United States Supreme Court
CNH INDUSTRIAL N.V. v. REESE
THE SIXTH CIRCUIT USED A UNIQUE SET OF PRESUMPTIONS WHEN INTERPRETING LABOR CONTRACTS
Prior to the High Court’s ruling in M&G Polymers USA, LLC. v. Tackett (“Tackett”), the US Sixth Circuit used a series of presumptions when interpreting contracts between unions and employers. Named after the Sixth Circuit case of International Union, United Auto, Aerospace & Agricultural Implement Workers of Am. v. Yard-Man, Inc., these “Yard-Man” principles presumed, for example, that collective bargaining agreements vested retiree benefits for life unless it was expressly stated otherwise.
In Tackett, the US Supreme Court overruled Yard-Man, and held that only ordinary principles of contract law should be used in these interpretations. The Yard-Man presumptions were therefore defunct.
THE LOWER COURT USED YARD-MAN LIKE PRESUMPTIONS TO FIND THE CBA VAGUE
Although ostensibly following Tackett, the lower court here used the Yard-Man presumptions to find a collective bargaining agreement vague. For example, although the CBA contained a duration clause that was general in scope, there were certain carveouts and exceptions which the appeals court found rendered the agreement vague. From that finding, the Sixth Circuit then went on to consult extrinsic evidence, which it found indicated that the benefits should have lifetime vesting.
“NORMAL CONTRACT PRINCIPLES” SHOULD HAVE BEEN APPLIED
The Supreme Court overturned the appellate court. Finding nothing vague about the contract, the court here ruled that the contract could not reasonably be read as vesting benefits for life. Therefore, the contract was not ambiguous, and the general durational principles should have been applied.
CONCLUSION: No presumptions different than those found in “normal contract principles” should be applied when interpreting CBAs.
US Supreme Court, Filed 2/20/18. Per curiam. 138 S.Ct. 761
California Courts of Appeal
GONZALEZ v. LEW
Ms. Gonzalez and her husband’s young son died in a fire in their rental home. Their families sued the Lews, who owned the home. The plaintiffs served a Code of Civil Procedure section 998 offer to settle all claims for $1.5 million. The Lews rejected the offer, and the jury found for the plaintiffs and awarded them over $2.6 million in damages. When the plaintiffs moved for costs, the Lews argued that the settlement offer was invalid because it encompassed two independent wrongful death claims.
THE PURPOSE OF CCP SECTION 998 IS TO ENCOURAGE SETTLEMENT
A prevailing party in a civil case is generally entitled to recover costs but not expert witness fees (absent statutory language to the contrary, such as in the Fair Employment and Housing Act). The prevailing plaintiff can recover expert fees if it obtains a more favorable judgment than the amount contained in a 998 offer rejected by the defendant. However, a 998 offer must meet certain content requirements.
998 offers are not always valid when there are multiple parties on one side. A 998 offer from a defendant to multiple plaintiffs with separate claims is invalid where the offer is conditioned on the acceptance of all plaintiffs. Courts have been split on whether an unallocated joint settlement made by multiple parties is valid.
AN UNALLOCATED 998 OFFER MADE BY MULTIPLE PLAINTIFFS MAY BE VALID WHERE IT IS CLEAR THAT THE PLAINTIFFS OBTAINED A MORE FAVORABLE RESULT THAN THE 998
Because the 998 offer was for $1.5 million and the plaintiffs collectively recovered $2.6 million, the verdict is clearly more favorable than the 998, even though one plaintiff was allocated less than $400,000 in damages. The fact that one plaintiff did not beat the collective 998 is irrelevant. Courts wish to discourage gamesmanship and other actions incompatible with the goal of resolving disputes.
COA Second District Division 3. Filed February 1, 2018. Opinion by Justice Lavin. 20 Cal.App.5th 155.
HURLEY v. CALIFORNIA DEPARTMENT OF PARKS & RECREATION
THE INFORMATION PRACTICES ACT PROHIBITS GOVERNMENT AGENCIES FROM RELEASING PERSONAL INFORMATION ABOUT THEIR EMPLOYEES
California’s Information Practices Act, Ca. Civ. Code §1798 et seq., requires government agencies to maintain personnel files for their employees, but strictly prohibits the unauthorized release of personal information from those files. Personal information includes such things as names, fingerprints, photographs, birth dates, social security numbers, and similar data.
