California Supreme Court
ZB, N.A. v. SUPERIOR COURT (LAWSON)
Plaintiff Kalethia Lawson worked for Defendant ZB, N.A. as an hourly employee. The employee handbook included an arbitration agreement, which contained a class action waiver. Lawson sued ZB for several wage and hour violations and sought unpaid wages under Labor Code section 558 via PAGA. ZB argued that section 558 penalties did not implicate PAGA and must be arbitrated. The trial court agreed, but ordered the issue to arbitration as a representative action. ZB filed both an appeal and a petition for writ of mandate. The Court of Appeal dismissed the appeal, holding that it did not have jurisdiction over an order granting a motion to compel arbitration. However, the Court of Appeal granted the writ, holding that the section 558 claim could not be arbitrated because it could be pursued via PAGA, and PAGA claims may not be arbitrated. The California Supreme Court granted ZB’s petition for review.
AN INVALID CLAIM MAY NOT BE COMPELLED TO ARBITRATION
Iskanian remains good law; PAGA claims may not be compelled to arbitration. However, not all penalties are “civil penalties” recoverable in a PAGA action. Section 558 has no private right of action. The unpaid wages referenced in section 558 are not a penalty and are therefore not recoverable through PAGA. Section 558 authorizes only the Labor Commissioner to issue a citation including both unpaid wages and a civil penalty. Lawson’s complaint requested section 558 unpaid wages and was therefore an impermissible request for relief rather than a valid claim that the court could compel to arbitration. Therefore, the Court of Appeal correctly granted the writ petition and ordered the trial court to deny the motion to compel arbitration.
CELA INVOLVEMENT
Thanks to CELA member Joanna Ghosh, and CELA members Bryan Schwartz, Ed Meleshinsky, and Logan Talbot for their Amicus work for CELA on behalf of Plaintiff Lawson.
California Supreme Court. Filed 9/12/19. 8 Cal.5th 175. Opinion by Justice Cuellar.
California Courts of Appeal
GUPTA v. TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY
A FEHA discrimination or retaliation plaintiff who uses comparator evidence need not show that she had “superior qualifications” to the comparator for that evidence to be admissible. Rather, she need only show that the comparator was “similarly situated in all material respects.”
THE PLAINTIFF COMPLAINED OF DISCRIMINATION AGAINST PROFESSORS OF COLOR
Dr. Rashmi Gupta worked as an assistant professor in the School of Social Work, College of Health and Social Sciences, at San Francisco State University. Starting in 2006, she was on the tenure track, meaning that she had a contract for 6 years, and would be evaluated for tenure after her fifth year.
In 2009, Dr. Gupta, who is of Indian ancestry, and some other employees complained of discrimination against women of color in the department. Although her previous review had been positive, less than two months later she received a review critical of her work in all three areas considered for tenure.
A few months later, in March 2010, she sent emails to a colleague complaining that the school’s dean and director were creating a hostile work environment. Dr. Taylor allegedly told Dr. Gupta that Dr. Taylor would “get even” with her, and that there were “consequences” to “those sorts of conversations.”
THE UNIVERSITY DENIED HER TENURE BUT GRANTED IT TO ANOTHER APPLICANT WHO WAS NOT A WOMAN OF COLOR
Dr. Gupta was denied her application for early tenure, primarily on Dr. Taylor’s recommendation. When she made her application for regular tenure for the 2011 – 12 school year, that was denied as well, again primarily on Dr. Taylor’s recommendation.
Meanwhile, the university granted tenure to Dr. J.H. (the court only used her initials to protect her anonymity), who was not a woman of color.
Because Dr. Gupta was not granted tenure, the university terminated her employment at the end of her contract.
THE JURY FOUND IN FAVOR OF DR. GUPTA ON THE RETALIATION CLAIM
The jury rejected the claim of discrimination, but found in favor of Plaintiff Dr. Gupta on her retaliation cause of action. The jury allowed her a total of $378,461 in damages, including $15,600 in noneconomic damages and the balance in past and future economic damages. The court then awarded $587,160.75 in attorney’s fees and costs.
