of civil penalties between the affected aggrieved employees or whether such allocation comports with PAGA.
Elation Systems, Inc. v. Fenn Bridge LLC (CA1/3 A159749 11/22/21) Breach of NDA
Plaintiff Elation Systems, Inc. (Elation) sued defendants Fenn Bridge LLC (Fenn Bridge) and Tiebiao “Joe” Shi (Shi) on multiple causes of action, including (1) breach of a nondisclosure agreement (NDA) (against Shi only) entered during the course of Shi’s prior employment with Elation; and (2) breach of a confidential settlement agreement and mutual release (Settlement Agreement) (against both defendants) entered to resolve a prior action between the parties. In turn, defendants filed a cross-complaint that included a cause of action for Elation’s breach of the Settlement Agreement. During trial, Elation admitted to liability and stipulated to $10,000 in liquidated damages on the cross-claim for breach of the Settlement Agreement. At trial, the jury found that Shi had breached the NDA and harmed Elation, and awarded Elation $10,000 in damages. The jury also found that defendants had breached the Settlement Agreement, but that Elation had suffered no harm. Following the jury verdict, Elation filed a motion that included a request for entry of a permanent injunction against defendants.
Defendants then filed a motion for judgment notwithstanding the verdict (JNOV), challenging (1) the jury’s finding on harm and award of damages for the NDA claim; and (2) the jury’s finding of breach on the Settlement Agreement claim. The trial court granted the JNOV motion and denied Elation’s motion for injunctive relief. Defendants subsequently filed a motion for attorney fees pursuant to Civil Code section 1717. The court entered judgment awarding defendants $700,000 in attorney fees.
In this consolidated appeal, Elation challenges (1) the JNOV order; and (2) the judgment awarding attorney fees to defendants. In the published portion of this opinion, we conclude the trial court should have awarded Elation nominal damages on its NDA claim, as defendants’ JNOV motion did not challenge the jury’s finding that Shi breached the NDA. In the unpublished portion, we conclude that substantial evidence did not support the jury’s finding in Elation’s favor on its Settlement Agreement claim, and that section 1717 applies to the claims and cross-claims on the Settlement Agreement, but does not apply to Elation’s NDA claim.
Accordingly, we affirm the order granting JNOV as to Elation’s Settlement Agreement claim but reverse the order granting JNOV as to Elation’s NDA claim. We also vacate the award of attorney fees. The matter is remanded to the trial court for further proceedings.
Plaskett v. Wormuth (9th Cir. 19-17294 11/19/21) ADEA Backpay
The panel affirmed the district court’s judgment dismissing for lack of jurisdiction plaintiff’s action against the Secretary of the U.S. Department of the Army under the Mandamus Act and the Administrative Procedure Act (“APA”) seeking payment of additional claimed backpay and a sanctions award.
Regardless of whether plaintiff’s claim was viewed as one under the Mandamus Act, 28 U.S.C. § 1361, or under the APA, 5 U.S.C. § 706(1), plaintiff was required to plead, inter alia, that the Army had a clear, certain, and mandatory duty to pay him the additional backpay he sought, and the sanctions award that the EEOC had imposed. The district court dismissed plaintiffs’ claims based solely on lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1), and expressly declined to reach the Army’s challenges under Fed. R. Civ. P. 12(b)(6). As to the sanctions award, the panel agreed with the district court that the issue of the Army’s sovereign immunity raised a jurisdictional issue and was properly resolved under Rule 12(b)(1). As to the issue of back pay, the panel held that the adequacy of plaintiff’s APA claim should have been analyzed under Rule 12(b)(6) rather than Rule 12(b)(1). The panel began by evaluating all of plaintiff’s claims under the standards applicable to a motion to dismiss for failure to state a claim. Because the panel concluded that all of plaintiff’s claims failed under those standards, the panel did not consider whether the applicable Rule 12(b)(1) standards might have made a difference.
The panel held that plaintiff’s claim to additional backpay rested on an EEOC October 2017 decision, but the order on its face expressed uncertainty as to what amount, if any, of additional backpay might be due. Plaintiff’s complaint failed to plead sufficient facts to show that the process contemplated by the October 2017 decision had been completed and that a certain amount of additional backpay was now clearly owed to him.
Plaintiff nonetheless contended that the Army should be barred from contesting that it owed him $21,020.01 in additional backpay. First, plaintiff contended that the Army effectively conceded that it owed him that amount. On this record, the panel held that plaintiff had provided no plausible basis for concluding that the Army had waived its objections to the adequacy of plaintiff's documentation or to the correctness of his claim for additional backpay. Second, plaintiff asserted that the doctrine of laches barred the Army from contesting the amount of backpay due. As the district court correctly recognized, a plaintiff cannot invoke the doctrine of laches based on the premise that the plaintiff was prejudiced by his opponent’s supposed failure to inform it about the plaintiff’s own burden of proof under the law. The panel held that plaintiff failed to state a claim under 28 U.S.C. § 1361 or APA § 706(1) for the payment of additional backpay, and the district court properly dismissed plaintiff’s first cause of action.
