California Supreme Court
ALVARADO v. DART CONTAINER CORPORATION OF CALIFORNIA
A FLAT SUM BONUS MUST BE FACTORED INTO THE CALCULATION OF AN EMPLOYEE’S REGULAR HOURLY RATE
Plaintiff Hector Alvarado worked for Defendant Dart Container Corporation of California as a warehouse associate. He and other class members were paid on an hourly basis. Dart paid an “attendance bonus” of $15 to every employee who worked a full shift on a Saturday or Sunday. Dart and a class of similarly situated employees alleged that Dart improperly calculated overtime pay. In order to calculate the employees’ regular rate of pay and subsequently the overtime rate of pay, the attendance bonus must be factored in. The crux of this case is the proper way to mathematically calculate the hourly pay rate. The trial court accepted Dart’s method, finding that federal law must be followed in the absence of a valid California regulation, and granted summary judgment. Alvarado appealed, but the Court of Appeal affirmed.
CALIFORNIA DISCOURAGES EMPLOYER-IMPOSED OVERTIME WORK
For almost a century, California has had a policy of discouraging the imposition of overtime work. California requires overtime pay for work in excess of eight hours per day, while federal law does not. Federal law does not preempt state law in this area, and state law must control to the extent that it is more protective of workers than federal law.
IN FLAT SUM BONUS CASES, ONLY THE NON-OVERTIME HOURS ACTUALLY WORKED ARE USED TO CALCULATE THE REGULAR HOURLY RATE
In order to calculate an employee’s regular rate of pay, the attendance bonus is treated as if it were earned on an hourly basis throughout the pay period. The question is whether the bonus is treated as earned throughout the entire pay period including any overtime hours, or throughout the pay period using only the non-overtime hours. The DLSE’s enforcement policy states that only the non-overtime hours are used in the calculation of the regular hourly rate. Though the DLSE’s policy is void, its interpretation of the law is correct. Labor Code section 515 states that only non-overtime hours should typically be used to calculate the regular hourly rate. However, in flat-sum bonus cases, the hours the employee actually worked should be used, rather than simply dividing by a 40-hour workweek regardless of the hours worked. If overtime hours were included in calculating the regular rate of pay, the regular rate of pay would decrease as overtime hours increase. This would undermine California’s policy of discouraging overtime work.
CELA INVOLVEMENT: Congratulations to CELA members Dennis Moss, Joseph Lavi, and Jordan Bello.
California Supreme Court. Filed March 5, 2018. Opinion by Justice Chin. 4 Cal.5th 542.
California Courts of Appeal
CORLEY v. SAN BERNARDINO COUNTY FIRE PROTECTION DISTRICT
PLAINTIFF CLAIMED HIS FIRING CONSTITUTED AGE DISCRIMINATION
Plaintiff Corley was the division chief for the San Bernardino County Fire Protection District (“SBCFPD”). He alleged that, despite an exemplary employment record, SBCFPD fired him in February 2012. Corley was 58 and the oldest of the division chiefs within SBCFPD. Corley presented other evidence from which the jury could infer, the court ruled, that he had been discriminated against on the basis of his age.
THE TRIAL COURT DENIED SBCFPD’S PROPOSED SPECIAL JURY INSTRUCTION
Defendant/Appellant SBCFPD requested the trial court give a special jury instruction. In pertinent part, that instruction read: “The removal of a fire chief by a public agency… for reasons including, but not limited to, incompatibility of management styles… shall be sufficient to constitute ‘reason’ or ‘reasons.’” The special instruction was modeled after the language of the Firefighers’ Procedural Bill of Rights.
THE TRIAL COURT’S DENIAL OF THE SPECIAL JURY INSTRUCTION WAS PROPER
Finding no error, the court examined the rules governing special jury instructions. Although litigants are entitled to nonargumentative instructions on every theory of the case supported by substantial evidence, the trial court properly refuses instructions that are incomplete, misleading or legally incorrect.
Here, the statute after which the instruction was modeled refers to “fire chief,” meaning the head of any fire jurisdiction. Although the act did not define “fire chief,” it was expressly modeled after the Peace Officer Bill of Rights (“POBOR”), which referred to “chief of police.” Reviewing cases relevant to POBOR, the court held that the analogous firefighters’ statute, when referring to “fire chief,” meant someone of equal stature to “chief of police.” That could only be the head fire chief of any fire jurisdiction.
