California Courts of Appeal
ABM INDUSTRIES OVERTIME CASES
THE PROPOSED CLASS INCLUDED JANITORS ON AN ELECTRONIC PAYROLL SYSTEM THAT AUTOMATICALLY DEDUCTED MEAL BREAKS
Plaintiffs are janitorial employees of Defendant ABM Industries who filed a class action for wage and hour violations. ABM used the same payroll system statewide. The system automatically deducted 30 minutes of work time for a meal period without determining whether any meal periods had been taken. Plaintiffs submitted a motion for class certification supported by declarations from janitors, supervisors and a database services expert. The expert analyzed the data from the payroll system and determined that over 1.1 million shifts showed no clocking out or in during the workday, and 94% of those shifts showed an automatic meal period deduction. The trial court denied Plaintiff’s motion for class certification, finding that Plaintiffs’ expert evidence was not admissible. The trial court found that the expert was unqualified and that the information he presented was not material to the case. Plaintiffs appealed.
EXPERT TESTIMONY IS ADMISSIBLE EVEN WHERE ADDITIONAL INFORMATION REGARDING QUALIFICATIONS WOULD BE PREFERRED
The expert was qualified under Evidence Code section 720, as he demonstrated special knowledge, skill, experience, or training. Questions regarding the degree of an expert’s knowledge relate more to the weight of the evidence than its admissibility. The trial court improperly focused too much on formal education and membership in professional organizations, given the expert’s clear familiarity with the transactions at issue in this case. In addition, class certification should have been granted.
Cal.Ct. App. First District Division 4. Filed December 11, 2017, modified January 10, 2018. Opinion by Justice Reardon. 19 Cal.App.5th 277.
APPLE, INC., v. SUPERIOR COURT
PLAINTIFFS SUED AS A CLASS OF AGGRIEVED CONSUMERS
In this product-related class action, plaintiffs were a putative class asserting that certain models of Apple iPhones had defective power buttons. Plaintiffs alleged that Apple sold the phones, knowing of the defect. The plaintiffs asserted violations of various consumer protection laws, as well as the Unfair Competition Law of Ca. B&P Code §17200.
DEFENDANT APPLE, INC., DISPUTED THE ADMISSIBILITY OF THE DECLARATIONS OF PLAINTIFF’S EXPERT IN SUPPORT OF THE CERTIFICATION MOTION
Although denied class certification at a first hearing, plaintiffs were permitted to file supplemental briefing, including a new expert declaration.
At the second hearing, the trial court declined to use the Sargon standard to determine whether the declarations of plaintiff’s experts were admissible. The trial court asked for further briefing, including another expert declaration detailing the methodology for damages calculation.
Plaintiffs did not only that, but filed declarations from two additional experts who also discussed damages calculations. Apple again opposed the admissibility of these expert opinions based on Sargon.
THE TRIAL COURT DECLINED TO APPLY SARGON
In its minute order granting class certification, the trial court expressly refused to apply the Sargon standard to the admissibility of expert opinion in the class certification motion.
THE SARGON STANDARD IS THE ONLY STANDARD FOR EXPERT ADMISSIBILITY IN CALIFORNIA
The Apple court pointed out that a trial court may only consider expert testimony if it is admissible, even when deciding on matters of class certification.
In Sargon, our Supreme Court laid out the standard for expert admissibility, relying on the language of the Evidence Code: “”[U]nder Evidence Code sections 801, subdivision (b), and 802, the trial court acts as a gatekeeper to exclude expert opinion testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative . . . . This means that a court may inquire into, not only the type of material on which an expert relies, but also whether that material actually supports the expert’s reasoning.” Sargon at 771 -72.
Sargon addressed admissibility at trial, but the Apple court found that its ruling applied equally to class certification motions. The court here disagreed with Garrett v. Howmedica Osteonics Corp., 214 Cal.App.4th 173, 188 – 89 (2013), which held that liberal construction of plaintiff’s evidence on summary judgment could conflict with the Sargon standard. The Apple court ruled that such liberal construction does not apply to class certification standards of numerosity, ascertainability, commonality and superiority, and that the Sargon standard should always be used when expert opinion admissibility is at issue.
CONCLUSION: There may be a conflict between Garrett and Apple, Inc., about whether the Sargon standard applies at a summary judgment hearing in class cases. As a matter of first impression, however, Apple, Inc. decided that it does apply for class certification motions.