Concerning plaintiff’s claim for payment of the sanctions award, the panel considered whether the district court correctly concluded that the Army’s sovereign immunity had not been waived. The panel agreed with the district court’s conclusion, but its reasoning differed. Whether the Army’s sovereign immunity has been waived here turns on whether an applicable waiver was unequivocally expressed in statutory text. In contending that the Army’s immunity from monetary litigation sanctions was waived, the only statute plaintiff relied on was § 15 of the Age Discrimination in Employment Act (“ADEA”). The panel rejected plaintiff’s contention that a sufficient waiver of the Government’s immunity against monetary litigation sanctions could be found in § 15’s express statement that the EEOC could impose appropriate remedies that will effectuate policies of the section. The panel rejected plaintiff’s additional arguments, and concluded that sovereign immunity precluded enforcement of the award levied by the EEOC in this case. The district court properly dismissed plaintiff’s second cause of action.
Judge Schroeder concurred, and agreed with the majority’s conclusion that plaintiff was not entitled to any of the relief he sought. Plaintiff could not succeed on his claim for additional backpay because he failed to show that the amount he sought represented moonlight earnings improperly deducted as replacement income. This was true based on either looking at the allegations of the complaint, as the majority did, or looking through the record, as the district court did. With respect to sanctions, there was no legal authority that authorized the EEOC to impose monetary sanctions against the government for discovery violations. The EEOC lacked express authority under either its regulations or the ADEA statute, and the court need not decide whether that express authority must be by a statutory amendment or whether an amendment to the EEOC regulations would be sufficient.
Wilkin v. Community Hospital of the Monterey Peninsula (CA4/3 G060420, filed 10/26/21, pub. ord. 11/18/21) FEHA and CFRA/Wrongful Termination
The Community Hospital of the Monterey Peninsula (the Hospital) terminated the employment of registered nurse Kimberly Wilkin (Wilkin) after discovering she had violated the Hospital’s policies governing the handling and documentation of patient medications. Wilkin sued the Hospital, alleging her discharge constituted disability discrimination, retaliation, and otherwise violated the Fair Employment and Housing Act (FEHA), Government Code section 12900 et seq.; resulted in the unlawful denial of medical leave and retaliation in violation of the Moore-Brown-Roberti Family Rights Act (CFRA), sections 12945.1 and 12945.2, and the federal Family and Medical Leave Act of 1993 (FMLA), title 29 United States Code section 2601 et seq.; and constituted a wrongful termination in violation of public policy.
Over a year after Wilkin filed her complaint, the Hospital filed a motion for summary judgment. The Hospital produced undisputed evidence, including Wilkin’s deposition testimony, showing she had violated policies governing the handling of medication, and, for over a year before she was discharged, had been regularly counseled for her chronic absenteeism and other issues. The trial court concluded the Hospital carried its burden of producing evidence showing its decision was based on legitimate, nondiscriminatory reasons. After Wilkin did not produce any evidence showing the Hospital’s reasons were fabricated or otherwise pretextual, the trial court concluded a reasonable trier of fact could not find in favor of Wilkin on any of her claims and granted summary judgment in favor of the Hospital.
We affirm. We have independently reviewed the record, including the evidence proffered by the parties, and agree with the trial court that it is devoid of evidence of pretext. As all of Wilkin’s claims depended on there being a triable issue of fact regarding the lawfulness of her discharge, and our record does not show such a triable issue of fact exists, summary judgment was properly granted.
Fried v. Wynn Las Vegas (9th Cir. 20-15710 11/18/21) Title VII/Hostile Work Environment
The panel reversed the district court’s summary judgment against Vincent Fried on his claim for hostile work environment in violation of Title VII, and remanded. The panel concluded that a reasonable factfinder could decide that Fried’s employer Wynn Las Vegas created a hostile work environment at the salon where he worked as a manicurist. To establish that he was subjected to a hostile work environment, Fried was required to prove that: (1) he was subjected to verbal or physical conduct of a sexual nature; (2) the conduct was unwelcome; and (3) the conduct was sufficiently severe or pervasive to alter the conditions of employment and create an abusive working environment. The panel held that it is well established that an employer can create a hostile work environment by failing to take immediate and corrective action in response to a coworker’s or third party’s sexual harassment or racial discrimination that the employer knew or should have known about. To determine whether an environment is sufficiently hostile or abusive to violate Title VII, a court must consider all the circumstances, including the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance.
The panel agreed with the district court that comments made by a manager and coworkers on two occasions were insufficiently severe or pervasive to support a hostile work environment claim. The panel held, however, that an employer’s response to a third party’s unwelcome sexual advances toward an employee can independently create a hostile work environment. Here, the manager’s response to Fried’s report that a customer had sexually propositioned him should have prevented entry of summary judgment in Wynn’s favor because the manager not only failed to take immediate corrective action, but also directed Fried to return to the customer and complete his pedicure. The panel also reversed the district court’s ruling that coworkers’ breakroom comments on the customer’s sexual proposition were insufficiently severe or pervasive to support Fried’s claim. The panel instructed the district court on remand to reconsider the cumulative effect of the coworkers’ comments.