United States Supreme Court
LAMPS PLUS, INC. v. VARELA
In Stolt-Nielson SA v. AnimalFeeds Int’l. Corp., the US Supreme Court employed some of its most twisted logic to prevent class actions in any form. In that case, the arbitration agreement was found to be enforceable. Because it was silent as to class arbitration, however, not only couldn’t a class be brought in that forum, it couldn’t be brought in court either.
In this case, the US Supreme Court throws logic to the wind, and extends Stolt-Nielson to do away with class arbitrations even if the agreement is ambiguous with respect to them.
PLAINTIFF SOUGHT TO BRING A CLASS ACTION
In 2016, a computer hacker obtained information about Lamps Plus employees illegally, and used that information to file false tax returns. Valera sought to represent a class of such employees against Lamps Plus in the district court.
THE DISTRICT COURT ORDERED CLASS ARBITRATION. THE NINTH CIRCUIT AFFIRMED
Lamps Plus moved to compel arbitration on an individual basis, and to dismiss the class claims. The district court denied the motion to compel the individual claim, instead compelling arbitration of the class claims. It then dismissed the suit from the district court.
The Ninth Circuit affirmed. Finding the arbitration agreement ambiguous as to class arbitration, the court used familiar California state law principles of construing the agreement against the drafter. In doing so, the Ninth Circuit found that the ambiguity required not the dismissal of the class claims and denial of class arbitration, but rather arbitration of the class claims and denial of individual arbitration.
THE APPELLATE COURTS HAD JURISDICTION
Granting certiorari, the US Supreme Court disposed first of a jurisdictional issue. For the first time, Valera argued here that the 9th Circuit, and therefore the High Court, lacked jurisdiction because the district court’s order was interlocutory and therefore not appealable. Valera pointed out that only the denial of arbitration was appealable, and not the granting of it.
The US Supreme Court disagreed. Reviewing the statutes granting jurisdiction, as well as its own precedent, the court stated that the dismissal of the underlying claim made the order final and therefore appealable. Moreover, Lamps Plus had standing to appeal because it did not gain the relief sought from the lower courts.
AMBIGUITY WILL NOT ALLOW CLASS ARBITRATION
The court deferred to the Ninth Circuit’s determination that the arbitration agreement was ambiguous, using the longstanding principle of according great deference to the lower court’s interpretation of state law.
It gave no such deference, however, with respect to the meaning of that determination. The court declared that the longstanding canon of interpreting ambiguous contracts against the drafter somehow did not apply to arbitration agreements. The Federal Arbitration Act’s public policy of enforcing arbitration agreements somehow meant that ambiguous contracts would prevent arbitration all together – but only for class claims.
The High Court continued the tortured reasoning of Stolt-Nielson: if there is a valid arbitration agreement, then arbitration is the only remedy available. If, however, the agreement is silent or ambiguous as to class arbitration, then there is no remedy available at all.
CONCLUSION
The Supreme Court continues its assault on the rights of workers and consumers, not only by enforcing admittedly ambiguous arbitration agreements, but by using them to deny the right to class remedies all together.
The tortured logic used in this case and in Stolt-Nielson will need a legislative fix to the FAA.
US Supreme Court, filed 4/24/19, Opinion by Chief Justice Roberts.
California Supreme Court
FILMON.COM INC. v. DOUBLEVERIFY INC.
THE CALIFORNIA SUPREME COURT GRANTED REVIEW TO CLARIFY THE PUBLIC INTEREST REQUIREMENT OF THE ANTI-SLAPP STATUTE WITH A FOCUS ON CONTENT AND CONTEXT OF SPEECH
Plaintiff FilmOn was a business that distributed web-based entertainment. Defendant DoubleVerify was a business that offered online tracking and verification to internet advertisers. DoubleVerify gathered information and compiled reports about websites on which its clients were interested in advertising. The confidential reports included a description of the websites’ content and tags such as “adult content” or “copyright infringement.” Some sites DoubleVerify tagged as containing adult content or copyright infringement belonged to FilmOn. FilmOn sued DoubleVerify for disparaging FilmOn’s digital distribution network. DoubleVerify filed an anti-SLAPP motion. The trial court granted the motion, and the Court of Appeal affirmed. The California Supreme Court granted FilmOn’s petition for review to decide how the context of a statement informs a court’s decision on whether the statement was made in furtherance of free speech in connection with a public issue.