Ca. Ct.App. 1/29/18
ARAVE v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
PLAINTIFF ARAVE MADE CLAIMS OF RELIGIOUS DISCRIMINATION, HARASSMENT, RETALIATION, AND FAILURE TO PAY WAGES
Plaintiff Arave was a Mormon. He alleged that Defendant Merrill Lynch harassed and discriminated against him because of his religion, and retaliated against him when he complained. Plaintiff Arave brought his claims under California’s Fair Employment & Housing Act (“FEHA”). He also alleged that, upon his resignation, Defendant Merrill Lynch failed to pay out his accrued vacation time, which constituted wages, in violation of Ca. Lab. Code §201.
THE JURY RETURNED A DEFENSE VERDICT, AND THE COURT AWARDED FEES AND COSTS TO DEFENDANT
After a five-week trial, the jury returned a verdict in favor of the defense on all counts.
Pursuant to post-trial motions by Defendant Merrill Lynch, the trial court awarded substantial costs, expert witness fees, and attorney’s fees to Defendant, the last of which was awarded solely in compensation for defending the wage claim. The trial court explicitly found that the FEHA claims were not frivolous.
THE TRIAL COURT WAS REVERSED. ONLY FRIVOLOUS WAGE CLAIMS ARE SUBJECT TO AN ATTORNEY’S FEE AWARD IN FAVOR OF A PREVAILING DEFENDANT
A prevailing defendant may only be awarded attorney’s fees on a wage claim “if the court finds that the employee brought the court action in bad faith.” Ca. Lab. Code §218.5(a). This has been interpreted to apply only to cases which are “frivolous.” Assem. Com. on Judiciary, Analysis of Sen. Bill No. 462 (2013-2014 Reg. Sess.) July 2, 2013, p. 4. Adopting the Assembly Committee’s reasoning, the Arave court agreed that “defendants would be entitled to attorney fees only if Arave’s wage claim was frivolous.” Without such a finding from the trial court, the ruling was reversed.
CONCLUSION
The rights to be paid correctly and to be free from discrimination are fundamental rights in California. Litigants should not be discouraged from bringing their claims for fear of being charged attorney’s fees, unless their claims are frivolous.
Cal.Ct. App. January 23, 2018
CANDELORE v. TINDER, INC.
TINDER CHARGES OLDER SUBSCRIBERS MORE FOR ITS SERVICES
Tinder is a dating application, which subscribers use to find people whom they would like to date. Subscribers pay a monthly fee for the service, and can pay a higher fee for additional functions.
Tinder allegedly charged consumers $9.99 per month or $14.99 per month, depending on the features used, if they were 30 years old or younger. The complaint alleged that Tinder charged $19.99 per month for those who were 30 or older if they bought the additional functions.
THE PUTATIVE CLASS ALLEGED AGE DISCRIMINATION
Candelore represented a putative class of plaintiffs, alleging age discrimination in the pricing scheme. Tinder defended, stating that its market research showed that younger persons had less disposable income, and therefore needed a lower price to be willing to subscribe. Candelore alleged age Discrimination under the Unruh Act (Ca. Civ. Code §51) and the Unfair Competition Law (Ca. B&P Code §17200).
The trial court sustained Tinder’s demurrer without leave to amend, stating that the price difference was reasonably based on the market testing presented by Tinder.
THE UNRUH ACT PROHIBITS AGE DISCRIMINATION IF THERE IS NO OVERRIDING PUBLIC PURPOSE BEHIND IT
The appellate court reversed. Unruh Act’s delineation of protected characteristics, said the Court, is “illustrative rather than restrictive.” Therefore, although age is not specifically listed as a protected characteristic, the courts have recognized that the Unruh Act prohibits age-based discrimination.
Citing the Supreme Court’s ruling in Marina Point Ltd., v. Wolfson, 30 Cal.3d. 721 (1982), the Candelore Court pointed out that discrimination occurs when generalizations impact individuals. “Even a true generalization about the class is an insufficient reason for disqualifying an individual to whom the generalization does not apply.” Id. at 740.
Therefore, the court ruled, because previous courts have determined that pricing differentials can constitute actionable discrimination, even a true generalization about older persons having more disposable income cannot justify charging them more for a service under the Unruh Act.
CONCLUSION: Generalizations will not justify discrimination under the Unruh Act if they affect individuals to whom they do not apply. This same reasoning should apply to the Fair Employment & Housing Act, as well as other anti-discrimination statutes with similar public policy purposes.
