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Viking River Cruises, Inc. v. Moriana (US 20-1573 oral argument transcript 3/30/22) Arbitration/PAGA
Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.
Decision Below: Moriana v. Viking River Cruises, Inc., 2020 WL 5584508 (CA2/3 2020):
Southwest Airlines Co. v. Saxon (US 21-309 oral argument transcript 3/28/22) Transportation Workers/FAA
Whether workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport such goods themselves, are interstate "transportation workers" exempt from the Federal Arbitration Act.
Decision Below: Saxon v. Southwest Airlines Co., 993 F.3d 492 (7th Cir. 2021)
Scheer v. Regents of the Univ. of Cal. (CA2/3 B303379 3/28/22) Whistleblower Retaliation/Lawson Applied
In this case alleging whistleblower retaliation, plaintiff and appellant Arnold Scheer, M.D., M.P.H., appeals a judgment entered pursuant to the grant of a motion for summary judgment in favor of defendants and respondents The Regents of the University of California (Regents), Jonathan Braun, M.D., Ph.D., and Scott Binder, M.D., (collectively, Defendants).
Scheer brought his whistleblower claims in three causes of action, alleging violations of three statutes: Labor Code section 1102.5, Government Code section 8547 et seq., and Health and Safety Code section 1278.5. In Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703 (Lawson), the California Supreme Court clarified the legal framework that applies to claims under Labor Code Section 1102.5, such as Scheer’s claim in this case. While Lawson did not discuss Government Code section 8547.10, that statute contains nearly identical language to the language analyzed by our Supreme Court. We therefore conclude that Lawson’s legal framework applies to Scheer’s Government Code claim as well. Because Defendants, in seeking summary adjudication of Scheer’s Labor and Government Code claims, relied on a legal standard inconsistent with Lawson, we reverse and remand as to those claims.
Lawson did not change the legal framework for Scheer’s third claim under Health and Safety Code section 1278.5. As to that claim, we conclude that a triable issue of material fact exists as to whether the stated reasons for termination were pretextual. Therefore, the judgment is reversed, and the matter is remanded for further proceedings consistent with this opinion.
Pacifica Firefighters Assn. v. City of Pacifica (CA1/2 A161575 3/24/22) City Measure/Fire Captain Salaries
In 1988, the voters in the City of Pacifica (City) approved Measure F, which prescribes procedures to be followed in the event of an impasse in labor disputes with the City’s firefighters. Under this measure, absent other agreement, the top step salaries of fire captains in the city are to be set at an amount not less than the average for top step salaries of fire captains in five neighboring cities. After an impasse in negotiations occurred in 2019, the Pacifica Firefighters Association (PFFA) sought a writ of mandate and declaratory relief requiring the City to follow Measure F. The trial court denied the petition, finding Measure F preempted by state law and an unlawful delegation of power. We affirm.
Estrada v. Royalty Carpet Mills, Inc. (CA4/3 G058397 3/23/22) Unmanageable PAGA Claims
The plaintiffs in this case were employees at three separate carpet manufacturing facilities operated by defendant Royalty Carpet Mills, Inc. (Royalty), which is now known as Royalty Carpet Mills, LLC. They alleged representative claims under the Private Attorneys General Act (PAGA; Lab. Code § 2698 et seq.), and class claims primarily based on purported meal and rest period violations. They sought premium pay under section 226.7 for these violations and asserted derivative claims for waiting time and wage statement penalties, among others. The trial court initially certified two classes: one for employees that worked at a facility in Porterville (the Porterville class) and another for employees that worked in two separate facilities in Orange County (the Dyer/Derian class). Following the presentation of evidence at trial, the court decertified the Dyer/Derian class and then entered judgment. The results were mixed and both sides appeal.
Plaintiffs make several contentions on appeal: (1) certain releases in settlement agreements that Royalty made with individual class members prior to trial are invalid; (2) the court erred in finding the Porterville class’s meal period claim, which was added in an amended complaint, did not relate back to any prior complaint; (3) the court abused its discretion by decertifying the Dyer/Derian class; (4) the court incorrectly applied a seven percent prejudgment interest rate to premium pay awarded under section 226.7 rather than a 10 percent rate; (5) the court’s judgment for Royalty on the Porterville class’s derivative waiting time and wage statement claims was wrong; and (6) the court mistakenly dismissed the PAGA meal period claims of the Dyer/Derian employees on unmanageability grounds. As explained in this opinion, we agree with three of these contentions. We find the court erred in failing to apply the relation back doctrine, in decertifying the Dyer/Derian class, and dismissing the PAGA claims as unmanageable.
We publish this opinion primarily due to our discussion concerning unmanageable PAGA claims. Currently, only one published California opinion, Wesson v. Staples the Office Superstore, LLC (2021) 68 Cal.App.5th 746 (Wesson), addresses this issue. It concluded courts have inherent authority to strike unmanageable PAGA claims. (Id. at pp. 766-767.) While we understand the concerns expressed in Wesson, we reach the opposite conclusion. Based on our reading of pertinent Supreme Court authority, chiefly Arias v. Superior Court (2009) 46 Cal.4th 969, and Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, we find a court cannot strike a PAGA claim based on manageability. These cases have made clear that PAGA claims are unlike conventional civil suits and, in particular, are not class actions. Allowing dismissal of unmanageable PAGA claims would effectively graft a class action requirement onto PAGA claims, undermining a core principle of these authorities. It would also interfere with PAGA’s purpose as a law enforcement mechanism by placing an extra hurdle on PAGA plaintiffs that is not placed on the state. That said, courts are not powerless when facing unwieldy PAGA claims. Courts may still, where appropriate and within reason, limit the amount of evidence PAGA plaintiffs may introduce at trial to prove alleged violations to other unrepresented employees. If plaintiffs are unable to show widespread violations in an efficient and reasonable manner, that will just reduce the amount of penalties awarded rather than lead to dismissal.
