California Supreme Court
RAND RESOURCES, LLC v. CITY OF CARSON
ARE YOU READY FOR SOME FOOTBALL?
Defendant City of Carson hired Plaintiff Rand Resources to be its agent in negotiating with the National Football League regarding a stadium. The contract specified that Rand would be the City’s sole negotiator for the project. The City eventually replaced Rand with Leonard Bloom. Rand then sued the City and Bloom, alleging that the City engaged Bloom to negotiate with the NFL during Rand’s contract term with the City, and that the City lied to Rand about it. The City responded with an anti-SLAPP motion. The trial court granted the motion, the Court of Appeal reversed, and the Supreme Court granted review to clarify the scope of the Anti-SLAPP statute.
A CLAIM DOES NOT NECESSARILY “ARISE FROM” PROTECTED ACTIVITY FOR ANTI-SLAPP PURPOSES SIMPLY BECAUSE IT WAS FILED BECAUSE OF PROTECTED ACTIVITY
Under CCP §425.16, the defendant must first show that the conduct falls under one of the four categories described in the anti-SLAPP statute and that the plaintiff’s claims arise from that conduct. If the defendant makes that showing, the burden shifts to the plaintiff to show a probability of success on the merits. The defendants here contended that Rand’s causes of action arose from two of the protected categories: communications made in connection with an issue under consideration or review by a legislative body (section (e)(2)) and conduct in furtherance of the exercise of free speech in connection with a public issue or an issue of public interest (section (e)(4)). The Supreme Court cautioned that the protected activity must “supply elements of the alleged claim” and that a claim does not arise from protected activity simply because it was filed because of protected activity. Rather, the defendant’s act that underlies the plaintiff’s cause of action must itself be an act in furtherance of the right of petition or free speech.
THE CITY’S STATEMENTS DID NOT FALL UNDER THE PROTECTION OF CCP §425.16 (e)(2) OR (e)(4)
Several of Rand’s claims were based on the City’s alleged concealment and lying about the City’s breach of the exclusivity provision of its contract with Rand. The City’s false statements to Rand supply an element of Rand’s fraud-based claims for misrepresentation. The statements therefore satisfied the anti-SLAPP requirement that the plaintiff’s claim arise from the defendant’s conduct. However, these statements were not made in connection with either a City Council issue under section (e)(2) or an issue of public interest under section (e)(4).
THE CITY COUNCIL DID NOT DEBATE BLOOM’S INVOLVEMENT, SO DEFENDANTS’ STATEMENTS WERE NOT MADE IN CONNECTION WITH A LEGISLATIVE PROCEEDING
Regarding (e)(2), the City Council debated and voted on whether to extend its contract with Rand. The City did not separately consider whether Bloom should represent the City. Therefore, only communications made in connection with the City Council’s consideration of the Rand contract fall under section (e)(2). Statements concerning any other issue, including concealment of the exclusivity provision and the involvement of Bloom, did not fall under the protection of section (e)(2).
THOUGH THE NFL STADIUM WAS AN ISSUE OF PUBLIC CONCERN, WHO NEGOTIATED THE DEAL ON THE CITY’S BEHALF WAS NOT. THE PUBLIC INTEREST ANALYSIS SHOULD NOT BE APPLIED OVERLY BROADLY
Regarding section (e)(4), the City argued that who served as the City’s negotiating agent was a matter of public concern because the NFL stadium was a matter of public concern, and a better negotiator increased the chances that the City would secure a stadium. The Supreme Court rejected this argument and the proposition that any connection between the challenged conduct and an issue of public interest could satisfy section (e)(4). “At a sufficiently high level of generalization, any conduct can appear rationally related to a broader issue of public importance.” Courts assessing anti-SLAPP “must focus on the speech at hand, rather than the prospects that such speech may conceivably have indirect consequences for an issue of public concern.” The conversations underlying Rand’s claim focus on the responsibility for the day-to-day functions of representing the City, not whether the stadium should be built. The City did not meet its burden on public concern. However, the Supreme Court found that Rand’s tortious interference claims did arise from a matter of public concern. The Court therefore affirmed the appellate court’s opinion regarding most of Rand’s claims and reversed on the tortious interference claims with instructions to the trial court to proceed to the second prong of the anti-SLAPP analysis, probability of success on the merits, for the tortious interference claims.
CA Supreme Court. Filed 2/4/19. 6 Cal.5th 610. Opinion by Justice Cuellar.
