United States Supreme Court
BABB v. WILKIE
PLAINTIFF BABB ALLEGED AGE DISCRIMINATION IN VIOLATION OF THE ADEA
Plaintiff Noris Babb was a pharmacist for the U.S. Department of Veterans Affairs. The VA denied her training opportunities, passed her over for positions, made her ineligible for promotion by removing her advanced scope designation, and reduced her holiday pay. She sued the VA for various violations, including age discrimination. The VA moved for summary judgment, which the district court granted. The Eleventh Circuit affirmed, noting it felt her arguments were foreclosed by precedent but that it otherwise may have agreed with her. The Supreme Court granted certiorari to resolve a Circuit split regarding the interpretation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. section 633a(a) and whether but-for causation is required.
THIS MUDDLED OPINION RAISES MORE QUESTIONS THAN IT ANSWERS
Section 633a(a) states that personnel actions affecting employees over 40 “shall be made free from any discrimination based on age.” The plain meaning of section 633a(a) requires that personnel actions be untainted by any consideration of age, so but-for causation for the end result (i.e., termination, demotion, etc) is not required. However, in order to obtain most forms of relief available under the ADEA, the plaintiff must prove age was the but-for cause of the end result. ADEA plaintiffs who demonstrate that they were subjected to unequal consideration but do not demonstrate but-for causation for the end result cannot obtain reinstatement, backpay, compensatory damages, or other forms of relief related to the end result of an employment decision. Plaintiffs who show that age was a but-for cause of differential treatment but not a but-for cause of the employment decision itself can seek injunctive or other forward-looking relief. Other types of appropriate relief are a matter for lower courts to first decide.
U.S. Supreme Court. Decided 4/6/20. 140 S.Ct. 1168. Opinion by Justice Alito.
California Courts of Appeal
ANTHONY v. LI
After filing a lawsuit related to a car accident, Plaintiff Chad Anthony served a Code of Civil Procedure section 998 offer to compromise. The section 998 offer applied to both Defendant Xiaobin Li and Defendant PV Holding Corporation and specified a total settlement payment of $500,000. Neither Defendant accepted the offer. Anthony had dismissed Defendant PV Holding from the case two months prior to serving the 998. Anthony prevailed at trial against Li with a verdict over $650,000. He sought costs under section 998. The trial court declined to award costs to Anthony per section 998 because his 998 offer was jointly made, not apportioned, and ambiguous. Anthony appealed, and the Court of Appeal affirmed.
A 998 OFFER DIRECTED TO A DISMISSED DEFENDANT IS INVALID
Anthony’s 998 offer was invalid because it was conditioned on acceptance by multiple defendants and was directed at a defendant who had already been dismissed with prejudice. 998 offers must be clear and specific to permit the recipient to meaningfully evaluate the offer and make a reasoned decision. A 998 offer made to multiple defendants is valid only if it is expressly apportioned among them and not conditioned on acceptance by all of them. There are exceptions where joint tortfeasors would be jointly and severally liable for a single injury, but the offer is still invalid if it requires all defendants to accept. Anthony’s 998 offer was conditioned on acceptance by both defendants and was therefore invalid as a matter of law.
PARTIES AGREEING TO SPLIT COSTS HAVE AGREED TO BEAR THOSE COSTS AND MAY NOT SEEK THEM AS PREVAILING PARTY COSTS, ABSENT AN AGREEMENT OTHERWISE
Where parties agree to split costs, such as for a discovery referee or mediator, the parties have agreed to bear those costs and may not recover them as prevailing party costs. In order to recover shared costs as a prevailing party, the parties must provide for later recovery of the shared costs.
COA 1st Dist., Div. 3. Filed 4/13/20, modified 4/14/20. 47 Cal.App.5th 816. Opinion by Justice Ioana Petrou.
BROOKS v. AMERIHOME MORTGAGE COMPANY, LLC
Plaintiff Anthony Brooks’ employment agreement with Defendant AmeriHome Mortgage Company contained an arbitration agreement that purported to apply to any dispute arising out of Brooks’ employment. In January 2019, Brooks filed a written notice of wage and hour violations on behalf of himself and other aggrieved employees with the Labor and Workforce Development Agency pursuant to the Private Attorneys General Act. In response, AmeriHome filed a demand for arbitration with AAA. Brooks filed a complaint in Ventura Superior Court, alleging a single cause of action under PAGA. Brooks’ prayer for relief sought only civil penalties, costs, and attorney fees and did not seek individual damages for Brooks. Brooks filed a motion for preliminary injunction to enjoin arbitration, which the trial court granted. AmeriHome appealed, and the Court of Appeal affirmed.