PLAINTIFF ALLEGED DPR RELEASED HER PERSONAL INFORMATION
Plaintiff Hurley worked for the California Department of Parks & Recreation (“DPR”). She alleged that her supervisor, Leda Seals, made inappropriate sexual statements and inquiries in the workplace.
She alleged further that Seals, in conversation with a nonsupervisory employee, revealed personal information from Plaintiff Hurley’s file. Hurley reacted so strongly that she threw up and was unable to return to work.
Hurley complained to the DPR. Seals was suspended, and ultimately told she would be terminated. While on suspension, Seals took Hurley’s personnel file home with her. Once notified of her impending termination, Seals retired instead.
Plaintiff Hurley alleged, among other things, violation of the Information Practices Act (“IPA”), both from the revelation of her personal information to the nonsupervisory employee, and from Seals taking the file home during her suspension.
THE COURT UPHELD THE JURY FINDING OF A VIOLATION OF THE IPA
Because the personnel file that Seals used contained Plaintiff Hurley’s name and information about her, it qualified as a “record” within the meaning of the IPA. DPR therefore had a duty to maintain it properly.
Among the personal information contained in the file were Hurley’s application to add her domestic partner to her health care benefits, a note from her psychologist placing her on leave for one month, and a note that Hurley had failed to pass probation in a previous job.
The court rejected DPR’s argument that the file kept by Seals did not constitute a “record” because it was not kept at a central location by the employer. Maintaining the information delineated within the IPA made it a “record” under that statute, and brought it within the statute’s purview.
As a consequence, the court found that there was substantial evidence to uphold the jury’s finding of a violation of the IPA.
CONCLUSION: Government employers are under a heightened obligation to protect the personal information of their workers. Allowing unauthorized access, or permitting supervisors to take personnel files home, invites liability.
CELA INVOLVEMENT: CELA’s President, Wendy Musell, and Elisa Stewart litigated this case for the plaintiff/appellant.
Ca. Ct. App., Fourth District, Division 1. Filed 2/21/18. Opinion by Judge McConnell. 20 Cal.App.5th 634
LANE v. BELL
THE PARTIES SUE EACH OTHER OVER A FAMILY PROPERTY
The Lanes and Ms. Bell (Ms. Lane’s mother) owned a piece of rural property. The Lanes sued Bell, and Bell cross-complained, bringing claims of elder abuse and intentional infliction of emotional distress, but also seeking a declaration of the value of her property interest and an order of partition. The Lanes mostly won. Bell succeeded only in obtaining the judgment valuing her property interest and the order of partition. The Lanes sued Bell for malicious prosecution, adding further tension to family dinners. Bell prevailed on summary judgment, and the Lanes appealed.
A PARTY MUST PREVAIL ON THE ENTIRE UNDERLYING ACTION IN ORDER TO BRING A MALICIOUS PROSECUTION CLAIM
To prevail on a malicious prosecution claim, the plaintiff must show: (1) a claim in the underlying action was pursued with subjective malice, (2) that claim was brought with no objective probable cause, and (3) the underlying action was terminated on the merits in favor of the party now bringing the malicious prosecution claim. If the plaintiff in the underlying case succeeded on any claims, the defendant in that case cannot bring a malicious prosecution claim. If the underlying defendant prevailed on all claims, however, it need only show that one of those claims was brought with malice and without probable cause to prevail on a malicious prosecution claim.
COA Fourth District Division 1. Filed January 31, 2018. Opinion by Justice Dato. 20 Cal.App.5th 61.
MORA v. WEBCOR CONSTRUCTION, L.P.
LABOR CODE SECTION 226(a) REQUIRES ITEMIZED WAGE STATEMENTS
Labor Code section 226(a) requires employee wage statements to itemize all wages earned, including the hours worked and applicable pay rates. Plaintiff Mora, on behalf of a class of employees, argued that deductions from his paycheck for a union vacation trust fund must list the hours and pay rate associated with the union vacation trust fund payment. Mora argued that the union payments were part of his wages, and therefore itemization was required. The trial court sustained Webcor’s demurrer.