GOONEWARDENE v. ADP, LLC
GOONEWARDENE SUED HER EMPLOYER’S PAYROLL COMPANY AFTER HER EMPLOYER VIOLATED WAGE AND HOUR LAWS
Plaintiff Sharmalee Goonewardene sued her former employer Altour International for wage and hour violations and wrongful termination, among other things. Goonewardene amended her complaint to add causes of action against Altour’s payroll company, Defendant ADP. The trial court sustained a demurrer without leave to amend as to all ADP causes of action and entered judgment regarding ADP. Goonewardene appealed, and the Court of Appeal reversed in part, holding that Goonewardene adequately pled claims against ADP for breach of contract, negligent misrepresentation, and negligence. The California Supreme Court disagreed, finding that the trial court had properly sustained the demurrer as to ADP.
GOONEWARDENE WAS NOT A THIRD PARTY BENEFICIARY TO HER EMPLOYER’S CONTRACT WITH ADP, AND ADP DID NOT OWE GOONEWARDENE A DUTY OF CARE
The breach of contract claim against ADP was based on the theory that ADP was negligent in failing to provide Goonewardene with paychecks and paystubs that accurately reflected her wages due. The Court of Appeal held that Goonewardene could maintain this theory under the third party beneficiary doctrine (Civil Code §1559). The third party beneficiary doctrine allows a nonparty to a contract to bring a breach of contract claim. Goonewardene was not a creditor beneficiary of the Altour/ADP contract, the purpose of the contract was not to provide a benefit to Altour’s employees, and allowing employees to sue ADP was not necessary to effectuate the purposes of the contract. Therefore, Goonewardene could not bring a breach of contract claim against ADP. ADP had no contractual relationship with Goonewardene and did not owe her a duty of care with respect to its payroll functions. The employer is liable to the employee for pay violations, and the payroll company is liable to the employer for errors, so there is no need to impose a duty to the employer’s employees upon the payroll company. Since ADP owed no duty to Goonewardene, her negligence claim failed.
CA Supreme Court. Filed 2/7/19. 6 Cal.5th 817. Opinion by Justice Cantil-Sakauye.
California Courts of Appeal
CORREIA v. NB BAKER ELECTRIC, INC.
PLAINTIFF CLAIMED WAGE AND HOUR ISSUES, AS WELL AS PAGA CLAIMS
Plaintiffs Correia and Stow sued their former employer, NB Baker Electric, Inc., alleging various wage and hour violations. Plaintiffs also made allegations under the Labor Code Private Attorneys General Act (“PAGA”), seeking penalties on behalf of the State for the various Labor Code violations claimed.
THE TRIAL COURT ORDERED THE CASE, EXCEPT FOR THE PAGA CLAIMS, TO ARBITRATION
Defendant Baker petitioned the trial court to compel the case to arbitration. The trial court granted the petition for all matters except the PAGA claim, finding that Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) and Tangulig v. Bloomingdale’s, Inc., 5 Cal.App.5th 665 (2016) were still good law, even after the US Supreme Court’s ruling in Epic Systems Corp. v. Lewis, __ US __ (2018).
PLAINTIFF’S OPPOSITION TO ARBITRATION WAS NOT UNTIMELY, AND EVEN IF IT WAS, THE COURT HAD DISCRETION TO HEAR IT ANYWAY
Baker appealed. It argued first that plaintiff’s opposition to its petition was untimely, and the trial court was without jurisdiction to consider it.
The appellate court disagreed. Apparently, the plaintiff thought that their opposition was due 9 days prior to the hearing, as if the petition were in fact a motion. Although the arbitration papers were styled as a petition, the court said that “it is not clear that the arbitration petition statute – rather than the general motions statute – governs the timing requirements” when a complaint has been filed in court, and cited cases to that effect.
The court then went on to point out that, if the petition statute applied, it expressly gave the court discretion to hear an untimely opposition absent prejudice to the petitioning party. If the motion statute applied, the opposition had been filed timely. The trial court was right to consider it either way.
ISKANIAN IS STILL GOOD LAW
In Iskanian, the California Supreme Court considered the impact of AT&T Mobility LLC v. Concepcion, 563 US 333 (2011), as relevant here, on waivers of PAGA actions. The Iskanian court held that the state law rule that such waivers violate public policy was not preempted by the Federal Arbitration Act (“FAA”) because PAGA claims are brought on behalf of the State, and the State’s interests can’t be waived by private contract.