As for Royalty, it makes two arguments in its cross-appeal. First, it asserts the trial court incorrectly found it liable to the Porterville class for meal period violations. We find the court correctly ruled that the meal policy at Porterville, which required employees to remain at the facility during meal breaks, violated governing law. Second, while the court dismissed the Dyer/Derian employees’ PAGA meal period claim as unmanageable, it awarded the named plaintiffs individual PAGA penalties. Royalty contends courts cannot award PAGA penalties to individual plaintiffs because such claims can only be brought in a representative capacity. We need not address this argument given our finding that the court erred by dismissing the PAGA claim as unmanageable.
For these reasons, we reverse the trial court’s order decertifying the Dyer/Derian class and dismissing the related PAGA claim as unmanageable, and we affirm and reverse various aspects of the court’s judgment.
Michaels v. State Personnel Bd. (CA3 C090196 3/21/22) State Employment/”Within One Year after Appointment” Defined
Nancy Michaels worked for more than one year as a Data Processing Manager II (DPM II) before her employer, California’s Public Employees’ Retirement System (CalPERS), voided her appointment at the direction of the State Personnel Board (SPB). The SPB may direct a state employer to void a civil service appointment if the SPB determines that the employee lacks the minimum qualifications for the position and does so “within one year after the appointment.” (Gov. Code, § 19257.5.) After the SPB issued a decision rejecting Michaels’s appeal of the voiding of her appointment, she filed a petition for writ of mandate in superior court. The superior court found that Michaels had served more than one year in her position and directed the SPB to vacate its decision. CalPERS appeals.
On appeal, CalPERS contends (1) because section 19257.5 does not define the date of “appointment,” that term must refer to when a new hire starts working in a new position for a state employer, (2) interpreting section 18525 to refer to the dates of offer and acceptance of a employment offer “undermines California’s civil-service law,” (3) the trial court’s definition of “appointment” date yields an “absurd result” that conflicts with the SPB’s constitutional mandate to ensure uniform application of state civil service law, (4) the application of offer-and-acceptance principles derived from contract law “introduces uncertainty” into the state civil service hiring process, and (5) Michaels was not prejudiced by having her DPM II position voided.
We conclude that the trial court correctly determined that the express language of section 18525 defines the term “appointment” to refer to the dates of offer and acceptance. As to CalPERS’s contentions regarding the wisdom of using the dates of offer and acceptance for determining the start of the one-year limitations period for voiding an appointment, the arguments concern considerations of policy that should be addressed to the Legislature. As to CalPERS’s prejudice argument, we conclude its two contentions lack merit. First, even if Michaels had notice of the possibility that her position would be voided, that notice did not allow CalPERS to act in an untimely manner. Second, CalPERS’s assertion that Michaels cannot avail herself of the statutes governing the limitations period for voiding an appointment would render the governing statutes a mere nullity. Accordingly, we affirm the trial court’s judgment.
Moreno v. Utiliquest (9th Cir. 21-55313 3/18/22) NLRA Preemption
The panel affirmed the district court’s dismissal, as preempted by the National Labor Relations Act (“NLRA”), of Cesar Moreno’s wrongful termination lawsuit against his former employer, UtiliQuest, LLC. Although the NLRA does not contain express preemption provisions, the Supreme Court held that two categories of state action are implicitly preempted: (1) laws that regulate conduct that is either protected or prohibited by the NLRA (Garmon preemption); and (2) laws that regulate in an area Congress intended to leave unregulated or controlled by the free play of economic forces (Machinists preemption). UtiliQuest contends that Garmon preemption applied to Moreno’s claims related to his termination.
Moreno brought various claims related to his termination, but the district court dismissed them because it found that they were preempted by the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq. Moreno also appeals the dismissal of his wage and hour claims, but as his appeal was pending, the Superior Court of California entered judgment on a final settlement precluding these claims. We affirm the district court’s dismissal of Moreno’s complaint.
Jauregui v. Roadrunner Transp. Serv. (9th Cir. 22-55058 3/17/22) Wage & Hour/CAFA
The panel reversed the district court’s order that remanded a class action to California state court after it determined that the $5 million amount in controversy requirement of the Class Action Fairness Act (“CAFA”) was not met.
The plaintiff filed a putative class action against Roadrunner Transportation Services on behalf of all Roadrunner and former California hourly workers, alleging violations of California labor law, primarily wage and hour violations. Roadrunner removed the case to federal court, invoking jurisdiction under CAFA. Plaintiff responded with a motion to remand for lack of jurisdiction. The district court found that Roadrunner failed to meet its burden to establish the requisite $5 million minimum for the amount in controversy, and remanded to state court.
The panel held that the district court erred in imposing – both explicitly and in its analysis – a presumption against CAFA jurisdiction. Presumably because of this, latent throughout the order was an inappropriate demand of certitude from Roadrunner over its assumptions used in calculating the amount in controversy.
The panel also held that the district court erred in how it approached the amount in controversy analysis. Because plaintiff contested removal, Roadrunner was required to show the amount in controversy by a preponderance of the evidence. Roadrunner offered substantial evidence and identified assumptions to support its valuation of each of the various claims in this case. The district court erred in assigning a $0 value for the amount in controversy for each of the five claims where it disagreed with Roadrunner’s calculations. The panel held that nothing in CAFA or caselaw compels such a draconian response when the district court disagrees with a single assumption underlying the claim valuation.
The panel held that the CAFA amount in controversy requirement was met. Using the lowest hourly wage rate identified by the district court, the minimum wage claim was reasonably valued at $4.5 million. Added to the $2.1 million for the two other claims accepted by the district court, that would be more than enough to establish jurisdiction under CAFA, without even considering any of the other four claims that the district court also zeroed-out. The panel remanded to the district court for further proceedings.