UNION VACATION TRUST PAYMENTS ARE NOT WAGES FOR PURPOSES OF LABOR CODE 226(a)
The Labor Management Relations Act specifically authorizes this type of vacation trust fund. These funds are funded by employer contributions and operated for the sole and exclusive benefit of the employees. Labor Code section 227.5 addresses these funds, and requires only annual notice of the payments made to the fund. Labor Code 226(a) does not apply to union vacation trust funds.
COA First District Division 5. Filed February 5, 2018. Opinion by Justice Simons. 20 Cal.App.5th 211.
MURO v. CORNERSTONE STAFFING SOLUTIONS, INC.
MURO DROVE TRUCKS THROUGHOUT THE WESTERN STATES
Plaintiff Muro was a truck driver for Defendant/Appellant Cornerstone Staffing Solutions. Cornerstone provided employees for its employer-clients, specializing in transportation and logistics.
MURO SIGNED AN ARBITRATION AGREEMENT AND CLASS ACTION WAIVER, BUT BROUGHT HIS CLAIMS IN SUPERIOR COURT ANYWAY
As a condition of his employment, Muro signed an arbitration agreement. That agreement stated that it was governed “solely by the Federal Arbitration Act,” and that it would proceed under the rules of the American Arbitration Association. The agreement also provided for a waiver of the right to proceed with or participate in a class action.
Nonetheless, Muro filed a putative wage and hour class action with the Superior Court. Cornerstone petitioned to compel arbitration.
THE FAA DID NOT APPLY
The Court of Appeals upheld the trial court’s denial of the petition. Even though the agreement specifically referenced the Federal Arbitration Act, and even though Muro was engaged in interstate commerce – which the FAA specifically holds is within its purview – the court found that “transportation workers” fell within a specific FAA exemption.
Section 1 of the FAA specifically exempts from its coverage all “contracts of employment of seamen, railroad employees,” and, as pertinent here, “any other class of workers engaged in foreign or interstate commerce,” which the United States Supreme Court has interpreted to mean “transportation workers.” This has consistently been held to include truck drivers who cross state lines. This was sufficient to find that the FAA did not apply, and the court then analyzed the contract under California law.
THE CLASS ACTION WAIVER AND THE ARBITRATION AGREEMENT WERE UNENFORCEABLE
California applies a four part test to determine if a class action waiver is enforceable. The party opposing the clause must show (1) the modest size of the potential recover for the individual, (2) potential for retaliation against members of the class, (3) absent members of the class may be ill informed of their rights, and (4) other, real world obstacles to vindication of the class members’ rights through individual arbitrations. Trial courts that conclude that a class action is more effective as a practical matter may void the class action waiver, as did the trial court here.
CONCLUSION: Trial courts that deny petitions to arbitrate and class action waivers will be upheld by the appellate courts. The four factor test shown above indicates that the class action mechanism is preferable for promoting the rights of California workers.
CELA INVOLVEMENT: CELA member Jamie Serb helped litigate this matter, along with the Turley & Mara Law Firm
Ca. Ct. App., Fourth District, Division 1. Filed 2/23/18. Opinion by Judge Dato. 20 Cal.App.5th 784
REDFEARN v. TRADER JOE’S COMPANY
PLAINTIFF REDFEARN’S BUSINESS PLACED FOOD PRODUCTS, AND HAD CONTRACTS WITH THE FOOD MANUFACTURERS
From 2001 to 2014, Plaintiff Redfearn had the majority interest in Caliber Sales and Marketing Corporation. That company helped food manufacturers place their products in grocery stores. In this case, Caliber helped Seneca Foods Corp. and Sunsweet Growers place their products in Trader Joes Market.
In 2014, Redfearn severed his relationship with Caliber. As part of their agreement, Caliber assigned all of its claims against Trader Joe’s to Redfearn.
