California Courts of Appeal
ASSOCIATION FOR LOS ANGELES DEPUTY SHERIFFS v. COUNTY OF LOS ANGELES
During a 2012 conversion to a new payroll system, defendant County of Los Angeles failed to apply the agreed-upon cap to certain bonus payments. This error resulted in overpayments to 107 deputies. In 2017, the County sent letters to the deputies informing them of the overpayment and giving them two repayment options: (1) repay the money in a lump sum, or (2) repay through recurring payroll deductions at a specified rate. ALADS sought declaratory and other forms of relief, arguing that the County violated Labor Code section 221. The County began paycheck deductions in 2018, over objections from the union, plaintiff ALADS. The trial court sustained the County’s demurrer without leave to amend, and ALADS appealed. The Court of Appeal affirmed.
ALADS was not required to exhaust administrative remedies prior to seeking court intervention. The administrative system is inadequate to provide class-wide relief. Labor Code section 221 does not apply to the County. Section 221 makes it unlawful for an employer to collect wages previously paid out to an employee. However, the Labor Code applies only to the private sector unless otherwise stated. The County operates under an MOU that was bargained for, and the repayment procedure stated in the MOU governs.
COA Second District, Division 8. Filed 1/29/21. 60 Cal.App.5th 327. Opinion by Justice Grimes.
CISNEROS ALVAREZ v. ALTAMED HEALTH SERVICES CORPORATION
Altamed’s job offer to plaintiff Erendira Cisneros Alvarez contained an arbitration agreement. Cisneros Alvarez signed a document affirming that she accepted the offer of employment as described. Altamed fired Cisneros Alvarez two years later, and she filed suit for wrongful termination and other claims. Altamed moved to compel arbitration, and the court denied the motion. The trial court found that the arbitration agreement did not contain the word “jury,” and therefore Cisneros Alvarez did not knowingly waive her right to a jury trial. The Court of Appeal reversed.
In ruling on a motion to compel arbitration, the court must first determine whether there is a valid agreement to arbitrate. If so, the court must order the case to arbitration unless there is a ground for revocation of the agreement, such as unconscionability. The moving party bears the burden of proving the existence of a valid arbitration agreement. The arbitration agreement contained a jury waiver, and the trial court’s finding otherwise was factually incorrect. The jury waiver was clear, and the agreement was not difficult to read or overly long. Altamed made clear that the arbitration agreement was a condition of employment, and Cisneros Alvarez accepted the employment offer as stated. Altamed was not required to provide a Spanish translation of the arbitration agreement where Cisneros Alvarez confirmed that she was comfortable speaking and reading in English. There was however, limited procedural unconscionability due to the employer-employee relationship.
Cisneros Alvarez cited only one substantively unconscionable term: the requirement that a second arbitrator review the arbitration award, creating an appellate arbitral review. This provision was unconscionable because it added an unclear delay and cost to arbitration with no defined rules that Altamed could bear much more easily than Cisceros Alvarez. In addition, a reviewing arbitrator would be unlikely to increase a plaintiff’s award, leaving no downside for Altamed to delay by seeking arbitral review. The ambiguities in the arbitral appellate process were created by Altamed, the drafter of the agreement, and had the potential to give it an advantage. Therefore, the provision was substantively unconscionable. However, the review provision was the only instance of substantive unconscionability and was entirely severable from the remainder of the arbitration agreement. Therefore, the provision must be severed and the case ordered to arbitration.
COA Second District, Division 8. Filed 2/4/21, as modified 3/4/21. 60 Cal.App.5th 572. Opinion by Justice Stratton.
Ninth Circuit
VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
The Ninth Circuit previously certified a question to the California Supreme Court regarding the retroactivity of the Dynamex ABC test regarding independent contractors. The California Supreme Court responded that the Dynamex decision is retroactive. The Ninth Circuit therefore amended and reissued its opinion in this matter.
The Ninth Circuit agreed that Dynamex applies retroactively and rejected Jan-Pro’s myriad arguments for avoiding a decision on the merits. The Ninth Circuit reiterated the California Supreme Court’s conclusion: “Dynamex applies retroactively to all nonfinal cases that predate the effective date of the Dynamex decision.” Dynamex’s ABC test placed the burden on the hiring entity to establish that the worker is an independent contractor not intended to be covered by the wage orders and required the entity to establish each of three factors: (A) the worker is free from the control or direction of the hiring entity in connection with the performance of the work; (B) the worker performs work outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. The ABC Test set forth how to interpret the phrase “suffer or permit to work” in the California wage orders and stressed that the phrase was intended to be read broadly. Since the analysis is fact-intensive, the Ninth Circuit vacated the previous grant of summary judgment and remanded to the district court for further development of the record and analysis.
CELA INVOLVEMENT
Congratulations to CELA member Shannon Liss-Riordan of Lichten & Liss-Riordan P.C.!
Ninth Circuit. Amended 2/2/21. 986 F.3d 1106. Opinion by District Judge Block, sitting by designation.
WARD v. UNITED AIRLINES, INC.
These consolidated cases are brought by pilots and flight attendants who allege that defendant United Airlines violated Labor Code section 226 in issuing wage statements. The Ninth Circuit previously certified a question to the California Supreme Court, asking whether Labor Code section 226 applies to employees who are based in California for work purposes but spend most time working outside of California. The California Supreme Court responded that section 226 applies to these employees. Upon resumption of the case before the Ninth Circuit, United argued that federal law precludes California from applying section 226 to employees who spend most of their time working outside of California.
California’s ties to the employment relationship were sufficient to justify application of Labor Code section 226. The employees were based in California for work purposes and performed at least some work in California (the Ward test).
Ninth Circuit. Filed 2/2/21. 986 F.3d 1234. Opinion by Judge Watford.