Khoiny v. Dignity Health (CA2/8 B301486 3/16/22) Sex Discrimination & Retaliation/Academic Deference
This case presents an issue of first impression under California law: whether a medical resident’s claim that she was dismissed from her residency program due to gender discrimination and in retaliation for complaints about discrimination and workplace safety is subject to the rule of academic deference. We hold the predominant relationship between a medical resident and a hospital residency program is an employee-employer relationship, and so academic deference does not apply to the jury’s determination whether the resident was terminated for discriminatory or retaliatory reasons. The jury in this case returned a verdict in favor of respondent Dignity Health, doing business as St. Mary Medical Center (SMMC), after being improperly instructed that SMMC’s decision to terminate Dr. Noushin Khoiny (appellant) was entitled to academic deference in the first instance. Dr. Khoiny presented credible evidence of gender discrimination and retaliation by SMMC, and there is a reasonable probability that, in the absence of the erroneous jury instruction, she would have obtained a more favorable verdict. We reverse the judgment and remand for a new trial.
Raines v. U.S. Healthworks Medical Group (9th Cir. 21-55229 3/16/22) FEHA/Agent of Employer/Pre-Employment Medical Screening
The panel certified to the Supreme Court of California the following question:
Does California’s Fair Employment and Housing Act, which defines “employer” to include “any person acting as an agent of an employer,” Cal. Gov’t Code § 12926(d), permit a business entity acting as an agent of an employer to be held directly liable for employment discrimination?
Depuy Synthes Sales v. Howmedica Osteonics (9th Cir. 21-55126 3/14/22) Employment Contract/Forum-Section, Non-Compete & Non-Solicitation Clauses
The panel affirmed the district court’s order denying transfer under 28 U.S.C. § 1404(a); and affirmed the grant of partial summary judgment to DePuy Synthes Sales, Inc. and Jonathan Waber because the district court did not err in holding the forum-selection, non-compete and nonsolicitation clauses in an employment contract void under California law.
Waber was hired by Howmedica Osteonics Corp., and signed an employment contract with Howmedica’s parent company, Stryker Corporation. The contract included a restrictive one-year non-compete clause and forum-selection and choice-of-law clauses requiring adjudication of contract disputes in New Jersey. Waber left Stryker to work at DePuy, a Howmedica competitor.
The panel first addressed the threshold jurisdictional issue. Howmedica was not a party to the case when Stryker’s motion to dismiss or transfer was decided. The panel held that as the actual employer that participated in the proceedings to enforce its parent corporation’s forumselection clause, Howmedica had a right to appeal the adverse decision of the district court on that issue. Moreover, Howmedica properly became a party to this litigation in the district court case, albeit after the district court denied the motion to transfer. The panel concluded there was jurisdiction to hear Howmedica’s appeal under 28 U.S.C. § 1201.
The panel considered whether federal or state law governed the validity of a forum-selection clause. The panel held that the state law applicable here, Cal. Labor Code § 925(b), which grants employees the option to void a forum-selection clause under a limited set of circumstances, determined the question of whether Waber’s contract contained a valid forum-selection clause. Section 925 as applied by the district court here is not a rule of state law that removed all discretion from a federal court on questions of venue. Rather, the provisions in § 925 circumscribing the kinds of employment agreements permitted and allowing parties unrepresented by counsel to void a forum-selection cause under certain circumstances relate to the terms of the agreement between the parties and, at least to that extent, are contrary to or within the scope of 28 U.S.C. § 1404(a). Waber’s voiding of the forum-selection clause in his employment contract under § 925(b) excised the forum-selection clause from the agreement as presented to the district court. The panel held that § 1404(a) and Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988), did not broadly preempt all state laws controlling how parties may agree to or void a forum-selection clause.
Having found that Waber satisfied all the prerequisites of § 925 and effectively voided the forum-selection clause under § 925(b), the district court turned to the traditional § 1404 factors under M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12–13 (1972), and held they favored denial of transfer. The panel held there was no error in applying the California choice-of-law rules here where there was no valid forum-selection clause. The panel rejected Howmedica’s challenges. There was no error in the district court’s consideration of § 925 as part of its transfer analysis. Howmedica was incorrect when it asserted that Bremen was inapplicable to adjudication of § 1404(a) motions because Stewart limited Bremen to the context of forum non conveniens rather than transfer. Finally, the district court did not abuse its discretion in finding that the forum-selection clause was void and unenforceable and that the modified Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, 571 U.S. 49, 62 n.5 (2013), analysis was thus inapplicable. The panel found no reason to question or overturn the district court’s analysis or its denial of Howmedica’s motion to transfer.
The panel held that Howmedica presented no persuasive reason to overturn the district court’s ruling of partial summary judgment in favor of DePuy and Waber that the forum-selection, non-compete and non-solicitation clauses were void under California law.
Meinhardt v. City of Sunnyvale (CA4/1 D079451 3/9/22) Writ of Administrative Mandamus/Police Officer Suspension
“California cases have uniformly held that a trial court’s complete denial of a petition for administrative mandamus is a final judgment that may be appealed by the petitioner.” (Dhillon v. John Muir Health (2017) 2 Cal.5th 1109, 1113 (Dhillon).) And, as the Supreme Court in Dhillon explained, a ruling nominally denominated as an “order” on a petition for writ of administrative mandate may, in fact, constitute a “final judgment” when such order has the effect of a final judgment. (Id. at p. 1115.) That is because it is “ ‘ “not the form of the decree but the substance and effect of the adjudication which is determinative.” ’ ” (Ibid.)