The court went on to find that Iskanian was not overruled by the recent case of Epic Systems Corp. v. Lewis. The Epic case did not discuss the specific issue addressed by Iskanian, which was the public policy against PAGA waivers. Thus, Iskanian’s rule against PAGA waivers remains standing.
PAGA CLAIMS CANNOT BE FORCED INTO ARBITRATION
Under much the same reasoning, agreements requiring PAGA claims to be arbitrated are unenforceable. PAGA claims are brought on behalf of the state, and the non-signatory State can’t be made to surrender its rights this way. In doing so, it recognized that several federal cases disagree.
CONCLUSION
PAGA waivers, and agreements requiring arbitration of PAGA claims, are unenforceable, even in the face of contrary federal authority. We may see further interest from the courts on this issue.
CELA INVOLVEMENT
Congratulations to Michelle Baker of the Baker Law Group for successfully litigating this case.
COA., 4th Dist., Div. 1, Filed Feb. 25, 2019. Opinion by Justice Haller.
JIMENEZ-SANCHEZ v. DARK HORSE EXPRESS, INC.
DEFENDANT DARK HORSE WAS READY FOR LITIGATION AND OBTAINED RELEASES FROM MOST POTENTIAL CLASS MEMBERS
Plaintiffs Fernando Jimenez Sanchez and Profirio Preciado brought a wage and hour class action against their former employer, Defendant Dark Horse Express. Dark Horse is a trucking company, and Plaintiffs were employed as drivers. Plaintiffs were paid on a piece-rate basis for driving and a contractual rate for other activities. Dark Horse identified 76 drivers as potential class member and obtained settlement agreements and releases from 54 of them. Plaintiffs filed a motion for class certification. Dark Horse opposed, arguing that there were only 17 potential class members, an insufficient number for the numerosity requirement, and that the remaining drivers were not typical. The trial court denied Plaintiffs’ motion for class certification, and they appealed. The Court of Appeal reversed.
MEAL AND REST BREAK VIOLATIONS MUST BE ANALYZED SEPARATELY FROM NONCOMPENSABLE TIME PIECE-RATE ISSUES
Plaintiffs failed to demonstrate that the drivers’ piece-rate compensation and non-compensable time presented sufficient common issues to proceed on a class basis. However, Dark Horse had a rest break policy that applied to all truckers and did not compensate the truckers for missed rest breaks. The trial court included the rest break claims in its piece-rate nonproductive time analysis and did not separately analyze the rest break issue. The trial court erroneously presumed that the law applicable to rest periods was the same as the law applicable to nonproductive time. Similarly, the trial court did not properly analyze Plaintiffs’ meal break claims. The Court of Appeal reversed and remanded the meal and rest break claims.
ISSUES REGARDING THE RELEASES OBTAINED BY DARK HORSE WERE TOO INDIVIDUALIZED FOR CLASS RESOLUTION
Plaintiffs also claimed the settlements and releases obtained by Dark Horse were invalid under Labor Code §206.5, which prohibits employers from requires a release of claims in exchange for wages due, unless the wages have already been paid. However, when there is a bona fide dispute regarding whether wages are owed, the wages are not “due” pursuant to section 206.5, and the dispute may be settlement with a release and payment. Individual issues predominated the release issue, and determining the validity of the releases would require consideration of individual questions regarding each driver’s release.
CELA INVOLVEMENT
Congratulations to CELA members Marco Palau, Eric Trabucco, and Stanley Mallison
COA, 5th Dist. Filed 1/16/19, publication ordered 2/14/19. 32 Cal.App.5th 224. Opinion by Justice Hill.
MARQUEZ v. CITY OF LONG BEACH
THE PUTATIVE CLASS COMPLAINED THAT THEY WERE NOT PAID THE MINIMUM WAGE
Plaintiffs Marquez and Smith, employees of the City of Long Beach, alleged that they were not paid the minimum wage. They sought to represent a class of similarly situated plaintiffs.
THE TRIAL COURT SUSTAINED A DEMURRER WITHOUT LEAVE TO AMEND
The City of Long Beach demurred. It relied on article XI, section 5 of the California Constitution, which grants to charter cities (formed by charter, as opposed to general law cities, formed by the State’s general laws) “plenary authority” over municipal affairs, including the compensation of its employees.
Plaintiffs opposed the demurrer, citing to article XIV, section 1 of the State Constitution, which allows the Legislature to provide for minimum wages and the general welfare of its employees.