Since Corley was a “division chief” and not a “fire chief,” that part of the statute did not apply to him, and the instruction was properly denied.
CONCLUSION: Statutes are presumed to mean what they say. If the language does not apply on its face, the courts will not allow a special instruction based on that language.
Ca.Ct.App., 4th District, Division 1. Filed 3/16/18. Opinion by Justice Aaron. 21 Cal.App.5th 390
MMM HOLDINGS, INC. v. REICH
A TERMINATED EXECUTIVE KEPT COMPANY DOCUMENTS AND GAVE THEM TO HIS ATTORNEY, WHO GAVE THEM TO ATTORNEYS NOT INVOLVED IN THE CASE
Attorney Marc Reich represented whistleblower Josh Valdez in a qui tam action against MMM Holdings and its subsidiary MSO of Puerto Rico. After his termination, Valdez kept a company laptop and two personal laptops containing company data and provided all three laptops to Reich. Valdez’s employment contract required him to return all documents and information to MSO upon termination. Reich forwarded some of the documents to other attorneys prosecuting separate and unrelated cases against MMM and MSO. MMM and MSO sued Reich for conversion, civil theft, and other similar claims. Reich filed an anti-SLAPP motion. The trial court granted the motion, finding that MMM and MSO’s claims were based on Reich’s protected activity, and the companies could not show a probability of prevailing. MMM and MSO appealed.
AN ATTORNEY’S CONDUCT MAY BE PROTECTED AND IN FURTHERANCE OF LITIGATION EVEN IF IT IS IN FURTHERANCE OF LITIGATION UNRELATED TO A PARTICULAR CLIENT
All parties properly conceded that Reich’s use of his client’s documents in the qui tam action was protected activity. Likewise, Reich’s transmittal of documents to attorneys involved in or considering involvement in the qui tam action was protected. Transmittal of documents to attorneys not involved in the qui tam action was done in furtherance of either the Constitutional right of petition or in furtherance of the exercise of the Constitutional right of free speech. All distributions of documents were done to further litigation efforts on behalf of Valdez or others. Litigation efforts do not have to be on behalf of a particular client in order to be protected. Reich’s distribution of documents concerned a public issue or issue of public interest because the qui tam action involved $1 billion in Medicare fraud, an issue of great interest to taxpayers. All of Reich’s document transmittals were therefore protected activity. Activity may be protected for anti-SLAPP purposes even if the activity was unlawful. MMM and MSO could not demonstrate a probability of prevailing on the merits because all of Reich’s conduct was protected by the litigation privilege.
COA Fourth District, Division 3. Filed March 12, 2018. Opinion by Justice Ikola. 21 Cal.App.5th 167.
PONCE v. WELLS FARGO BANK
PLAINTIFFS LOST THEIR HOUSE TO WELLS FARGO, AND EVERYONE SUED EACH OTHER
Plaintiffs Antonio and Imelda Aranda and their son-in-law Heriberto Ponce (collectively “Ponce”) obtained a loan from Defendant Wells Fargo to purchase a house in 2008. They applied for a loan modification in 2009, but Wells Fargo made several errors in the modification agreement that resulted in higher payments for Ponce. Ponce could not afford the payments and defaulted on the loan. Wells Fargo both instructed Ponce not to pay until the modification errors were fixed and demanded immediate payment. Wells Fargo scheduled a trustee’s sale of the property, assured Ponce that the property would not be sold, and sold the property. Multiple lawsuits ensued. Ponce sued Wells Fargo for breach of contract, fraud, negligent misrepresentation, and similar claims. Wells Fargo repeatedly asked Ponce to dismiss the case due to a stipulation and release signed and entered in one of the other cases, though Wells Fargo was not a party to the stipulation. Ponce did not respond. Wells Fargo moved for monetary and terminating sanctions based on Code of Civil Procedure section 128.7, claiming the case was brought for an improper purpose. The trial court granted the motions and dismissed Ponce’s case. Ponce appealed.