In addressing whether a ruling has sufficient finality to constitute a judgment, the Dhillon court stated, “ ‘ “As a general test, which must be adapted to the particular circumstances of the individual case, it may be said that where no issue is left for future consideration except the fact of compliance or noncompliance with the terms of the first decree, that decree is final, but where anything further in the nature of judicial action on the part of the court is essential to a final determination of the rights of the parties, the decree is interlocutory.” ’ ” (Dhillon, supra, 2 Cal.5th at p. 1115.) The Dhillon court applied this test in concluding that the trial court’s “order” on the plaintiff’s petition for writ of administrative mandate in that case “was an appealable final judgment.” (Id. a p. 1116.)
Dhillon is consistent with numerous published cases that have concluded that an order denying a petition for writ of mandate is a final judgment for purposes of an appeal. (See, e.g., Sandlin v. McLaughlin (2020) 50 Cal.App.5th 805, 820 (Sandlin) [“Although the trial court never entered a formal judgment on the petition for writ of mandate, its order denying the petition in its entirety ‘constitutes a final judgment for purposes of an appeal’ ”]; Molloy v. Vu (2019) 42 Cal.App.5th 746, 753 (Molloy) [“ ‘[A]n order granting or denying a petition for an extraordinary writ constitutes a final judgment for purposes of an appeal, even if the order is not accompanied by a separate formal judgment,’ ” quoting Public Defenders’ Organization v. County of Riverside (2003) 106 Cal.App.4th 1403, 1409 (Public Defenders’ Organization)]; Tomra Pacific, Inc. v. Chiang (2011) 199 Cal.App.4th 463, 481–482 (Tomra Pacific, Inc.) [“We note that the order denying the petitions for a writ of mandate is not termed a judgment and does not explicitly address the declaratory relief causes of action. Nevertheless, we are satisfied that the order before us constitutes an appealable final judgment as it left no issue for further consideration”].)
Published authority also reveals an important consequence that follows from this case law. In a case in which a court has entered a ruling on a writ petition that constitutes a final judgment, any party seeking appellate review of that ruling must timely appeal from that final judgment—and the time to file a notice of appeal is not restarted by the trial court’s subsequent entry of a document styled as a “judgment” that merely reiterates the prior final judgment. (See City of Calexico v. Bergeson (2021) 64 Cal.App.5th 180, 182–183 (City of Calexico) [dismissing cross-appeal where party failed to timely appeal from September 24 ruling denying two petitions for writ of mandate that constituted a final judgment and stating, “[t]he mere fact that the trial court entered a subsequent judgment after issuing the September 24 ruling is irrelevant, because the September 24 ruling was itself a final judgment” (id. at p. 192)]; Laraway v. Pasadena Unified School Dist. (2002) 98 Cal.App.4th 579, 582–583 (Laraway) [concluding that an order that “completely resolved all issues between all parties” on petitioner’s writ petition was a final judgment from which no timely appeal was taken and stating that the “[r]ules of [c]ourt do not provide, once a judgment . . . has been entered, . . . the time to appeal can be restarted or extended by the filing of a subsequent judgment . . . making the same decision”]; accord Valero Refining Co.—California v. Bay Area Air Quality Management Dist. Hearing Bd. (2020) 49 Cal.App.5th 618, 633, fn. 10 (Valero) [“Contrary to the suggestion by the [defendants], the appealable judgment was the court’s order granting a writ of mandate, not a ‘judgment’ that it subsequently entered”].)
In this case, plaintiff Officer David Meinhardt failed to timely appeal from a trial court ruling that denied his petition for writ of administrative mandate in its entirety, completely resolved all of the issues in the matter, and contemplated no further judicial action. Although the ruling was denominated an “order,” (boldface & capitalization omitted) it was, under the case law outlined above, a final judgment. Instead, Meinhardt filed a notice of appeal from a document that the trial court subsequently entered, which was styled as a “judgment,” but merely restated the prior judgment.
In light of the case law described above, we solicited supplemental briefing from the parties on the timeliness of Officer Meinhardt’s appeal. In his supplemental brief, Meinhardt contends that to dismiss his appeal would contravene applicable statutory language, conflict with certain case law, and be “patently inequitable.” (Boldface & italics omitted.) He further contends that City of Calexico is distinguishable and that this court “should resist the impulse to extend Laraway’s questionable logic further.”
While we have carefully considered Officer Meinhardt’s arguments, Laraway and City of Calexico are directly on point and mandate dismissal of his appeal. We publish our opinion to explain how Dhillon supports the conclusion that Laraway and City of Calexico were correctly decided, and to reiterate the critical importance of determining whether a ruling on a petition for writ of mandate is a final judgment in seeking appellate review of such a ruling.
Crenshaw Subway Coalition v. City of L.A. (CA2/2 B309288 3/3/22) FHA/FEHA/Gentrification
After the City of Los Angeles (the City) approved a project aimed at “revitaliz[ing]” a neighborhood in South Los Angeles through the renovation and expansion of an existing shopping mall and the construction of additional office space, a hotel, and new apartments and condominiums, a neighborhood advocacy group sued to enjoin the project under the federal Fair Housing Act (42 U.S.C. § 3601 et seq.) and California’s Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.). The group’s lawsuit rests on a “gentrification” theory—namely, that the project will lead to an “influx of new, more affluent residents”; that this influx will lead to “increased rents and increased property values that [will] put pressure” on the low-income residents who currently live near the project site; and that these higher rents will push the low-income residents out of “their neighborhoods.” Because a majority of these low-income residents are Black or Latinx, the group alleges, the project has the effect of “mak[ing]” “dwellings” “unavailable” “because of race[ and] color” in violation of the disparate impact prong of the Fair Housing Act (and, thus, by extension, the FEHA).