A PLAINTIFF WOULD SUFFER IRREPARABLE HARM IF FORCED TO ARBITRATE A NONARBITRABLE CLAIM
PAGA representative actions cannot be compelled to arbitration. Where an employee alleges a single representative PAGA cause of action, the claim cannot be split into an arbitrable individual claim and a nonarbitrable representative claim. Similarly, the issue of whether Brooks was an “aggrieved employee” under PAGA cannot be compelled to arbitration. The fact that Brooks alleged individual claims and damages in his letter to the LWDA is irrelevant because the complaint, not the letter, sets forth the issues in controversy. A party forced to arbitrate a nonarbitrable claim would suffer irreparable harm.
CELA INVOLVEMENT
Congratulations to CELA member Douglas Han of Justice Law Corporation!
COA 2nd Dist., Div. 6. Filed 3/16/20, publication ordered 4/8/20. 47 Cal.App.5th 624. Opinion by Justice Tangeman.
DENNISON v. ROSLAND CAPITAL LLC
Plaintiff William Dennison invested his retirement funds in gold and silver coins from Defendant Rosland Capital LLC. The coins were worth significantly less than Dennison paid. Dennison sued, and Rosland Capital petitioned to compel arbitration based on its Customer Agreement, which contained an arbitration provision. The Customer Agreement was printed in a compressed tiny font that could not be read without a magnifying glass. The trial court found the contract unenforceable and denied the petition. Rosland Capital appealed, and the Court of Appeal affirmed.
AN ARBITRATOR MAY DECIDE ARBITRABILITY ONLY WHERE THE LANGUAGE GRANTING THAT AUTHORITY IS CLEAR AND UNMISTAKABLE
The party seeking to compel arbitration has the initial burden to plead and prove the existence of a valid arbitration agreement that applies to the dispute. California law presumes a judge will decide arbitrability, unless there is clear and unmistakable evidence that the parties intended the arbitrator to decide arbitrability. Where a contract includes a severability clause stating that a court may excise an unconscionable provision, there is no clear delegation to the arbitrator to decide arbitrability, even where the contact specified the arbitrator would decide the scope or applicability of the arbitration agreement.
AN AGREEMENT CONTAINING MORE THAN ONE UNCONSCIONABLE PROVISION IS PERMEATED BY UNCONSCIONABILITY
The agreement was procedurally unconscionable because it was a contract of adhesion and in tiny print that could not be read by the naked eye. The contract was also substantively unconscionable for several reasons: (1) The arbitration agreement was not mutual and required Dennison, but not Rosland Capital, to arbitrate. The agreement also required Dennison to pay Rosland’s costs and fees if he lost, but gave him no mechanism to recover costs and fees if he won. (2) Several paragraphs limited Rosland Capital’s liability and placed a cap on damages, which was one-sided and an unfair surprise. (3) The arbitration agreement shortened Dennison’s statute of limitations to one year while limiting none of Rosland Capital’s rights. Because of these factors, the contract was permeated with unconscionability and could not be saved by severing a single clause.
COA 2nd Dist, Div. 8. Filed 4/1/20. 47 Cal.App.5th 204. Opinion by Justice Grimes.
McPHERSON v. EF INTERCULTURAL FOUNDATION, INC.
Defendant EF Intercultural Foundation operated out of Massachusetts but employed full-time area managers on the west coast. EF’s employee handbook provided salaried employees with a fixed amount of vacation days per month. However, this vacation policy did not apply to area managers. Area managers could take time off with pay but did not accrue vacation days. Plaintiffs sued EF for wage and hour violations, including denial of vacation wages under Labor Code section 227.3. After a bench trial, the trial court concluded that the employee handbook did not apply to the plaintiffs as area managers, and that the plaintiffs were owed vacation pay. EF appealed.