COURTS MUST CONSIDER WHETHER SPEECH WAS ACTUALLY ABOUT A MATTER OF PUBLIC INTEREST, OR WHETHER IT CONCERNED A LARGELY PRIVATE DISPUTE
The anti-SLAPP statute (CCP §425.16) provides a method to strike meritless claims early in litigation, but only if the claims arise from acts in furtherance of a person’s right of petition or free speech under the U.S. or California Constitution in connection with a public issue. It was enacted to protect nonprofit corporations and individuals from large corporations and is supposed to guard against lawsuits brought primarily to chill the exercise of speech and petition rights. In assessing the public interest issue, the context of the speech matters, including the identity of the speaker, the audience of the speech, and the purpose of the speech. There are also specific considerations, such as whether the subject of the speech was a person in the public eye or could affect large numbers of people. When invoking section 425.16(e)(4), a court must consider both the context and content of the speech in determining whether the speech furthers the exercise of constitutional speech rights in connection with a matter of public interest. Courts must also discern whether the speech was really about the asserted issue of public interest, or whether it was more accurately about a largely private dispute.
COURTS MUST ASSESS THE CONTENT OF THE SPEECH AND THEN ASSESS THE RELATIONSHIP BETWEEN THE SPEECH AND THE PUBLIC DISCOURSE
Section 425.16(e)(4) requires a two-part analysis. First, assess what public issues the speech implicates by looking at the content of the speech. Second, ask what functional relationship exists between the speech and the public conversation about a matter of public interest, during which context is useful. Here, DoubleVerify argued that its reports concerned public interest by addressing the presence of adult content on the internet and the presence of copyright-infringing material on FilmOn’s sites. However, the section (e)(4) catchall requires some degree of closeness between the challenged statements and the asserted public interest. The speech must not merely refer to a subject of widespread interest; the speech must itself contribute to the public debate. While adult content in the abstract is an issue of public interest, the inquiry must focus on the specific nature of the speech. DoubleVerify issued reports to paying clients, not to the wider public, and the clients use the information solely for their own business purposes without disseminating it to the public. DoubleVerify’s reports did not qualify for protection under section (e)(4) because it did not issue reports in furtherance of free speech in connection with an issue of public interest.
CA Supreme Court. Filed 5/6/19. 7 Cal.5th 133. Opinion by Justice Cuellar.
California Courts of Appeal
BRAVO v. RADC ENTERPRISES, INC.
THE ARBITRATION AGREEMENT PROVIDED FOR ARBITRATION OF ALL CLAIMS
Defendant RADC Enterprises hired Plaintiff Mel Bravo to manage a store and required him to sign an arbitration agreement. The arbitration agreement provided that the parties would arbitrate “all disputes” arising from the employment relationship. The end of the arbitration agreement stated that the agreement would be governed in accordance with California law. The trial court compelled arbitration on some of Bravo’s individual claims but denied arbitration as to Bravo’s individual wage and hour claims. The trial court reasoned that the choice of law provision meant that Labor Code 229 disregarding arbitration agreements as to wage claims applied to Bravo’s wage and hour claims. RADC appealed, and the Court of Appeal reversed.
THE CLEAR INTENT OF THE ARBITRATION AGREEMENT WAS TO ARBITRATE ALL CLAIMS
The choice of law provision does not negate the arbitration portion of the arbitration agreement, and the agreement should not be interpreted that way. The agreement should not be interpreted so that the choice of law provision is in conflict with the rest of the agreement.
COA 2nd Dist., Div. 8. Filed 3/29.19. 33 Cal.App.5th 920. Opinion by Justice Wiley.
COHEN v. KABBALAH CENTRE INTERNATIONAL, INC.
Though this is not an employment case, it contains notable holdings. Plaintiff Cohen’s Fifth Amended Complaint alleged that the conversations constituting an oral contract occurred in 2004. She had previously stated at deposition that she had not had these conversations in 2004. Defendant Centre filed a motion for summary judgment. With her opposition, Cohen submitted a declaration stating that the oral contract conversations had occurred in 2003. The trial court held that, since Cohen’s declaration contradicted the Complaint and her previous deposition regarding the oral contract, the declaration could be disregarded as to those assertions. The Court of Appeal agreed. The Court of Appeal also emphasized that litigants should not file excessive evidentiary objections in support of or opposition to summary judgment. “Blunderbuss objections” may result in informal reprimands or formal sanctions for engaging in abusive practices: (“objecting to every single thing with no display of professional judgment or restraint is an abusive practice”).