The trial court sustained the demurrer without leave to amend. Citing the former constitutional provision as the “home rule” doctrine, the trial court found that imposing the minimum wage on the charter City of Long Beach unconstitutionally infringed on the self-determination provision of article XI, section 5.
THE APPELLATE COURT REVERSED, FINDING THAT THE MINIMUM WAGE IS A MATTER OF STATEWIDE CONCERN
It is beyond dispute that legislating a minimum wage for California workers is a matter of statewide concern. On that basis, the appellate court reversed.
Analysis of the “home rule doctrine,” codified in article XIV, section 1, requires consideration of four issues. Under this “analytical framework,” the court must consider (1) “whether the city ordinance at issue regulates an activity that can be characterized as a ‘municipal affair’”; (2) whether there is “‘an actual conflict between [local and state law]’”; (3) “whether the state law addresses a matter of ‘statewide concern’”; and (4) “whether the law is ‘reasonably related to . . . resolution’ of that concern [citation] and ‘narrowly tailored’ to avoid unnecessary interference in local governance.”
The court relied on precedent to state that “‘[i]f . . . the court is persuaded that the subject of the state statute is one of statewide concern and that the statute is reasonably related to its resolution [and not unduly broad in its sweep], then the conflicting charter city measure ceases to be a “municipal affair” pro tanto and the Legislature is not prohibited by article XI, section 5(a), from addressing the statewide dimension by its own tailored enactments.’”
In other words, if the third and fourth parts of the analysis are met, the first part is therefore determined in favor of the state legislation.
Here, there was no doubt, especially considering our Supreme Court’s recent ruling in Dynamex, that the minimum wage is an important matter of statewide concern. The minimum wage, the court determined, is reasonably related and narrowly tailored to the statewide concern of worker health and welfare. Therefore, the constitutional power of the Legislature allowed it to set minimum wages, even for charter cities.
CONCLUSION
The importance of a statewide minimum wage cannot be overstated, and the courts have affirmed it once again. The constitutional power of the Legislature to set a minimum wage will override contrary provisions, even constitutional ones.
COA, 2nd Dist. Div. 7, Filed 2/25/19. Opinion by Justice Feuer.
MOORER v. NOBLE L.A. EVENTS, INC.
PLAINTIFF MOORER ATTEMPTED TO OBTAIN A DEFAULT JUDGMENT ON A PAGA CLAIM
Plaintiff Moorer alleged Labor Code violations against his employer, Noble L.A. Events, Inc. (“Noble”). His allegations included individual claims, as well as claims under California’s Labor Code Private Attorneys General Act (“PAGA”).
When Defendant Noble’s attorney withdrew, it failed to obtain a new attorney in time for a court hearing. Since corporations cannot represent themselves in court, the trial court struck Noble’s answer. It then ordered Plaintiff Moorer to file a first amended complaint detailing the damages, and seek a default judgment.
PLAINTIFF MOORER DID NOT COMPLY WITH THE COURT’S ORDER
After several default judgment requests were denied due to clerical errors, the court entered a further order. It said that Moorer had “one last chance” to obtain a default judgment. It stated further that Moorer’s proposed default judgment must allocate 75% of the PAGA penalties to the state L&WDA, and the remaining 25% to be distributed to all employees affected by Noble’s alleged Labor Code violations.
Instead, Plaintiff Moorer allocated all of the 25% of the penalties to himself. The trial court refused to enter default judgment. At a hearing, Moorer told the court that he did not wish another chance to correct the default judgment. The trial court then ordered the case dismissed.
PAGA CLAIMS ARE INTENDED TO BENEFIT THE PUBLIC, NOT THE INDIVIDUAL
At the appellate court, Moorer argued that PAGA claims are similar to qui tam actions, in which a percentage of any recovery not retained by the government is allocated solely to the relator.
The Moorer court disagreed. It held that PAGA claims are similar to law enforcement actions, brought for the benefit of the State and of the public at large. It is not intended to provide disproportionate benefit to the plaintiff alone. Citing dicta in Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (2014), the appellate court held that the 25% share of penalties should be distributed to all affected employees.
CONCLUSION
PAGA jurisprudence continues to develop. Here, the appellate court affirmed the public policy nature of PAGA, and made even clearer than did Iskanian how the penalties are to be distributed.
CELA INVOLVEMENT
CELA members Neil Pedersen and Jamie Gottschalk-Hall litigated this matter.