PLAINTIFFS’ CLAIMS WERE NOT BROUGHT FOR AN IMPROPER PURPOSE BECAUSE PONCE HAD A NON-FRIVOLOUS ARGUMENT THAT THE STIPULATION DID NOT APPLY
CCP 128.7(b)(1) allows the court to impose sanctions if a pleading was filed for an improper purpose. Improper purposes include bringing claims not grounded in fact or not warranted by existing law. Sanctions may be granted only if the party’s conduct in asserting the claim was objectively unreasonable. Whether or not the stipulation applied to Wells Fargo, Ponce had a plausible, non-frivolous argument that the stipulation did not apply. As a matter of law, claims that are not frivolous cannot be brought for an improper purpose.
COA Third District. Filed March 13, 2018. Opinion by Justice Renner. 21 Cal.App.5th 253.
SAHELI v. WHITE MEMORIAL MEDICAL CENTER
A FELLOW DOCTOR MADE ETHNIC SLURS AND SEXUAL COMMENTS AFTER SAHELI REPORTED PATIENT CARE VIOLATIONS
Plaintiff Saheli reported HIPAA violations and unsafe patient care during her employment with Defendant White Memorial Medical Center. In response, White Memorial retaliated against and harassed her and eventually placed her on a leave of absence pending termination. In particular, another doctor made numerous slurs regarding her Iranian nationality and inappropriate sexual comments. Saheli filed suit alleging nine causes of action including violations of the Ralph Act (Civil Code section 51.7) and Bane Act (Civil Code section 52.1). White Memorial moved to compel arbitration. Saheli argued that the arbitration agreement did not meet the specific requirements of the Ralph and Bane Acts. The trial court agreed, compelling seven causes of action to arbitration while retaining jurisdiction over the Ralph and Bane Act claims. White Memorial appealed.
THE CALIFORNIA LEGISLATURE AMENDED THE RALPH AND BANE ACTS IN 2014 TO MAKE IT MORE DIFFICULT TO HIDE HATE SPEECH AND CONDUCT BEHIND THE CURTAIN OF ARBITRATION
The California Legislature passed the Ralph Act in 1976 to combat conduct similar to hate crimes. It passed the Bane Act ten years later as a supplement to the Ralph Act. In 2014, the Legislature limited the circumstances under which a person could agree to arbitration in Ralph and Bane Act cases. The Federal Arbitration Act (FAA) declares arbitration agreements valid and enforceable unless general contract law principles render an arbitration agreement revocable or invalid.
THE FEDERAL ARBITRATION ACT PREEMPTS THE REQUIREMENTS OF THE RALPH AND BANE ACTS RELATING TO ARBITRATION
The FAA preempts any state law that prohibits arbitration of particular claims or places onerous requirements on arbitration agreements that are not placed on other contracts. The 2014 Ralph and Bane Act amendments discriminate against arbitration by placing restrictions on arbitration agreements that do not apply to other types of contracts. The 2014 amendments are therefore preempted by the FAA.
COA Second District, Division 8. Filed March 14, 2018. Opinion by Justice Bigelow. 21 Cal.App.5th 308.
SERRANO v. AEROTEK, INC.
PLAINTIFF BROUGHT A CLASS ACTION COMPLAINT AGAINST BOTH HER TEMPORARY PLACEMENT AGENCY AND ITS CLIENT
California law has long held that a temporary placement agency is an employer for those workers it places, and over whom it has the power of control, whether exercised or not. Here, the class plaintiffs alleged meal break violations against Aerotek, their temporary agency, and Bay Bread where they were placed.
THE TEMPORARY AGENCY DID NOT INTERFERE WITH MEAL BREAKS AND HAD PROCEDURES TO ENSURE THEY WERE TAKEN
Aerotek presented evidence that its contract with Bay Bread required the latter to “comply with applicable federal, state and local laws” in connection with Aerotek’s services. More specifically, Aerotek’s employee handbook not only stated that the employees whom it placed in temporary positions must be given their breaks, but it also provided a process for an employee to report meal break violations.
Aerotek went further, going onsite at Bay Bread to train Aerotek employees on its meal break policy.
In response to interrogatories, Plaintiff Serrano stated that she was unaware of any action Aerotek took to interfere with required break periods.
AEROTEK WAS ENTITLED TO SUMMARY JUDGMENT
This was sufficient to exonerate Aerotek. An employer, said the court, was not required to police its employees to ensure they took their breaks. Rather, an employer was required only to provide the opportunity for breaks, and to do nothing to interfere with them.