LABOR CODE SECTION 227.3 APPLIES TO A SUPPOSEDLY UNLIMITED VACATION POLICY IF THE POLICY IS NOT WRITTEN AND THERE IS AN IMPLIED CAP ON VACATION DAYS
Whenever an employer provides its employees with paid vacation, Labor Code section 227.3 requires the employer to pay as wages any vested vacation time a terminated employee has not used. Vacation time vests when the labor that earns the vacation time is rendered. EF argued that plaintiffs earned no vested vacation time because EF did not promise a specific amount of vacation. The Court of Appeal rejected this argument. However, the Court expressly declined to decide whether an unlimited uncapped vacation policy results in vested vacation and noted that Labor Code 227.3 does not necessarily apply to all “unlimited” paid time off policies. Instead, the Court ruled that because EF had no written vacation policy for area managers and never told plaintiffs that vacation was unlimited or that vacation was not part of their compensation, the vacation policy was not actually unlimited or uncapped. Management testified that they expected area managers to take 2-4 weeks of vacation, and plaintiffs averaged two weeks of vacation per year. Plaintiffs testified their work hours precluded use of more vacation time. The record therefore showed that vacation time had an implied cap and was not unlimited. An employer cannot circumvent Labor Code 227.3 by leaving the amount of vacation time undefined while impliedly limiting the time, particularly where the policy is not in writing.
LABOR CODE SECTION 227.3 DOES NOT APPLY TO WORK PERFORMED OUTSIDE OF CALIFORNIA BY A NON-CALIFORNIA RESIDENT FOR AN EMPLOYER NOT BASED IN CALIFORNIA
Plaintiff Heimann worked from her home in Virginia but traveled to California annually and stayed in California for EF’s summer program from June through August. Labor Code 227.3 did not apply to work Heimann performed outside of California. EF paid for Heimann to stay in California. Heimann did not maintain a residence in California and did not pay California income taxes. The Court of Appeal concluded that Labor Code 227.3 did not apply to vacation Heimann earned after she moved to Virginia.
COA 2nd Dist., Div. 3. Filed 4/1/20. 47 Cal.App.5th 243. Opinion by Justice Egerton.
TILKEY v. ALLSTATE INSURANCE CO.
PLAINTIFF AND THE PUTATIVE CLASS WERE REQUIRED TO MAKE THEMSELVES AVAILABLE FOR “CALL-IN” SHIFTS
In addition to their scheduled shifts, employees at Zumiez were often scheduled for “call in” shifts. This meant that they had to call in to their supervisor prior to the shift to see if they needed to work that shift. If they had worked the previous shift, they had to check with their supervisor before leaving. In either case, the employee had to make themselves available to work “call in” shifts.
ZUMIEZ DID NOT PAY IF THE EMPLOYEE DID NOT WORK
If the supervisor decided that the employee was not needed to work, then the employee received no pay for the call in shift. This was true even though the employees had to clear out their schedule, make themselves available for work, and could be disciplined if they refused to show when required to.
THE DISTRICT COURT DENIED JUDGMENT ON THE PLEADINGS
Zumiez moved in the trial court for judgment on the pleadings. Zumiez argued that the Wage Order’s use of the term “report for work” did not include telephonic reporting, but required a physical appearance. The district court rejected the argument, and denied the motion.
On Zumiez’ motion, the district court certified the question as to whether “report for work” required a physical appearance.
“REPORT FOR WORK” CAN INCLUDE TELEPHONIC REPORTING
Sitting in diversity, the Ninth Circuit applied California law. Looking to California Supreme Court precedent, the court found that the wage orders are to be interpreted “to favor the protection of employees.”
In this case, Wage Order 7 applied. That wage order required a half day’s pay (no less than 2 hours and no more than 4 hours) when an employee “is required to report to work and does report, but is not put to work” or works less than a half day.
During the pendency of the appeal, the California Appellate Court decided Ward v. Tilly’s, Inc., a case with facts substantially similar to this one. That case decided that telephonic call-in requirements could be sufficient to trigger the protections of the Wage Order. The California Supreme Court denied review.
Following the rule that, if the Supreme Court has not spoken it must follow a precedential lower court ruling unless there is “persuasive data” that the Supreme Court would rule otherwise, the Ninth Circuit followed Ward. That case found that “report for work” was an ambiguous term, with dictionary definitions of “report” allowing for different meanings.
Because reporting time pay can count as “hours worked” if the employee is subject to the employer’s control, the court also found factual issues as to whether Zumiez violated minimum wage laws.
CONCLUSION
Reporting time pay can be implicated when an employee is required to call in and be available for work, and, if subject to the employer’s control, can also implicate minimum wage laws.
COA 4th Dist., Div. 1. Filed 4/21/20. Opinion by Justice Huffman
Ninth Circuit
ANTHONY v. TRAX INTERNATIONAL CORP.
Under the Americans with Disabilities Act, although after-acquired evidence cannot be used as evidence to eliminate liability for discriminatory conduct, it can be used to demonstrate that the plaintiff was not a “qualified individual” and therefore has no protection under the act.
Furthermore, a plaintiff who is not “otherwise qualified” is not entitled to the ADA’s good faith interactive process.