COA 2nd Dist., Div. 8. Filed 5/7/19. 35 Cal.App.5th 13. Opinion by Justice Wiley.
DANE-ELEC CORP. v. BODOKH
California Labor Code §218.5 provides for attorney fee-shifting in wage claims. It is an asymmetric statute, however: a prevailing employee is entitled to attorney’s fees, but a prevailing employer may only recover attorney’s fees upon a finding that the action was brought in bad faith.
Here, the defendant employer prevailed on both the §218.5 claim, and a contract claim for wages. The contract had its own, symmetric fee-shifting provision.
The court held that §218.5 prevailed over the contractual provisions when the wage claim is “inextricably intertwined” with the contractual claim. Therefore, a prevailing employer cannot recover attorney’s fees without a finding of bad faith.
BODOKH SIGNED A PROMISSORY NOTE FOR THE EMPLOYER BUT FAILED TO REPAY IT
In the 1980s, Nessim Bodokh and David Haccoun co-founded Dane-Elec Memory Corp., which produced and sold computer memory and data storage. The company grew and evolved through different names and established a holding company.
In 2008, Bodokh and Haccoun each signed their own promissory note for $500,000, as a loan from the company, for them to invest individually in a commercial bank. Bodokh did not repay the entire loan.
THE COMPANY REDUCED EMPLOYEES’ COMPENSATION, BUT PROMISED TO RESTORE IT FOR SALARIED EMPLOYEES
Over the ensuing years, the company experienced financial hardship. At one point, it imposed salary reductions. It stated that it would restore the compensation of salaried employees and pay them backpay upon a return to profitability.
THE COMPANY SUED BODOKH FOR BREACH OF CONTRACT. HE COUNTER-CLAIMED FOR FAILURE TO PAY WAGES. THE TRIAL COURT FOUND FOR THE COMPANY ON THE COMPLAINT AND CROSS-COMPLAINT
Eventually, the company was bought out by another company named Gigastone. It then sued Bodokh for breach of contract on the promissory note. Bodokh cross-complained for failure to pay wages.
After a bench trial, the court found on behalf of the company, both on the promissory note and the failure to pay wages claim.
THE COURT AWARDED ATTORNEY’S FEES TO THE COMPANY FOR THE CONTRACT CLAIM, BUT NOT THE WAGE CLAIM
In post-trial motions, the court granted in part the company’s motion for attorney’s fees on the ground that the promissory note included a contractual attorney’s fee provision. It denied the motion to the extent that attorney’s fees were claimed for defeating the unpaid wages causes of action, expressly finding that the cross-complaint was not brought in bad faith. Bodokh appealed.
ATTORNEY’S FEES CANNOT BE HAD BY AN EMPLOYER IF THE CAUSE OF ACTION IS INEXTRICABLY INTERTWINED WITH A WAGE CLAIM, AND IF THE WAGE CLAIM WAS NOT BROUGHT IN BAD FAITH
The appellate court reversed the attorney’s fee award in part. The court looked back to precedent which held that apportionment of attorney’s fees need not be made when two causes of action – one with an attorney’s fee provision and one without – involve common issues. In other words, ““[a]pportionment is not required when the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney’s time into compensable and noncompensable units.” Calvo Fisher & Jacob LLP v. Lujan, 234 Cal.App.4th 608, 625-626 (2015).
Here, however, the court recognized the public policy behind encouraging wage claims by employees, and not chilling them even when a similar contractual claim could be brought against the employee. Thus, the court stated, attorney’s fees could not be recovered for defending the wage claim, even that part of the wage claim that was inextricably intertwined with the contractual claim. For this conclusion, the court relied on the language of the legislative history of §218.5, referring to the public policy as “fundamental” and “important.”
CONCLUSION
Contractual rights to attorney’s fees are secondary to the fundamental policy codified in §218.5 of encouraging wage claims.