Ca. Ct. App., 1/30/18
CENTRAL VALLEY HOSPITALISTS v. DIGNITY HEALTH
AN ANTI-SLAPP MOTION CANNOT BE GRANTED BASED ON SPECULATION AS TO FACTS NOT IN THE COMPLAINT
Background: Plaintiff Central Valley Hospitalists, on behalf of the doctors in its membership, sued Defendant Dignity Health for five causes of action related to contract breach and interference. Dignity stated an intent to demur. During the meet-and-confer process, the Hospitalists’ attorneys stressed that they were not putting peer review at issue in the lawsuit. Instead of demurring, Dignity filed an anti-SLAPP motion. The motion’s primary argument was that the peer review process was an “official proceeding” and therefore protected activity. Hospitalists’ attorney sent a letter reiterating that the lawsuit was not about peer review and offering to amend the complaint to clearly reflect that. Dignity refused to withdraw the motion and filed a demurrer as well. Before the trial court ruled on the anti-SLAPP motion, it sustained Dignity’s demurrer with leave to amend. The trial court denied the anti-SLAPP motion almost one month later. The court noted that the complaint did not allege facts supporting the claims. In the complete absence of facts, Dignity could not meet its anti-SLAPP burden of showing that the non-existent facts were based on protected activity. Dignity appealed.
COURTS DISFAVOR MISUSE OF ANTI-SLAPP BY DEFENDANTS
The Court of Appeal strongly disapproved of Dignity’s tactics and waste of time and resources, holding “Dignity Health is very wrong.” Since the trial court sustained Dignity’s demurrer, Dignity should have dropped the anti-SLAPP entirely and assessed the case anew based on the First Amended Complaint.
A complaint falls under anti-SLAPP when a cause of action is based on the defendant’s protected speech or activity. The complaint did not provide enough factual detail for that showing: “If there are no acts alleged, there can be no showing that alleged acts arise from protected activity.” However, Hospitalists submitted declarations and evidence in its anti-SLAPP opposition clarifying the basis for the claims, which was not peer review.
Note: Prior to oral arguments, the Court of Appeal notified the parties that it was considering sanctions against Dignity on its own motion. Dignity promptly requested dismissal of the appeal, which the Court of Appeal declined to file, forcing the parties to appear for oral argument. The Court implied that it would have sanctioned Dignity, had Hospitalists not failed to respond as to its desire for sanctions.
Cal.Ct. App. First District Division 2. Filed January 9, 2018. Opinion by Justice Richman. 19 Cal.App. 5th 203
KHAN v. DUNN-EDWARDS CORPORATION
PLAINTIFF KHAN ALLEGED THAT HIS PAYSTUBS WERE INCOMPLETE, AND THAT HE WAS IMPROPERLY PAID LATE
In his First Amended Complaint, Plaintiff Khan alleged that his paystubs did not include the start time for his work day, in violation of the paystub requirements laid out in Ca. Lab. Code §226(a). His was the only paystub, out of all employees working there, that suffered this infirmity. He alleged also that he was not paid immediately upon termination, in fact that he was paid 11 days late, in violation of Ca. Lab. Code §§201 – 203.
PLAINTIFF KHAN FILED HIS NOTICE WITH THE L&WDA, IN AN ATTEMPT TO EXHAUST HIS ADMINISTRATIVE REMEDIES
Prior to filing suit, Plaintiff Khan filed a letter with the Labor & Workforce Development Agency, in an attempt to exhaust his administrative remedies for a cause of action under California’s Private Attorneys General Act (“PAGA”). In that letter, Plaintiff Khan stated that his employer:
- Violated Labor Code § 226(a) by failing to identify all of the required information on my final paycheck stub/itemized wage statement that I received, including but not limited to the pay period begin date, the correct pay date, and the total hours worked.
- Violated Labor Code §§ 201-203 by failing to pay all of my earned wages immediately upon termination and failure to pay waiting time penalties as a result thereof. (emphasis added)
THE NOTICE WAS INSUFFICIENT
In affirming the granting of summary judgment, the Khan court pointed out that filing a notice with the Labor & Workforce Development Agency was a prerequisite to filing a claim under PAGA. This is to allow the L&WDA the opportunity to determine if it wished to allocate resources to pursue the claim itself, as provided for by the statute. This is an administrative remedy, and its exhaustion is a jurisdictional requirement.
PAGA claims, however, are representative causes of action. Although not class actions and not subject to class action requirements, they are nonetheless brought on behalf of the plaintiff and “other current and former employees.” By limiting his L&WDA letter to his own claims, Plaintiff Khan failed to put the L&WDA on sufficient notice of the existence of the issue for “other current and former employees.” Therefore, the L&WDA had no basis on which to make a decision whether or not to pursue the matter, and the notice was insufficient to exhaust administrative remedies.
CONCLUSION
The Khan court’s discussion of the exhaustion requirement tacitly assumed that PAGA claims must involve more than one plaintiff. This has still not been definitively decided, but the trend seems to be in that direction.
CELA’s INVOVLEMENT: CELA Members Larry W. Lee and Edward W. Choi litigated this matter.