Bay Bread was potentially liable on its own, given the allegations of the complaint. Aerotek, on the other hand, had fulfilled its own, independent obligations. It was not required to make sure that Bay Bread adhered to the law, or even knew of Aerotek’s policies.
CONCLUSION: Temporary agencies, and the companies with which they place their workers, have independent obligations to provide appropriate breaks, and to do nothing to interfere with those breaks.
Ca. Ct. App., 1st Dist., Div. 1, Filed 3/9/18, published opinion 3/21/18; Opinion by Justice Humes
TIMED OUT, LLC, v. 13359 CORPORATION
PLAINTIFF WON A VERDICT FOR ITS MISAPPROPRIATION CLAIM
Plaintiff Timed Out LLC received the misappropriation of image claims as an assignee from a model whose picture appeared, allegedly without her consent, at a bar owned by Defendant 13359 Corporation.
After a two day bench trial, the court found in favor of the plaintiff, and awarded it $4,483.30, exclusive of costs and attorney’s fees.
The issue in the case was the offer previously made by Defendant, pursuant to Ca. Code Civ. Pro. §998, for $12,500, “exclusive of reasonable costs and attorney[] fees, if any.”
THE PLAINTIFF WAS THE PREVAILING PARTY
The misappropriation statute, Ca. Civ Code §3344, provides for costs and attorney’s fees for the prevailing party. Here, the trial court determined, and the appellate court affirmed, that the plaintiff was the prevailing party.
THE OFFER EXCLUDED ATTORNEY’S FEES FROM ITS CALCULATION TO DETERMINE IF THE 998 OFFER WAS BESTED
The language of the offer, said the court, meant that the trial court was correct in not considering pre-offer attorney’s fees in deciding whether plaintiff exceeded the 998 offer. Because those fees were not included, and the verdict was less than the offer, the 998 penalties applied. Plaintiff could obtain its pre-offer, but not post-offer, costs and attorney’s fees.
CONCLUSION: This case seems to run counter to the purpose of Ca. Code Civ. Pro. §998. If defendants can issue such an offer irrespective of the attorney’s fees incurred up to that point, it creates an incentive to allow the litigation to continue longer than it might otherwise. Plaintiffs need to be aware of this important case.
Ca. Ct. App., 2nd Dist., Div. 1, Filed 2/27/18, Published 3/27/18; Opinion by Justice Bendix
Ninth Circuit
ORR v. PLUMB
DEFENDANT PLUMB PUNCHED AN OLD MAN, LOST AT TRIAL, AND WAITED SEVEN MONTHS TO APPEAL THE VERDICT
Defendant Plumb, a police officer, punched 76-year-old plaintiff Harrison Orr during a routine traffic stop. A jury found that Plumb used excessive force and awarded Orr $125,000 in damages in June 2015. The court clerk entered the special verdict into the docket the same day but did not enter judgment. Plumb moved for judgment as a matter of law (“JMOL”) the following week. The district court denied the motion in July 2015, and Plumb appealed only the JMOL denial. In January 2016, Plumb suddenly filed a second notice of appeal regarding the underlying judgment. Plumb claimed judgment was entered as a matter of law 150 days after the JMOL denial under FRCP 58(c)(2)(B). In February, the district court clerk signed and entered a document captioned “Judgment in a Civil Case.”
IF THE COURT DOES NOT ENTER A JUDGMENT DOCUMENT, JUDGMENT IS CONSIDERED CONSTRUCTIVELY ENTERED 150 DAYS AFTER A SPECIAL VERDICT
In federal court, a notice of appeal must generally be filed within 30 days of entry of judgment or appealable order. Timely filing is a jurisdictional requirement. The deadline to appeal the JMOL order began running from entry of the order, so Plumb’s appeal of the JMOL denial was timely. His appeal of the verdict was not timely. Under FRCP 58, if the district court does not enter judgment, judgment is considered automatically entered 150 days after the decision on which judgment is based. A jury special verdict starts the 150 days running. Therefore, judgment was constructively entered in November, 150 days after the special verdict. Plumb then had 30 days to appeal, but he did not appeal until January. He was Plumb out of luck.
Ninth Circuit. Filed March 12, 2018. Opinion by Judge Nguyen, dissent by Judge Rawlinson. 884 F.3d 923.