- GUPTA’S COMPARATOR EVIDENCE WAS PROPERLY ADMITTED
On appeal, SFSU argued primarily that the trial court should not have admitted evidence that Dr. J.H. was granted tenure. It claimed that, for comparator evidence to be admissible, the plaintiff must show her qualifications to have been “clearly superior” to those of the comparator.
The Gupta court disagreed. It pointed to a long line of cases stating that comparators need only be “substantially similar” in “all material respects” for evidence of their better treatment to be admissible.
The court distinguished Reeves v. MV Transportation, 186 Cal.App.4th 666 (2010) by pointing out that it analyzed comparator evidence in the summary judgment context, not for admissibility at trial. Reeves stood for the proposition that, during the summary judgment burden-shifting scheme used for indirect evidence cases, weak comparator evidence will be insufficient by itself to prove pretext, and the plaintiff must show her qualifications to be “clearly superior” if that is the only evidence of pretext that she has. But even weak comparator evidence will be enough when combined with other evidence of pretext.
Reeves therefore made no comment on the admissibility of comparator evidence at time of trial. Reeves and the other cases cited by SFSU were also distinguishable inasmuch as they were applicant cases, and therefore the comparator evidence was all that was available to the plaintiff.
CONCLUSION
The distinction drawn in this case is an important one. Litigators often confuse the requirements for surviving summary judgment with the requirements for admissibility at time of trial. Here, evidence of a comparator who is similarly situated, not in the protected class, and treated better than the plaintiff will likely be admissible.
COA, 1st Dist., Div. 3, Filed 9/26/19; Opinion by Judge Petrou.
HAWKINS v. CITY OF LOS ANGELES
This whistleblower case has a number of important holdings. First, a long period of time between a protected act and an adverse employment action will not preclude the finding of a causal link, if the employer took other actions indicative of retaliatory animus during that time. Second, there are various types of evidence that can show pretext in the whistleblower burden-shifting scheme. Third, a PAGA notice will be sufficient if, in its totality, it put the employer on notice of the representative nature of the claims. Fourth, a public benefit is conferred under the private attorney general doctrine if it vindicates a significant public right, which here included the right to a fair and impartial administrative hearing.
PLAINTIFFS COMPLAINED THAT THEY WERE BEING PRESSURED TO CHANGE THEIR FINDINGS
Plaintiffs Hawkins and Kim were hearing officers within the City of Los Angeles’ Department of Transportation. Their jobs included conducting hearings for members of the public who contested their parking citations.
During that time, they each complained, both verbally and in writing, that they were being pressured by their supervisor to change their findings after conducting their hearings. Specifically, they complained that the supervising Office Manager, Carolyn Walton-Joseph, pressured them and other hearing officers to change their findings from “not liable” to “liable,” meaning that the contesting citizens would not receive refunds of their traffic fines. Plaintiffs were fired within a few months of submitting their written complaints.
Plaintiffs Hawkins and Kim sued for, as relevant here, violations of the Bane Act, Ca. Lab. Code §1102.5, as well as claims under the California Private Attorneys General Act (“PAGA”) using §1102.5 as the underlying cause of action.
PLAINTIFFS PREVAILED AT TRIAL ON THESE CLAIMS
Plaintiffs prevailed on the causes of action listed here, although they lost on a FEHA-related claim and a federal cause of action. The jury allowed Hawkins $238,531 and Kim $188,631 in damages, a $20,000 PAGA penalty and over $1M in attorney’s fees.
THE APPELLATE COURT UPHELD THE VERDICT
On appeal, Defendant City of Los Angeles argued first that the Plaintiffs did not engage in a protected act, but merely grievances about their manager’s style. The court stated that, even if the bulk of their written complaints addressed non-actionable issues, such as management style, they nonetheless did include actionable complaints, such as describing being pressured to change their rulings in violation of the Vehicle Code. The jury was entitled to determine the gravamen of the complaints, and they found against Defendant.