Is a disparate impact claim based on this gentrification theory cognizable under the Fair Housing Act? We conclude it is not, and this conclusion is dictated by the United States Supreme Court’s decision in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc. (2015) 576 U.S. 519 (Inclusive Communities). In no uncertain terms, Inclusive Communities held that the Fair Housing Act does not afford relief if such relief “cause[s] race to be used and considered in a pervasive and explicit manner [in deciding whether] to justify governmental or private actions” because doing so “inject[s] racial considerations into [the] decision.” (Id. at p. 543.) Because the Fair Housing Act itself was enacted to combat (and hence only prohibits) those policies and practices that “ha[ve] a ‘significantly disparate impact on nonwhites’” (Hardie v. NCAA (9th Cir. 2017) 876 F.3d 312, 319 (Hardie), quoting Wards Cove Packing Co. v. Atonio (1989) 490 U.S. 642, 658 (Wards Cove), italics added), the gentrification theory would be available—if at all—only when the low-income residents who are displaced by revitalization efforts are minorities. Thus, recognizing the group’s gentrification theory would obligate the City to “use and consider” race in making local planning decisions, and thus the group’s gentrification theory is not cognizable under the Fair Housing Act (and, by extension, the FEHA).
For this reason and others, we affirm the dismissal of the group’s gentrification-based claims under the Fair Housing Act and FEHA. In the unpublished portion of our opinion, we also affirm the dismissal of the group’s claim under the California Environmental Quality Act (CEQA) (Pub. Resources Code, § 21000 et seq.) as untimely.
Mendoza v. Trans Valley Transport (CA6 H044372, filed 2/4/22, ord. pub. 3/1/22) Arbitration
In this wage and hours class action, we consider whether an arbitration provision in an employee handbook, coupled with acknowledgement forms the class representative signed, created a legally binding agreement to arbitrate the claims presented. Defendants and appellants Trans Valley Transport (Trans Valley) and FTU Labor Contractors, Inc. (FTU, jointly “Employers”) appeal from the trial court’s order denying their petition to compel arbitration of a putative class action brought by a former employee—plaintiff and respondent Jose Mario Mendoza—on behalf of truck drivers employed by Trans Valley and FTU. The trial court found that the parties had not entered into a binding agreement to arbitrate.
On appeal, Employers contend, based on a delegation clause in the arbitration policy described in FTU’s employee handbook, that the question whether the parties had agreed to arbitrate is for the arbitrator, not a court, to decide. They also argue that the parties entered into an express agreement to arbitrate based on the arbitration clause in the handbook and the acknowledgement forms. Alternatively, they argue that Mendoza entered into an implied-in-fact agreement to arbitrate when he received the handbook and worked for the company. Finally, they argue that the Arbitration Policy is not unconscionable.
We conclude that Employers have forfeited their delegation clause argument by reserving the issue for their reply in the trial court and not adequately briefing the issue below or on appeal. However, we exercise our discretion to address the issue on the merits, and hold that it was for a court to decide whether the parties had entered into an agreement to arbitrate. We also conclude that in the circumstances of this case, the parties have not entered into either an express or an implied contract to arbitrate their disputes. We will therefore affirm the trial court’s order denying the motion to compel arbitration.
LGCY Power v. Super. Ct. (CA5 F082353 3/1/22) Labor Code section 925
California Labor Code section 925 went into effect on January 1, 2017, and provides that employers cannot force an employee who resides and works primarily in California to agree, as a condition of employment, to: (1) litigate a claim arising in California in a forum outside of California; or (2) waive the employee’s right to the substantive protection of California law with respect to a controversy arising in California. (Labor Code, § 925, subd. (a)(1)—(2).) Any provision in a contract that violates these terms is voidable by the employee, and if a violative provision is rendered void at the employee’s request, the matter must be adjudicated in California under California law. (§ 925, subd. (b).)
This writ proceeding requires us to address the interplay between section 925 and California’s compulsory cross-complaint statute (Code Civ. Proc., § 426.30), as well as the interplay between section 925 and the Full Faith and Credit Clause of the United States Constitution (U.S. Const., art IV, § 1).
The petitioner in this writ proceeding, LGCY Power, LLC (“LGCY”), is a Utah limited liability company formed in Delaware and headquartered in Salt Lake County, Utah. It markets and sells residential solar energy systems in various parts of the western United States. Michael Jed Sewell, the real party in interest, is a California resident who worked for LGCY as a sales representative, and later a sales manager, from January 2015 to August 2019.
Around August 2019, Sewell and six other former LGCY executives and managers left LGCY and formed a competing solar company. LGCY filed suit in Utah state court against all seven of them, alleging various causes of action including breach of their employment agreements with LGCY, which contained noncompetition, non-solicitation, and confidentiality provisions.
Most of the defendants, but not Sewell, filed a joint cross-complaint in the Utah action alleging claims including LGCY’s breach of their employment agreements and failure to pay wages and commissions. Rather than join this cross-complaint, Sewell filed a complaint in Fresno County Superior Court alleging virtually identical claims as those of his codefendants in their Utah cross-complaint.
LGCY demurred to Sewell’s complaint, contending his causes of action were barred by both California and Utah’s compulsory cross-complaint statutes, which both require that a defendant bring any related causes of action he or she has against the plaintiff in a cross-complaint. (Code Civ. Proc., § 426.30, subd. (a); Ut. Rules Civ. Proc., rule 13(a).) The superior court overruled the demurrer, concluding section 925 provided an exception to Code of Civil Procedure section 426.30, subdivision (a), and thus Sewell was not precluded under California law from bringing his claims in California despite there being a pending related suit in Utah.
LGCY brings this petition for a writ of mandate challenging the Fresno County Superior Court’s order overruling its demurrer. LGCY requests we issue a writ of mandate directing the superior court to vacate its order overruling the demurrer and enter a new order sustaining the demurrer.
We are required to answer two related questions of first impression in this opinion. First, does section 925 provide an exception to California’s compulsory cross-complaint statute (Code Civ. Proc., § 426.30) such that an employee who comes within section 925’s purview may file a complaint in California alleging claims that are related to the causes of action their employer has filed against them in a pending action in a sister state? We conclude the answer to this question is yes.
