California Supreme Court
VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
The Ninth Circuit requested that the California Supreme Court answer the question whether the Dynamex decision applies retroactively. The Supreme Court answered that Dynamex does apply retroactively.
JUDICIAL INTERPRETATION OF STATUTORY OR LEGAL LANGUAGE IS RETROACTIVE BECAUSE IT MERELY EXPLAINS WHAT THE LANGUAGE HAS ALWAYS MEANT
Dynamex noted that the term “independent contractor” was not defined in California’s wage orders. Therefore, the Supreme Court conducted a lengthy review of prior decisions and set forth a test for determining employee versus independent contractor status know as the ABC Test. The ABC test placed the burden on the hiring entity to establish that the worker is an independent contractor not intended to be covered by the wage orders and required the entity to establish each of three factors: (A) the worker is free from the control or direction of the hiring entity in connection with the performance of the work; (B) the worker performs work outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. The ABC Test set forth how to interpret the phrase “suffer or permit to work” in the California wage orders. Judicial interpretation of language is retroactive under well-established principles. Such interpretation merely provides guidance as to what a statute or law has always meant. Therefore, the ABC test applies retroactively.
CELA INVOLVEMENT
Congratulations to CELA member Shannon Liss-Riordan of Lichten & Liss-Riordan, PC. Thank you to Monique Olivier for drafting an amicus brief on CELA’s behalf.
California Supreme Court. Filed 1/14/21. 10 Cal.5th 944. Opinion by Chief Justice Cantil-Sakauye.
California Courts of Appeal
GARCIA v. HARALAMBOS BEVERAGE CO.
DEFENDANT HARALAMBOS WAITED 24 MONTHS TO COMPEL ARBITRATION
Plaintiffs Paul Garcia and Pierre Atme worked for Defendant Haralambos as truck drivers. Haralambos’ employee handbook contained an arbitration agreement. Garcia filed suit in 2016, and Haralambos filed its answer in March 2017. Haralambos demanded arbitration via letter to plaintiffs in June 2018 but did not file a motion to compel arbitration until November 2018. Haralambos claimed it had been unable to locate the plaintiffs’ executed arbitration agreements until June 2018. At the motion hearing, Haralambos admitted that, as of the filing of the lawsuit, it had documents confirming its policy requiring employees to sign arbitration agreements and checklists confirming that the plaintiffs had received the arbitration agreements. The court denied Haralambos’ motion to compel arbitration, finding that it had failed to diligently search for the signed arbitration agreements, had acted inconsistently with the right to arbitrate after locating the agreements, and had prejudiced the plaintiffs by delaying. The Court of Appeal affirmed.
HARALAMBOS WAIVED ARBITRATION BY ACTING INCONSISTENTLY WITH ITS RIGHT TO ARBITRATE
In determining whether a party has waived the right to arbitrate, a court can consider whether: (1) the party’s actions are inconsistent with the right to arbitrate; (2) the litigation machinery has been substantially invoked; (3) a party elected to enforce arbitration close to the trial date or delayed for a long period of time; (4) a defendant seeking arbitration filed a counterclaim without asking for a stay; (5) important intervening steps like taking advantage of discovery have taken place; and (6) the delay affected, misled or prejudiced the opposing party. However, each case must be examined in context. Haralambos did not dispute that it knew of its right to arbitrate at the outset of litigation and even asserted it as an affirmative defense. Waiting twenty-four months was an unreasonable delay. Courts have found delays of 5, 6.5, and 10 months unreasonable in previous cases. Haralambos represented at two status conferences that it did not intend to arbitrate the case. During the twenty-four month delay, Haralambos agreed to a protective order, engaged in mediation, participated in the Belaire-West class notice process, and engaged in discovery. After Haralambos located the arbitration agreements, it continued to meet and confer with plaintiffs regarding discovery and the Belaire-West process, participated in an informal discovery conference, and then ignored the court’s order to produce documents, causing plaintiffs to file a motion to compel. Haralambos raised arbitration as a belated strategy after participating in litigation. Plaintiffs retained experts to prepare for the classwide mediation, expended time and resources on class discovery, and expended resources to file a motion to compel. Therefore, substantial evidence supported the finding of prejudice to plaintiffs.
CELA INVOLVEMENT
Congratulations to CELA members David Mara and Matthew Crawford of Mara Law Firm and Jeff Geraci of Cohelan Khoury & Singer.
COA Second District, Division 5. Filed 1/4/21. 59 Cal.App.5th 534. Opinion by Justice Kim.
TRINITY RISK MANAGEMENT, LLC v. SIMPLIFIED LABOR STAFFING SOLUTIONS, INC.