The court also found that the closing of the investigations of the written complaints, occurring October 2013, was close enough to the November and December 2013 firings. Even if the court were to consider the initial complaint having been made in 2012, there were enough intervening acts showing retaliatory intent during that time. These included disciplinary counselings within days of complaining about pressure to change their decisions, and the unusual requirement of a doctor’s note for a 1-day absence.
Pretext was established, the court found, through various types of testimony. The City stated that it fired Hawkins because of a counseling he had received in 2011, but he was allowed to return to work between that time and his ultimate firing. As for Kim, his disciplinary history was “miniscule,” and a jury could reasonably find that it was not the reason for his firing. Moreover, multiple hearing officers, including the City’s own witness, testified that they were pressured to change their rulings, showing a motivation to fire people who didn’t comply. The jury was also entitled to make credibility assessments, and were entitled to disbelieve the City’s witnesses, especially in light of the multiple hearing officers who testified in Plaintiffs’ favor.
The Defendant City of Los Angeles also argued that the pre-litigation PAGA notice was insufficient. The court distinguished Kahn v. Dunn-Edwards Corp., 19 Cal.App.5th 804 (2018), refusing to read that case as requiring the use of plural pronouns to put the employer on notice that the claim was a representative one. Rather, the totality of the notice, including references to actions that “coerc[ed] employees, including Claimant, to change their decisions” was sufficient.
Finally, in awarding attorney’s fees under Ca. Code Civ. Pro. §1021.5, the trial court made findings that Plaintiffs vindicated the public’s right to fair and impartial hearings, a matter of great public consequence. The fact that they also received a benefit themselves did not preclude the attorney’s fee award under §1021.5.
CONCLUSION
This is an important and dense case, with positive implications for whistleblowers, especially those working for public entities.
CELA INVOLVEMENT
Congratulations to David Myers of The Myers Law Group for successfully litigating this case.
COA, 2nd Dist., Filed 9/9/19; Certified for partial publication 9/25/19; Opinion by Judge Dhanidina.
MANCINI & ASSOCIATES v. SCHWETZ
Plaintiff Mancini & Associates represented Gina Rodriguez in a lawsuit against her former employer NADT LLC. The retainer agreement provided for a contingency arrangement and recovery of attorney fees. The matter went to trial, and the jury awarded Rodriguez $68,650 in damages. The court awarded over $12,000 in costs and $136,050 in attorney fees. Mancini sought to collect the judgment on behalf of Rodriguez for several years but was unsuccessful. Without Mancini, Rodriguez and Schwetz executed a settlement and release memorandum releasing all parties from all damages, costs, and fees. Mancini sued Schwetz for intentional interference with contract and other similar claims. The court found Schwetz liable and awarded Mancini a judgment over $400,000. Schwetz appealed. The Court of Appeal held that Mancini presented sufficient evidence that Schwetz was aware of Mancini’s fee agreement with Rodriguez and that he intentionally and wrongfully interfered to avoid paying the attorney fees and costs, and affirmed the judgment.
CELA INVOLVEMENT
Congratulations to CELA member Tara Licata!
COA 2nd Dist., Div. 6. Filed 9/4/19, modified on denial of rehearing 9/30/19. 39 Cal.App.5th 656. Opinion by Presiding Justice Gilbert.
SOUTHERN CALIFORNIA PIZZA CO., LLC., v. CERTAIN UNDERWRITERS AT LLOYD’S LONDON
Plaintiffs’ employment practitioners need to be aware of insurance coverage issues as much as our defense practitioner colleagues. Here, the court ruled that the EPLI insurance at issue provided coverage for certain Labor Code-related claims – including Ca. Lab. Code §2802 claims– despite the policy’s wage-and-hour exclusion.