PLAINTIFF MISREPRESENTED HER EDUCATIONAL BACKGROUND ON HER APPLICATION
Plaintiff/Appellant Sunny Anthony was a technical writer with Defendant/Respondent TRAX International Corp. since 2010. TRAX fired her in 2012, after an extended leave under the Family & Medical Leave Act and a refused request to work from home. TRAX required her to submit a note from her doctor allowing her to return from work with no accommodations, and fired her when she did not.
Anthony sued, claiming that TRAX fired her because it did want to accommodate the learning disability which had necessitated her leave.
In discovery, TRAX learned that Anthony had misrepresented that she had a bachelor’s degree, when in fact she did not. A bachelor’s degree was required for the job because, under TRAX’s contract with the government, it could not bill for a technical writer without a bachelor’s degree. Therefore, the requirement was neither subjective nor discretionary.
THE DISTRICT COURT GRANTED SUMMARY JUDGMENT
In granting summary judgment, the district court found that Anthony was not a “qualified individual,” and therefore not subject to the ADA’s protections. The district court did not comment on Anthony’s claim for failure to engage in a timely, good faith, interactive process, but dismissed the claim anyway.
AFTER-ACQUIRED EVIDENCE CAN BE USED TO SHOW A PLAINTIFF WAS NOT A “QUALIFIED INDIVIDUAL”
The Ninth Circuit affirmed. It looked to the language of the ADA, finding that it protected only “qualified individuals.” 42 USC 12112(a). It then referred to EEOC regulations, adopted by the courts, describing a two-step process for determining if a plaintiff was a “qualified individual.” In the first step, the court was to determine if there was sufficient evidence to determine that “the individual satisfies the requisite skill, experience, education and other job-related requirements of the employment position such individual holds or desires.” 29 CFR 1630.2(m). The prerequisites could be challenged if they themselves were discriminatory. In the second step, the court decides if the individual can perform the essential functions of the position with or without reasonable accommodation.
Here, the plaintiff did not satisfy the first prong. She did not have a bachelor’s degree, which prerequisite was not negotiable as it was necessary for TRAX’s billing to the government. Anthony was therefore not a “qualified individual,” and no further analysis was necessary because the ADA did not protect her in any way. By the same reasoning, she was not an “otherwise qualified” individual and was not entitled to a timely, good faith interactive process.
Importantly, the court distinguished this case from matters brought under the Age Discrimination in Employment Act, because that statute has no language requiring the plaintiff to be a “qualified individual.”
CONCLUSION
This case has unusual facts, and its applicability should be limited because of that. The court reserved the questions of prerequisites that were unevenly applied, or technical prerequisites (like a degree) that could be substituted with experience. Here, the degree requirement was not discretionary, in that it was necessary for billing under the government contract, and the plaintiff therefore had no protection under the ADA.
9th Circuit. Filed 4/17/20. Opinion by Judge Wardlaw
GALAZA v. WOLF
PLAINTIFF GALAZA VOLUNTARILY DISMISSED HER REMAINING CLAIMS WITHOUT PREJUDICE AFTER HER BEST CLAIMS WERE SUMMARILY ADJUDICATED
Plaintiff Anna Galaza worked for the TSA. After she was injured several times, the TSA gave her a permanent limited duty position and eventually terminated her. She sued for numerous violations, including under Title VII and the Rehabilitation Act. The district court granted the TSA’s motion to dismiss as to all claims except the Title VII claims. Galaza filed a notice of voluntary dismissal of her remaining claims, without prejudice, and then appealed.
VOLUNTARY DISMISSAL WITHOUT PREJUDICE IS ONLY APPEALABLE WHERE THE DISTRICT COURT PARTICIPATES IN THE DISMISSAL
The Ninth Circuit dismissed Galaza’s appeal for lack of jurisdiction. Voluntary dismissal without prejudice is ordinarily not a final judgment from which a plaintiff may appeal. There is an exception to this principle where (1) there is no evidence of any attempt to manipulate appellate jurisdiction, and (2) the plaintiff seeks the district court’s permission to dismiss the remaining claims. Though the Ninth Circuit found no attempt to manipulate appellate jurisdiction, it also found no meaningful district court participation in Galaza’s voluntary dismissal. When a party suffers an adverse partial judgment and subsequently dismisses remaining claims without prejudice and without the approval and participation of the district court, the Ninth Circuit lacks jurisdiction under 28 U.S.C. section 1291.
9th Circuit. Filed 4/8/20. 954 F.3d 1267. Opinion by Judge Choe-Groves.