COA, 4th Dist., Div. 3. Filed 5/24/19, Opinion by Judge Fybel.
DIAZ v. SOHNEN ENTERPRISES
DEFENDANT SOHNEN ADOPTED AN ARBITRATION AGREEMENT AND INFORMED EMPLOYEES THAT CONTINUED EMPLOYMENT CONSTITUTED ACCEPTANCE
Defendant Sohnen Enterprises adopted a new policy requiring mandatory arbitration of all employment claims. Sohnen’s COO told employees that refusing to sign the arbitration agreement but continuing to work for Sohnen constituted acceptance of the arbitration agreement. Plaintiff Erika Diaz told Sohnen that she did not want to sign the arbitration agreement. Sohnen told her that continuing to work constituted acceptance. Four days later, Diaz and her attorney stated in a letter to Sohnen that Diaz rejected the arbitration agreement but intended to continue her employment. Diaz sued Sohnen for discrimination. Sohnen moved to compel arbitration, and the trial court denied the motion. Sohnen appealed.
WHERE THE PLAINTIFF WAS REPEATEDLY TOLD THAT CONTINUED EMPLOYMENT CONSTITUTED ACCEPTANCE, NO SIGNED ARBITRATION AGREEMENT WAS REQUIRED
The party seeking to compel arbitration bears the burden of establishing the existence of an agreement to arbitrate. When an employee continues employment after notification that an agreement to arbitrate is a condition of continued employment, that employee has impliedly consented to arbitration. Here, Diaz was told repeatedly that her continued employment manifested an agreement to arbitrate, and she was never required to sign an arbitration agreement. Therefore, caselaw regarding whether an employee signed an arbitration agreement does not apply.
THE BURDEN SHIFTED TO PLAINTIFF TO SHOW UNCONSCIONABILITY. SINCE PLAINTIFF DID NOT ARGUE SUBSTANTIVE UNCONSCIONABILITY, THE ARBITRATION AGREEMENT WAS ENFORCEABLE.
Since Sohnen established the formation of a binding agreement, the burden shifted to Diaz to show the agreement was unenforceable. To do so, Diaz needed to show that the agreement was both procedurally and substantively unconscionable. The trial court found that the agreement was adhesive in nature and therefore procedurally unconscionable. However, there was no evidence of substantive unconscionability. Diaz’s appellate briefing did not address substantive unconscionability, and she therefore waived that argument. Without substantive unconscionability, the arbitration agreement was enforceable.
COA 2nd Dist, Div. 7. Filed 4/10/19. 34 Cal.App.5th 126. Opinion by Justice Zelon, dissent by Justice Segal.
LE MERE v. LOS ANGELES UNIFIED SCHOOL DISTRICT
A CAUSE OF ACTION FOR FEHA RETALIATION MUST INCLUDE ALLEGATIONS OF RETALIATORY MOTIVE
Plaintiff Aurora La Mere sued her former employer LAUSD for various FEHA violations. The FEHA retaliation claim in her Complaint failed to allege that any of the bad actors had retaliatory animus against her, knew of the previous lawsuit that formed the basis of the retaliation claim, or worked for LAUSD. In response to LAUSD’s demurrer, Le Mere did not contend that she could allege any additional facts to support the FEHA retaliation claim. Since Le Mere had previously been given leave to amend this claim and did not amend to add required elements in the First Amended Complaint, the trial court sustained the demurrer without leave to amend. The Court of Appeal agreed.
A GOVERNMENT (TORT) CLAIM IS REQUIRED FOR LABOR CODE SECTION 1102.5 CAUSES OF ACTION PRIOR TO FILING A LAWSUIT AGAINST A PUBLIC ENTITY.
Le Mere’s complaint included a cause of action for retaliation in violation of Labor Code section 1102.5. However, Le Mere did not file a government (“tort”) claim and therefore failed to exhaust administrative remedies. The trial court sustained the demurrer to the 1102.5 cause of action, and the Court of Appeal affirmed.
COA 2nd Dist., Div. 8. Filed 4/30/19, publication ordered 5/14/19. 35 Cal.App.5th 237. Opinion by Justice Stratton.