THE ORIGINAL PLAINTIFFS SUED AS A CLASS FOR VARIOUS ALLEGED VIOLATIONS UNDER THE LABOR CODE AND CA. B&P CODE §17200
Southern California Pizza Co. own and operate over 250 Pizza Hut and Wing Street restaurants. They were sued by a prospective class alleging various violations of the Labor Code as well as related claims under Ca. B&P Code §17200 (the “underlying lawsuit”).
THE TRIAL COURT SUSTAINED THE INSURER’S DEMURRER
Southern California Pizza Co. tendered a claim to its insurer, Lloyd’s of London, requesting indemnity and defense. Lloyd’s denied indemnity, but agreed to provide $250,000 in defense. Southern California Pizza Co. sued Lloyd’s, believing it was entitled to more coverage.
The trial court sustained Lloyd’s demurrer. Under an exclusion provision of the insurance policy, the court determined that all of the allegations were “wage and hour” claims, and therefore excluded from all but defense coverage, as Lloyds had argued. Southern California Pizza Co. timely appealed.
THE COURT STARTED BY INTERPRETING THE CONTRACT
The appellate court started with basic principles of contract interpretation. If the language was clear, it would be given its plain meaning. If the language was deemed ambiguous, it would be interpreted to protect the “objectively reasonable expectations of the insured.” If these rules did not resolve the ambiguity, the court would then construe the language strictly against the drafter.
THE COURT USED LAY INTERPRETATION TO DETERMINE THE MEANING OF “WAGE AND HOUR”
The contract’s language excluded claims that ““aris[e] out of, [are] directly or indirectly connected or related to, or in any way alleg[e] violation(s) of any . . . state . . . wage and hour or overtime law(s)[.]” The court therefore was obliged to determine the meaning of “wage and hour.”
The court noted that terms in insurance contracts in particular are to be interpreted the way a lay person, not an attorney or insurance professional, would read them, unless they are intended to have a technical meaning. Neither party urged that “wage and hour” here had a technical meaning, nor was it defined within the contract. Thus, the court used various lay references to find that “wage and hour” here meant “laws concerning duration worked and/or remuneration received in exchange for work.”
SOME CLAIMS WERE EXCLUDED FROM COVERAGE; OTHERS WERE NOT
Using that meaning, the court found that allegations of paystub violations, under Ca. Lab. Code §226, were not covered. The fact that it did not provide for remuneration with wages was not dispositive. Its import was to insure proper documentation of wages and hours, and thus was a “quintessential” wage and hour law.
Reimbursement claims under §2802 and 2800, however, resulted in a different conclusion. Neither of these statutes involve duration or remuneration for work performed, but rather reimbursement for expenses. The court noted that our Supreme Court has referred to these statutes as involving “nonwage” claims. See Smith v. Rae-Venter Law Group, 29 Cal.4th 345, 353 (2002). The court dismissed federal authority, even one case that came to the same conclusion, as nonbinding and unpersuasive.
The fact that these claims did not fall within the exclusion did not imply that they did fall within the coverage, however. Here, the court again looked at the statutory language describing coverage for “any other employment related workplace tort.”
The appellate court pointed out that the mere fact that a violation is embodied in a statute does not preclude it from being a tort. A tort is a civil wrong, and not all of them are created by common law. Thus, the court found that these claims, as well as the related §17200 allegations, should be covered under the insurance contract.
CONCLUSION
Insurance coverage is as important to a plaintiff as it is to a defendant. This case may provide at least some EPLI coverage for employment class actions based on reimbursements, which is welcome news to plaintiffs’ employment lawyers as well as defendants.