TRADER JOE’S ALLEGEDLY INTERFERED WITH CALIBER’S CONTRACTS WITH ITS CLIENTS
Redfearn alleged that, in January 2014, a supervisor at Trader Joe’s defamed him to Seneca and Sunsweet Growers, and required them to stop doing business with him in order to maintain their contracts. Consequently, it was alleged, both companies terminated their contracts with Caliber. As Caliber’s assignee, Redfearn sued Trader Joe’s, alleging interference with contract and other torts.
TRADER JOE’S WAS A “STRANGER” TO THE CONTRACT, AND THEREFORE COULD BE HELD LIABLE FOR INTERFERING WITH IT
The Redfearn court first examined our Supreme Court’s precedent, finding from Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503 (2017) that a party to a contract cannot be held liable for interfering with its own contract. Rather, such torts could only fall upon “strangers to the contract.”
The court went on to examine its sister courts’ various interpretations of what constituted a “stranger to the contract.” It rejected the analysis of some cases which held that, if a noncontracting party either had an economic interest in the contract, or if the contract expressly depended upon the noncontracting party’s performance, then that noncontracting party could not be held liable because it was not a “stranger to the contract.”
Instead, the Redfearn court sided with those cases which found that anyone who was not a contracting party or an agent of a contracting party was a “stranger to the contract,” and could be held liable in tort for interfering with that contract.
CONCLUSION: Although not an employment case, the Redfearn matter may nonetheless apply in employment cases. In California, employment has long been held to be a matter of contract. It is a colorable argument, then, that a supervisor who determines illegally to fire an employee may be liable for interference with contract, whether the worker is an employee, or more especially an independent contractor.
Ca. Ct. App., Second District, Division 7. Filed 2/28/18. Opinion by Judge Perluss. 20 Cal.App.5th 989
TERRIS v. COUNTY OF SANTA BARBARA
PLAINTIFF WAS TERMINATED, AND CLAIMED IT WAS DUE TO HER PROTECTED ACT OF WHISTLEBLOWING
Plaintiff Terris worked for the County of Santa Barbara as an analyst. The County laid her off in 2009. Asserting her civil service protections, she opted to bump another employee of lesser seniority.
In response, that employee’s Director determined that the position required “special skills” under the civil service rules, and that Terris therefore did not qualify for the position.
Terris filed a complaint with the Civil Service Commission, alleging a violation of her seniority rights, and retaliation against her for exercising those rights. The Commission ruled against her.
PLAINTIFF FILED A CLAIM OF WHISTLEBLOWER RETALIATION WITH THE SUPERIOR COURT, AND THE SUPERIOR COURT GRANTED SUMMARY JUDGMENT
Plaintiff Terris filed her complaint with the Superior Court, alleging whistleblower retaliation under Labor Code §§1101, 1102, and 1102.5. She also alleged discrimination on the basis of sexual orientation.
The Superior Court granted the County’s motion for summary judgment. The court found that Terris had not exhausted her administrative remedies.
PUBLIC EMPLOYEES MUST EXHAUST INTERNAL REMEDIES, NOTWITHSTANDING THE PROVISIONS OF CA. LABOR CODE
The appellate court affirmed. Under the Civil Service Rules, Terris had the ability to file a complaint with the County’s EEO office, which the rules provided investigated complaints of whistleblower retaliation. Because she didn’t do that, her failure to exhaust those administrative remedies was fatal to her claims.
This was true despite the provisions of California Labor Code §244(a), which provides: “An individual is not required to exhaust administrative remedies or procedures in order to bring a civil action under any provision of this code, unless the section under which the action is brought expressly requires exhaustion of an administrative remedy.” As a matter of first impression the Terris court found that this statute did not eliminate the internal exhaustion requirement for public employees.
CONCLUSION: Public employees must still exhaust internal remedies prior to pursuing Labor Code violations, because the Civil Service Rules, which have the force of law, require it. This is not true for employees of private companies, because there is no statutory requirement to exhaust a private company’s internal remedies.
Ca.Ct.App., 2nd District, Division 6. Filed 2/16/18. Opinion by Justice Gilbert. 20 Cal.App.5th 551
Ninth Circuit
LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS v. NLRB
RESPONDENT HOTEL UNILATERALLY ENDED ITS DUES-CHECKOFF AGREEMENT WITH THE UNION
Respondents Hacienda Resort Hotel and Casino and Sahara Hotel and Casino in Las Vegas, both now defunct, had collective bargaining agreements with the appellant union. The CBA did not include a union security clause, which would have restricted employment to union members, because Nevada law prohibits such agreements.