COA, 2nd Dist. Div. 7, Filed 2/11/19. Opinion by Justice Feuer.
SYMMONDS v. MAHONEY
TWO TICKETS TO LITIGATION
Defendant Mahoney is singer/songwriter Eddie Money. Plaintiff Glenn Symmonds was his drummer for 41 years. Symmonds injured his back and could no longer lift heavy objects. He also developed cancer, which caused him to require adult diapers. Mahoney mocked Symmonds during concerts, calling him “Chemo the Drummer” and joking that the concert was sponsored by “Depends” adult diapers. Mahoney laid off the entire band, then rehired everyone but Symmonds, instead hiring a younger, healthier, and less skilled drummer. Symmonds sued for disability and age discrimination, harassment, and wrongful termination. Mahoney filed an anti-SLAPP motion as to the first cause of action for discrimination, arguing he had a First Amendment right to choose his bandmates. The trial court denied the motion, finding that Symmonds’ first cause of action was not based on protected activity. Mahoney appealed. The Court of Appeal reversed.
MUSIC IS PROTECTED BY THE FIRST AMENDMENT, AND EDDIE MONEY’S MUSIC IS ARGUABLY OF INTEREST TO THE PUBLIC
The Court of Appeal found that Mahoney’s decision to terminate the drummer in his band was protected conduct under anti-SLAPP. Music is protected by the First Amendment, and a singer’s choice regarding the musicians that play with him advances and assists the performance of the music. Therefore, choosing bandmates is an act in furtherance of free speech. Mahoney’s selection of a drummer was in connection with an issue of public interest under CCP 425.16(e)(4). Mahoney made a prima facie showing that his music and concerts were of interest to the public. In addition, Symmonds’ discrimination claim arose from Mahoney’s decision to terminate him and therefore arose from protected activity. However, the Court stressed that it did not suggest that employment decisions are generally acts in furtherance of free speech for anti-SLAPP purposes. The Court remanded for the trial court to assess the second step of the anti-SLAPP analysis, Symmonds’ probability of success on the merits.
NOTE: A request for sanctions on appeal must be brought in a motion separate from the briefing. A respondent may not first request sanctions in its opening brief. In addition, the Court of Appeal will not find an anti-SLAPP motion frivolous where the issue was not first determined by the trial court, but the trial court may make a determination of frivolity upon remand.
COA, 2nd Dist, Div. 1. Filed 2/1/19. 31 Cal.App.5th 1096. Opinion by Justice Bendix.
WARD v. TILLY’S
TILLY’S EMPLOYEES WERE REQUIRED TO CALL IN TWO HOURS BEFORE EACH SHIFT TO LEARN WHETHER THEY MUST COME TO WORK
Plaintiff Skylar Ward worked at a store operated by Defendant Tilly’s. Tilly’s practiced on-call scheduling. Under this system, Ward and other employees were assigned on-call shifts. They were required to call in two hours before each on-call shift to find out whether they should report to work or not. If they were told to work, they were paid for the shift. If they were told not to work, they were not paid for having been on call. Ward filed a class action and alleged that Tilly’s on-call scheduling violated Wage Order 7 (8 CCR §11070), which requires employers to pay “reporting time pay” to employees who are required to and in fact report to work, but are not put to work. Ward argued that calling in before a shift constituted “reporting to work” and must be compensated. Tilly’s demurred, arguing that calling in was not reporting to work under Wage Order 7. The trial court sustained the demurrer without leave to amend, and Ward appealed. The Court of Appeal reversed.
CALLING IN AT A REQUIRED TIME CONSTITUES REPORTING TO WORK UNDER WAGE ORDER 7 AND TRIGGERS REPORTING TIME PAY
On-call scheduling burdens employees, greatly benefit employers, and create no incentive for employers to competently anticipate their labor needs. Employees cannot anticipate child or elder care needs, schedule other jobs or classes, or commit to social plans. In addition, the phone call requirement restricts employee activities two hours before the shift when they cannot sleep, see a movie, take a class, or be in an area without phone service. Wage Order 7 requires an employer to pay an employee for two to four hours of work if that employee is required to report to work, reports, but is not put to work. The purpose of the Wage Order is to compensate employees and to encourage proper notice and scheduling of shifts. Therefore, telephonic call-in requirements trigger reporting time pay.
COA, 2nd, Dist., Div. 2. Filed 2/4/19. 31 Cal.App.5th 1167. Opinion by Justice Edmon.