COA, 4th Dist., Div. 3, Filed 8/27/19, certified for publication 9/20/19. Opinion by Acting Presiding Justice Fybel
WILLIAMS v. SACRAMENTO RIVER CATS BASEBALL CLUB
PLAINTIFF WILLIAMS SUED FOR FAILURE TO HIRE
Because this matter proceeded from the granting of demurer, the following facts were considered to be true. Plaintiff Williams provided catering and other meal services for Defendant River Cats (a minor league baseball team). At one point, a job opening as Assistant Visitor Clubhouse Manager opened, and Plaintiff Williams, an African-American, applied. He was denied the job, which was given instead to an unqualified Caucasian high school student.
Plaintiff Williams sued for various statutory violations. Pertinent here, however, was Williams’ claim for failure to hire in violation of public policy under Tameny v. Atlantic Richfield Co., 27 Cal.3d 167 (1980).
THE TRIAL COURT SUSTAINED THE DEMURRER
Defendant River Cats demurred, pointing out that Williams was not an employee, but merely an applicant. The trial court sustained the demurrer, granting leave to amend. Plaintiff Williams and Defendant River Cats stipulated that the demurrer be granted without leave to amend so as to facilitate the appeal.
THERE IS NO COMMON LAW CLAIM FOR FAILURE TO HIRE IN VIOLATION OF PUBLIC POLICY
The appellate court first considered the issue of standing. Defendant River Cats argued that Plaintiff Williams had no standing, because his stipulation constituted a stipulation to judgment.
The Williams court disagreed. It found that the record was sufficient to conclude that Plaintiff Williams had stipulated not to the demurrer, but rather to the demurrer being sustained without leave to amend. In other words, Williams had stipulated not to the reasoning of the demurrer, but merely to its appealability. The court found that such a stipulation, meant to expedite the appellate process, did not remove Plaintiff Williams’ standing to appeal.
The court went on to examine Tameny and its progeny. It noted that the language of Tameny, applying public policy torts to “employers,” seemed to support Plaintiff Williams’ claim that a failure to hire cause of action was cognizable under public policy.
The court went so far as to point out that the California Constitution and the Fair Employment and Housing Act both prohibit failing to hire someone on the basis of race. This is sufficient to establish that such failure to hire violates the public policy of the state of California. The failure to hire even fulfilled all of the factors for a public policy violation laid out in Stevenson v. Superior Court, 16 Cal.4th 880 (1997).
Although it seems like that would end the inquiry, the court then determined that, because Williams was an applicant and not an employee, Defendant River Cats owed him no duty not to violate a pubic policy. It looked at previous cases ostensibly requiring the existence of an employment relationship for the malfeasance to sound in tort, including cases denying such a claim to independent contractors.
With the lack of duty, there was no tort, and therefore no common law cause of action.
CONCLUSION
This odd case somehow concludes that an employer can violate an established public policy of the State, yet not have committed a tort because of a lack of duty to the employee not to violate that public policy. The court’s reasoning is tortured, ignoring the fact that the public policy is found in Constitutional and statutory provisions, which language seems to indicate that such a duty exists.
The reach of this case should be minimal because the FEHA still prohibits discriminatory failure to hire, but the tort, with a potentially longer statute of limitations, has been determined not to exist.
COA, 3rd Dist., Filed 9/24/19. Opinion by Judge Robie.
Ninth Circuit
ARIAS v. RESIDENCE INN BY MARRIOTT
DEFENDANT MARRIOTT REMOVED BASED ON THE CLASS ACTION FAIRNESS ACT
Plaintiff Blanca Arias filed a class action in California Superior Court against Defendant Residence Inn by Marriott, accusing Marriott of several wage and hour violations. Marriott removed the case to federal court under the Class Action Fairness Act (“CAFA”). Marriott alleged that the district court had original jurisdiction over the case because it satisfied CAFA’s requirements of minimum diversity: (1) any class member is a citizen of a state different from any defendant; (2) the class size is at least 100; and (3) the amount in controversy exceeds $5 million. Marriott provided estimates for the amount in controversy based on the complaint’s allegations, its own records, and some assumptions. The district court remanded the case sua sponte, concluding that Marriott’s calculations were based on speculation and faulting Marriott for failing to provide evidentiary support for its calculations. Marriott was granted permission to appeal and then appealed.