AFTER PLAINTIFF SIMPLIFIED SUED DEFENDANTS, DEFENDANTS CROSS-COMPLAINED FOR DEFAMATION, RESULTING IN ANTI-SLAPP DRAMA
Trinity Risk Management and Simplified Labor Staffing Solutions were both entitles providing staffing services like secure payroll, insurance, and licenses. Ashish Wahi owned Simplified, and Michael Dougan was its CFO. Simplified sued Trinity and other entities like Knight Management Group for fraud and other claims related to workers’ compensation insurance purchased from Trinity. Simplified filed a first amended complaint adding Captive Resources as another defendant and adding ten more causes of action. All defendants flied a cross-complaint against Simplified alleging defamation and other claims. They alleged that Wahi and Dougan sent a series of emails to Captive maligning and disparaging Knight. Simplified filed a second amended complaint and a special motion to strike the defamation cause of action under the anti-SLAPP statute. Trinity then dismissed its cross-complaint. The trial court granted Simplified’s anti-SLAPP motion and awarded all of its requested attorney fees. Trinity and the others appealed, and the Court of Appeal affirmed.
THE FILING OF A SECOND-AMENDED COMPLAINT DOES NOT MOOT A PREVIOUSLY-FILED CROSS-COMPLAINT
The Court of Appeal soundly rejected defendants’ initial argument that the filing of the SAC caused both the FAC and defendants’ cross-complaint to the FAC to cease to have effect. A cross-complaint creates a distinct and separate action. The Court also rejected the argument that Simplified failed to meet and confer, finding no requirement to meet and confer prior to filing an anti-SLAPP motion.
THE LITIGATION PRIVILEGE PROTECTED EMAILS REGARDING THE INTENDED LITIGATION SENT LESS THAN TWO WEEKS BEFORE THE LAWSUIT WAS FILED
Anti-SLAPP motions are evaluated under a two-prong test: (1) the moving party must show that the challenged cause of action arises from protected activity, then (2) the non-moving party must demonstrate that the challenged cause of action has minimal merit, making a prima facie showing that the claim is legally sufficient and factually substantiated. The anti-SLAPP statute, CCP 425.16, encompasses any cause of action arising from any statement made in connection with an issue under consideration by an official proceeding or body. This includes statements made in anticipation of court action. Such a pre-litigation statement is privileged only if it relates to litigation that is contemplated in good faith and under serious consideration. The allegedly defamatory emails sent by Wahi and Dougan occurred less than two weeks before they filed Simplified’s complaint, and one of the emails copied their attorney. The emails were essentially a discovery request in anticipation of litigation. Therefore, prong one of the anti-SLAPP analysis was satisfied, as the defamation cause of action arose from protected activity. Under prong two, defendants were unable to show a likelihood of success. Civil Code section 47 sets forth the litigation privilege, which clearly protected the communications.
COA Second District, Division 8. Filed 1/11/21. 59 Cal.App.5th 995. Opinion by Justice Stratton.
Ninth Circuit
SCALIA v. STATE OF ALASKA
Secretary of Labor Eugene Scalia sued Alaska’s Department of Transportation and Public Facilities for miscalculating the amount of FMLA leave that employees were entitled to take. The DOT had some “rotational” employees who worked seven days in a row and then had seven days off, resulting in an 80-hour workweek followed by a 0-hour workweek. Rotational employees taking FMLA leave were given twelve workweeks of continuous leave, which covered six working weeks and six nonworking weeks. Scalia argued that only the six working weeks should be counted as leave, entitling rotational employees to six more working weeks of FMLA leave. The district court agreed and granted Scalia’s motion for summary judgment. The Alaska DOT appealed, and the Ninth Circuit reversed.
AN FMLA “WORKWEEK” IS DEFINED AS A WEEKLONG PERIOD DURING WHICH THE EMPLOYER OPERATES
The term “workweek” is not defined in the FMLA. However, other statutes like the FLSA define “workweek” as essentially a fixed period of seven consecutive days. The workweek does not revolve around an individual employee’s work schedule but is rather a week-long period during which the employer is in operation. Therefore, the 12-week period of FMLA leave included both the working and non-working weeks for rotational employees. To hold otherwise would give traditional employees 12 weeks of leave and rotational employees 24 weeks of leave, an unjustified disparity in treatment. The FMLA’s definition of “workweek” must therefore be the same as the FLSA’s: a fixed, pre-established period of seven consecutive days in which the employer is operating.
In the dissent, Judge Christen criticized the majority for pegging “workweek” to the employer’s schedule rather than the employee’s schedule. “Workweek” should be given its plain and ordinary meaning absent a definition in the FMLA. An employee is entitled to 12 workweeks of leave, not 12 weeks of leave.
Ninth Circuit. Filed 1/15/21. 985 F.3d 742. Opinion by Judge Watford, dissent by Judge Christen.