MESA RHF PARTNERS, L.P. v. CITY OF LOS ANGELES
THE SETTLEMENT AGREEMENT STATED THE COURT WOULD RETAIN JURISDICTION UNDER CCP SECTION 664, AND THE REQUEST FOR DISMISSAL REITERATED THAT REQUEST
The parties settled during litigation. The settlement agreement included the generally-standard language that the trial court would retain jurisdiction of the matter pursuant to Code of Civil Procedure section 664.6 to enforce the terms of the settlement agreement. The parties then requested dismissal of the action, and the case was dismissed in 2013. In late 2017, a dispute arose over some of the settlement terms. Mesa and others filed motions to enforce the settlement under section 664.6 in January 2018. The trial court denied the motions, and Mesa appealed.
A REQUEST UNDER SECTION 664.6 IS INVALID IF REQUESTED BY THE LAWYERS RATHER THAN THE PARTIES THEMSELVES
Voluntarily dismissal of a matter ends the court’s jurisdiction over that matter. The court may retain jurisdiction to enforce a settlement until the terms of the settlement are performed under section 664.6. However, this must be “requested by the parties.” Such a request must be made during the pendency of the case before dismissal, by the parties themselves, and in a writing signed by the parties or made orally by the parties before the court. Here, the request for dismissal requesting that the court retain jurisdiction was signed by the lawyers, but not the parties. The settlement agreement stating that the court would retain jurisdiction was signed by the parties, but never provided to the court. However, nothing in section 664.6 or this opinion precludes a party from filing a new breach of contract action based on the breach of a settlement agreement.
Compliance tip: The Court of Appeal suggested that parties file a stipulation and proposed order requesting that the court retain jurisdiction under section 664.6 and either (1) attach a copy of the settlement agreement signed by the parties, or (2) have the parties sign the stipulation.
COA 2nd Dist., Div. 1. Filed 3/29/19. 33 Cal.App.5th 913. Opinion by Justice Chaney.
MULLER v. ROY MILLER FREIGHT LINES
THOUGH PLAINTIFF MULLER DID NOT CROSS STATE LINES, 99% OF DEFENDANT RMFL’S FREIGHT CAME FROM OUT OF STATE
Defendant Roy Miller Freight Lines (“RMFL”) was a motor carrier company that employed truck drivers to transfer freight to and from its six California terminals. Over 99% of the freight originated from outside California, but RMFL only transported the freight within California. Plaintiff Muller worked as a truck driver for RMFL for less than a year. During that time, Muller never transported freight across state lines and never drove outside of California. Muller signed an arbitration agreement that stated it was binding under the Federal Arbitration Act (“FAA”). After his employment ended, Muller filed a class action against RMFL for unpaid wages and other wage and hour violations. RMFL moved to compel arbitration. The trial court granted the motion on all but Muller’s claim for unpaid wages but stayed that claim pending completion of arbitration. RMFL appealed, and the Court of Appeal affirmed.
LABOR CODE SECTION 229 PRECLUDES ARBITRATION OF UNPAID WAGE CLAIMS, UNLESS THE FAA APPLIES
California Labor Code section 229 prevents arbitration of claims for unpaid wages. However, section 229 is preempted by the FAA, if the FAA applies. The FAA does not apply to transportation workers engaged in foreign or interstate commerce. After a lengthy discussion of the split of authority on this issue, the Court of Appeal concluded that Muller was engaged in the movement of goods in interstate commerce and therefore a transportation worker exempt from the FAA. RMFL is part of the transportation industry, and 99% of its freight originated across state lines. Even though Muller did not personally transport freight across state lines, he played a key role in transporting freight through interstate commerce. Since the FAA did not apply, Muller’s case was analyzed under California law. Therefore, Labor Code section 229 rendered the arbitration agreement ineffective on Muller’s claim for unpaid wages. Finally, the Court of Appeal ruled that the arbitrator, not the trial court, must decide whether Muller’s claims could be arbitrated on a class basis.
CELA INVOLVEMENT:
Congratulations to CELA member Jonathan Melmed of Melmed Law Group, P.C.
COA, 4th Dist., Div. 3. Filed 5/1/19. 34 Cal.App.5th 1056. Opinion by Justice Aronson.
SAVEA v. YRC INC.
AN EMPLOYER AND ITS RECORDED FICTITIOUS BUSINESS NAME ARE THE SAME LEGAL ENTITY.