A DEFENDANT MAY RELY ON REASONABLE ASSUMPTIONS TO DEMONSTRATE THE AMOUNT IN CONTROVERSY
The Ninth Circuit reaffirmed three principles applicable in CAFA removal cases: (1) the notice of removal must contain plausible allegations of the jurisdictional elements and need not contain evidentiary submissions; (2) when the allegations of removal jurisdiction are challenged, the defendant’s showing on the amount in controversy may rely on reasonable assumptions; and (3) when the statute or contract in question provides for attorney fees, prospective attorney fees must be included in the assessment of the amount in controversy. When the notice of removal plausibly alleges a basis for federal court jurisdiction, a district court may not remand without first giving the defendant a chance to show that the jurisdictional requirements are satisfied by a preponderance of the evidence. When the district court questioned Marriott’s calculations, it was required to give Marriott a fair opportunity to submit proof before remanding. In addition, a removing defendant is permitted to rely on a chain of reasoning that includes assumptions, though there must be some reasonable ground underlying those assumptions. The Ninth Circuit vacated and remanded the matter back to the district court.
9th Circuit. Filed 9/3/19. 936 F.3d 920. Opinion by Judge Callahan.
ROBERTS v. CITY AND COUNTY OF HONOLULU
PLAINTIFF MOVED FOR ATTORNEY FEES AFTER PREVAILING ON A SECTION 1983 CLAIM.
Plaintiff Andrew Roberts filed a 42 U.S.C. §1983 civil rights action against Defendant City and County of Honolulu for denying him a firearm permit. The parties reached a settlement but could not agree on attorney fees. Roberts filed a motion for attorney fees and costs, and Honolulu opposed. The assigned magistrate judge found the attorneys’ requested hourly rates unreasonable and recommended much lower rates. The magistrate judge also found that the hours spent on the matter were unreasonable and necessitated a reduction. The district court adopted the magistrate judge’s recommendation regarding the reduced hourly rates but awarded fees for time spent on unfiled motions through November 25, 2015, when the parties had agreed in principle to the settlement. Roberts appealed.
A DEFENDANT HAS THE BURDEN OF PRODUCING EVIDENCE TO REBUT A PLAINTIFF’S EVIDENCE REGARDING REASONABLE HOURLY RATES FOR THE LODESTAR ANALYSIS
A prevailing plaintiff in a section 1983 action is entitled to reasonable attorney fees under section 1988(b). A plaintiff prevails when actual relief on the merits of the claim materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff. Since Roberts received substantially all of his requested relief via the settlement agreement, he was the prevailing party and entitled to reasonable attorney fees using the lodestar method. In the lodestar method, the court multiplies the hours reasonably spent on the case by a reasonable hourly rate. The reasonable hourly rate is determined by the prevailing market rate in the relevant community. The district court abused its discretion in disregarding the declarations in support of the hourly rates and focusing only on previous fee awards. It is reversible error to rely on cases decided years before the attorneys rendered their services and to award outdated rates. The party opposing the fee motion must submit evidence in rebuttal, but Honolulu submitted no evidence to refute Roberts’ declarations. The Court of Appeal therefore reversed and remanded for the district court to properly determine the prevailing hourly rate in the District of Hawaii for comparable work performed by attorneys of similar skill, experience, and reputation. The district court further erred in cutting off Roberts’ hours before a settlement agreement was signed, and the Court of Appeal remanded for a determination whether a reasonable attorney with his client’s interests in mind would have continued working on the unfiled motions after November 25th, and if so, until what date.
9th Circuit. Filed 9/12/19. 938 F.3d 1020. Opinion by Judge Rawlinson.
https://law.justia.com/cases/federal/appellate-courts/ca9/16-16179/16-16179-2019-09-12.html