Ca.Ct.App., 1/22/18
KIM v. REINS INTERNATIONAL CALIFORNIA, INC.
EXEMPT TRAINING MANAGERS PERFORMED NO MANAGERIAL TASKS
Plaintiff Justin Kim brought a class action against his former employer Defendant Reins for wage and hour violations. Kim worked 50-70 hours per week as a “training manager” at one of Reins’ restaurants. Reins classified all training managers as exempt employees even though the training managers performed no managerial tasks. Kim sued for unpaid wages and overtime, lack of meal and rest periods, and related Labor Code claims. Kim also sought penalties under the Private Attorneys General Act of 2004 (“PAGA”) on behalf of himself and other aggrieved employees.
THE TRIAL COURT GRANTED MSJ OF THE PAGA CLAIMS AFTER KIM SETTLED AND DISMISSED HIS INDIVIDUAL CLAIM
The court granted Reins’ motion to compel arbitration of Kim’s individual claims, but the PAGA claims remained in court. Kim accepted Reins’ Section 998 offer to settle his individual claims and dismissed the arbitration action with prejudice. Reins then moved for summary judgment of the PAGA claims, arguing that Kim was no longer an aggrieved employee after settling his individual claims and therefore no longer had standing to bring the PAGA action. The court granted the MSJ and dismissed the case but encouraged the parties to appeal to obtain much-needed guidance from the Court of Appeal.
A PLAINTIFF WITH NO INDIVIDUAL CLAIMS MAY NOT BRING A PAGA ACTION
Under PAGA, an employee must have suffered harm in order to bring an action. A PAGA action may only be brought by an “aggrieved employee,” which is anyone who was employed by the defendant and against whom one or more violations was committed. The key question on appeal is whether Kim still met the definition of “aggrieved employee” after settling his individual wage and hour claims.
A plaintiff may not prosecute a PAGA action without a grievance against his or her employer for Labor Code violations. By accepting Reins’ settlement offer and dismissing his individual claims with prejudice, Kim effectively stated that he no longer had any Labor Code claims against Reins. Therefore, Kim was no longer an aggrieved employee under PAGA and had no standing to bring a PAGA action. However, the dismissal affects only Kim’s standing as the PAGA representative. Any other aggrieved employee could still assert these PAGA claims against Reins.
Note: the Court of Appeal specifically confined its decision to the specific circumstances of this case: a plaintiff asserting both individual and PAGA claims in the same lawsuit who voluntarily settles and dismisses the individual claims with prejudice. The holding should not be extrapolated to other situations.
Cal.Ct. App. Second District Division 4. Filed December 29, 2017. Opinion by Justice Collins. 18 Cal.App.5th 1052.
SIMERS v. LOS ANGELES TIMES COMMUNICATIONS, LLC
SIMERS ENGAGED IN DISALLOWED FREELANCE WORK AND SUFFERED A NEUROLOGICAL EVENT
Plaintiff Simers was a well-known sports columnist for the L.A. Times. At age 62, Simers suffered a neurological event similar to a mini-stroke. He recovered quickly and continued to write his column. Two and a half months later, the Times reduced his columns, ostensibly to give him more time to write them. Editors said that upper management had been unhappy with his columns for over a year. Upon learning that Simers had participated in a viral video and that a Hollywood producer was developing a television show based on Simers’ life, the Times suspended Simers’ column to investigate a possible ethical breach by Simers. Times employees were prohibited from accepting freelance assignments without a supervisor’s approval. After completing the investigation, the Times gave Simers a final written warning and removed him from his columnist position. Though the Times made Simers a senior reporter, it did not reduce his pay. Simers said that he considered the title change a constructive termination.
The jury returned a large verdict in Simers’ favor and found that he had been constructively terminated. The trial court granted JNOV on only the constructive termination cause of action. The court granted new trial on damages because it could not determine which damages were awarded for the discrimination claim independent of the constructive discharge.
THE INTOLERABLE CONDITIONS SIMERS LISTED IN SUPPORT OF CONSTRUCTIVE DISCHARGE WERE INSUFFICIENT AS A MATTER OF LAW
Simers listed ten intolerable conditions that forced him to resign. However, he failed to provide evidence to support some of them. Others were standard management actions not rising to the level of intolerability required for constructive discharge, particularly because Simers’ salary was not decreased and because the Times reason for investigating Simers was legitimate.
Note: the Court of Appeal distinguished that constructive discharge may be shown in similar situations, such as when performance criticism is part of a campaign of harassment.
Cal.Ct. App. Second District Division 8. Filed January 5, 2018. Opinion by Justice Grimes. 18 Cal.App.5th 1248.