Plaintiff Vaiula Savea sued his employer, Defendant YRC Inc., for failing to provide the correct employer name on his wage statements as required by Labor Code section 226(a)(8). YRC used its fictitious business name “YRC Freight” on the wage statements and did not provide the additional four mail stop code digits after the zip code. The trial court sustained YRC’s demurrer without leave to amend, and Savea appealed. The Court of Appeal affirmed. YRC Freight was YRC’s registered fictitious business name, making them the same legal entity. Therefore, its name was accurate on the wage statements. YRC provided its correct mailing address on the wage statements. There is no authority that YRC was required to include the four-digit mail stop code after the zip code.
COA 1st Dist, Div. 3. Filed 4/10.19. 34 Cal.App.5th 173. Opinion by Justice Wiseman.
SUBCONTRACTING CONCEPTS (CT), LLC v. DE MELO
DEFENDANT ATTEMPTED TO COMPEL ARBITRATION AFTER PLAINTIFF FILED WITH THE LABOR COMMISSIONER
Defendant Subcontracting Concepts (SCI) contracted with Plaintiff De Melo for services via an Owner/Operator Agreement. One of the 27 numbered paragraphs in the agreement contained an arbitration provision. De Melo later filed an administrative wage claim with the Labor Commissioner alleging numerous wage and hour violations. SCI filed a petition to compel arbitration, the Labor Commissioner intervened, and the court denied the petition to compel arbitration. SCI appealed.
A COURT NEED NOT DECIDE AN UNDERLYING EMPLOYEE / INDEPENDENT CONTRACTOR ISSUE IN ORDER TO FIND AN ARBITRATION AGREEMENT UNENFORCEABLE DUE TO UNCONSCIONABILITY
The parties disputed whether De Melo was an employee or independent contractor. The Court of Appeal found it unnecessary to resolve that issue because there was a clear power imbalance between the parties, De Melo was required to sign the agreement, and the underlying claims of the case involved the employee versus independent contractor issue. Therefore, the Court went on to assess unconscionability. The agreement was procedurally unconscionable because: (1) it was presented in a take-it-or-leave-it manner, (2) De Melo was asked to sign immediately with no opportunity to negotiate, (3) the agreement was in English though De Melo’s English is limited, and (4) the agreement did not state which AAA rules would apply and did not attach rules. The agreement was also substantively unconscionable because it: (1) required De Melo to bear his own arbitration costs, (2) barred De Melo from recovering attorney fees and costs, (3) barred De Melo from seeking statutory remedies including punitive damages and penalties, (4) barred PAGA claims, and (5) prevented De Melo from proceeding before the Labor Commissioner. The unconscionable provisions were not severable because unconscionability tainted the entire agreement. Therefore, the arbitration clause could not be enforced.
COA 1st Dist., Div. 2. Filed 4/10/19. 34 Cal.App.5th 201. Opinion by Justice Kline.
WORKMAN v. COLICHMAN
DEFENDANT COLICHMAN FILED AN ANTI-SLAPP MOTION AFTER PLAINTIFF WORKMAN SUED HIM FOR INTERFERING WITH THE SALE OF A HOUSE.
Plaintiff Donna Sue Workman listed her house for sale, contracted with a buyer, and entered escrow. Defendant Paul Colichman and others were residents of a neighboring property who told Workman’s real estate agent that they were going to build a home addition that would interfere with the view from Workman’s house. The sale fell through. Workman sued her neighbors, alleging interference with the sale using false statements, since no construction was planned. Colichman filed an anti-SLAPP motion claiming their speech involved a matter of public interest: representations made to the public about the views from Workman’s house. The trial court denied the motion, and Colichman appealed. Workman filed a motion for attorney fees, arguing that the anti-SLAPP motion was frivolous. The trial court denied the fee motion, and Workman appealed.
DEFENDANTS DO NOT MEET THEIR BURDEN ON PRONG ONE OF THE ANTI-SLAPP ANALYSIS IF THEY CANNOT SHOW THEIR SPEECH WAS A MATTER OF PUBLIC INTEREST OF CONCERN TO A SUBSTANTIAL NUMBER OF PEOPLE.