Instead, the CBA contained a “dues-checkoff” provision, requiring Respondent hotels to deduct union dues from employee paychecks, even if those employees were not union members. The hotels did this until June 1995, when it unilaterally ceased those deductions.
In a previous case – in this matter which has been continuing for more than 20 years – the 9th Circuit found that hotel’s unilateral termination violated the National Labor Relations Act because the action without bargaining to agreement or impasse. The court remanded to the NLRB to determine the appropriate remedy.
NLRB IMPROPERLY AWARDED PROSPECTIVE RELIEF ONLY
On remand, the NLRB declined to award make-whole relief, instead requiring the employer to proceed in compliance with the NLRA prospectively only.
The 9th Circuit reversed the NLRB again, for the fourth time in this case. The court explained that make-whole relief is the standard remedy awarded by the NLRB when the employer unilaterally ceases dues-checkoff. The NLRB may deviate from a standard remedy, but it must provide a reasoned decision explaining the rationale for doing so. It failed to do that here, and was therefore reversed and ordered to reconsider on remand.
CONCLUSION: The NLRB cannot apply different remedies in similar situations without some form of rational explanation in its opinion. Although the NLRB has wide discretion, that discretion is finite, and it will be reversed if abused.
United States 9th Cir., Filed Feb. 27, 2018. Opinion by Judge Paez. 883 F.3d 1129
NEWTON v. PARKER DRILLING MANAGEMENT SERVICES, LTD.
NEWTON WORKED TWELVE UNPAID HOURS PER SHIFT ON AN OFFSHORE DRILLING PLATFORM
Plaintiff Newton worked on a drilling platform in the Santa Barbara Channel. The drilling platform was located more than three miles offshore and was fixed to the seabed of the outer Continental Shelf. Newton worked fourteen-day shifts called “hitches,” made up of twelve hours on duty followed by twelve hours on “controlled standby.” Defendant Parking Drilling paid Newton for the twelve on-duty hours per hitch and did not provide meal periods.
Newton filed a class action in California state court alleging seven wage and hour causes of action under California law. Parker Drilling removed the case to federal court and filed a motion for judgment on the pleadings. Parker Drilling argued that California law did not apply because, under the Outer Continental Shelf Lands Act (43 U.S.C. §§1331-1356b), the federal Fair Labor Standards Act already provided a comprehensive statutory scheme to address wage and hour grievances. The district court agreed, finding no voids or gaps in the FLSA that would allow for the use of state law.
CALIFORNIA STATE WAGE AND HOUR LAW MAY APPLY ON THE OUTER CONTINENTAL SHELF, WERE STATE LAW IS APPLICABLE AND NOT INCONSISTENT WITH THE FAIR LABOR STANDARDS ACT
The OCSLA declares that U.S. law applies to the outer Continental Shelf, as well as all structures attached to the seabed. It also states that the laws of adjacent states apply, as long as state law is “applicable and not inconsistent with” Federal law. California’s wage and hour laws are not inconsistent with the FLSA. The FLSA’s savings clause provides that states are free to adopt standards more protective of workers. Absence of federal law is not a prerequisite for the application of state law. California’s minimum wage and maximum hours worked laws are applicable and not inconsistent with the OCSLA. However, the Ninth Circuit remanded for the district court to decide whether California’s meal period, final pay, and pay stub laws are “not inconsistent” with federal law. Finally, Newton should have been granted leave to amend his complaint to clarify vague portions, as leave to amend should be “freely given” and “applied with extreme liberality.”
CELA INVOLVEMENT: Congratulations to CELA member Michal Strauss!
9th Circuit. Filed February 5, 2018. Opinion by Judge Christen. 881 F.3d 1078.