Second, if a related action was filed first and is still pending in a sister state (here, Utah), does the Clause compel a state court (here, California) to extend credit to and apply the sister state’s compulsory cross-complaint statute? We conclude the answer to this question is no.
LGCY has not demonstrated that the Fresno County Superior Court erred in overruling its demurrer, and we therefore deny its petition.
Perez v. City and County of San Francisco (CA1/5 A161279 3/1/22) Respondeat Superior
A police officer employed by the police department (Department) of the City and County of San Francisco (City) left his Department-approved firearm unsecured in his vehicle after returning home from an assigned training session. That evening his vehicle was burglarized and the firearm stolen. Soon thereafter, the son of Mayra Perez (Plaintiff) was killed with that weapon. Plaintiff sued the City, but the trial court granted the City’s motion for summary judgment, finding as a matter of law the officer’s conduct was not within the scope of his employment. We reverse. In the context of the enterprise of policing, a jury could reasonably find the officer’s failure to safely secure his weapon is “ ‘ “not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer’s business.” ’ ” (Farmers Ins. Group v. County of Santa Clara (1995) 11 Cal.4th 992, 1003 (Farmers).)
Kirk v. Ratner (CA2/7 B309880M, filed 2/10/22, mod. 2/23/22) Violation of Arbitration Agreement
It is ordered that the opinion filed herein on February 10, 2022 be modified as follows:
At the bottom of page 7 and continuing to the top of page 8, delete the language that now reads:
because Marshall, although a signatory of the Duchess Agreement, was not a party to the settlement agreement and could not be compelled to arbitrate any disputes with the executives.
and replace it with the following language:
because Marshall was not a party to the settlement agreement or a signatory to any other agreement with the executives and could not be compelled to arbitrate any disputes with them.
There is no change in the appellate judgment. Appellants’ petition for rehearing is denied.
Ramirez v. Charter Communications, Inc. (CA2/4 B309408 2/18/22) Arbitration/Unconscionability
Plaintiff Angelica Ramirez and defendant Charter Communications, Inc. (Charter) are parties to an arbitration agreement. After Charter terminated Ramirez’s employment, Ramirez filed suit alleging claims under the Fair Employment and Housing Act (Gov. Code, § 12940, et. seq.; FEHA) against Charter, and Charter filed a motion to compel arbitration. Finding the arbitration agreement unconscionable, the trial court denied Charter’s motion, and Charter appealed. On appeal, Charter contends the trial court erred in concluding the arbitration agreement is unconscionable and in refusing to sever any provisions the court considered unconscionable.
We affirm the trial court’s order denying the motion to compel arbitration (though we disagree with certain particulars of the trial court’s reasoning). In affirming, we also disagree with Patterson v. Superior Court (2021) 70 Cal.App.5th 473 (Patterson), which considered the enforceability of a provision in the same arbitration agreement at issue here that awards attorney fees to the prevailing party on a motion to compel arbitration. After concluding that the provision is not enforceable as written, the court in Patterson incorporated an implied term bringing the provision into accord with the asymmetrical attorney fee standard of FEHA under section 12965, subdivision (c)(6) (a prevailing defendant is entitled to attorney fees only if the employee’s action was frivolous, unreasonable, or groundless.) With that implied term, the court in Patterson found the provision enforceable. As we explain in detail below, we disagree with Patterson’s analysis and find the provision unconscionable.
LaFace v. Ralphs Grocery Co. (CA2/4 B305494 2/18/22) PAGA/Seating for Cashiers
Plaintiff Jill La Face appeals from the judgment entered following a bench trial in her representative action against Ralphs Grocery Company under the Private Attorneys General Act seeking civil penalties for alleged violations of labor law workplace seating requirements. We reject her contention that she was entitled to a jury trial and affirm the trial court’s finding that Ralphs was not required to provide seating for its cashiers.
White v. Smule, Inc. (CA1/4 A161858, filed 1/27/22, pub. ord. 2/18/22) Employment Offer/False Representation
Labor Code section 970 prohibits employers from inducing employees to relocate and accept employment by way of knowingly false representations regarding the kind, character, or existence of work, or the length of time such work will last. (§ 970, subds. (a), (b).) Defendant Smule, Inc. (Smule) develops and markets consumer applications with a specialty in music social applications. In this case, plaintiff Kenneth White alleges a violation of section 970 arising out of discussions he had with Smule prior to accepting a position with the company as lead project manager.
Section 970 requires the plaintiff to establish, among other elements, justifiable reliance and a knowingly false representation. (CACI No. 2710.) Smule moved for summary judgment, contending that White alleged false representations regarding the length of time his work at Smule would last, but evidence of an integrated, “at-will” employment agreement that White conceded he read, signed, and understood negated justifiable reliance as a matter of law. Smule also argued White could not establish that Smule made any knowingly false representations. The trial court agreed with Smule’s first argument and granted summary judgment.
On appeal, White contends the trial court erroneously found that his undisputed “at-will” employment status meant that he could not establish justifiable reliance on alleged representations regarding the kind or character of work White would perform, rather than the length of time such work would last. Broadly construed, White’s complaint encompassed allegations of false assurances of long-term employment as well as misrepresentations regarding the role White would fill at Smule. The “at-will” employment provision negated justifiable reliance on the former representations, but not the latter. The trial court’s ruling therefore cannot stand, and Smule has not established entitlement to summary judgment on an alternative ground. Accordingly, we will reverse.
Martinez-Gonzalez v. Elkhorn Packing (9th Cir. 19-17311 2/14/22) Arbitration/Economic Duress & Undue Influence
The panel reversed the district court’s order refusing to enforce arbitration agreements between Dario MartinezGonzalez and his former employers in an action alleging violations of federal and state labor and wage laws.