The anti-SLAPP statue is intended to apply only to meritless lawsuits that threaten free speech on matters of public interest. Where, as here, Defendants have not met their threshold burden to show their actions were connected to a public issue, a court need not address the second prong of the anti-SLAPP analysis. Information regarding the views from a private residence affecting only those people directly interested in buying or selling that house is not an issue of public interest. A matter of public interest must be of concern to a substantial number of people and must not be a broad and amorphous public interest. Communications to small, limited-interest groups typically do not meet the public interest requirement.
THE PREVAILING PLAINTIFF IS ENTITLED TO ATTORNEY FEES IF THE ANTI-SLAPP MOTION MISCHARACTERIZES A PRIVATE ISSUE AS PUBLIC AND IS FILED TO DELAY THE CASE.
Defendants characterized clearly private communications about a private dispute as an issue of public interest in their anti-SLAPP motion. The anti-SLAPP motion was therefore frivolous. In addition, there was persuasive evidence that the anti-SLAPP motion was filed in order to delay the case. Under these circumstances, an attorney fee award to the plaintiff is mandatory.
PLAINTIFFS MAY SEEK AND RECEIVE SANCTIONS WHEN DEFENDANTS FILE FRIVOLOUS ANTI-SLAPP APPEALS.
Workman filed a motion for sanctions on appeal, accusing Colichman of filing a frivolous appeal for purposes of delay. The Court of Appeal granted the motion and awarded sanctions: “This case is simply ‘[a]nother appeal in an anti-SLAPP case. Another appeal by a defendant whose anti-SLAPP motion failed below. Another appeal [with] no merit, [which] will result in an inordinate delay of the plaintiff’s case and cause [her] to incur more unnecessary attorney fees.’”
COA 2nd Dist., Div. 4. Filed 4/2/19. 33 Cal.App.5th 1039. Opinion by Justice Collins.
Ninth Circuit
VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
JAN-PRO’S UNIT FRANCHISEES CLAIMED TO BE EMPLOYEES
Defendant Jan-Pro organized cleaning franchises. It operated a two-tiered system in which it sold the rights to the Jan-Pro logo to master owners, who could then sell business plans to unit franchisees. Unit franchisees alleged that the structure was a farce and that they were actually direct employees of Jan-Pro. Litigation ensued in multiple states over the course of many years. The California plaintiffs were severed, and the remainder of the case came before the Ninth Circuit. The Ninth Circuit first held that the plaintiffs’ arguments were not subject to res judicata or other preclusion by any decisions in the other cases. The Court then analyzed whether the Dynamex decision is retroactive, and found that it is.
MOST JUDICIAL DECISIONS ARE RETROACTIVE, AND DYNAMEX MERELY CLARIFIED EXISTING LAW
Judicial decisions are generally retroactive, even when they overrule precedent. However, the California Supreme Court has stated an exception to retroactivity where a judicial decision changes a settled rule on which the parties have relied. Considerations relevant to retroactivity include: (1) the reasonableness of the parties’ reliance on the previous rule, (2) the substantive or procedural nature of the change, (3) retroactivity’s effect on the administration of justice, and (4) the purposes to be served by the new rule. In Dynamex, the California Supreme Court stated that the ABC test regarding employees/independent contractors was not new and was faithful to the fundamental purpose of California’s wage orders. The Dynamex holding was described as a clarification of established law. Given the presumption of retroactivity, Dynamex must be applied retroactively.
PRONG B OF THE “ABC TEST” MAY BE SUSCEPTIBLE TO SUMMARY JUDGMENT, BUT PRONGS A AND C REQUIRE HEAVY FACTUAL ANALYSIS
Dynamex clarified the “suffer or permit” standard, holding that the hiring entity suffers or permits a person to work if the hiring entity cannot overcome the ABC test. The ABC test requires the hiring entity to establish three elements to disprove that a worker is an employee: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, (B) the worker performs work that is 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. Since the District Court had no opportunity to assess the case facts under Dynamex before granting summary judgment, the Ninth Circuit vacated the judgment and remanded the case for a fact-intensive inquiry, with guidance. The guidance instructed the District Court to consider all three prongs of the ABC test, to disregard Patterson (a franchise case with no wage and hour issues), and to consider that prong B of the ABC test is the most susceptible to summary judgment while prongs A and C required detailed factual analysis.
9th Circuit. Filed 5/2/19. 923 F.3d 575. Opinion by Judge Block.