PEREZ v. CITY OF ROSEVILLE
PEREZ AND A CO-WORKER WERE REPRIMANDED FOR HAVING AN OFF-DUTY AFFAIR, AND PEREZ WAS FIRED AFTER SHE APPEALED
Plaintiff Janelle Perez was a probationary police officer employed by the Roseville Police Department. A few months after her hire, Perez began a romantic relationship with fellow officer Shad Begley while both were still married to, but separated from, their current spouses. Begley’s wife filed a citizen complaint alleging that Perez and Begley were having an affair and engaging in sexual conduct while on duty. The Department opened an investigation which concluded that there was no evidence of on-duty sexual contact, but that the two had called and texted each other while one or both were on duty. The calls and texts “potentially” violated Department policy. The Department issued written reprimands to both Perez and Begley for “unsatisfactory work performance” and “conduct unbecoming.” Perez filed an administrative appeal of her reprimand. At the conclusion of the hearing, the Department abruptly fired Perez without explanation. Two weeks after Perez’s termination, the Department issued a new reprimand to her, reversing the findings of unsatisfactory work performance and conduct unbecoming and substituting a new charge of violating the rules for personal communication devices. Perez sued, and the district court granted summary judgment.
PRIVATE, OFF-DUTY SEXUAL CONDUCT IS PROTECTED BY THE CONSTITUTION
Government employers cannot take adverse employment actions based on private sexual conduct unless the government demonstrates that the conduct either affects job performance or violates a constitutionally permissible and narrowly tailored regulation. Police employees have a right of privacy for private, off-duty sexual behavior, and such behavior is protected. Termination of a public employee at least in part on the basis of protected sexual activity violations the Constitution. Because there was no evidence that Perez’s affair had any meaningful impact on her job performance or violated a narrowly tailored department regulation, her Constitutional rights were violated. The Supreme Court’s Lawrence v. Texas decision recognized that intimate sexual conduct is an aspect of the substantive liberty protected by due process. The Department was not entitled to qualified immunity for adverse actions taken based on off-duty conduct.
Useful MSJ quotes: “Summary judgment is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions.” (p. 852) ““Temporal proximity between protected activity and an adverse employment action can by itself constitute sufficient circumstantial evidence of retaliation in some cases.” (p. 852) “A plaintiff may … raise a triable issue of pretext through evidence that an employer[ ] … deviated from its normal internal disciplinary procedure.” (p. 853)
9th Circuit. Filed February 9, 2018. Opinion by Judge Reinhardt, concurrence by Judge Tashima. 882 F.3d 843.
SIMPSON v. TRUMP UNIVERSITY, LLC
SIMPSON TRIED TO OPT OUT OF A CLASS ACTION AFTER THE DEADLINE
During the 2016 presidential election, three lawsuits were filed against Trump University and Donald Trump. Two were class actions filed in the Southern District of California, and one was filed by the New York Attorney General in New York. All three lawsuits alleged that Trump University engaged in false advertising to sell expensive education seminars that included no education and aggressively sold mentorship programs that also provided no benefits. After the election, the parties to the California class actions reached a $21 million settlement. One objector, Sherri Simpson, sought to opt out of the class and bring her claims in a separate lawsuit, which would have derailed the entire settlement. Simpson received a court-approved opt-out notice and did not return it by the deadline. She argued that she was promised a second chance to opt out at the settlement stage, and that due process required a second chance to opt out.
NO REASONABLE CLASS MEMBER WOULD HAVE INTERPRETED THE NOTICE TO ALLOW FOR A SECOND OPT-OUT PERIOD
A second opt-out notice was not required, even though the first opt-out notice stated that class members would be notified at the settlement stage “how to obtain a share (or how to ask to be excluded from any settlement).” FRCP 23(b)(3) requires that the class be given “the best notice that is practicable under the circumstances.” Allegations of insufficient notice are assessed under a reasonableness standard. Because the detailed class notice clearly stated that class members must “act before November 16, 2015” in order to be excluded, a second chance to opt out was not required and would be inconsistent with the class notice as a whole. The proper inquiry is what the average class member would have understood the class notice to mean. No other class member agreed with Simpson’s theory, meaning no reasonable class member would have understood the notice to allow for a second opt-out. Due process does not require more than one opportunity to opt out.
9th Circuit. Filed February 6, 2018. Opinion by Judge Nguyen. 881 F.3d 1111.