Elkhorn Packing Company is a farm labor contractor for D’Arrigo Brothers, a California-based grower of vegetables. As part of Elkhorn’s orientation for incoming employees, Martinez-Gonzalez signed employment paperwork that included arbitration agreements. The district court held that the arbitration agreements resulted from undue influence and economic duress, and therefore the agreements were invalid and unenforceable.
The panel held that under California law, the doctrine of economic duress did not render the arbitration agreements unenforceable because Elkhorn did not commit a wrongful act and reasonable alternatives were available to MartinezGonzalez. Martinez-Gonzalez asserted that Elkhorn committed a wrongful act by asking him to sign the arbitration agreement after he made the journey from Mexico to California, where he was dependent on Elkhorn housing and had already started harvesting lettuce. The panel held that, while the circumstances surrounding the signing of the agreements were not ideal, they did not constitute a “wrongful act” under California law. The panel held further that Martinez-Gonzalez also failed to demonstrate a lack of reasonable alternatives where the agreements themselves did not say they were necessary for him to keep his job, no one at Elkhorn told MartinezGonzalez that refusing to sign the agreements was a cause for termination, and Martinez-Gonzalez admitted that no one at Elkhorn told him he would be terminated if he did not sign the agreements. With no threat of termination or express statement that the agreements were mandatory, it was clearly erroneous for the district court to conclude that MartinezGonzalez lacked a reasonable alternative – such as asking whether he could decline to sign the agreements. Furthermore, Martinez-Gonzalez had another reasonable alternative – to revoke the arbitration agreements.
The doctrine of “undue influence” can be used to rescind an agreement under California law. The panel held that the economic duress doctrine is employed only in limited circumstances, and here there was no reason to invoke this last resort given the lack of wrongful actions, the existence of reasonable alternatives, and Martinez-Gonzalez’s continued ability to vindicate his interests in arbitration. Martinez-Gonzalez did not show undue susceptibility where the facts did not support a finding that he was especially vulnerable to pressure. Given the lack of heightened susceptibility, Martinez-Gonzalez had to establish that “extraordinary force” was brought against him to prove undue influence. The panel held that the conditions here, while not ideal, were a far cry from actions considered “oppressive” under California law where: the timing and place of the orientation did not show that MartinezGonzalez’s will was overborne; the lack of time to consult with attorneys or read the agreements did not improperly induce Martinez-Gonzalez’s signatures since Elkhorn did not interfere with his ability to use either option; Elkhorn’s representatives’ instructions to sign the agreements quickly were not insistent demands; and Elkhorn representatives’ general statements to follow the company’s rules and directions had nothing to do with the arbitration agreements. Given the totality of the circumstances, the panel held that the district court clearly erred in finding undue influence here.
The panel remanded to the district court to determine whether Martinez-Gonzalez’s claims fell within the scope of the arbitration agreements.
Judge Rawlinson dissented because the majority completely disregarded the district court’s comprehensive factual findings following trial and the clear error standard of review. She agreed with the district court because the district court did not clearly err in concluding, after a bench trial, that the atmosphere surrounding the arbitration agreements rose to the level of a wrongful act. In addition, the district court’s finding of economic duress was amply supported by the evidence developed during trial, and the majority’s contrary finding was not.
Kirk v. Ratner (CA2/7 B309880 2/10/22) Violation of Arbitration Agreement
Charlotte Kirk, an actress, using the pseudonym Melissa Parker, entered into a confidential settlement agreement in August 2017 with four entertainment industry executives, Brett Ratner, Kevin Tsujihara, James Packer and Avi Lerner, using the fictitious names Clark Grandin, Bruce Hamilton, Gregory Kemp and Walter Nelson in the agreement and documents filed in the superior court. The agreement contained an arbitration clause.
The executives filed a demand for arbitration in June 2020, naming Kirk (as Parker) and Neil Marshall (actual name), Kirk’s fiancé, and two others as respondents, asserting claims for breach of contract, interference with contract and civil extortion. The executives obtained from an emergency arbitrator a preliminary injunction prohibiting Kirk, Marshall and the other respondents from disclosing confidential information as that term is defined in the settlement agreement, including any disclosures in court documents, and from initiating any lawsuit against the executives in violation of the arbitration provisions in the settlement agreement.
Kirk (as Parker) and Marshall filed a petition in superior court to vacate the preliminary injunction. Because the emergency arbitrator’s ruling was not an “award” within the meaning of Code of Civil Procedure section 1283.4, the court dismissed the petition for lack of jurisdiction. For the same reason, we dismiss Kirk and Marshall’s appeal as taken from a nonappealable order.
Joseph v. City of Atwater (CA5 F080711 2/9/22) POBRA
Plaintiff Samuel Joseph filed a petition for writ of mandate after defendant City of Atwater (City) terminated his employment as chief of police. Plaintiff alleged City violated the Public Safety Officers Procedural Bill of Rights Act (POBRA; Gov. Code, § 3300 et seq.). Section 3304, subdivision (c) provides that no chief of police may be removed from office without being provided written notice of the reasons “and an opportunity for administrative appeal.” Plaintiff alleges City failed to provide him with the type of hearing necessary to afford him “an opportunity for administrative appeal” because the hearing offered by City (1) was not mutually scheduled, (2) was not before a mutually selected neutral hearing officer, (3) did not require City to bear the burden of proof as to just cause for his termination, and (4) did not require City to present witnesses and allow them to be cross-examined.
The trial court denied plaintiff’s petition for writ of mandate, concluding plaintiff was an at-will employee pursuant to the terms of his employment contract and the hearing offered by City satisfied the statutory requirement of providing “an opportunity for administrative appeal.” (§ 3304, subd. (c).) Plaintiff contends the trial court erred in characterizing him as an at-will employee for all purposes and then determining the hearing offered by City was adequate for such an employee.
Plaintiff’s employment agreement stated he could be removed as police chief for any reason and, if the removal was not for willful misconduct, he had the option of continuing his employment by returning to the position of police lieutenant. Based on our de novo interpretation of the employment agreement, we conclude plaintiff (1) was an at-will employee only in the capacity of police chief and (2) had rights to employment as a lieutenant that could be terminated only for cause. Thus, plaintiff’s employment as a lieutenant was not at-will. Consequently, before City could terminate his right to employment as a lieutenant, it was required by POBRA to provide him with the type of administrative appeal afforded public safety officers who are terminable only for cause. City did not offer plaintiff that type of administrative appeal, which includes a full evidentiary hearing before a neutral fact finder. Thus, a writ of mandate should have been issued directing City to offer plaintiff such a hearing.
We therefore reverse the judgment.
Bill Signed by Governor (2/8/22)
SB 114 Committee on Budget and Fiscal Review. Employment: COVID-19: supplemental paid sick leave
Barke v. Banks (9th Cir. 20-56075 per curiam 2/7/22) Public Sector Employment Union Dues/Pre-Enforcement Statutory Challenge
The panel affirmed the district court’s dismissal without leave to amend of a complaint brought by a group of elected local government officials asserting a pre-enforcement challenge to California Government Code section 3550, and remanded for the limited purpose of amending the judgment to reflect that the dismissal is without prejudice.
California Government Code section 3550 states in part that “[a] public employer shall not deter or discourage public employees . . . from becoming or remaining members of an employee organization.” The district court dismissed the case, in part, on the ground that Plaintiffs lacked standing because section 3550 applies only to “public employer[s],” not to Plaintiffs individually. Despite this statutory limitation, Plaintiffs alleged that their speech has been chilled because they fear the State of California Public Employment Relations Board (“PERB”) will erroneously attribute the statements Plaintiffs wish to make in their individual capacities to Plaintiffs’ public employers, thereby causing their employers to be sanctioned and damaging Plaintiffs’ reputations as a result.
The panel determined that section 3550 does not regulate Plaintiffs’ individual speech, and any restrictions the statute does impose on Plaintiffs’ ability to speak on behalf of their employers did not injure Plaintiffs’ constitutionally protected individual interests. The panel held that Plaintiffs had not shown that they had a well-founded fear that PERB would impute statements made by Plaintiffs in their individual capacities to Plaintiffs’ public employers, particularly in light of concessions made by PERB in this litigation. The panel concluded that Plaintiffs had failed to demonstrate that they have suffered an injury in fact sufficient to establish their standing to pursue their pre-enforcement challenge.
The panel held that Plaintiffs failed to show that the district court erred in determining that any amendment to their complaint would be futile, and therefore, the district court did not abuse its discretion by denying Plaintiffs leave to amend. Finally, the panel noted that dismissals for lack of Article III jurisdiction must be entered without prejudice because a court that lacks jurisdiction is powerless to reach the merits. The panel remanded the case to the district court to enter judgment dismissing the case without prejudice.
Hutcheson v. Superior Court (CA1/2 A159861 2/7/22) PAGA/Relation Back
The Legislature enacted the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq., (PAGA)) for the “sole purpose” of increasing the limited capability of the State of California to enforce violations of the Labor Code. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 86 (Kim).) The statute authorizes “aggrieved employees” to file lawsuits on behalf of the state seeking civil penalties for violations of the Labor Code, and allocates 75 percent of the civil penalties recovered to the California Labor and Workforce Development Agency (LWDA) and the remaining 25 percent to all employees affected by the violation. (§ 2699, subd. (i); Moorer v. Noble L.A. Events, Inc. (2019) 32 Cal.App.5th 736, 742.) PAGA requires that before filing suit, the so-called PAGA plaintiff must submit notice of the alleged violations to the LWDA and to the employer. (§ 2699.3, subd. (a).)
This case raises a narrow legal issue at the intersection of PAGA and the judicially created doctrine of relation back, a doctrine which, in certain circumstances, deems the claims in an amended complaint to have been filed on the date of the initial complaint for purposes of the statute of limitations. In this appeal, an aggrieved employee (the first employee) submitted notice of alleged Labor Code violations by his employer to the LWDA in compliance with PAGA and subsequently filed a complaint in superior court alleging a PAGA claim. The first employee later sought to amend his complaint to substitute in as the named plaintiff a different aggrieved employee (the second employee) who had worked for the same employer. The issue before us is whether the amended PAGA complaint (with the second employee as the named plaintiff) can relate back to the original PAGA complaint where the second employee submitted his PAGA notice after the original complaint was filed. At stake is the length of time for which the employer may be liable for statutory civil penalties if the alleged violations of the Labor Code are proven to be true.
This issue was presented below in a motion for summary adjudication brought by the employer on stipulated facts. The trial court granted the motion, concluding that the doctrine of relation back does not apply to PAGA claims in these circumstances. Because we conclude that the doctrine of relation back may apply, we reverse.
Dept. of Corrections & Rehabilitation v. State Personnel Bd. (CA3 C084698 2/7/22) FEHA Discrimination/SPB Writ
In this employment case, the State Personnel Board (Board) sustained a complaint brought by Vickie Mabry-Height, M.D., against the Department of Corrections and Rehabilitation (Department) alleging discrimination based on age, race, and gender in violation of the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) (FEHA). The Board concluded that Dr. Mabry-Height established a prima facie case of unlawful discrimination based on certain conduct described below and the Department failed to rebut the presumption of discrimination by offering evidence that it had a legitimate, nondiscriminatory reason for this conduct. The Department petitioned the trial court for a writ of administrative mandamus seeking an order setting aside the Board’s decision. This petition was denied, and judgment was entered in favor of Dr. Mabry-Height. The Department appeals. We affirm.